May 13, 2019
PUBLISHED BY Cassie Ann Hodges
SOURCE National Venture Capital Association
Welcome to the NVCA Blog series, Building Better, where we celebrate the dynamic relationship between our VC members and their innovative portfolio companies around the nation. For today’s Building Better, we spoke with Bruce Cleveland, Founding Partner at Wildcat Venture Partners, and with Pete Sinclair, CEO of Obo, a Wildcat portfolio company. Learn about their partnership in the Q&A below!
Wildcat Venture Partners: Bruce Cleveland, Founding Partner
Q: Give us some background on Wildcat Venture Partners: How did the firm start, what is your mission and how does the firm strive to meet its goals?
A: Wildcat Venture Partners is a venture firm that invests in early stage technology startups. Founded in 2015, our primary focus is on B2B and B2B2C startups leveraging key technologies such as Machine Learning/AI, IoT, and Cloud & Mobility in the following markets: Digital Health, EdTech, Enterprise SaaS and FinTech. Each founding Wildcat general partner (GP) has been a founder, founding investor or a member of a founding team that has scaled one or more startups to a $B+ outcome. As venture investors, together one out of every four early stage startups our team has invested in over the course of our careers has scaled to a $B+ valuation.
Wildcat’s mission is to help 21st century Wildcatters (tech entrepreneurs) identify trapped value and monetize digital oil to become the next market disruptors and category leaders. Trapped value resides in many forms, including:
• Decades-old, stagnant business models prime for disruption;
• Out-of-date commercial data which can be replaced with dynamic, real-time data that is far more valuable;
• Static pools of capital that can be repurposed to generate higher returns;
• Human capital agency models that can be redesigned by incorporating cost-efficient computing resources; and
• Global instantaneous communication that reduces business overhead.
Digital oil is simply the data generated through consumer and business transactions which can be captured and monetized through next-generation systems of engagement and intelligence. Trapped value and digital oil are foundational to Wildcat’s investment thesis and strategy. This is how we think about investment opportunities and what we look for in the entrepreneurs we back.
Q: What does Wildcat Venture Partners look for in a partner when choosing to invest in a portfolio company? What does Wildcat Venture Partners value? What do you value in the Obo team?
A: We have developed an early stage investment decision model called the Traction Gap Framework®. This framework features four architectural pillars (Product, Revenue, Team and Systems) and metrics associated with key stages in a startup’s early life. We use the Traction Gap Framework to assess a company’s maturity, market opportunity, and team capabilities. It also allows us to better understand what the team will need to accomplish and the capital it will require to scale.
Almost every team we meet with has great product engineering skills. Unfortunately, product engineering alone isn’t what separates the startups that succeed from those that fail. Almost universally, the teams that become market leaders possess both great product engineering and “market engineering” skills.
Market engineering is a term we coined to connote skills such as: category creation/redefinition, thought leadership, value propositions, messaging and other elements that we describe in detail in Traversing the Traction Gap, the book we recently released based on the Traction Gap Framework.
What we value most in the Obo executive team is that every member is a tried, tested and proven product entrepreneur who recognizes the value of market engineering. They have each been product executives in market leading companies where market engineering played a role in the company’s success. They know what it takes to convert an idea into a market-leading company.
Q: How does Wildcat Venture Partners support its portfolio companies? How does it help entrepreneurs grow and advance the VC industry?
A: We have operationalized the Traction Gap Framework to provide our portfolio companies with significant assistance during the murky go-to-market phase.
Shortly after we make an investment, we meet with our early stage teams after each team member has had an opportunity to fill out a Traction Gap Assessment. This process produces a heat map that we use to analyze and identify areas of deficiency in the four Traction Gap Framework architectural pillars.
Subsequently, we hold a workshop, led by Geoffrey Moore – a Wildcat venture partner and the author of Crossing the Chasm. These workshops help bring the team – and Wildcat – into alignment regarding what specific actions are required to reach the next Traction Gap value inflection point and prepare to scale.
Through the use of our Traction Gap Framework and workshops, we help our portfolio companies by providing them with the principles they can use and access to successful entrepreneurs who can help to guide them to success.
We lecture on the Traction Gap Framework principles at a variety of universities such as Stanford, Columbia, University of Chicago – Booth, and Babson College. In fact, Babson has created an entire course based upon the Traction Gap Framework.
Read the full article on National Venture Capital Association.