1Mby1M Virtual Accelerator Investor Forum: With John Frankel, Partner at ff Venture Capital 2021 (Part 4)

Sramana Mitra: The deal size at which you had to meet in person has vastly changed. You can do large deals and raise investments without meeting in person. That is a massive shift and a massive removal of friction in scalability, fluidity, and velocity in any company’s growth trajectory. 

John Frankel: Totally. It is amazing that you can do that. I do hope that in a few months, meeting in person is something that we feel very comfortable doing. You are right. There has been a huge proof point around working remotely and getting things done efficiently.

I still believe that there is breaking bread with an individual by meeting them in person. I do suspect that it will be a hybrid of the two. 

Sramana Mitra: There is nothing like meeting in person to establish a deep connection. It is not easy to do that online. We have run this program virtually for over a decade now and the connections are really deep because we work weekly with our entrepreneurs all around the world.

You get to know their businesses and the trust that develops by just working together for such a long period on a sustained basis is incredibly interesting. 

John Frankel: It really is. It has been a huge enablement of reduction in business friction and honestly the creation of enormous health for the global economy. My job is to be a venture capitalist, so I am a strong believer in capitalism though they raise the tide for everybody.

I love the fact that this is something that can happen anywhere. Everybody can learn to code and anybody with a good idea can go and attack a market. They don’t need to have a room filled with sun servers. You used to have a room with your servers, hire system administrators, own mail server, and PBX exchange.

It used to cost you $10 million. Now, you can almost sit on your couch almost unemployed, and be the CEO of your company. I think that it is wonderful.

Sramana Mitra: Can you catch us up about the vital statistics of your fund? Since we last spoke, what is the fund size? 

John Frankel: We like to invest at the seed stage. For us, that is sort of a mid-single-digit valuation. We carry on with that scene and stop at the $50 million valuation, so we invest from the seed to Series B. Our target fund size is around $55 million.

We are in the middle of raising our sixth fund right now. We are just very engaged as VCs. We know that companies have issues and fail. About 90% of seed-funded companies don’t go ahead to raise a Series B. In our portfolio, it is about 50%. We are running survivorship at five times the average.

We’ve honed the set of things that we think are important to do and we have discarded things that we think sound good but don’t move the needle for our companies. We have been doing this long enough – for 13 years.

We have companies of all sizes. We have about 74 active portfolio companies. We have 26 at the $50 million level and about 16 worth $100 million or more. We have had 22 exits.

Outlook baby care has this little sock that you put in a baby. This is Outlook. They just filed to go public. They save tens of thousands of babies’ lives. They monitor if there is a heart or lung problem. This allows mothers and fathers at home to do this at home. This is amazing.

They are now going global to sell more products. When we invested in them seven years ago, it was a circuit board with some tape. Today, it is on the cusp of becoming a public company. That is just a lot of fun. 

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With John Frankel, Partner at ff Venture Capital 2021
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