268. Breaking the Founder Stereotype, Mastering Conviction Over Zoom, & the Contrast between European and American Entrepreneurs (Maren Bannon)

Maren Bannon of January Ventures joins Nick to discuss Breaking the Founder Stereotype, Mastering Conviction Over Zoom, & the Contrast between European and American Entrepreneurs. In this episode, we cover:

• Walk us through your background and path to VC
• What’s the thesis at  January Ventures?
• How are you and your team at January Ventures making tech more of an equal opportunity?
• What is your approach to portfolio construction in this fund and how will that evolve in the future?
• What’s one thing you know now that you wish you knew prior to raising the fund?
• You take meetings with founders VERY early — no warm intro, no pitch deck, or no revenue required to pitch to January Ventures. How do you evaluate the potential this early?
• How do you filter all of the opportunities — what is your pre-filter process?
• How have you changed your work/process at January post COVID?
• What is your experience like moving from SF to Europe and what is your view of the European tech ecosystem?

Guest Links:

• January Ventures
• Maren’s LinkedIn
• Maren’s Twitter

Takeaways:

•  Growing up in Silicon Valley, and working in tech, and going to business school at Stanford, I think I saw just how network-driven tech and venture capital are. And I saw how, you know, if you have a certain network and pedigree and geography, it’s much easier to access venture capital. And for everyone else, you can have all the talent and ambition in the world. But venture just isn’t set up to find you. 
• Europe has the building blocks in place for a strong ecosystem. And actually, there are more engineers in Europe than in the US. There are a lot of legacy industries that are ripe for disruption. There’s also this element of Silicon Valley being not just a place, but a mindset, and that mindset spreading all across the US and Europe, and the world.
•  European founding teams, they tend to actually set goals and metrics that are much more achievable. And they tend to not go as much into the big vision, there’s less of a culture around sales, I think; American startups, they tend to always go and painting the picture of the billion or multi-billion opportunity.
• Our ethos is all about radical transparency and access. And so we believe the next generation of founders is going to look fundamentally different from the last, we believe they’re going to be more diverse, more women more geographically distributed. And so what we try to focus on is really removing friction from the fundraising process and making it easier for founders to pitch us. 
•  I think the more you can get to know somebody over time and see the progress, you can get a lot more conviction and their ability to build a big business.
• If you’re going to do a cold email or a cold pitch, you’ve got to have it really concise and really easy to skim. And you’ve got to be able to describe what you do and why you matter in one line. And then you’ve got to have a clear ask.
• I think as you do more and more of these video calls, I think we’re all just picking up on more of the subtleties of like how to read people in these situations where you can’t be in person
• Put more information out there more transparency around how VC works, and how I think the model is really well suited for certain types of businesses. It’s not well suited for others, I think it’s important for founders to know what they’re getting into when they take venture capital. 

Transcribed with AI:

0:00
Maren Bannon joins us today from Amsterdam. She’s the co founder and general partner at January Ventures, a pre seed and seed stage venture fund investing in US and European tech companies with a vision to provide equal opportunity in the tech ecosystem. prior to January ventures, she was the CEO and co founder of Little Lane, a mobile marketplace for local activities. Maren, welcome to the show.

0:22
Thanks, Nick. I’m really excited to be here. I’ve been a longtime fan of your podcast. Awesome. Well, it’s

0:27
it’s great to reconnect and finally have you on the show. But can you tell us a bit about your background and sort of your path to investing?

0:34
Of course, I’m so I’m an American living in Europe, living in Amsterdam, I grew up in Silicon Valley and went to high school across the street from Stanford parents didn’t work in tech. But I felt very fortunate to grow up in such a progressive place in the Bay Area. I’ve known what venture capitalists are since a young age just from growing up around it, but but never aspired to be one. And growing up, I loved math and decided to major in engineering in college. And I remember walking into my first engineering class in college, and it was this sea of men in the room. And I remember the first assignment was coding a video game. And most of the assignments actually, in my CS class was about coding video games. And it wasn’t a problem that really appealed to me. And I think if it had been solving different types of problems, I would have been much more excited about engineering. But regardless, I went on and got my engineering degree, but left University with a feeling that I wanted to go build things and work with startups, but not actually be an engineer. So went on and worked in operating roles and worked in marketing and sales roles at some big tech companies and healthcare companies. And then went and led marketing at a few startups. And then I was the founder of a startup and went through that incredible experience of founding something and growing it and then I merged it with a larger startup.

1:51
What was the timeframe of, of your startup Little Lane?

1:55
2014, to 2016. So I had that amazing experience. And, and I think growing up in Silicon Valley, and working in tech and going to business school at Stanford, I think I saw just how network driven tech and venture capital are. And I saw how, you know, if you have a certain network and pedigree and geography, it’s much easier to access venture capital. And for everyone else, you can have, you know, all the talent and ambition in the world. But venture just isn’t set up to find you. And I think this is something that I have seen even more as I moved outside of the Bay Area and moved over to Europe about years ago. And I think seeing this venture is structure and how it’s, it causes it to miss a lot of opportunities made me realize this was a huge inefficiency in the market assessment opera and a proud co found January Ventures about two years ago with my co founder, Jen,

2:45
about two years ago. Very good. So you have a fund under management. How many portfolio companies have you invested in?

2:52
We’ve invested in 33 portfolio companies, and they’re spread across the US and Europe.

2:57
Great, great. And is that, can you tell us a bit about the thesis and what you guys focus on?

3:03
Of course, so our tagline in January is investing early and opening doors for the founders of the future. We invest at the earliest stage. So it’s pre seed and seed and we focus on high growth tech companies within future of work productivity, FinTech and digital health. Our portfolio is very skewed towards b2b software. And we as I mentioned, we invest across the US and Europe. I’m based in Amsterdam, and my co founder, Jen is based in Boston.

3:29
Yeah. Why the why the HQ in Europe?

3:31
Yeah, I’m happy to share more about Europe. So I moved over here about four years ago, and was I had heard, heard interesting things about the European tech ecosystem and was intrigued, I had heard it was taking off. And just in the four years I’ve been here, I have been really blown away. I think it’s really accelerated, even in that short time. I think the thing that’s interesting about Europe is it has the building blocks in place for a strong ecosystem. And actually, there are more engineers in Europe than the US. There are the top research institutions. There are a lot of these legacy industries that are ripe for disruption. And then I think over the past couple of years, there’s more and more capital that’s coming into Europe across early stage through growth. And then I think there’s also this element of Silicon Valley being not just a place, but a mindset and that mindset spreading all across the US and Europe and the world. And I think the things that I’m excited about in Europe. Well, one, there’s of course, the arbitrage opportunity that it’s, I think, a lot more cost effective to build a business in Europe, generally, salaries are lower, and valuations are lower. But the thing that I’m really excited about are the businesses that have this really global mindset from the beginning. It’s they tend to be b2b software businesses that can sell into the US, even from the earliest stage. And we also really like these businesses that have an advantage by being in Europe. So I think the ones that are the copy of the US startup, but based in Europe in a smaller market aren’t very exciting to us. But instead, we’re really looking at those businesses that have this advantage by being started here. So for example, fintechs in the UK? Got it.

5:07
Got it? And what would you say if if we just talk about founders for a second? What would you say is the primary difference that you’ve observed between sort of the American founding teams in the European?

5:19
Good question. I think that the European founding teams, they tend to actually set goals and metrics that are much more achievable. And they tend to not go as much into the big vision, there’s less of a culture around sales, I think, American startups, they tend to always go and painting the picture of the billion or multi billion opportunity. And I think in Europe, I often see the pitches that are, you know, we’re gonna get to profitability within two years.

5:50
Interesting. Interesting. What about on the business side? Is there? Is there anything in, in growing these companies and how the concept and the business evolves that is just fundamentally different from a management standpoint, or the way that, you know, you need to work with and guide the startups?

6:08
Yeah, so I think a couple of things. In Europe, we see a lot of a lot of great FinTech companies, we see a lot of staff, a lot of really strong SAS, we see see some interesting healthcare companies, and, and also a lot of deep tech, I think in terms of how, how we need to help the founders, I think, one, it’s the coaching of painting the picture of the big vision, because I think if they’re going to expand to the US and expand globally and raise capital from those markets, they need to paint that that picture of the bigger vision. And then a lot of the way that we help by January is with go to market and plugging them into the Silicon Valley ecosystem. And and especially for European founders, I think they often are really excited to build the connections with the US at the earliest stage at pre seed and seed. So we help plug them in to customers and investors for fundraising. And and help them think through expansion plans.

7:01
Good. You know, I know a big part of your thesis is sort of making tech more of an equal opportunity, you know, how, how are you in the team of January doing that?

7:10
Yeah, so what we’re doing. So our ethos is all about radical transparency and access. And so we believe the next generation of founders is going to look fundamentally different from the last, we believe they’re going to be more diverse, more women more geographically distributed. And so what we what we try to focus on is really removing friction from the fundraising process and making it easier for founders to pitch us. So what we say to founders is you don’t need revenue, you don’t need a pitch deck, you don’t need a warm intro, we have a form on our website, they can apply in two minutes. And we try to make that whole process really easy. And the goal for us is really about meeting founders really early in their startup journeys.

7:50
What does evaluation look like when you’re, you know, so early, it’s like pre revenue startups, you know, maybe the team is, is very small. Maybe the the opportunity isn’t fully, you know, fully baked in in the market, you know, what is what is early stage evaluation look like, at January for opportunities that are so early.

8:12
Yeah, so um, so what we do at January, we really draw on our experiences. Jen, my co founder, was the co founder of an accelerator previously, and ran that for six years. So she has a lot of experience working with these really early stage startups through that. And then I of course, have experience as an operator and a founder. And I think what we really look for at this early stage, when there isn’t a whole lot of data about the business, it’s really the having a really magnetic founder who has a unique insight into the market. And then it’s having a massive market or potential market that they’re creating. And then I think it’s just a founder who really understands the customer and the problem that they’re solving for that customer. And I think how we do it at this really early stage one, as I said, we allow founders to pitch us really easily. So we meet a lot of founders really early in the process. And then we do workshops for founders, and we make them on really tactical subjects related to building a company. So everything kind of in the realm of go to market and fundraising, we do them on, you know, b2b sales, how to build your brand, as a startup, how to do a PR launch a bunch of different topics in that realm. And they’re not just for a portfolio, they’re open to all founders. And we, through those workshops, meet a lot of the founders that we later invest in, but often meet them before they’re raising and can get to know them. And I think that kind of overused phrase of investing in lines, not dots, I think is really true. I think the more you can get to know somebody over time and see the progress, you can get a lot more conviction and their ability to build a big business.

9:45
Got it? Got it. How do you feel about an early stage business that has a hypothesis, you know, the founder sees an opportunity understands the customers that they are building tech to address that problem and then serendipitously, you know, they get linked up with a, a very large tech enterprise. And this enterprise sees the value and sort of brings them in, and that becomes the sandbox and sort of they’re, you know, they’re building a solution that’s maybe a little bit different, but similar, you know, for this large enterprise, you know, how do you view that, in an early stage business, you know, versus, you know, the sort of the standard building, you know, start small and, and, you know, get some velocity around small customers and work your way up.

10:32
So we tend to invest in businesses that have much more of like a bottoms up sales process. So they tend to not be at pre seed and seed going and trying to get those big enterprise sales, I think the risk of that is that you get that big enterprise sale, but then it’s not a repeatable sale. So the businesses we invest in tend to be the ones that do the more bottoms up strategy of going and getting people to use it. And at these add a lot of these companies, and then the freemium model, and then getting the upgrades and then selling in once they have significant usage at the company. And I think that is like a, an easier thing for an early stage startup to execute on,

11:09
when you’re seeing all these opportunities, you know, at that, the pre seed stage, we also invest a pre seed and seed early seed, the volume of opportunities is immense. And there’s a tremendous amount of noise, right. And so, it’s easy to get overwhelmed with the the size and scale of total opportunities that are hitting the inbox, either, you know, through the through the network, or direct or opportunities that you found, you know, how do you attempt to filter so many opportunities at the pre seed stage, you know, investing across both Europe and the States?

11:46
Great question. So we do get a very high volume of deal flow, because we make it easy for founders to pitch us. So what we do is through that basic form, we capture the basic information on the startup. And then we’re easily easily able to use that type form and and screen out the pitches that are not within our sector focus or stage focus or geographic focus. And then once we get the subset that that fits, our focus will dig into those figure out which ones we want to screen and are most interested in. And we try to be very generous with the first meeting. And we make it just half an hour. And we make it high level we make it focused on the founders background and their vision. And because the reason that we do that is often you’ll see a pitch and it’s really hard to tell just from looking at different different pitches that come in and, and often in the meeting, you’ll be surprised by somebody. And this approach allows us to meet a much broader range of founders than we otherwise would. But then the bar is very high for a second meeting and for us to go and do diligence and spend significant time on it. So this is how we basically designed our process to give a much wider range of founders a shot, but still be protective of our our time in terms of really digging into the things that we think are the best fit for us,

13:00
or other elements or words of advice that you would give to founders out there that, you know, are trying to get noticed by investors, you know, whether it’s the profile, whether it’s what they’re building, maybe the way that they reach out and communicate, you know, do you have any tips that you’d give to the founders to that, more often would lead to you taking that that early meeting.

13:25
So I’m a big fan of cold emails, and I use them a lot myself. And so what I recommend is if you’re going to do a cold email or a cold pitch, you’ve got to have it really concise and really easy to skim. And you’ve got to be able to describe what you do and why you matter in one line. And then you’ve got to have a clear ask. And so that’s the first thing I would say is just make sure that that initial outreach to the investor is really, really crisp, and clear and concise. And then the second thing is once you get the meeting with the investor, my recommendation is to really think of it as storytelling and paint the picture of why you’re unique, why you’re the best people to build this and and what your vision is of the world, once you build the company that you’re building.

14:11
Good, great. Have you have you guys changed anything? You know, with the pandemic? I’m not really sure. You know, how things are operating in in Europe at the moment? And if people are seeing each other in person, or where where the rates are at but, you know, is there any change to your approach, whether it be filtering or sourcing or the way that you do investments, you know, since the pandemic broke?

14:34
So for us, COVID hasn’t operationally been a big change for us. Jen and I have always been a fully distributed team spread across two continents, and we’ve had to set up the infrastructure and the process early on to really make that work. I think in the early days, you know, we had people say to us, you can’t possibly do this if you’re not in the same place. And we we even had people say to us, nothing interesting. happens outside of Silicon Valley. So I don’t believe in what you’re doing. making investments on zoom hasn’t been a big issue for us, we’re very comfortable doing it, the things that have changed. So in the early days of the pandemic, we did spend a lot of time communicating with LPs communicating with our portfolio, just as I think all investors were doing. And then soon after that, in April, we did a survey of early stage founders to just find out what their challenges were. And one of the, one of the biggest things we saw was that over 80% of these early stage founders were using or planning to fundraise in the coming months. And they said that 75% of investors who are taking much longer to respond. And so what we decided to do is set up this event called pitch collective. And the goal is to really remove friction for founders. And so we take the cold pitches that we get, instead of just pitching us, we invite eight to 10. Other early stage investors, so the founder can pitch 10 investors at once, instead of just pitching us and not have to get those 10 warm intros one by one and take the meetings one by one. And we’ve seen it really helped accelerate their fundraising processes. And for us, we’ve really sourced some really interesting companies through the event, we’ve done three so far now, and we’re planning to continue doing them.

16:11
Wow, is that exclusive to Europe? Or is that open to founders, you know, in, in either the US or Europe?

16:20
No open to founders in in both places. And we’ve worked with different investors on each one that we’ve hosted. And we plan to kind of keep inviting different groups of investors to them. And of course, having founders you know, across the US and Europe, pitch at them,

16:34
that’s great. I like that you’ve got, you know, the startup founders able to pitch to lots of investors at once, almost like, you know, a demo day or, or something of that nature.

16:43
Yeah. So one other thing that I think we’ve noticed with COVID is i think it’s it’s exacerbated privilege. And I think it’s really underscored the importance for the work that we’re doing a January and the work that other investors are doing for underrepresented founders. But one thing that we have seen are VCs defaulting to the their networks and tending to back who they know and who they’re comfortable with right now. And the numbers in q3 there, we saw a big drop in funding to female founders, which was really unfortunate to see.

17:11
Right. Yep. Yeah, we noticed the same thing early on, for sure. And increasingly, now we’re seeing a lot of coastal presence actually, in in some of our overlooked markets, as we call them. It seems like folks are getting more comfortable over zoom. And we’re seeing a lot more investors in places where previously we hadn’t.

17:32
Definitely we’re seeing the same thing It feels like it’s in some ways, kind of opening investors eyes to doing a lot of these meetings virtually, and therefore opening up some new geographies, which is exciting.

17:43
Before you have completed investments during the pandemic year, have you attempted to try and meet with the founders? Or are you totally comfortable, you know, doing investment over zoom?

17:56
We’re completely comfortable making investments over zoom. So we’ve done probably 10 investments over the past nine months, completely over them.

18:06
Wow, impressive. And any, have you noticed any difference in zoom based investments versus non zoom, you know, founders that you’ve met in person? And part of the reason I ask this question is I was, I was talking with a CTO of one of our very successful startups last week. And he was telling me that, so when they hire and acquired talent, they’ve had a lot of success. They’ve had incredible retention, good internal fill rates, very low, voluntary attrition. But since the pandemic broke, they have been doing hiring exclusively over zoom. And of course, these people aren’t embedded in the culture, right? They’re not coming into the office and meeting everyone. And the hiring has been a lot worse post pandemic, than it was pre pandemic. And so, you know, I’m curious if it’s kind of a loose proxy for investing. He had mentioned all these different, you know, signals you get from somebody, you meet them in person, like it activates all your senses. You can sense you know, body language, there’s a lot more visuals than just the screen, you get a full frame instead of just a person on a screen.

19:16
Yeah, so my thoughts on I’m making investments over zoom. So so one piece of it is I do think you have to spend a little bit more time during the meeting, just building connection. And I think if if you’re going to meet in person, you often need a whole hour because there is that small talk. And I think you have to kind of build in the same leeway on a zoom call, so that you have that time to actually just have kind of a more natural conversation. I think as you do more and more of these video calls, I think we’re all just picking up on more of the subtleties of like how to read people in these situations where you can’t be in in person unfortunately. And then the other thing that I’ve noticed is sometimes it takes one more meeting or two more calls with the founders when you can’t meet in person because you just you know again, need to just spend a little bit more time getting to know them. The other thing that we have been doing is is more reference checking, and especially just finding people not references, the founder gifts, but just finding anyone, you know, we can find who’s worked with them in the past and trying to get to get, you know, any information we can to get more comfortable with those people. And this, we’re doing the same thing for the founders in our portfolio that are raising, we’re trying to go out and not just make introductions, but go out and do a lot of the back channeling so that they can go in with a much warmer conversation.

20:32
Good. You know, maybe we could transition a bit, I’d love to talk about sort of the fund itself, the raise strategically, you know, how you approach that, you know, what is your What are your thoughts on portfolio construction? You know, what, what was the size of the first fund? And, you know, how many investments? And how do you think about sort of diversification versus concentration?

20:54
Yeah, so, um, so our first fund, we made 28 investments out of that first fund, and, as I mentioned, really focused on transparency and access and removing friction from the process. The portfolio that we have built doesn’t look like the portfolio of most venture funds. of our portfolio companies. 90%, have a female founder or CEO 50% have a founder of color 20% have a black founder 39% have an immigrant founder. And then in terms of the portfolio construction, so we focus a lot on pre seed and seed. And I think over the past decade, we’ve seen a lot of the seed funds get much bigger and more institutional. And I think a seed round today feels like a series A around 10 years ago. And we feel like there’s really a gap at pre seed. And we see this as an opportunity. And pre seed often is not just one round, but a couple of rounds often spread over a year or two. And especially for founders that aren’t in the Bay Area, and really well connected, it can be just a much harder round to pull together. And so these are the rounds that we like we like to invest as early as possible in this angel or pre seed round, we can play the role of lead, if it helps really move the round along, we try to help catalyze it, pull in other investors in our network. And we typically will start with a smaller check out pre seed, and then we’ll put in more capital as we see progress. And then we’ll also invest at the seed stage. But at the seed stage, we wouldn’t play the role of lead, we would be a co investor in those rounds. So typically, our check sizes are anywhere from 50,000 up to 400,000.

22:34
Yeah, I can imagine, especially, you know, you think about the valley and all the the wealth that’s been created and all that the explosion of angel investors and syndicates I mean, there, there’s a lot of early stage capital opportunity there. And in some of these other regions there, there just isn’t. So you know, a firm like yours can really be sort of a go to resource for a lot of the compelling tech companies being built.

23:01
Definitely yours, too.

23:03
Right, Maren, what’s one thing you know, you wish you knew prior to, to launch in January and raising your first fund, you know, something, you know, now that you wish you had known before?

23:16
Yeah. So when I was a founder, I didn’t actually know where venture capitalists got their money. I didn’t know the whole structure of how venture funds were set up, I didn’t know that venture capitalists actually spent a lot of time pitching investors themselves. And so I think actually, providing a lot of this education to founders is really important. It’s something that we have tried to do a lot at January is just trying to put more information out there more transparency around how VC works, and how I think the model is really well suited for certain types of businesses. It’s not well suited for others, I think it’s important for founders to know what they’re getting into when they take venture capital. And I think that this can make founders be a lot smarter about who they take money from, and when they take it and be more successful and how they pitch. That’s great.

24:03
That’s great. Have you found that there’s, you know, when you’re dealing with non serial founders, and folks, maybe underrepresented, and folks that haven’t kind of been through this, you know, tech hypergrowth, you know, venture scale story before, have you found there’s certain areas that you can provide more help on and you engage to, you know, to a greater degree in certain areas, you know, supporting your your portfolio.

24:32
So, the areas where we get most involved are, are helping them with go to market and helping them helping plug them into the Bay Area tech ecosystem. So go to the go to market help is very focused on marketing, sales, business development, it’s the background of my myself and my co founder, and we tend to get very actively involved with our startups there. And then the second piece is really about helping to plug these founders in, make the introductions to customers make the introductions to invest We do this ourselves. And then we also do it through our operator network, which is a group of 75. leaders at tech companies and startups, they’re spread across about 50 different unicorns. And our operator network is actually majority women, which is rare for an operator network. But we think of it really is an extension of ourselves. And we can really tap into them to help our portfolio as they, you know, need advice about a problem that they’re facing or an introduction to a customer or an investor? Or

25:30
what resources have you found really valuable that you would recommend to listeners,

25:35
that big podcast listener, of course, I love the full ratchet, and a couple other podcasts that I really enjoy. Arlen Hamilton’s podcast, I like exponential view, the pivot podcast, rock health, how I built this 20 minute VC, I could go on and on. And then a couple books that have have made an imprint on the one I like the Phil Knight book called shoe dog. And the part that I really liked about it is that he goes really in depth into the struggles that he faced in the early days of starting Nike. And I think that really brings to light that what it’s really like to be a founder at the early stage. It’s really messy. It’s really hard. And I think getting those stories out there is important for founders, so they realize it’s not going to just be a straight line. And then another book that I have have really I read a while ago, but has been one that has stuck with me is Chris Christiansen and his book on how you measure your life. And I think it’s definitely a great read. I’m a very purpose driven person. And I think that that book just really resonated with me in terms of thinking about the big picture

26:43
of it. That’s great. Martin, what do you know, you need to get better at.

26:47
So as as somebody who is has started a fund, basically an entrepreneur, I am always pushing myself to get better at ruthless prioritization, I think that’s essential for any founder. So I set monthly, quarterly daily goals. I think with everything that comes in, I’m constantly asking myself, is this going to move the needle? Is this a good use of time? And there is just so much that I’m passionate about in tech and so much that I want to do I wish I had more time in the day. But I think for any founder just prioritization is definitely the the most important thing to get really good at.

27:25
It’s really tough when there’s when it’s early stage, there’s so many opportunities, you’re wearing so many different hats. It’s tough to prioritize and stay focused for sure. Even as a fund manager, definitely. And then finally, Martin, what’s the best way for listeners to connect with you? Yeah,

27:40
so if founders would like to pitch us the best way to do that is on our website, January dot ventures, we have a pitch form there if founders want to reach me directly. My email is Marlon at January ventures, and then I’m also on Twitter at Martin underscore Bannon. So feel free to reach out I would love to hear from you. Awesome. Well, Martin, this

27:59
has been a great pleasure for me. I I appreciate you know, your mission and everything you’re doing to to help those founders that maybe haven’t gotten the attention that they deserve. And, you know, hopefully we can find one to work on together.

28:12
That would be great. Thank you so much for having me. It was a it was a fun discussion.

28:15
Awesome. Take care.