20VC The Blurring of Early & Late Stage, Why Your Go To Market Strategy Is More Important Now Than Ever & Why Venture Is The Academia Of Tech with Roseanne Wincek @ IVP



In this episode of the 20 Minutes VC, host Harry Stebbings interviews Roseanne Wincek, an investor with IVP, a firm known for growth financing with an impressive portfolio including companies like Snap, AppDynamics, Supercell, and Slack. Wincek, who has a background as a principal at Canaan Partners and co-founder of a music app startup, shares her journey into venture capital, highlighting her transition from early-stage to growth-stage investing. She emphasizes the importance of building relationships with companies well before investment opportunities arise and discusses the nuances of go-to-market strategies, the role of incumbents in distribution, and the competitive landscape of VC funding. Wincek also expresses her enthusiasm for Masterclass, her most recent investment, for its innovative approach to online education by leveraging the internet to go back to one-on-one master-apprentice learning models.

Summary Notes

Introduction to Roseanne Wincek and IVP

  • Roseanne Wincek is an investor at IVP, focusing on later-stage consumer and enterprise companies.
  • IVP's portfolio includes companies like Snap, AppDynamics, Supercell, and Slack.
  • Roseanne serves as a board observer for MasterClass and actively works with Compass, Glossier, and Qubole.
  • Before IVP, Roseanne was a principal at Canaan Partners and a co-founder at I'm In Music.

"I'm very excited to welcome Roseanne Winchick to the hot seat today. Now Roseanne is an investor with IVP... At IVP, Roseanne focuses on investing in later stage high growth consumer and enterprise companies, currently serving as a board observer for masterclass and actively working with IVP's investments in Compass, Glossier and QBOL."

The quote introduces Roseanne Wincek and her role at IVP, highlighting her focus on later-stage, high-growth companies and her involvement with significant investments.

Venture Capital Tools

  • Eshares is a cap table management platform used by many VCs and over 5000 companies.
  • Fond is an employee engagement suite offering rewards, perks, and engagement surveys.

"But before we dive into today's show, very few pieces of software are a must for the majority of vcs I have on the show, but eshares most certainly is. Eshares is the number one cap table management platform... And once you have all the paperwork tied down with eshares, you can now engage with your employees. And that's where fond comes in."

This quote outlines the importance of Eshares as a cap table management tool for VCs and introduces Fond as a complementary platform for employee engagement.

Roseanne Wincek's Background and Transition to Venture Capital

  • Roseanne started as a chemistry major and transitioned from a Ph.D. in biophysics to tech entrepreneurship.
  • She co-founded a company building Facebook apps and then worked at Nextbio, an enterprise analytics company.
  • Roseanne's interest in venture capital was piqued by a suggestion from a board meeting attendee.
  • She views venture capital as the academia of tech, conducting experiments to test business models.
  • Roseanne joined Canaan Partners out of business school and later moved to IVP, attracted by the opportunity for growth investing.

"Sure. I feel like I had a pretty random walk into venture... And I think it was so appealing to me because I had really started my career in academia, and I really feel like venture is kind of the academia of tech, right?"

Roseanne explains her unconventional path into venture capital and how her academic background and interest in tech led her to view venture capital as a field that aligns with her skills and interests.

Early vs. Late Stage Investing

  • Early-stage investing involves meeting many CEOs and being sold on a company's vision.
  • Late-stage investing focuses on fewer companies with more market data and understanding broader market trends.
  • The transition from early to late-stage investing involves a change in pace and investment approach.
  • Roseanne prefers late-stage investing as it allows for more strategic investment timing.

"So I would say the biggest kind of fundamental difference between early and late is the pace of companies... And late stage investors, frankly, are kind of bad at giving entrepreneurs credit for what could be, and they're very good at understanding what is."

Roseanne discusses the fundamental differences between early and late-stage investing, emphasizing the pace at which companies operate and the focus of late-stage investors on existing data and market performance.## Investor Perspectives on Company Growth and Valuation

  • Late-stage investors focus on companies with proven models, looking for ways to scale effectively.
  • They are skilled at identifying what works and how to enhance growth with capital or executive changes.
  • New products and bigger visions are seen as upside but are often mispriced by late-stage investors.
  • Roseanne Wincek observed a difference in excitement for mid-stage deals at IVP due to varying investor mindsets.
  • Early-stage investors expect a third of their companies to fail, a third to return capital, and a third to be highly profitable.
  • Early-stage investors need big exits to compensate for losses and provide overall fund returns.
  • Late-stage investors rarely encounter total losses as they invest in more established companies.

"And those new products or that bigger vision is upside, but they're really bad at pricing that."

This quote highlights the challenge late-stage investors face in accurately valuing the potential of new products or expanded visions of a company.

Early Stage vs. Late Stage Investment Approach

  • Early-stage investment is more of an art due to the high level of uncertainty and the need to evaluate potential without much historical data.
  • Despite the artistic nature, early-stage investment also involves scientific analysis, particularly in assessing technical risks.
  • Late-stage investment is more scientific with the ability to analyze concrete financial data, but valuation still involves a significant degree of art.
  • Valuation at both stages requires a mix of quantitative analysis and qualitative judgment.

"Early stage is definitely, it's more of an art from kind of how you value the companies and how you pick them and how you choose entrepreneurs."

This quote underlines the subjective and nuanced nature of early-stage investment, where valuation and entrepreneur selection are less formulaic.

Portfolio Construction and Follow-On Financing

  • Early-stage funds reserve more capital for follow-on investments compared to late-stage funds.
  • Late-stage companies are less likely to need additional financing due to profitability, acquisition, or going public.
  • Early-stage investing emphasizes maintaining ownership in high-performing companies to offset losses from failed investments.
  • Both early and late-stage VCs participate in follow-on financings, but the allocation of capital differs based on fund size and investment stage.
  • Early-stage investors may be limited in later rounds due to fund size constraints, while late-stage investors can invest more heavily.

"At the early stage, the amount that's reserved for each company is much higher than it is at the late stage."

This quote explains the strategic differences in capital allocation for follow-on investments between early and late-stage funds.

Blurring Lines Between Early and Late Stage Investing

  • Fund sizes for early-stage firms are increasing, allowing them to invest across a broader range of stages.
  • Early-stage funds are creating opportunity funds and special purpose vehicles (SPVs) to invest more in their winning portfolio companies.
  • Late-stage firms are investing earlier to gain information advantages and deploy capital in favorable conditions.
  • The venture capital market is becoming more competitive as more funds seek to identify and invest in winning companies early.
  • Increased competition comes from lifecycle firms and limited partner (LP) co-investments.

"I think that what we see on the early stage is that fund size is really increasing."

This quote signifies the trend of early-stage funds growing larger, enabling them to participate in both early and late-stage investment rounds.

Competitive Market Dynamics

  • There is more capital available in the market than there are high-quality companies to invest in.
  • The venture capital landscape has shifted from a buyer's market to one with intense competition for investment opportunities.
  • The abundance of early-stage capital leads to many companies reaching the level where late-stage funds like IVP can invest.
  • Despite increased competition, the market is dynamic and presents numerous investment opportunities.

"I mean, I think that the market is more competitive for everyone."

This quote acknowledges the heightened competition in the venture capital market, affecting all participants, including late-stage funds.

Importance of Go-to-Market Strategies

  • Sales and marketing are significant expenses for any company, making go-to-market strategies crucial.
  • Roseanne Wincek emphasizes the importance of these strategies due to their impact on a company's success and resource allocation.

"I mean, it's because sales and marketing is so expensive."

This quote stresses the significance of go-to-market strategies, as they directly influence the financial efficiency and growth potential of a company.## Go-to-Market Strategy and Product-Market Fit

  • The effectiveness of a go-to-market strategy is fundamentally linked to having a product-market fit.
  • Without a product that customers truly desire, no amount of positioning, messaging, or pricing will make it successful in the market.

"You can market yourself into oblivion if your go-to-market isn't working. And really, I mean, I kind of feel like this is a punt, but really the core of a go-to-market that fits is product market fit."

The quote emphasizes that a successful go-to-market strategy is futile without a product that meets the market's needs. Product-market fit is the core of any successful go-to-market strategy.

Indicators of Product-Market Fit for Growth Investors

  • Growth investors like Roseanne Wincek look for repeatable and improving metrics to ascertain product-market fit.
  • Indicators include retention curves, increasing average purchase sizes over time, and the magic number pattern reflecting sales team performance.

"It's when you see that the metrics have been repeatable and that they're starting to improve."

This quote explains that consistent and improving metrics are key indicators of product-market fit for growth investors, signifying a company's readiness for further investment.

Common Levers for Success in Consumer and Enterprise Startups

  • Despite the differences in early-stage focus, successful companies in both consumer and enterprise sectors share similarities in their underlying strategies.
  • Key levers include achieving product-market fit with excellent positioning and pricing, and developing organic, proprietary go-to-market channels that provide a competitive advantage.

"The best enterprise companies and the best consumer companies really look quite similar underneath the covers."

The quote suggests that successful companies across sectors share fundamental similarities in their approach to achieving product-market fit and developing organic go-to-market strategies.

The Challenge of Distribution Channels and Incumbency Advantage

  • Incumbent platforms like Apple's App Store, Google Play, and Amazon present significant challenges for new entrants due to their control over distribution channels.
  • The incumbency advantage can make it difficult for startups to break through, but innovative go-to-market strategies can still lead to success.

"I completely agree. I think that the incumbents are so powerful, and so good that it's really difficult to break out."

The quote acknowledges the difficulty for new companies to compete with established platforms that dominate distribution channels, highlighting the challenge for startups in go-to-market strategies.

Building Relationships and Securing Competitive Deals

  • Roseanne Wincek differentiates herself by leveraging her product background and early-stage experience in growth-stage investing.
  • Building long-term relationships with companies and entrepreneurs is crucial for securing competitive deals, often engaging with them well before an investment opportunity arises.

"For the most part, I'm spending time with companies 18 months before we want to invest in them."

This quote underscores the strategy of developing relationships with potential investment targets far in advance, indicating a proactive approach to securing deals rather than reacting to fundraising announcements.## Pre-Investment Relationship Building

  • Competing in a competitive market requires early engagement with companies.
  • Being helpful and showing interest in a company before a formal process starts is crucial.

"But I think that the only way that you can compete in this really competitive market is by being there before it's competitive and showing companies that you think that they're interesting and trying to be helpful before a process actually starts."

This quote emphasizes the importance of early relationship building in venture capital to gain a competitive edge.

Favorite Book and Personal Interests

  • Roseanne Wincek enjoys reading dorky science books and chic-lit.
  • "Einstein's Refrigerator" is a physics book that has significantly influenced her worldview.
  • She also has a keen interest in travel, cooking, and the chemistry involved in cooking.

"So I read either dorky science books or like, kind of trashy, almost chiclet. And I would say on the dorky science side, there's this book that I read years ago that keep going back to called Einstein's refrigerator."

The quote reveals Roseanne's diverse reading interests and the impact of a particular science book on her perspective.

Nicknames and Personal Anecdotes

  • Roseanne is sometimes called "Roxy" by her friends.
  • The nickname was initiated by Jenny Loughcourt and has historical roots from Roseanne's high school years.

"I think that was from Jenny Loughcourt. And I think Jenny left court, called me Roxy."

This quote explains the origin of Roseanne's nickname and highlights the light-hearted camaraderie among her peers.

Next-Generation BI Companies

  • Modern BI companies benefit from fast, standardized cloud infrastructure.
  • The scalability and the ability to provide personalized experiences are key advantages.
  • The abundance of data and consumer expectations drive innovation in BI companies.

"I think what's so exciting about being a bi company today is just the fact of how good and fast and standardized the infrastructure is underneath."

Roseanne discusses the technological advancements that make modern BI companies exciting and innovative.

Career Advice for Juniors in Venture Capital

  • Attention to detail is critical when applying for jobs in venture capital.
  • Understanding nuances and knowing the numbers are essential for investment judgment.

"My biggest piece of advice is attention to detail. I cannot tell you how many jobs I post that people then applies to me, or they just completely don't read the instructions and send something that's completely irrelevant."

Roseanne emphasizes the importance of attention to detail for those seeking to enter the venture capital industry.

Masterclass Investment

  • Masterclass is an online education platform taught by experts in various fields.
  • Roseanne's passion for education and belief in the product-market fit influenced her investment decision.
  • The platform is seen as a modern form of apprenticeship, leveraging the Internet to scale learning.

"So my most recent announced investment is a company called Masterclass, which is a online education platform where it's video classes that are taught by the masters."

This quote highlights Roseanne's most recent investment and her enthusiasm for the company's educational approach.

Acknowledgements and Sign-offs

  • Thanks are given to Roseanne Wincek for her participation in the show.
  • Acknowledgements are made to Jenny Lefkour and Layla Sturdy for their introductions.
  • The host encourages following Roseanne on social media.

"And an even bigger hand to Jenny Lefkour at free Style and to Layla Sturdy at Capital G for the introduction today, without which this episode would not have been possible."

This quote acknowledges the contributions of others in facilitating the interview and underscores the importance of networking and connections in the industry.

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