1Mby1M Virtual Accelerator Investor Forum: With Mark Achler of MATH Venture Partners (Part 3)

Mark Achler: Our preference and our sweet spot is, we like it when there’s velocity and when there’s momentum in the sales pipeline and when there is a scalable way to generate growth, which is also another proxy for saying size and scale of the opportunity. There are a lot of wonderful companies out there that’s not just appropriate for venture. We need to get an understanding of the potential of the company, the potential of the market, and the team’s ability to sell.

Let me give you a concrete example. In the last three years, we’ve met with 4,200 entrepreneurs at my fund. We get pitches four or five times a day. The vast majority of entrepreneurs when they come and pitch, they start with, “Our product does…”. I stop them halfway through.

I say, “That’s important, but I really don’t care. What I really care about is tell me, from the point of view of the customer, what problem you are solving, what problem is so urgent, and how do you reach them in a repeatable and scalable way.” The vast majority of entrepreneurs can’t describe that.

Sramana Mitra: You will never find a pitch from us that fits the first category that you described because we harp on this exact point. No one cares what your product does. People care what problem you solve, how you solve it, and what ROI you deliver by solving that problem.

Mark Achler: Of course.

Sramana Mitra: The other comment I wanted to make on your point on velocity is the difference between a venture-fundable company or a company that can fit the venture model and the company that needs to be built bootstrapped.

Mark Achler: I would agree with that. In venture capital, we talk a lot about the jockey or the horse and how important the team is. I’m definitely on the side of I will always opt for the great CEO. A great team will take a good opportunity and turn it into a great opportunity. Team is incredibly important.

Sramana Mitra: Yes. Having said that, the market is incredibly important. I have worked with great CEOs. You can’t inject velocity into poor markets however a good CEO you are.

Mark Achler: That is true. It’s a complicated matrix. We also look for leverage. I use the word urgency. Why is this problem so important where they’re going to trust you with their critical major issue? We’re always looking for leverage whether it’s an insurance company that says, “We are going to raise your rates if you don’t use this?”

It’s like that Apervita example where the Joint Commission says, “In order to fulfill your audit obligations, you must use this.” We like those types of opportunities where there’s some kind of leverage whether it’s compliance or financial leverage.

Sramana Mitra: What trends are you seeing in your deal flow? So far, you have described highlights from your portfolio that you’ve invested in. Of course, there is a continuous of stream of companies that are coming to pitch to you. What are some of the trends that are showing up in the current deal flow?

Mark Achler: We see a lot of Big Data and analytics. We see IoT. We’re seeing a lot of FinTech. We see more B2B than B2C. In fact, I think B2C deal flow is diminished a little bit, but that could be, in part, because we’re not B2C people. We see a lot in security.

Sramana Mitra: You haven’t seen anything that stands out as a trend? I remember some years ago, everybody I talked to really keyed in was always bringing up Twitter. There was a phenomenon going on called Twitter. They’re growing like crazy. Is there anything like that bubbling in the system? 

Mark Achler: I don’t see any game-changing platform. That happens once every 10 years. These things happen but they don’t happen every year. There’s nothing that I’m seeing at the moment.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Mark Achler of MATH Venture Partners
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