Happy Friday, friends! I hope everyone has been doing well. I am excited to continue on this journey with you all. If you find this content engaging, please feel free to share it with others who might also enjoy it. As always, I welcome your thoughts and suggestions, so don't hesitate to reply to this email with your feedback!

Fishing in Venture 🎣

This week I was thinking a lot about the relationship between founders and investors. These relationships can be good, bad, sticky, and all the above. As investors and founders it is crucial that we manage our expectations with how our own agendas affect our decision making and perspective. All week our team had been preparing to meet with a group of investors and entrepreneurs all together in one room. It’s amazing what you can accomplish with people who work hard and love what they do. So, this week's Fishing in Venture will be a little shorter after a long week of making great connections and building upon relationships.

In the venture ecosystem, the dynamics between investors and entrepreneurs are foundational, serving as the foundation that sets up success for investors and entrepreneurs. This relationship extends beyond financial investments to encompass strategic guidance, access to networks, problem-solving, and a shared vision for the startup's future. Entrepreneurs should engage with investors openly and with assurance, ensuring a foundation of trust and mutual respect in their partnerships. Conversely, investors are expected to provide more than capital; their industry experience, mentorship, and networking opportunities are equally vital. Establishing and maintaining these relationships with transparency, regular communication, and aligned objectives is crucial. It's a partnership where success can be mutually beneficial. This stems from the importance of selecting the right investors who believe in the startup's mission and are committed to its journey.

There have been many instances where startups, facing hurdles or failures, chose to withhold critical information from their investors, leading to a breakdown in trust and potential legal and financial repercussions once the truth surfaced. Some startups have experienced situations where investors leveraged disproportionate control or exerted undue pressure, leading to decisions that favored the investor at the startup's expense, sometimes prioritizing short-term gains over the company's long-term vision. Now, successful investor-founder relationships often feature open communication, mutual respect, and aligned goals.

Fish of the Week 🐟

Raising venture $ is hard. It's also draining. As first time founders, this problem is compounded. I got to hear the story of David Peng, the founder of Fornax. They have built a tool that helps with the process of building a deck to fundraise with. When they first launched, they found that they  had no idea how to raise money. They knew VCs existed but assumed it was a bunch of rich folk that gave companies money. While that is part-way true, they did not anticipate the soft rules, processes and systems in place to even capture the attention of an investor. One of the most fundamental tools a startup has is a pitch deck. It should convey all the necessary information for someone to decide whether they are interested in the company or not. Beyond that, it is a great way to structure how one should think about one's business - beyond just the single product/feature that has been built. 

As a lawyer, David assumed that what he had to say mattered and that he needed to paint a rich mosaic of why his business is the best. And he literally did that - in 43 slides (with whole paragraphs and footnotes). Unsurprisingly, they either got no response or realized very quickly that investors did not bother moving past slide 5. After speaking to numerous investors and finding mentors who have been down this path before, they realized that there were some common pieces of information investors wanted to glean in a pitch deck. More importantly, they realized that the ratio of investor to founders was highly skewed, meaning that investors only had so little time to read an email asking for money, let alone a pitch deck. As such, they condensed their pitch deck to 13 slides, with the idea that the deck is a series of highway billboards - each one captivating attention and being able to convey all the information in a few seconds or less - after all, investors only spend 2.5 minutes per deck. 

It was a painful road paved with rejection and hard truths to get to where they are today, and that's why they decided to build Fornax. But the story doesn't end there! They want as many founders to use the tool as possible. Their ultimate goal is to build tools that arm founders with the skills to tell compelling narratives. Too many times have they seen amazing founders with game-changing products falter simply because they failed to convey the importance and urgency of what they are building in a way that resonates with either users or investors. The change starts with a simple pitch deck review but doesn't end there.

Growing up in New Zealand, David was surrounded by water. Therefore, fishing opportunities are in abundance. He prefers surfing but has fished with friends from time to time. One time they chartered a fishing boat off the coast of Whitianga and spent the day fishing. What he didn't anticipate was how exhausting and strategic it can be to reel in a large-ish fish!  David’s goal with Fornax is to create a tool that provides founders with instant feedback on their pitch decks. Founders simply upload their PDF and will receive a slide-by-slide report within minutes. They focus on immediate and implementable feedback rather than pages and pages of high-level advice that becomes difficult to implement. Fornax has over 1,000 users and the main victory is that everyone they spoke to (roughly 100 of their users) really loved the tool and found the feedback helpful. One of their users got accepted into Y Combinator and another won a pitch competition in Tulsa after using their tool. Their team's biggest challenge is getting users and finding the right places where entrepreneurs hang out. 

If you’d like to work with David and his team - reply to this email! I would love to connect you all with him. The tool is super slick and intuitive! I highly recommend trying it out.

Ebbs & Flows 🌊

Product-market fit

Achieving product-market fit is a critical milestone for startups, signifying when a product successfully meets market demand. Marc Andreessen emphasizes its importance, noting it occurs when a startup finds a good market and creates a product that fulfills that market's needs. This journey involves iterating the product based on customer feedback and refining the value proposition to ensure it resonates strongly with the target audience. We discussed this concept a few weeks ago when I dove into an article that Marc had written in 2007.

For entrepreneurs, identifying product-market fit means observing signs of organic growth, such as unsolicited customer referrals and positive feedback, indicating that the product genuinely solves a significant problem for its users. Achieving this fit often requires startups to pivot from their original ideas, focusing instead on what the market truly needs. For an example in the context of recognizing product-market fit, consider Slack's pivot from a gaming platform to a workplace communication tool. Initially developed for internal use, the founders realized the broader potential for their communication solution, marking a successful pivot towards product-market fit as demand for efficient workplace communication tools grew.

Venture capitalists view product-market fit as a key indicator of a startup's potential for success, often requiring evidence of this fit before investing. Startups with a clear product-market fit can grow rapidly, acquire customers cost-effectively, and scale with fewer growing pains, underlining the importance of reaching this fit early in the startup's lifecycle. Netflix initially provided DVD rental services by mail to meet market demand for a convenient, late-fee-free alternative to brick-and-mortar rentals. As consumer behavior shifted towards digital consumption, Netflix adapted, transitioning to streaming services and consistently evolving its offerings to maintain product-market fit in the changing entertainment landscape.

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