Charla Triplett has over 20 years of experience bridging the gap between academia, business, startups, non-profit and Venture Capital. Educated as a bioengineer, she has a breadth of experience in digital health, biosensors, medtech and the life sciences. Charla has been a sought out mentor, advisor and connector in the industry for decades.
She is a Senior Venture Partner at Expert Dojo Healthcare Ventures, Managing Director at Suncoast Ventures, and founder and CEO of Spine by Design, a surgical decision support software startup. Her prior roles include a broad range of business development and strategic partnership roles in Biomedical Engineering, interactive digital marketing and product development in medical devices.
- How can you evaluate and find the right support for YOUR startup – one that fits your industry, your stage and what you need most right now?
- What preparatory steps can you take early on to protect your interests before ever stepping into an accelerator program?
- How can you get the most bang for your accelerator buck and continue to build your business once you enter an accelerator?
In this episode, Charla Triplett, Managing Director of Suncoast Ventures gives you the low down on everything you always wanted to know about accelerators but were afraid to ask!
Links and Resources
ExpertDojo: International early-stage growth accelerator in Southern California
Suncoast Ventures: A global health innovation and impact venture firm
The Women’s Innovation Network: The Women’s Innovation Network (WIN) is a nine-month program at the University of Oregon that helps faculty, graduate students, and entrepreneurs in our community navigate gender-based barriers to bringing their research to market or to launching and sustaining their businesses.
Charla Triplett: Thanks. I’m excited to be here.
Charla Triplett: Yes, so I have a background as a scientist and an engineer. I worked for a number of years in a number of different roles, picking up different kinds of skill sets along the way.
I realized pretty early on that I was not cut out for the scientific and engineering research side of things. I didn’t ever feel like I was going to be the one to make the inventions like the next latest innovation and I was really interested in things in particular that were applied.
I had started out as a basic scientist. I moved my way into engineering, which I found was much more aligned with how I thought about things. I wanted to be able to not just find something that was in a textbook somewhere after 20 years of doing work, but something that actually made an impact.
I’ve always had an interest and a desire to do that in healthcare. The way that I’ve ended up becoming a VC is essentially starting by working with companies in early stage and strategy based on my background and experience from previous projects.
Then at that point I also realized that I needed to find ways to get them connected to capital. That’s how I started learning about venture capital and early-stage funding. Then I applied my knowledge to help support my clients and ultimately I was recruited into a venture fund that was working towards becoming a firm at some point.
That is where I met my current partner that I work with. Ultimately, I’m not sure where that firm ended up, but the two of us went on together, and went into Expert Dojo and I think from there also founded and are running Suncoast Ventures as well.
Charla Triplett: Technically my title is something like “Senior Venture Partner.” I work hand in hand with Genevieve LeMarchal, who is the Head of Healthcare. We do all of the diligence and all of the recruiting of the companies into the accelerator. Then we work with companies to help support them along the way.
So, Expert Dojo is a little different than some other accelerators in terms of, say, a typical accelerator, which has a very determined time period, typically like a three-month kind of thing, and then they’re out the door.
That’s not how we operate at Expert Dojo. So, even though we’ve had three cohorts to date, we’re still actively working very closely with those companies that have come through.
Charla Triplett: Yes. So, the founder of Expert Dojo, Brian MacMahon looked around and saw that venture capital was broken in that it really was about who you knew and an idea in the Bay Area was what was getting funded at that time and he thought there has got to be a better way.
I think what he saw is that growth was the great equalizer, meaning that if you had a fast-growing start-up, then you could get funding even if you didn’t look like the traditional founder, so to speak.
So, that’s why he founded and started Expert Dojo where the concept was, “Hey, if we really teach people how to growth-hack and if we teach people how to get these fast-growing start-ups then they will get funding.”
So, the goal was to be able to fund great diverse founders, not focused on their background, but focused on their execution and the fact that they could execute and grow companies. So, I’m really proud of our diversity metrics at Expert Dojo.
I think that within healthcare in particular, we have funded 50% female and I believe 42% underrepresented, not female. I think that speaks for itself in terms of the fact that we are able to find amazing founders that are not the typical funding metrics that are out there.
Charla Triplett: Yes, I would say that finding diverse founders is not an issue. I mean, there are plenty of them out there, I think, by nature of the fact that many of them do struggle to get the typical funding. We have a lot of different ways that we deal source, so we have a lot of referrals. So, given the nature of working in an industry for a number of years, essentially we get people who refer companies into us. Some of them are through my personal networks that I have worked with. A number of different universities in particular, like places that are spinning out of innovation programs within universities are prime, often for that.
We have a number of other VC firms that refer people in. So, for example, they’ll come to a VC firm and that VC firm will say, “You are not quite ready for us, but we think you would be perfect for Expert Dojo.”
They can send them that way. I think my favorite way that we get referrals in is through other founders that we’ve worked with.
When founders who have gone through a program and benefited from us say, “You should take a look at this company. I think they are a great company. They’d be a great fit.” Those are probably my favorite sources of referrals because we know immediately that we trust that founder to know what the right timing and fit for us is, but also that that is a good company and a good founder and that they are referring in.
Charla Triplett: An accelerator – a good one does exactly what its name says, it accelerates you on your journey. We like to say the companies we fund at Dojo would definitely get there without us, we just make the process faster.
So, the goal of an accelerator is to help you move forward faster in your business. Typically, that means getting funding faster, creating certain milestones faster, or having access to the kinds of resources that would allow you to move faster in your business.
An incubator typically tends to be much earlier kind of stage. Incubators tend to also be physically present. Accelerators may or may not have a physical presence component to them. So, for example, Expert Dojo’s accelerator is entirely virtual, but there are other accelerators, for example, like Cedar Sinai has an accelerator in healthcare. You have to move to LA for that three-month period and live and work and eat and breathe and be in that physical space.
This works for some people, but it may or may not work for other people. In particular, potentially female founders that have families or have other responsibilities that would make it difficult for them to do that.
So, an incubator tends to be more of something like a venture studio type of a thing where maybe people are putting money in, maybe they’re not. I think the other thing to note is that some accelerators put money in, some do, some take equity, some don’t, some charge a fee and don’t take any equity.
There are all different ways in which accelerators can help support and I think you are bringing up a great point, which is that you should really understand what the biggest needs are for your company and what that particular accelerator can offer because many or most of them will offer some kind of investment or funding.
But as we like to say at Dojo, it’s expensive money. So, accelerator terms typically tend to be pretty steep in terms of what you might be able to raise from other investors. So, you have to understand the value that they bring to the table.
Charla Triplett: Especially in healthcare, this is a great question because there are such a variety of different kinds of start-ups that you could create. Some of them obviously have a requirement for a ton of funding or a lot more in funding or a lot more, for example, in research and development prior to being able to take it into the market.
Unlike an app or a B2B software platform the people joke that you are supposed to move fast and break things, but in healthcare that is typically not something that you can do because there is a regulatory component to it. Potentially there are security components related to data in healthcare.
So, there are many different aspects. I think the best question to ask is number one, “How much help or support am I going to need to pull this idea together?” Say I’m a clinician, for example, and this happens all the time. I have an idea, I see this need in my practice, and I say, “Wow, it would be amazing if I had this kind of a tool to support my patients.”
That’s a very early stage and likely what I would say for a company like that is, see what support you have within your own institutions. What if you are an academic institution? Typically, there is, for example, here in Portland, OHSU and they have programs internally to help support people that might have entrepreneurial ideas.
I think the other thing that is really important to note and understand is, “Is the idea commercializable?”
This means that just because you have an idea and even if that idea might help your patients or improve healthcare, it doesn’t necessarily mean it is something that could be adopted into the system.
From a healthcare perspective, the thing that I would tell an early stage entrepreneur is, see if you can find forms of non-dilutive funding, so grants or other things that can move your idea forward to a point at which you are able to evaluate, “Okay, is this a feasible thing that people would pay money for – that I could commercialize that would be adopted within whatever system, whether it is direct to consumer or direct into clinics or within healthcare systems?”
Then I think the other side of that is depending on who you are as a founder, it is perfectly fine to be a “solo founder.” There is nothing wrong with that. But I also think that understanding who is in that team that is going to help you bring this forward is important because no one can really do this on their own.
So, whether that is a university support team, whether that is, for example, bringing in outside contractors that have experience in a particular area, you really need to have that picture of what is it going to take to get this thing from my idea all the way through to being a product or a service.
I think that is where having that clear roadmap and figuring out how much money it is going to take, how much time it will take, and what your barriers are comes into play.
That sort of plan, or at least a very loose plan, is super important in the beginning. You can’t really go out with just an idea on the back of a napkin and get lots of money and turn it into a thing on the other side as you might in maybe some other areas, consumer-product or some of the other spaces.
I would say that the process is pretty much the same in most places, which is, “Is there an actual need for the thing that you are creating? Will people pay money for it? Do I have a team that can execute and actually bring this thing to fruition?” I think those are the three biggest questions that you have to ask yourself.
Charla Triplett: IP is definitely very important in this space and I think sometimes people also overestimate IP. I mean, even if great IP doesn’t have a commercializable plan behind it, it is only worth whatever somebody would pay to license it outside of you or if you have the ability to defend it, meaning if someone else can easily break the pattern or go around it, do you really have the money to take on, especially a big player in that space?
I was a part of a group that just started last year and now is continuing on, called the Women’s Innovation Network out of University of Oregon. I love what they are doing in that. They are encouraging more women to file invention disclosures, and they are giving them the reasons behind it.
I think one of the biggest things that happens to female faculty members is that on the tenure track they have a lot of different things that are competing for their time, and they definitely typically tend to get more of the service type things put on them into their roles.
So, they have all of these things that they are trying to juggle within their role, teaching, research, funding, et cetera. I think this is not just a female faculty member thing. The innovation system in the US in particular is very broken in that what faculty is rewarded for in their day jobs versus the innovation side of it are very different things.
So in some cases, the idea that you have more patents may or may not be good for you in your tenure, depending on how those things come about. But what I would say is this, get to know your tech transfer office and have an understanding of what that means.
They typically tend to have classes or other things that help you understand what the process is to go through that. I am a co-founder in a university spin out. My co-founder is technical. She is faculty.
I can guarantee you she probably would not have gone through this process, without me. Not because she wouldn’t have been interested, but because the barriers to understanding all of the different steps that were involved would’ve been overwhelming.
If you think you have something valuable, if you want to make a company, ensure that you are not publicly disclosing information about what it is that you are working on until you have had a chance to do an invention disclosure and file a provisional patent because otherwise that is essentially public knowledge and then therefore invalidates any patent that you might have.
Charla Triplett: Yes, it is interesting. One of the things that there has been an explosion in is accelerators. Honestly, YC (Y Combinator) sort of invented this process and they did a great job in the beginning and there is no dissing on any part of YC. I think that they have a brand that is very well recognized that just being accepted as a YC founder gives you a certain amount of cachet.
But I do think that it is going to depend on the stage of the company that you are at. So, most accelerators operate in that early-product market fit, “figuring out who we are” space in that space.
Typically, your valuation is probably already under 5 million as it stands right on the street. There are some people who think that their start-ups are more worth more than that with just an idea and not much more. But I would say in those cases, accelerator terms tend to make sense.
They are typically something like $100,000 to $150,000 for like 6%, 7% of the company and really what they are doing is that they are giving you an outside stamp of validation of the fact that they think that they are there, and they are going to help you put that picture together in a way that can help you sell that to the outside world.
Often these accelerators all about teaching you how to pitch and help support you in some other ways by providing a set of mentors that could be formally engaging with your company in different ways.
I think the best way to research an accelerator is to understand where you are at in the timeframe and what you need. Say that you are a medical device start-up, and what you really need is anything about regulatory and “we don’t know what we don’t know. We’re still really early stage.”
There are places that you can go that are really great places that have that full picture. For example, MedTech Innovator is a great one that does that. They don’t necessarily do funding, but they provide those guardrails, and so it really depends on where you are at.
If you are further along, for example, and you have sales, you are already in sales and you are trying to grow, then there are fewer accelerators that make sense at those times. Often the accelerators that I would recommend at those times outside Expert Dojo, which is obviously a growth focus accelerator, would be ones that are very specific to your industry or your customer.
For example, I know a company that has done an accelerator in the AARP aging space, and that made total sense because their target customer was in that space.
So, the kinds of connections, mentors, customers and other things that they can get connected to through there make total sense. It is really about the stage and then also what it is that you need. There is something that we see called accelerator hopping, which is like going from one accelerator to another and not raising any outside money.
This is a big red flag for investors. Many of the companies that we have funded at Expert Dojo have participated in other accelerators, and we don’t see that as a negative at all.
We see that as like, “Okay, they went and they did this, they got this bit of knowledge, then they went out on their own and did a little bit more, and then they got some other outside investment and now they really need help in this area. It is hard to get help in that area, so we are going to go into this brand accelerator, or we are going to go into this, so it needs to make sense for the timing and what it is that you need.”
Then I would say the other thing, one of the best ways to figure out is to go talk to some of the founders that have been through the program because I think that is probably the best way to figure out whether or not it is worth it.
Charla Triplett: First of all, if they don’t offer to introduce you to founders or they don’t say that you can talk to any of our founders, then that is a red flag. So, you can find out that they have their portfolios typically listed on their thing. You can reach out directly to founders or you can ask for introductions to founders.
What we typically do is that we connect founders to other founders that would make sense for them. So, for example, we are in the health IT space, so I’m going to introduce you to another Health IT founder that went through so that maybe you can, relate, or perhaps it is another female founder, or perhaps it is another founder of color or another founder in Mexico, for example.
You are in Mexico. “We are going to introduce you to another founder that we work with in Mexico so you can understand that we can work with start-ups in that space.” So, I would definitely speak to other founders, and you can easily find them in their portfolio.
Charla Triplett: This is what I would say. I would say, understand the process of how they are going to help you. What is their curriculum or process? I think asking them for their track record, sometimes accelerators are new, and they may not have a track record, but looking at who is going to be participating in that and finding out about their follow on funding track record is really important.
This is because I’ve seen this in some accelerators, really they may not necessarily take equity, but charge a fee. Then on the other side, they don’t really have a track record of actually supporting those companies.
So, just like anything else, we sort of joke that there is a process of Expert Dojo where it is like getting engaged and then for those companies that move into Suncoast, it is like, yeah, we are getting married now, right?
The companies that would flow from Expert Dojo into Suncoast, it is not just about, “Do we like this company?” Obviously we do, or we wouldn’t have brought them into Expert Dojo. We think that they have potential to be a unicorn, right? We think that they could be an amazing company. We recognize and understand that.
Every company at that stage is going to have lots of warts and things under the covers. You are dancing as fast as you can to go out and continue to keep moving things forward. I think personality and culture fit is a huge aspect of it.
Do you actually like the people that you are going to be working with there? That can be a harder thing, especially in some of these larger programs that run just like these big batches through and that might be all you need.
But I would say the other red flag is how many actual investors are they introducing you to? Or is it a dog and pony show where just everybody shows up and it may or may not be helpful. So, I think asking the hard questions about that would be really important.
Charla Triplett: So, first of all, and I’m not going to go into Expert Dojo terms here, but what I would say is this, there are accelerators that essentially rely on volunteers and or service providers that come in and the service providers end up getting business off of those things.
There is nothing wrong with that, it is just that you should be aware of the upfront side of that component of it.
Here is what I have to say – in the end, it takes a village. You are going to have to give up equity to someone somewhere and it is just a matter of, “Is there a value exchange that is worth it?” They are not wrong to say, “I’m going to pay these guys 10 grand and they are going to help me with X, Y, and Z.”
I do consulting and I help start-up clients do that. We have very specific goals about what comes out at the end, and I think there is nothing wrong with that. But I do think that there are some that I have seen that operate as a sales machine, in the sense that they are just there to garner that and the quality of the programming and the value that comes out the other end, is dubious for us.
The ones that fight it the least on terms or even if it makes sense to cut, are people who have done a start-up before. So, people who have done a start-up before recognize that at some point in time, if you are going to be a venture backer you are going to give away equity.
The longer that you hold on to the amount that you have or don’t have, a hundred percent of nothing is nothing, right? So, the question that you have to ask is, “Is this reasonable for the stage that we are at?”
By the way, you can push back, you can try to say what terms are negotiable, what terms are not negotiable. Asking all of those questions is really important too. I think that I’ve seen people actively negotiate with accelerators, and if they really think that you are a great fit and they would love to see you in there, then I think that they tend to be pretty reasonable.
Charla Triplett: I think one of the questions that founders ask us is, “Can more of my team come and participate?” We would say, “Heck yes!” I don’t know about other accelerators but maximizing your time that you put in while also integrating that work back into the company is, I think, one of the biggest things that you need to do if you do it in a vacuum.
If you think, “I’m going to do this stuff over here and then everything else is going to run. I’m going to separate those things.” I don’t think that you’re going to get the value out of it that you need or deserve.
So, we see companies that come in that give us that equity and then don’t put in the work, and it’s like – you are going to get out of it what you put into it. If you are going to give up that equity for that investment, I would never go into an accelerator purely for the investment. A hundred percent. You should never do that.
You should do it potentially because of the investment and the support at the stage that you’re at. If you are doing it only for investment, there are much cheaper and easier ways to get investment. If you are not going to value the programmatic aspect of an accelerator, then you also should not do it.
So, I would say that you should be the squeaky wheel, be the one that always shows up also because when you do that you are going to be the one that gets the introduction and also communicate on your end what your needs are and what are the things that you are looking to get out of it upfront because those are going to be important for the people that are running the accelerator too.
Charla Triplett: You have the same problem that everybody else does. We totally get it. It’s not like anyone else is in any different of a position, right?
That is why I say that you have to lean on co-founders or lean on other key staff. For example, if there is a marketing component to the accelerator curriculum, let your marketing person, if you have one of those, be the lead in that aspect of it and ask them to integrate it into the rest of the company.
The way that you are doing it, you should also look at the demands of the accelerator, right? If it is in person and you are required to physically move somewhere and do those things that you have to really carve out to say, “Okay, these are the things that I’m putting on the back burner for now and these are the things that I’m focusing on and this is the reason why I’m choosing to do that and this is going to move me forward, but it is going to feel like I’m taking a little bit of a standstill or a step back.”
The goal would be that as you come out, you jump forward in a number of different ways and there are some things that you can put a little bit of a pause on and there are some things that you can’t, and you have to decide amongst those because I think that is something that we hear a lot from our founders.
For example, if they’ve got an investor meeting and if they’ve got something else going too, we hope that they will schedule them accordingly, but we understand, that is something that we see all the time and we don’t have an issue with that.
But it is a matter of whether you are just genuinely not participating or applying what we are supporting you with. Then you are going to get out of it what you put in and you are going to end up in the same place that you were when you started, or worse.
Charla Triplett: It’s going to depend on the accelerator. Some of them don’t do any of that. They may or may not introduce you. They may only just do a demo day in which you meet investors there or you don’t, and those investors reach out to you or they don’t. I would say Expert Dojo has an entire investment team and we make direct introductions for our founders.
We, Genevieve and I, will help our start-ups with thinking about terms and looking at things. We’re not lawyers. You should absolutely have a lawyer and somebody that is within your company that understands these things.
But one of the biggest things that I see founders do that drives me absolutely crazy is that they set up on their end non-standard terms. They create some crazy note that has weird terms in it that is not standard and then they wonder why people are pushing back on it or investors are wrong.
What to look out for there is to just understand that there are different qualities of investors. They could be angels, or they could be early-stage VC funds and typically, when you are looking at these, that is what it is because you are in an accelerator environment.
Just vet the investors yourself too and if you have a weird feeling about whether or not there is genuine interest or if there is something else going on, then report that back to the accelerator because most of them are genuinely trying to only introduce accredited investors.
The other thing I would say is, especially in healthcare sometimes what will happen is that it is a big group and you are going through with a bunch of different companies and maybe there are tech companies and FinTech companies and healthcare, and then everybody is there.
So, one of the biggest things to ask or look out for is, “Do the investors invest in your industry?” because usually FinTech investors are not going to invest in healthcare and vice versa. There are some crossovers, we’ve had some companies that blockchain and healthcare and it is tricky because they actually have genuine blockchain investors and then the healthcare investors will struggle with the blockchain side and the blockchain struggle with the healthcare side.
So, understanding better who your target investor is and understanding whether they have connections into those would also be really helpful rather than, “I don’t know if there is a particular red flag on an investor”, but you should have a very clear process of what their investment process is, like how many meetings are you going to have? What kind of checks do they write? Asking similar questions about who they have invested in previous to now is important. It’s like being on the other end of the job interview.
Start-ups should do a lot more asking of the other side of investors as well because there are plenty of people writing checks and if money is the only thing that you need, like we joke about having smart money, neutral money, and then dumb money and there is dumb money, which is money that you are going to regret later, which is somebody who is doing this because they are fascinated with start-ups and just want to like talk to you 24/7 and now they are your investor and you have to think what the boundaries are.
So, there is money like that too, or people who don’t really understand what investing is or how risky being an angel investor is. I think it’s important to vet that these are people who genuinely understand the process.
I probably as a start-up wouldn’t take angel investment from somebody that hadn’t done it before or that didn’t at least have the education to understand what it was about.
Charla Triplett: I think a lot of the disparity in the pay is about not pushing back counter offering. I’m lucky to say that I feel like my daughter’s generation does that, but there was a culture where mediocre males would push back on salary offers, whereas stellar outstanding women wouldn’t necessarily because it was not seen as “nice” and there was an aspect of it that was culturally gender specific.
I think the same is true potentially with investors. Maybe the reason for that is because males tend to push back more. If you don’t think an offer is fair, gut check it with some other people who are friendly to you and your start-ups and understand whether or not, and then counter.
I’ve had people just walk away without countering and sometimes that is super frustrating because we would have absolutely negotiated if they didn’t think that it was fair and if they had reasons why. So, that’s the other side of that coin.
Don’t just push back and say, “I don’t think that is fair or this is what I think is fair.” You need to come with the receipts, “This is why it’s fair, because X, Y, and Z.” That is all that they want to see and then they will either make a choice to invest or not.
The idea that you would just literally walk away without countering, which I have seen more from women than men leads me to believe that there is an aspect of it that has to do with pushing back and requesting what you want.
Charla Triplett: Well, here’s the thing, I’m sure that there are times that they maybe get low balled compared to a male founder. I think this is always the case when you are a woman or you are a person of color.
You don’t know whether the behavior is how they treat everybody or if this is specifically happening to me because of who I am and I’ve been in that situation in a career position and I had to go ask my male colleague, “Is this how he is with everybody? Is he treating me like a five-year-old because that’s how he treats everybody or is that specific to me because I’m a woman?”
I don’t know if there is data around that. I know that there is data that they have done around housing discrimination and other things where it is that people with the exact same application – men typically tend to push back more easily.
Maybe it is more ingrained in the way that they were raised to believe was acceptable. But like I said, I feel grateful. My daughter is 27 and has zero problem with negotiating and she is literally hard balling it.
I’m glad because that is something that I think has traditionally held us back in getting salaries that we deserve. There is absolutely bias there. There are absolutely offers that come in that should be the same, that are not. I think the same is probably true in venture.
The other side of that coin is that I sometimes see female founders present their start-up where it’s not a lack of confidence in themselves, but Genevieve says that they are pitching a Popsicle stand and they have a rocket ship.
So, in the way that they position or how they talk about the opportunity, often there is a disparity in what we see male founders do. Female founders tend to be more realistic and present. This is the business, and this is how it is going to grow.
Male founders are like, “We are going to be a unicorn, or we’re going to do this, and we are going to do this.” So, the way that people are talking about their business also affects the kind of offers that they get for investment.
So, maybe some component of pushing back is the best thing that I would say along with finding investors that are aligned with you. I very rarely have seen, and I know that there are some, I’m aware of them, people who genuinely do this to female founders. I don’t send any of my founders to those places. I know some of them. Then I’m like, “No, I would never send a female founder there.”
Charla Triplett: Yes.
Charla Triplett: Sure. So, just to be clear, Expert Dojo is actually venture as well. So, we have a fund, and we invest in companies and then we follow on investing companies. So, we are making investment decisions there and I got involved in Suncoast as an emerging manager.
I’m managing director of Suncoast Ventures, and it is an emerging VC firm. We look to support start-ups that are in the healthcare space.
It is very aligned with what Expert Dojo is doing and typically those founders are going to be people who have come through Expert Dojo. So, this is not a sort of separate deal in the sense that one of the things that is tremendous and amazing about being able to work with companies at Expert Dojo is that as I mentioned before, we get to see what is under the covers.
We get to work with them in long tail diligence, and we get to really understand who could use the type of support that Suncoast could offer or not and also if these are the founders that we would want to work with. One of the things that I think is interesting is that it is like dating before marriage, as we talked about before. Everybody can be on their best behavior for a little bit of the time and then you start to see the stuff that is underneath the covers.
I think that from the Suncoast side, for me, it just made a natural fit in terms of we as a firm want to be a value-add group. We want to be able to look at it from a perspective of, “Is there a fit? Is there a match? Does that match make sense for what it is that we have outlined in how we want to support start-ups? Is the timing right?” So, that is the other component of it.
I think this is really hard for start-ups sometimes to understand. Sometimes the timing is just off. They’ll say to me when they come from Expert Dojo that I talked to this fund, thought things were going really well, and then I hear “We are interested, keep in touch with us. But the timing isn’t right, right now.”
That is a classic sort of VC brush off. Sometimes what that means is, “I really like you when you get to this place. I’ll consider funding you.” Sometimes that just means no and it is hard to know, but until you hear an actual no, you can always continue on that conversation.
But what I would say is this, getting involved in Suncoast for me is about supporting entrepreneurs. So, being able to be there to help them and to be able to have somebody in venture that is there that they can tell the bad stuff to and say, “I really need help with this.”
I do think a lot of founders think that they have to only show their good side or their face that gets them checks in the door and then all the other stuff they have to shove under the couch cushions and they have to only show that side. I think being able to be the kind of VC firm that cares about founders and wants to make an impact in the world and not just from returns, which every VC firm wants to see, but from the human impact in supporting founders as well as global impact from a healthcare perspective.
Charla Triplett: You can tell the difference. It depends on where the firm is at. If they’re actively deploying checks and they have capital deploy you should ask them, “What kind of KPIs would you like to see before I come back and try to reengage you again? What are you looking for? Can you give me some guidance or insight into this?”
If it sounds like timing is off then that may be because they’ve already allocated the investment that they want to do into healthcare this year or it may be that they like what you are doing, but they want to see a little more traction before they come into you.
So, you can try. I have learned as being on the other end because I have told founders from Expert Dojo that we are not going to invest in them and basically if you tell them the truth, they can come back and try to argue. But once you’ve made that decision, you’ve made that decision.
I would say that until you hear a no, it is not a no, but you should get some guidance into it because I have founders that literally think that because a venture fund has not emailed them back to a response of setting up a meeting then that is a no.
They are busy, they are overloaded. It’s hard for them to gauge all of these things until you hear a “You are not a fit.” If you hear “You are not a fit for the fund”, that’s a good thing. That makes sense and that is something that actually I think more founders need to do.
I get emailed all the time to Suncoast Ventures about people wanting me to look at their start-up and it is not even in healthcare. I’m like, “Did you even look?” So, are you a fit for their thesis is an important question.
There may be other reasons why they pass on you. There is another investment in their portfolio that is too close to you. They couldn’t feel like they could support you because they would be directly competitive with a company they have already invested in, number one.
Number two, it could be that like I said, the timing is just not right. They are like, “We like them, but we typically invest closer to this stage when a company has done this much revenue or this much whatever.”
So, I would try to suss out what is the reasoning behind it when they say the timing is not a fit? You can say something to the effect of, “What would you like to see in growth metrics or whatever those things are for me to come back around?”
Charla Triplett: Oh, so like they are meeting some kind of quota. Is that what you are thinking?
Charla Triplett: There is nothing wrong with asking about those metrics. I think that is a double-edged sword too. Funds that are solely focused on investing in women or people of color, their portfolios, are visible. You can go look at who they’ve invested in, or you can ask them about their investment portfolio.
I think that they are not going to probably waste your time past a second meeting and I do think that honestly one of the best things that comes out of like Expert Dojo’s cohorts is that those folks bond with each other and they share information.
So, a lot of this information is readily available. There are some funds that are literally so painful because they take so long to make decisions. So again, the more information that you can get about processes the better it is.
“How many meetings and what kind of gauntlet do I have to run through in order to get a cross to a check?” But on the other side of it as being somebody who has to do that component of the diligence and all of those things, there are a lot of things that have to be done and that have to get lined up, that check boxes have to get made, and some of it has nothing to do with you. Some of it just has to do with the ways that they are balancing all of things that they are doing.
So, they are supporting current portfolio companies. They are doing the meetings and all of these things. Figuring out how their process works is important, but I think it also depends on who you’re talking to. If you are just talking to a junior associate then there is nothing wrong with that.
But that person likely has no voice in the investment committee decisions, and I think that it is a typical front-gate door thing, but better understanding who it is that you are talking to and whether or not they have investment decision is necessary.
Don’t dismiss them but just know what boat you are getting into. I don’t know if there is like a list somewhere. But there are lists in places that have information on what funds have supported female founders.
I think that one of the things that I would say is that it is a tricky fine line because if you box yourself into being a fund that supports with a diversity lens, then often people don’t think that you are investing for returns. So, it can become a tricky thing.
Charla Triplett: It depends on how big the fund is. If it is a small fund then you are probably going to be talking to the principals. You might be talking to a scout who is just really vetting check boxes. They are going to be looking for the things that I mentioned before in terms of, “What is it that they are looking for?” They are looking for, “Is this a big market? Is this one of the other things that they are looking for and we are often looking for? Is this a unique idea?”
There is a sweet spot between “Nobody is in it” and “Everybody is in it and now it is impossible to compete.” There is a window there. “Is this a team that can execute and take that across the line?”
I think one of the biggest reasons why women have been discriminated against in venture because there is a lot of pattern matching going on and the pattern matching goes something like this, if this person has had a successful start-up before they get two, five extra points. If they have put in their own money and they have bootstrapped it until this point, they get another. If they have successfully raised – and so on.
Some of the reasons why women may have been excluded for funding, some of it is just pure discrimination. Some of it is pattern matching, as in, “I don’t know, I’ve never seen a founder like this before. That is, coming from this background” and then they are going to be looking for the things that show them that you are going to execute, that you are going to drive forward, that you are going to take this company forward no matter what because they know that you are going to have bumps along the way, and they want to see that.
Lastly, I cannot stress this enough, they are looking for your coachability. So, coming off as arrogant or as if you can’t hear advice from other people. That being said, I’ve also seen founders that are getting conflicting advice from 20 different places and trying to start those out. It is up to you to take in that advice, put it through your own filter and say, “Does that resonate with me or not? Does that make sense or not?”
The process is typically that in the first meeting and the first call, you will know very quickly if it is a “No.” Usually, if it is a hard no, if it is just “Oh my gosh, you are way too early” – I see this a lot at Expert Dojo where you are not in revenue yet. You are not relieving close to having a product finished yet. Check back when you do.
Then there are some where I need to dive a little deeper. I need to understand a little bit more. The first meeting is really those top line things of, “Is there a big enough market for this company? Does this seem like there is some kind of product market fit?” Signals, whether they are selling or not. Does the team look like it is a good team, and it is going to be able to execute on this? Is this a fit for our fund?”
If you are a later stage healthcare company and you are pitching an early stage FinTech, then it is not a fit. Even if it is a cool company and they would love to fund you, it is not a fit.
So, the second meeting is typically diving in more with founders, getting to know them personally, getting to dive into some questions. You should be able to come with the receipts. Like, “Why do you say that this is this kind of a market? Why do you think that you are going to beat your competitors? Who are competitors?” Diving into all of those, maybe even picking through them depending on the amount of the check and what it is could and usually is at least, a third meeting.
Some may often include your team members. They may want to meet other founders, not just the main founder or the technical team for example. There might be a technical diligence. We do that. We do a clinical diligence. So, we will bring you and put you in front of a founder that’s a doc that understands how to commercialize technology and healthcare and they are going to ask the hard clinical questions about your product if that is relevant.
So, there could be four to five diligence calls. But I think the biggest thing for me to emphasize with founders is that you should be asking questions along the way as well. “What is the next step in the process? When will I hear from you?”
I don’t think any VC is ever being malicious when they don’t get back to a start-up when they say they are going to. There could be a variety of different reasons. Continue to be diligent on your end and in particular as you reach out, it is always great to give them good news about, “Hey, I just wanted to follow up. I had a great discussion. We still think you are a great fit, by the way. We just signed another customer, or we just brought in another 250K in funding. We’d love to have you in on that round.” Whatever that is, that you can also reengage them with the positive, I think is important.
Then in the end, they are going to ask you for your data room. They are going to go through it. Some are going to go through it more than others. There may be things that are missing that they want to see, so they are going to ask you for those things.
So, having all of that in line upfront is important. A data room usually consists of all the things that are more in detail, like all the contracts that you have out, the cap table, et cetera and then next step when things are moving forward would be to get to a term sheet, which is non-binding on both sides, but you’ve agreed on what you are going to do.
Then the final step is signing the note or the SAFE, or if it is an equity investment, then signing those documents and then wiring money, everybody takes longer for each one of those steps and there are lawyers involved and it is not as fast as an angel investment. If you want fast investment, go to angels.
Charla Triplett: Yes. Only the right ones. I would agree with that.
Charla Triplett: I think the first one is ensuring that you have product market fit or that you can justify that you do in some kind of metrics there, even if you are at an early stage, that you think that you do.
I think the other is really about the team that you have built and whether or not that team brings to value and really amplifies what you bring to the table. Really understanding yourself as a founder is probably one of those, as in if you are not an operations person, ensure that you find an operations person on your team, because that is going to be really critical.
For example, if you are a technical founder, finding somebody that has the business acumen or support is important. Another thing would be to find mentors who have been there and have done that. That is super critical because I just got the first outside funding for my start-up.
I write texts to start-up and funds and make funding decisions on the other side. But it is being on that side of the fence, having people that you can bounce ideas off of and get good advice from.
So, surround yourself not just with a good team, but also good advisors and mentors who have, for example, been there, done that, and understand this process better than you do so that you can get their insight and advice.
Then lastly, I would say make sure that you know how to tell a good story. So ultimately, the people that get funded are the ones that can tell the best stories and it is because of the full picture.
It is all the things that I mentioned. “We are a great team. We have got a big market. We have got this cool thing that no one else has and we are going to make all of the things.”
If that is out of your comfort zone and you are the CEO, then you need to seek support, whether that is from founders’ groups that might be free, or whether that is from hiring a pitch coach or somebody that can help you gain the kind of ability that you would need in order to get that across.
There is no one that is going to be able to tell your story better than you can. But not everybody is as comfortable as in that and so, making sure that you have all the fundamentals is important.
Then you do need that extra aspect of being able to come across with the story in a unique way because people fund who they remember. It is the truth. If you are listening to many pitches in a day, if they don’t remember you, even if they thought you were good it is because they don’t remember. If they don’t remember, then it is not going to happen.
So, I think really making sure that you have the ability to come through with that story is necessary.
Charla Triplett: It has been a lot of fun. Thank you so much!