If you have been bootstrapping and think you are ready for investors, you need to learn how investors think. First, please study our free Bootstrapping course and the Investor Introductions page. Then, start looking for entrepreneur – investor fit. Today, I introduce you to Cindy Padnos, Illuminate Ventures.
Cindy Padnos, Founder and Managing Partner at Illuminate Ventures, discusses a topic that we’ve been highlighting recently: the need for multiple seed rounds as a way to bridge the Series A gap. You can listen to a podcast of our conversation here or watch the roundtable video below:
Sramana Mitra: Tell us about Illuminate Ventures. What is the focus of the firm? How big is the fund? What sized investments do you make?
Cindy Padnos: We’re on our third fund. It’s a $30 million fund. Our focus is exclusively in the enterprise or B2B category. We invest in startups that are SaaS business applications, cloud computing, mobile software targeted towards the enterprise.
Sramana Mitra: What is the deal size that you do? What is the denomination of investment that you typically put in?
Cindy Padnos: We’re typically a company’s first institutional financing round. We don’t do notes. We’re frequently coming in after angel investors and before a Series A round. The size of that round can range from a million to $5 million depending on the progress the company has already made.
Sramana Mitra: I remember when we talked some years ago, you were a big champion of female entrepreneurs. Is this all kinds of entrepreneurs or is there any kind of bias towards women?
Cindy Padnos: We don’t have any bias. We have created an environment that is conducive to expanding our deal flow. That means that it ends up being more inclusive. More than half of our portfolio do indeed have at least one female co-founder but we never use gender, ethnicity, age or anything else as part of our investment criteria.
Sramana Mitra: What about geography?
Cindy Padnos: We focus exclusively in North America. That includes Canada. Today 80% of our investments are in the United States and 20% in Canada.
Sramana Mitra: It’s not Silicon Valley exclusive. You invest all over the country and all over North America.
Cindy Padnos: That’s a really important question. One that we’ve done a lot of homework around. Over the last five years, we’ve had an interesting focus of being open to investments outside of the Bay Area. Roughly, a third of our portfolio is outside of the Bay Area. They’re in places like Philadelphia, New York, Seattle, Santa Barbara. We have definitely a little bit different focus than many small firms do.
Sramana Mitra: Tell us what trends you are seeing in your deal flow.
Cindy Padnos: Because we invest in the enterprise space, we tend to see entrepreneurs who are a little bit more experienced. They’ve started a company before or they’ve been a part of a startup before. They come to us with a really interesting set of knowledge about the space that they are building a company in.
We have a founder who has built a really interesting company in the industrial Internet of Things category. That’s a category that’s really interesting and has lots of opportunities to grow and prosper. It would be pretty tough to say that someone’s a serial entrepreneur in that space because it’s a relatively new space.