Verissimo Ventures Monthly: March 2024
Verissimo Ventures is a Pre-seed and Seed Venture Fund based in Israel and the US. We invest primarily in enterprise software companies and take a fundamentals-driven approach to early-stage investing. We work closely with founders to help them build the strongest, most fundamentally sound businesses with potential for explosive growth and a meaningful impact on the market.
We were founded in 2020 and are currently investing out of Fund 2.
Thoughts on Investing and Starting Up
We are excited to have just completed our first annual meeting. While it took a lot of effort and brought us away from the core work of investing and working with the portfolio, we felt it was a very worthwhile endeavor as it allowed us to take a step back and focus on where our business as a whole is headed. Operating companies (should) get this through regular board meetings, but our business requires us to take the initiative to make it happen. This is also the case for many pre-seed, pre-board companies. As a result, I encourage pre-seed founders to create a structure for the same sort of accountability, buy-in and engagement from leading stakeholders in order to make sure the strategic direction of the business stays true and to help avoid tactical mistakes. One of our recent investments (to be announced soon) just conducted their first such “quasi board meeting,” and it was evident that it is very helpful, especially for solo founders.
One of the biggest insights that our annual meeting process hammered home is the difference between core competencies and non-core competencies.
This is an idea we push with all early stage founders, but it applies to our business as well. For example, being able to explain the state of our business, define some of our core investment frameworks and walk through our philosophy is something that we need to be able to do ourselves, i.e. a core competency. In contrast, producing the video, making graphics, editing the raw footage and creating the infrastructure to share it are all non-core competencies. It is important to establish that both core competencies and non-core competencies are critical for success, it is just a matter of who has the expertise - in other words: what should be delegated. Delegated does not mean outsourced and forgotten; it means engaging with experts who can more effectively take you where you need to go.
For us, it meant delegating things like video production to a professional, dedicated team (shoutout https://www.fondu.co/). It needed to be good, and as you can see from this opening snippet, it is:
Video production is probably something that our team could have learned about and gotten good, but it would a) never be quite as good as Fondu and b) be a massive time-consuming distraction from our core functions, so it is an example of a non-core competence that should be delegated. That being said, we still needed to be aware of the high level direction of the video production to the extent that we could have intelligent opinions, hire the right team, manage expectations and improve the overall finished product.
While investors delegating video production seems fairly obvious, there are many other areas where it is not so clear. For example, building a CRM: this is something we have done pretty much entirely on our own. Given that we are data-minded and had a specific vision, it made sense for us to learn the ins and outs of the underlying platform and build it ourselves. For another team, this may not be the case. Maintaining the right level of self-awareness and constantly re-evaluating is a secret weapon in any business.
Delegation is not absolute, but instead has varying degrees of involvement and detailed understanding. When it comes to running our fund’s back office, we follow the lead of AngelList as they are the experts in the detailed reporting functions and operations. We have very few opinions on the details of how they do what they do. While it’s important to understand how it all works, we can generally disengage once we know the machine works (until questions arise that require our input). But when it comes to our marketing content, we are much more involved, leaving only the tactical editing work entirely in the hands of the production team. There are varying degrees of post-delegation engagement and awareness of this level and how it changes over time improves overall efficiency.
Another challenge is that we are always drawn to the areas we excel at and enjoy the most, often ignoring other functions, even though they are also critical. This is even more pervasive than most people think it is. This is where our investing and portfolio strategy comes into play…
I wrote last summer about different types of founders. We included a graphic that illustrates how roles change when a company grows:
This is meant to illustrate the developing role of non-core and core competencies in growing businesses. Early on, everything falls to the CEO (and/or CTO and other co-founders). Most CEOs in our world are superb product leaders, marketers, salespeople, recruiters, and/or engineers. Most are not all of the above. The hope is that a founding team will include this entire range of core skills, but the truth is that it is OK if it doesn’t. As an investor, I look for something special in founders: being the best in the world in 1-3 areas, and that unique combination will create a truly interesting opportunity. It is absolutely OK if there are gaps as long as the founder(s) know what non-core things they need and where to get it. This actually requires them understanding a bit about that function even if they don’t excel at it.
This is what we do with finance. Rarely are software founders super strong in finance. Every once in a while a former banker or PE investor starts a software company, but more often than not, the company leaders are engineering, product, and sales experts. They don’t need to become finance experts, and when they grow they will hire a dedicated person to lead that function. But in the meantime, it falls to the CEO. Our approach is to empower the CEO with the basics: what core concepts drive this function? What are the right questions to ask? How will they know if it’s working right? This can be done pretty efficiently (in a couple of hours), and takes founders to an entirely different place when it comes to delegating that function - either outsourcing to a service provider or knowing what to look for in hiring. We define finance as a critical non-core competence. There are several other non-core competences when starting a company, and we have found that the right combination of expert advisors and investors around the table can make a world of difference by providing the CEOs with the basic understanding to properly delegate and manage the functions where they are not experts.
So for founders, if an investor/angel/advisor is an expert at something that you don’t necessarily find important or understand, it may be just the right fit to augment the broader function of building the business alongside your core expertise.
Portfolio Highlights
MotorMia’s mission is to transform and enrich the aftermarket automotive experience for enthusiasts, manufacturers and service professionals. With their beta launched, the team is looking to bring a customization experience into the real world that previously only existed in video games. Having been an expensive and painful challenge for decades, AI infrastructure allows them to manage all of the stakeholders involved in making aftermarket car modifications in a single application. You can sign up for the beta here: https://www.motormia.co/concept
Carrot is developing tools to enhance the E-commerce experience by simplifying the process for shoppers to find the best deals online. Their latest (viral) tool allows users to put dupe.com in front of any product URL to see if they’re looking at the best item or if there’s a better alternative out there for them. Dupe then spins up an instant landing page on the fly that allows the user to do better research, which will soon take shopping to a new level.
Josh, Tova and Sruli have launched Groove, the best way for professionals working from home to build the relationships they need to succeed. It is overwhelming working alone. Launched in January, the coworking app surrounds members with people to support them and help accomplish their goals. Members are already spending over 4 hours a day on the app. Try it out on the app store “Groove: Coworking Space” and use the code “THEGROOVETEAM” to jump the queue.
Trusstor is a construction management platform bringing together a zero-intrusion IoT solution with advanced oversight, reporting and construction analytics capabilities to enable one single source of truth of how a build site is, and should be, performing. The company is now live on four continents having just launched a partnership in Japan.