This week I’m at Reinventure, a VC company that seeks to reinvent financial services, with Westpac as major investor.
What does Reinventure look for?
As one of the partners at Reinventure described, it’s almost like a marriage. You’ll need to work together and trust each other over a very long period of time. Integrity is a very important value to prevent the VC-startup relationship from souring.
Mindful of cash/revenue generation
A startup can be passionate about providing solutions to a problem meaningful to them, and that’s great, but they also need to show that they have a mind for generating cash, because it’s an investment not a donation.
Not a mercenary
Yes, cash-generation is important but that shouldn’t be the central reason a startup was founded upon. VC’s are not looking for founders that think startups are a get-rich-quick scheme, or founders motivated solely by cash. Simply put, most startups don’t have very pretty financials and most never will. It’s a risky business and founders need to be able to grind through the marathon, in spite of being money poor.
Know your numbers
When a VC asks about the basic financials, they don’t want to hear “I need to check up on that”. As a founder, you need to have an exceptional understanding of how the puzzle pieces fit together. There needs to be clarity on where things are going and where you’re planning to head to.
Can Westpac add value?
Now I didn’t expect this. I would’ve thought that the investment criteria was the opposite; how can Westpac benefit from these startups? But it’s clearly illustrated in Reinventure’s entire portfolio of investments. All the startups benefit one way or another from Westpac, whether it’s from Westpac’s data, network or services. Again it’s not a passive investor-investee relationship, its more a symbiotic partnership.
Makes the VC feel special
VC’s really like startups that come looking for them because their fund can offer distinctive and unique benefits that aren’t offered by other funds. There’s something significant about founders who choose their investors.
Last week I saw a VC fund in the really early stages, this week I’m at a more mature fund. I can’t wait to learn how things are different, how they are the same and most of all to learn about what happens after the initial investment is made.