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 Jon Staenberg.
Jon Staenberg, Managing Partner at Staenberg Venture Partners, has been a Seed Investor in over 400 ventures over the last 30 years. Jon draws from his long background and discusses some of what interests him to invest in a startup. He also reflects on the question People or Market: Which takes priority? You can listen to a podcast of our conversation here or watch the roundtable video below:
Sramana Mitra: Tell us about the focus of your investments and let’s introduce you to our audience.
Jon Staenberg: I’m a little disappointed that it took 374 shows to get me on, but I’m glad to be here. I’m kidding, of course! Congratulations to you for doing this. It’s nice to be interviewed. I’m an old dinosaur at this point, having done this for some 30 years. I originally moved to the Pacific Northwest to work at Microsoft in the late 80’s and have been venture and angel investing for that long.
I’ve been a partner in funds. I raised two funds under an autonomous name and then joined a group out of LA called Rustic Canyon Partners where I was a partner was well. You asked specifically what the focus of my investments is. I don’t really have a specific geography or sector focus. Having done this as long as I have, there are some areas when it comes to pattern recognition and people who I’ve worked with in the past that I tend to focus on.
To be clear, I’m not sure I’m very good these days at keeping up with all the changing trends and all the differentiated and iterative kinds of companies being formed. When I started doing this, my focus was pretty clear. It was mostly enterprise software. It was a completely different game. There were fewer venture players. You put several million dollars to work and it would take a couple of years. Then you hope you’d figure it out and then you try and get a couple of customers with a long sales cycle.
That world, of course, has changed dramatically. While I remain active and excited, I would say that I’m much more opportunistic these days than I am focused on one thing. Having said that, I am currently excited and interested about several sectors. I do think that Blockchain-related activities are extremely interesting and significantly game-changing opportunities. Even if my background was in enterprise, it’s hard to ignore what’s happening in the cloud.
What I’m saying is I’m trying to build off all the things I’ve done. I’ve made well over 300 investments at this point. Hopefully, I can take some pattern recognition from those previous investments and apply it to the modern era.
Sramana Mitra: Tell us a bit about what has been some of your most interesting investments. In the 300 or so that you’ve invested in, what stands out and why?
Jon Staenberg: The thing that’s interesting to me is that I can honestly say you never know what’s going to work. I’m often surprised both downside and upside. I had a company that I thought would never amount to anything and it had over a $2 billion exit in the last 12 months. It’s pretty exciting.
Sramana Mitra: What company was that?
Jon Staenberg: SquareTrade. It’s in the warranty business. You probably have seen their ads.
Sramana Mitra: Yes.
Jon Staenberg: I was in that company for a very long time and had not expected that outcome. What was interesting about that one is, they had received a very significant investment a few years ago from a major private equity firm. That was not a traditional path and that private equity fund took it to the next level.
Back in the day, it was a pretty traditional path to an exit or non-exit. You did a Series A through C and then you either got acquired or went public. Today, there are so many different paths. It’s exciting, but it also has created a lot of noise or confusion in the marketplace.
Sramana Mitra: That noise is what we’re trying to help cut through and come up with some sort of a logic to understand that. I’ve been in this business for more than 20 years as well. I did three companies in the 90’s. In the 90’s, you used to do seed investment and then Series A.
Now you do pre-seed, seed, post-seed, pre-Series A. What is the difference between post-seed and pre-Series A? This is not so simple anymore to understand. For entrepreneurs who are doing it for the first time, it’s not easy for them to understand where they fit in.