20 VC 043 How To Be A VC Analyst and Lessons From Union Square and First Round with Charlie O'Donnell, Founder @ Brooklyn Bridge Venture



In episode 43 of the "20 minutes VC," host Harry Stebbings interviews Charlie O'Donnell, the founder of Brooklyn Bridge Ventures. O'Donnell, a seasoned VC with experience at Union Square Ventures and First Round Capital, shares insights into his career path, starting with an internship at General Motors' pension fund. He discusses the New York tech scene, the challenges of seed-stage investing, and the importance of community involvement and adding value. O'Donnell also touches on his investment strategy, which includes a willingness to fund hardware startups, provided customers fund manufacturing through pre-sales platforms like Kickstarter. Additionally, he highlights the role of personal branding for VCs, advocating for writing and active community participation. Despite the challenges of raising funds for a micro VC, O'Donnell remains committed to early-stage investing and is working on his next fund.

Summary Notes

Introduction to Charlie O'Donnell and Brooklyn Bridge Ventures

  • Charlie O'Donnell is the founder and sole partner at Brooklyn Bridge Ventures.
  • He has a notable career in the venture capital (VC) industry, with prior roles at First Round Capital and Union Square Ventures.
  • At First Round Capital, Charlie sourced the firm's first investments in SinglePlatform, Constant Contact, and GroupMe.
  • Before his current venture, he worked at Union Square Ventures alongside Fred Wilson.
  • He has been named one of Business Insider's 100 most influential people in New York tech five or more times.
  • Charlie's portfolio company, Canary home security, secured $30 million in Series B funding from various investors.

"Charlie has had a stellar career in the VC industry. He is currently the sole partner and founder at Brooklyn Bridge Ventures."

This quote introduces Charlie O'Donnell as a prominent figure in the VC industry and the founder of Brooklyn Bridge Ventures.

Charlie's Start in the Venture Industry

  • Charlie O'Donnell began his venture career with a high school internship at the General Motors pension fund.
  • His internship continued through his college years as he attended Fordham University in the Bronx.
  • Upon graduation, he joined the venture capital and private equity group at GM, which had been investing in venture funds since the late '70s.

"I actually started out basically with a high school internship... And the group that happened to have an opening when I graduated was the venture capital and private equity group."

This quote explains how Charlie's career in venture capital began with an internship that led to a full-time position at the General Motors pension fund's venture capital and private equity group.

Internships in Venture Capital

  • Internships within the venture capital community are relatively rare due to the relationship-based nature of the business.
  • Productivity in VC internships is challenging without significant experience in evaluating startups.
  • Thematic investors may benefit from internships focused on sector-specific research projects.

"A handful, I think it's such a relationship based business and being able to vet deals, I think requires some amount of experience and just getting your 10,000 hours in looking at startups."

This quote highlights the challenges of VC internships and the necessity of experience in deal evaluation.

Advice for Aspiring Venture Capitalists

  • Charlie O'Donnell advises young individuals to participate in the community and pick up valuable skills.
  • Skills in recruiting, PR, or customer acquisition are particularly beneficial as VC firms look to build platforms that add value.
  • Charlie's blog post titled "How to be a VC analyst" ranks first on Google and provides insights into entering the VC industry.

"So a lot of what I advocate is participating in the community picking up a skill that you can offer to others."

The quote emphasizes the importance of community involvement and skill acquisition for those looking to enter the venture capital industry.

Charlie O'Donnell's Approach to Venture Capital

  • Charlie O'Donnell considers himself generous with his time, network, and knowledge.
  • He believes in being helpful and supportive to the startup community.
  • When fundraising for his next fund, he questioned why anyone would take money from him, leading him to reflect on the value he brings to investments.

"One, I think I'm pretty generous with my time, not just time, but network and knowledge and all that other stuff. So my default position is how can I help?"

This quote reveals Charlie's philosophy of being a resourceful and supportive venture capitalist, offering his time, network, and knowledge to assist startups.

Early Stage Investment Approach

  • Harry Stebbings discusses his preference for being the first money in, funding ideas, PowerPoints, and projects from hackathons or before presales.
  • The willingness to support companies at the inception stage is seen as beneficial for early-stage investments.

"I'm very early, so I'm often the first money in. I've funded founders with ideas, I've funded PowerPoints, I've funded things coming out of hackathons, things before their Indiegogo presale takes off."

The quote emphasizes Harry Stebbings' investment strategy of engaging with companies at the earliest possible stage, demonstrating a hands-on approach and a high risk tolerance characteristic of early-stage investors.

Sourcing Investments

  • Charlie O'Donnell makes himself findable to source investments, especially in New York.
  • He runs a newsletter with a wide reach and has been blogging for over a decade.
  • Regular speaking events contribute to his visibility in the tech community.

"I think I just try and make myself findable, more so than anything else, particularly in New York."

Charlie O'Donnell describes his proactive approach to being accessible to potential investment opportunities, indicating that visibility and accessibility are key to sourcing early-stage investments.

Building a Personal Brand

  • Blogging and running a newsletter have significantly contributed to Charlie O'Donnell's personal brand.
  • Writing helps in developing a voice, positioning, and sharpening thinking by structuring disconnected thoughts into a coherent narrative.

"Blogging has brought a lot to you as a brand, almost."

This quote reflects the impact of consistent blogging on Charlie O'Donnell's personal brand, suggesting that content creation is a powerful tool for establishing oneself in the venture capital industry.

Newsletter Growth and Community Engagement

  • Charlie O'Donnell's newsletter started by accident but grew significantly over five years.
  • The newsletter keeps him top of mind within the tech community and allows for direct engagement.

"And just being a reply away from 10,000 people in the tech community means that I'm top of mind for a lot of these topics."

This quote highlights the value of maintaining close communication with a large network, illustrating how a newsletter can serve as a platform for staying relevant and accessible in the tech community.

Brooklyn Bridge Fund Size

  • The Brooklyn Bridge fund, which Charlie O'Donnell is currently investing from, is a little over $8 million.

"The fund that I'm investing in now is a little over $8 million."

The quote provides a specific figure for the Brooklyn Bridge fund's size, giving context to the scale of investments and the fund's position in the market.

Seed Stage Investing Market

  • Charlie O'Donnell differentiates between those who invest in early stages because they enjoy it and those who see it as a stepping stone to larger funds.
  • His preference is to remain focused on early-stage investing without transitioning to later rounds.

"And I definitely do it because I like doing it. I don't plan on going later stage, I don't plan on doing different rounds..."

This quote expresses Charlie O'Donnell's commitment to early-stage investing and his disinterest in using it as a means to scale to larger investment rounds, highlighting a passion-driven investment philosophy.

Challenges for First-Time VCs

  • Charlie O'Donnell had prior experience in venture capital, which eased his transition to running his own fund.
  • Fundraising is a significant challenge for smaller funds due to the mismatch between the typical check sizes of sophisticated investors and the fund sizes.

"I think part of the challenge is actually at a fund this size, and the biggest challenge is fundraising..."

The quote outlines the primary difficulty faced by small fund managers in attracting investors who usually prefer larger funds, underscoring the fundraising hurdles in the venture capital ecosystem.

Targeting LPs for the Fund

  • The Brooklyn Bridge fund is too small for most institutional investors.
  • High net worth individuals and family offices are potential LPs, but finding the right match can be challenging.

"It's a little too small for most institutionals. So essentially you don't target, you wind up talking randomly to a lot of people who have money."

This quote conveys the challenge of identifying suitable limited partners (LPs) for a smaller venture fund, suggesting that the search for investors often requires broad and somewhat random outreach.

Takeaways from Prestigious Firms

  • Charlie O'Donnell reflects on his experiences working at Union Square and First Round, noting the differences in his roles and the firms' stages.

"And you mentioned Union Square and first round. What would you say are the biggest takeaways for you from working at such prestigious firms?"

While the quote poses a question about the lessons learned from working at established venture capital firms, it implies that such experiences are valuable and formative for venture capitalists.

Early Career and Networking

  • Harry Stebbings was part of a firm with a strong portfolio but lacking in process and infrastructure.
  • He focused on networking within the New York tech community to build the firm's presence.
  • He acknowledges that most deals were driven by senior partners, Brad and Fred.
  • Harry was present during significant investments at his first firm but attributes the success to the senior partners.

"And so I spent a lot of time trying to network within the New York community that I sort of felt like if I help build the community around the firm, then that'll be beneficial for the firm in the long term, because it was a partner driven shop, and most of the deals went to Brad and Fred, and they were driving that."

This quote highlights Harry's strategy of networking to build the firm's community presence, recognizing the partner-driven nature of the firm where senior partners like Brad and Fred led most deals.

Transition to First Round and Deal Flow

  • Harry had immediate deal flow and relationships with peers starting companies when he joined First Round.
  • He led his first deal within 100 days at a more structured firm.
  • The dynamics of deal completion differed between USV and First Round, with the latter doing more deals annually.

"When I started there in nine, I started doing deals right away. I had deal flow. I had more relationships with. My peers in the community were now starting their own companies, as opposed to working for other people's companies."

This quote emphasizes Harry's quick start at First Round, leveraging his relationships and the firm's structure to lead deals soon after joining.

Personal Branding and Passion

  • Writing and engaging in enjoyable activities are key to personal branding.
  • Authentic passion is crucial when choosing a focus area, whether it's a specific industry or community building.
  • Harry's passion for the New York community and helping people with their careers is a significant part of his brand.

"So whatever it is that you pick, just have it be something that you want to talk about all the time and want to be a leader in too. That's key."

The quote advises choosing a focus area based on genuine interest and passion, as this will naturally lead to becoming a leader in that space.

Investing in Hardware

  • Harry has experience with seed hardware deals and is open to them if the technology is understandable without scientific expertise.
  • Pre-sale platforms like Kickstarter have made early-stage hardware investments more viable by having customers fund manufacturing.

"And I think that all these various presale platforms are really making it economically viable for vcs to make early stage investments because you're not funding the manufacturing, the customers are funding the manufacturing, and so it's a lot easier to swallow for an investor."

Harry points out the economic advantage of pre-sale platforms for venture capitalists in hardware investments, as the customer funding reduces financial risk for investors.

Kickstarter's Role in Financing

  • Kickstarter is not an investment platform but serves as a method of financing.
  • Successful hardware companies often raise VC funding before going to pre-sale.
  • Significant research and preparation are needed before launching a Kickstarter campaign.

"But actually three of the four hardware related companies I did raised VC before they went to presale."

The quote indicates that successful hardware startups typically secure venture capital funding before utilizing pre-sale platforms, highlighting the importance of foundational financing.

Delivery Challenges in Hardware

  • No hardware company has delivered on time as per Harry's knowledge.
  • Transparency and communication are critical for maintaining customer trust during delays.
  • Teams need expertise and sufficient funding to fulfill product delivery promises.

"Everyone was hoping to get their canaries sooner, but as soon as they got them, they loved them."

Harry uses the Canary product as an example to illustrate that while delays are common in hardware startups, customer satisfaction can still be high if the end product meets expectations.

Brooklyn Bridge Ventures' Future Plans

  • Brooklyn Bridge Ventures aims to maintain its current trajectory.
  • Charlie O'Donnell (Speaker C) plans to raise another fund, similar or slightly larger than the current one, with a target size of 15 million.

And Brooklyn Bridge, hopefully exactly the same. Another fund, yes. Same size, slightly larger. 15 million.

This quote indicates that Charlie O'Donnell is looking to continue with what Brooklyn Bridge Ventures has been doing, with potential growth in the size of their next fund.

Charlie O'Donnell's Current Challenges

  • Charlie O'Donnell expresses contentment with his life and work.
  • He does not identify any significant problems worth complaining about.

I have a good life. I can't say I have too many problems. So this is, I like what I do, so nothing worth complaining about.

Charlie O'Donnell's response reflects a positive outlook on his personal and professional life, implying that there are no pressing issues at the moment.

Insights on Innovation and Simplicity

  • Charlie O'Donnell finds the simplicity of certain ideas to be mind-blowing.
  • He uses Snapchat's ephemeral messaging and Hungryroot's quick meal preparation as examples of simple yet impactful innovations.

The thing that's mind blowing is that somebody hasn't come up with it already... It's not mind blowing, but it almost blows your mind in terms of the simplicity, right?

This quote highlights Charlie O'Donnell's fascination with simple ideas that have a significant impact, suggesting that sometimes the most obvious solutions are the most innovative.

Instagram's Role and Impact

  • Charlie O'Donnell frequently uses Instagram and acknowledges its value in making users feel like skilled photographers.
  • He appreciates Instagram for its ability to help maintain connections with friends and provide marketing opportunities for startups.

A picture is worth a thousand words. And it's also a nice way to sort of, in an ambient kind of way, keep up with friends and what they've been up to...

The quote conveys the importance of visual storytelling and the social connectivity provided by Instagram, which can be leveraged for personal and business purposes.

Hungryroot's Market Presence and Growth

  • Hungryroot is a consumer packaged goods company offering healthy, quick-to-prepare meals.
  • Charlie O'Donnell has been marketing their products on Instagram.
  • The company is currently local to the northeast but plans to expand nationally.

They are vegetable based meals, so it's healthy and quick... They will be national by the end of the year.

This quote explains Hungryroot's business model and their expansion plans, indicating a growing market for healthy and convenient food options.

Tinkergarten Investment and Concept

  • Charlie O'Donnell's most recent investment is in Tinkergarten, a company offering outdoor classes for children.
  • The company operates a distributed network of certified classes in public parks.
  • Tinkergarten provides curriculum and kits for educational games and activities.

Tinkergarten was a company that I not only, I can't say I said yes, because the entrepreneur didn't really pitch to me, I sort of convinced themselves, I convinced the entrepreneurs to go work on it full time.

The quote reveals Charlie O'Donnell's proactive approach to investment and his belief in Tinkergarten's concept, which combines education with outdoor activities.

Conclusion and Additional Resources

  • Harry Stebbings (Speaker A) wraps up the show with a thank-you to Charlie O'Donnell.
  • He directs listeners to further resources and mentions the hiring platform Hiring Screen.

To find out more about Charlie and Brooklyn Bridge Ventures, head on over to www. Dot the 20 minutevc.com...

Harry Stebbings provides listeners with information on where to find more about the guest and his ventures, as well as a personal endorsement of Hiring Screen, a recruitment tool.

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