1Mby1M Virtual Accelerator Investor Forum: With Dan Roselli of CFV Ventures (Part 2)

Sramana Mitra: What does the company need to have by way of proof point to qualify for your funding?

Dan Roselli: I’ll start by saying what’s next and then work backwards. Series A investors want to see about $100,000 in monthly recurring revenue.

If you’re a direct to consumer business, they’d probably want to see 20,000 to 30,000 clients. If you’re a B2B business, they probably want to see you have two dozen clients.

We invest at the stage where they are post-launch and post-revenue, and probably have some early signs of market fit. We’re not totally banking on speculative entrepreneurs or people with ideas.

We’re not an angel fund. We want to see a product in place. We want to see a team in place and some early marketplace validation. That will change a lot of times, but that’s what we’re looking for.

Sramana Mitra: If you are trying to get these companies to the Series A, what is your MRR threshold? What is your comfort level?

Dan Roselli: We don’t have a hard threshold. If they have case studies, endorsers, and references, that would probably suffice. There are some that are pre-revenue, but it’s rare.

Sramana Mitra: Let’s talk about some of the companies that you’ve invested in. Give us a sense of what they are doing. What is the business model? What trends are you seeing in FinTech?

Since this is your sweet spot, you have a good thesis around FinTech and InsurTech. I would love to pick your brains on that.

Dan Roselli: Let me start with some of the alumni. We have always had a philosophy of casting a wide tent within FinTech and InsurTech. It could be everything from cyber security, AI to P2P lending. We go the full gamut. We think that allows us to get the best companies and the best entrepreneurs.

Our portfolio is about 80 companies. We’re at a pretty early stage. One of my favorites is Trust Stamp out of Atlanta. They do work on biometric verification. They’ve announced their intentions to go public on the Ireland Stock Exchange this year.

We have a company called Catapult that is based in the Charlotte region and manages RFP processes. There’s another company called Amicus that deals with donor funds. It just landed an opportunity with a major top 10 global bank.

You can see with those three examples the spectrum of things within the FinTech space that we look at. In InsurTech, it’s equally broad – from carrier, innovation to claims. There is a whole bunch of work being done on claims automation.

One of our companies in our last cohort is using data and AI on a microclimate basis to understand potential weather damage to expedite claims processing for damage from weather-related issues in the US. It saves insurance companies hundreds of thousands of dollars in inefficient claims processes.

Sramana Mitra: Give us a sense of the trends in those two sectors. 

Dan Roselli: The biggest trend is around AI and machine learning. I know those have been buzzwords, so I hesitate to use them.

This idea of creating efficiencies with machine learning is to make processes more efficient. These companies that we work with are such huge organizations that even a small increase in the efficiency of the process has a huge yield downstream. While it’s not particularly sexy, it’s big money.

I just did a conference last week on Blockchain. I showed the technology curve in that session. You get this innovation hype and you get this hangover. Then the reality starts creeping up. You could put self-driving cars in this category.

I put Blockchain in the same technology curve. It got overhyped. People didn’t know how to use it or what it was going to be used for. Last year, we had this hangover from the Blockchain buzz. But now we’re seeing interesting technology using immutable ledgers and how that could work to make processes from lending and claims more efficient.

This segment is part 2 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Dan Roselli of CFV Ventures
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