1Mby1M Virtual Accelerator Investor Forum: With Julie Lein, Managing Partner at Urban Innovation Fund (Part 2)

Julie Lein: What we want to see is execution. You may not have a full-fledged product yet. You may not have everything figured out, but you’re doing things to attract attention. You’re doing things to move the customer feedback forward. That’s what we get impressed about at pre-seed. The definition has changed.

It’s typically that first round of funding, typically, less than two million. In our order of criteria, one is the team and the ability to execute. Two is, we do look at the market. We want markets where you can have a pathway to having a billion-dollar type of exit and beyond.

The third thing we look at is the product. At the pre-seed, they tend to be very raw. That’s okay. You don’t need the perfect working product. What we want to see is that there are some folks who are starting to use it. If you can get them to pay for it, great, but that’s not necessary at pre-seed. We want to see the team, market, and product lineup so that, with additional capital, you can grow to be a massive billion-dollar-plus business.

Sramana Mitra: Even in the pre-seed round, you are looking for customer engagement?

Julie Lein: Right. They’re not necessarily paying for it, but you’re, at least, getting customer feedback. I can give an example of a pre-seed round we did recently. It was their first round of funding. They wanted to raise $500,000 but they ended up raising more. They had a working product.

They had three highlight customers who weren’t paying, but were giving a ton of feedback. I talked to those customers. They just raved about the product. It was the enthusiasm of those customer references that got us extremely excited about writing that early check. That’s a really good validator for startups at an early stage.

They don’t have to be paying. They don’t have to be writing these massive six-figure contracts, but you want customer engagement and feedback in a way that shows you understand your customer and pain point. You’re building a solution that will ultimately solve it.

Sramana Mitra: What about geography?

Julie Lein: We are based in the San Francisco Bay Area. We do invest across the US and North America more broadly. We are starting to be more opportunistic about international opportunities as well. We recently invested in folks in Europe. We’ve looked at Israel and Asia.

Now in our Zoom world, it’s becoming easier to have meetings. It’s just that for an investor like us where we tend to have a more concentrated portfolio, we don’t want to get ahead of ourselves. We want to be opportunistic and open-minded toward all the best early-stage urban innovation startups.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Julie Lein, Managing Partner at Urban Innovation Fund
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