Best of Bootstrapping: Bootstrapping to Exit with David Lambert, Right Side Capital

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. Here is my conversation from 2019 with David Lambert of Right Side Capital Management.

David Lambert is Managing Director at Right Side Capital Management, a firm that invests small chunks of capital in capital efficient ventures. The firm is very much in line with the Bootstrapping to Exit philosophy we’ve been discussing. You can listen to a podcast of our conversation here or watch the roundtable video below:

Sramana Mitra: Tell us about yourself. Tell us about Right Side. Let’s get acquainted.

David Lambert: I have predominantly been a career entrepreneur before starting Right Side Capital. I came out to the San Francisco Bay Area to go to Stanford in the late 80’s. A month after I graduated, I started my first company.

>>>

1Mby1M Virtual Accelerator Investor Forum: With Kyle Asman, Managing Director at Backswing Ventures (Part 3)

Sramana Mitra: Talk about the case studies of the two companies that you sold.

Kyle Asman: One of them was in real estate technology. It was a highly-profitable company with high revenue. They were pretty quick to exit. They needed some investment to grow some things and get to the next level. The other one was a secondary sale. That went from little in revenue and grew it well into the eight figures.

1Mby1M Virtual Accelerator Investor Forum: With Kyle Asman, Managing Director at Backswing Ventures (Part 2)

Sramana Mitra: That’s after they have come to you and decided that they want to work with you. These are two different, slightly off-center entities – a company that is already doing a million dollars in revenue that is profitability focused and is interested in a relatively early exit. Those are the characteristics of the business.

On the other hand, you have a venture fund that is looking for those kinds of businesses. What is the source of your deal flow?

1Mby1M Virtual Accelerator Investor Forum: With Kyle Asman, Managing Director at Backswing Ventures (Part 1)

Kyle Asman is Managing Director at Backswing Ventures, a firm that has a non-Unicorn investment thesis.

Sramana Mitra: Let’s get acquainted. Tell us about your background and also about Backswing Ventures.

1Mby1M Virtual Accelerator Investor Forum: With Bhaskar Ghosh, Partner and CTO at 8VC (Part 4)

Sramana Mitra: There is a Series A gap. There are investors that are doing pre-Series A, but it’s a smaller pool. The Series A investors want to see a lot in place before they’re willing to write a check. How do you see this? This is not specific to your firm. I’m asking you generally as an industry observer. How do you see this resolving?

Some of the trends we are seeing is that some of the pre-seed and seed companies are exiting into companies that have raised a lot of money without trying to raise as much money themselves. They have to find some path either through exit, funding, or becoming profitable.

1Mby1M Virtual Accelerator Investor Forum: With Bhaskar Ghosh, Partner and CTO at 8VC (Part 3)

Sramana Mitra: Talk a little bit about this company that you invested in from the Freshworks ecosystem. Is it built on the Freshworks stack?

Bhaskar Ghosh: The founders are second-time founders. Their first company, Rocketlane, was acquired by Freshworks. I just want to call something out. We are huge fans of the entrepreneur ecosystem coming out of Freshworks and Zoho, which have revolutionized the B2B SaaS ecosystem of India.

1Mby1M Virtual Accelerator Investor Forum: With Bhaskar Ghosh, Partner and CTO at 8VC (Part 2)

Sramana Mitra: Let’s focus on the pre-seed and seed first. Are you investing in concepts? Are you looking for a certain amount of proof point? What is the sweet spot?

Bhaskar Ghosh: If you look at founders, products, and market, we focus heavily on the founder and on the market size. We are not looking for product-market fit. We are not even looking for a product. We tend to gel closely with highly technical entrepreneurs. There is bimodal DNA there. We do back first-time entrepreneurs coming out of schools. We have a very strong campus program at Yale, Caltech, MIT, Harvard, and Stanford. We tend to back founders out of these campuses fairly heavily.

1Mby1M Virtual Accelerator Investor Forum: With Bhaskar Ghosh, Partner and CTO at 8VC (Part 1)

Bhaskar Ghosh, Partner and CTO at 8VC, discusses his firm’s investment thesis, and we have an interesting discussion about the definition of a “good” entrepreneur.