March 12, 2017
PUBLISHED BY Steven Loeb
Venture capital used to be a cottage industry, with very few investing in tomorrow’s products and services. Oh how times have changed. While there are more startups than ever, there’s also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We’re highlighting key members of the community to find out.
Katherine Barr is a Founding Partner at Wildcat Venture Partners.
Barr is a Founding Board and Charter Member as well as former Co-Chair of the C100, the leading Canadian technology entrepreneur association in North America, and is a member of the Advisory Council on Economic Growth for Canada’s Minister of Finance. She is also an Advisor for the Creative Destruction Lab (CDL) West, and is an Emmy Noether Council Member at the Perimeter Institute, one of the world’s leading institutes of theoretical physics.
Barr was previously a Senior Negotiator at Vantage Partners for global technology companies such as IBM, Cisco, Applied Materials, and HP on their deals with customers, partners, and service providers, a Senior Product Manager at HSA, and a Senior Marketing Manager at ACCESS.
VatorNews: What is your investment philosophy or methodology?
Katherine Barr: We are an early stage technology venture firm. These days, that means a lot of different things to different people.
A specific way to describe our investment philosophy is that we look for companies that are in what we call the “traction gap.” That is the go-to-market stage for companies in between what we call “IPR,” or initial product release, and MVT, which is minimum viable traction. We did a lot of research on this and saw that for companies between seed stage and Series B, only about 23 percent or so of them make it though the traction gap. The traction gap is a tough and risky time for companies figuring out how to go-to-market effectively and efficiently and getting to material traction out the back end, where other firms are going to be interested in investing.
When we looked at our portfolio companies, we saw that nearly 80 percent had made it through the traction gap because we we all have experience as former operators who have been in venture for a long time, and were able to work with and support them through this gap. Specifically, there are four key areas where we support with our companies in getting effectively and efficiently through the traction gap, depending on where the companies need the most help: product, revenue, company systems and team.
Product tends to be the least risky. Usually the founding teams are quite good technologists, and we just need to make sure that the platforms are going to be highly scalable. Revenue or refining the business model, is often where the less experienced teams in particular can struggle without support or guidance. Trying to actually build product market fit, and a sustainable, scalable business model around that is critical for companies to figure out during the traction gap.
Internal company systems refer to making sure that entrepreneurs are setting their companies up internally to scale effectively. Many entrepreneurs realize too late that they don’t have scalable systems, whether it’s finance or HR for example, and that can really hinder companies as they’re growing quickly.
And then team; we do a lot of work on team building, because we have seen the movie so many times now, on the operating side and on the venture side. We help with who you should be hiring on your executive team, when to hire them, and how do it effectively in a quickly growing company. There’s real art and science to it and entrepreneurs can often struggle with this, especially the less experienced ones. We will sometimes hear, “Oh, I don’t have the time for this right now, I’ll get to it later.” Or, “Oh, but these other people have been so loyal to me and they’ve compromised so much and they’ve worked so hard that I don’t want to hurt them or lose them by bringing someone over them.” Those are all common themes that we hear, but, invariably, on the other side of hiring the right executive in the right role at the right time, the CEOs always say, “Thank goodness. I have so much more leverage now I can actually do my job as the CEO. This made all the difference in the world.” If they handle it properly then the team is happy too, because they see how having experienced executives in key functional roles really benefits the company.
Read the full interview on vator.tv here.