April 1, 2024

207. Why now?

Show Notes
Transcript

Text your thoughts directly to Rich.

The longer an investor has been around, the more likely they've seen someone attempting to solve the same problem you're tackling. Convince them "why now" to get their attention.

Read more of Allyson's work on our Substack: https://vcminute.substack.com/

About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast - get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.

Transcript

WEBVTT

00:00:01.000 --> 00:00:08.654
This is Rich Maloy with SpringTime Ventures, bringing you the VC Minute, quick advice to help startup founders fundraise better.

00:00:09.657 --> 00:00:11.428
I've really been enjoying my partner.

00:00:11.428 --> 00:00:13.917
Allyson's writing over on our sub stack.

00:00:14.458 --> 00:00:18.957
If you haven't checked it out, head over to VCminute.substack.com.

00:00:19.538 --> 00:00:22.777
She's leading off this week with her three most recent articles.

00:00:23.408 --> 00:00:27.984
But first I can confidently say that our sponsor is a financial game changer.

00:00:28.283 --> 00:00:33.954
They've been a trusted financial ally providing invaluable insights to several of our portfolio companies.

00:00:34.454 --> 00:00:39.463
I've known them through the startup community for over a decade and they have a stellar reputation.

00:00:39.963 --> 00:00:43.984
So who is our game-changer, helping growth companies with their success?

00:00:44.484 --> 00:00:46.223
AVL Growth Partners.

00:00:46.723 --> 00:00:52.094
Head to AVLgrowth.com and explore how they can be pivotal to your growth.

00:00:52.853 --> 00:00:54.204
AVL Growth Partners.

00:00:54.603 --> 00:00:55.624
Your success.

00:00:55.923 --> 00:00:57.124
Their expertise.

00:00:58.124 --> 00:01:06.373
If you spend enough time in the startup ecosystem, it's inevitable you'll come across companies solving the same types of chronic problems, such as care coordination or food waste.

00:01:06.823 --> 00:01:10.813
These are pervasive near universal problems in dire need of a solution.

00:01:11.323 --> 00:01:13.123
Yet, they remain largely unsolved.

00:01:13.123 --> 00:01:22.784
In the storytelling around successful startups, one of the critical elements that often gets under-emphasized is the role timing can play in making or breaking a company.

00:01:23.293 --> 00:01:31.933
A company might have an amazing founding team with a well thought out solution, but the likely outcome will be much smaller if they're too early or too late to market.

00:01:32.353 --> 00:01:39.944
For example, AlchemyAPI, which was building a deep learning platform, started in 2005 and was acquired by IBM in 2015.

00:01:40.543 --> 00:01:44.384
From what I've been told, the outcome was modest compared to AI evaluations today.

00:01:45.013 --> 00:01:50.203
This is pure speculation, but had they started a decade later, I suspect the outcome could have been very different.

00:01:51.254 --> 00:01:56.623
When investors talk about market analysis, one of the key points they're trying to understand is the"why now".

00:01:57.043 --> 00:02:01.873
This is an even more critical question if the investor has seen other companies fail to solve the problem.

00:02:02.414 --> 00:02:16.903
An investor's pattern recognition can be positive and negative assets, but if there's a graveyard of companies that have come before and have not found success, an investor is likely to be biased from past failures and will want to understand what's different now that makes a solution feasible.

00:02:17.834 --> 00:02:25.633
In a previous newsletter, we discussed the importance of founders describing the hair-on-fire problem a startup's customers have, but it shouldn't stop there.

00:02:26.174 --> 00:02:32.954
If this is such a massive problem, founders need to explain why it hasn't been solved before and what makes this moment unique for doing so.

00:02:33.704 --> 00:02:45.524
It could be technological shifts, cultural changes, regulation, or something else entirely but the burden of proof is on the founder to demonstrate that there are enough tailwinds to break customers free from the status quo.

00:02:46.274 --> 00:02:51.563
This is exactly what Liz Georgi CEO and co-founder of Soona discusses in episode 198.

00:02:51.943 --> 00:02:58.783
Market context, that is the timing and bigger picture of why your business should exist, is one of the three pitches founders should hone.

00:02:59.383 --> 00:03:02.473
The analogy she uses is that of a world-class surfer.

00:03:02.653 --> 00:03:06.253
It doesn't matter how good the surfer is if there are no waves to ride.

00:03:07.243 --> 00:03:13.033
Ultimately successfully answering the"why now" question comes down to being able to articulate differentiation.

00:03:13.424 --> 00:03:20.473
For founders to stand out to investors, they have to effectively communicate why the timing, team, and insights are different enough to succeed now.

00:03:21.014 --> 00:03:24.674
Otherwise investors will infer from past experiences and pass.

207. Why now?

Throw the hottest pool party in town