1Mby1M Virtual Accelerator Investor Forum: With Dan Roselli of CFV Ventures (Part 3)

Sramana Mitra: What is your modus operandi? You have a small fund. Are you looking for unicorns? Are you looking for early exits?

Dan Roselli: We know that we will still have a relatively high failure rate. When you look at the failure rate of companies in general, you get less of that in the Series B stage. At the seed stage, you’re still trying to figure out if the company is going to make it.

Since we’re investing at valuations that are $3 million, a company that gets to $80 million is an interesting exit for us. It doesn’t have to be a billion-dollar valuation. It needs to be a billion-dollar valuation when you’re putting in $50 million at a Series B when the company is already valued at $100 million. That’s where you need to get to unicorn status.

Could some of ours grow up to be on that path? Sure. Having co-founded one, I know what that trajectory looks like but I don’t think that’s necessarily our goal.

Our first IPO went out of fashion but is now coming back into fashion. The most likely path for most of our companies is going to be strategic exits. That’s going to be much more common than unicorn status. 

Sramana Mitra: What is the geographical footprint? Your preference is for people coming out of your accelerator, but you also give examples of companies from Atlanta. It sounds like you are not completely constrained to North Carolina companies. 

Dan Roselli: We do focus in the US and Canada. We happen to be based in Charlotte, North Carolina but we don’t focus on Charlotte or the Carolinas. Our perspective has been global in nature. We get people from all over.

We’ve had companies from every continent, from hundreds of different countries, almost every State. That comes from the fact that we focus on a couple of verticals. We thought we had an ecosystem that could support that.

When we started the program, we said, “What areas can we compete in and win on an international level?” That was our thinking of why we chose to be vertically-specific. As soon as we started doing the FinTech program, we got applicants from all over the world.

I’ll never forget the first time we got a company from New York and San Francisco to move to Charlotte to incubate their FinTech startup. The last thing I’ll mention is international. We get a lot of international companies applying to our program because they want access to the US marketplace.

We’ve created a whole new program across those verticals called the International Landing Pact with the idea that people come in and make Charlotte their North American homebase. We are more cost-effective than New York and much more connected. We will look at companies through that as well.

Sramana Mitra: I’m completely in agreement with you that the trend is very much in that direction. Companies are not going to be doing their entrepreneurial work in expensive places like New York and San Francisco. Maybe they’ll have one or two people. The real bulk of the operation is going to be somewhere else.

Part of the success of our program has been because of this global nature of entrepreneurship. Especially in the last decade, the movement has been very much in the global direction.

Dan Roselli: I remember 10 years ago if a startup in Charlotte had gotten funding from New York or San Francisco, it was almost certainly required that they had to move to that geographic location. 

Sramana Mitra: In this upcoming decade, that is going to be accentuated.

Dan Roselli: I totally agree with that.

Sramana Mitra: Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Dan Roselli of CFV Ventures
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