1Mby1M Virtual Accelerator Investor Forum: With Ben Narasin, Founder and General Partner at Tenacity Venture Capital (Part 2)

Sramana Mitra: Today, the industry is segmented in to pre-seed, seed, post-seed, pre-Series A, early Series A. Where are you positioning yourself?

Ben Narasin: I’m happy with anything before the Series A. My focus has always been finding entrepreneurs that I believe are venture-scalable and helping them raise their first venture round. I got over 327 VCs in my eight years as a seed investor. In that eight-year period, between 63% and 71% startups I seeded went on to raise follow-on rounds. Typically, Series A. Those rounds often came from the introductions I made.

I funded 80 companies in eight years and I was involved in every single Series A. That doesn’t mean that the entrepreneurs always took money from the people I introduced them to. One of the things about venture industry is that they tend to be aligned with top-tier firms. My 327-person network was entirely derived from the top 15 firms. A lot of my work was figuring out who to take entrepreneurs to that would be right for their business. I like to get there early enough to be helpful and sometimes to be formative. Anything before the Series A is fine and maybe doing the Series A.

I have an entrepreneur who’s a great founder out of LA. I have seen her in a startup competition and we talked a lot. There was a risk I was not comfortable with. She came back six months later for some advice. She was doing exceptionally. I introduced her to the fund that became her Series A investor and participated in the round.

A big part of my thesis and value-add is that I can help them get a successful Series A done. One of my rules is, I’ll help you raise Series A when I think you’re ready. I’m very picky about who I introduce to whom. In making introductions, I had just two people ever say no. 

Sramana Mitra: We do exactly the same thing. Very often, people come to 1Mby1M looking for investors. We don’t offer it as a fund but we have a network of investors who work with us. We are very particular about making sure that they are fundable before sending them to VCs by our judgement. It’s exactly the same logic that you just laid out.

Ben Narasin: I spent an inordinate amount of time over that eight-year period. I was very fortunate to have a platform that gave me unlimited time and money to do it. It’s not a perfect analogy, but over the last 18 months, we’ve been fostering puppies. My job is to get these puppies a safe and happy home. When I think about my own interactions with entrepreneurs, I have a lot of adopted children.

I can’t bend the discipline because if I do, then that deserving puppy doesn’t get the opportunity. You want to protect those relationships. I remember I was talking to a VC once. They were raising a Series B. I was making all the introductions. I said to the VC, “Why am I doing it?” They said, “I don’t usually make connections to entrepreneurs. If I connect an entrepreneur to another VC, it makes them look weak.” I’m not going to say everybody feels that way. 

Sramana Mitra: It’s a very odd logic. I don’t agree with that at all.

Ben Narasin: I think that a lot of VCs feel like if it had to be introduced, it wasn’t strong enough to get there on its own. When you get a seed investor, it’s the opposite. The seed investor is expected to make those introductions. Every venture firm always has a list of the seed investors that they want to stay on top of. As long as that respect is maintained, they’re going to listen to what you say.

If the VC likes the introduction, I get a call. They want to know what my year with that entrepreneur has taught me. Usually what they’re asking is, “Is this the long-term CEO?” By then, I’ll be able to say I don’t know if they can scale all the way to IPO, but I’m inclined to believe so. It is interesting to me that when I was a VC, all the people I know tend to call me when I introduce them to entrepreneurs if they’re interested.

They’re either asking about the entrepreneur or asking how to win a highly-competitive round. It is very rare for VCs to reach out to the earlier investors, which I find confusing. They’re a great source of intel. It’s a funky world.

Sramana Mitra: It’s a funky world. I’ve been in Silicon Valley since 1996. It has changed a lot, but it is a funky world. One of the points that we stress in 1Mby1M is just like looking for product-market fit, you also need to look for investor-entrepreneur fit to make a deal happen.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Ben Narasin, Founder and General Partner at Tenacity Venture Capital
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