Catch me if you can
Stealth deals are obviously harder to find but, interestingly, we have found they are often also harder to win. Let’s use three of our Fund III investments that were in stealth mode when we invested as examples to demonstrate how we got access and why the founder ultimately chose us when they had lots of other options.
Fluxnium. This relationship started more than a year before the company existed. We knew the co-founders as co-investors and went on to build the relationship through shared dealflow and diligence. When Fluxnium came together, we focused on the gap the founder cared about most: value-add investors. We initiated the connection to his most coveted strategic partner who participated in the round.
Gritt. We are the only Canadian VC that got access. Our outbound search surfaced Gritt before they were officially raising but already claimed several Tier 1 VCs on the cap table like First Round Capital. We focused on the founder's hardest problem: hiring. We shared what we've learned about attracting top talent and how to screen candidates during the hiring process.
Jetson. We were the only VC in Jetson's first round that hadn't invested in the founders' prior company, North (acquired by Google). That access came from trust built over years, starting with mentoring together at Creative Destruction Lab. We acted fast with high conviction and were easy to deal with.
In addition, all of these founders did reference checks on us with other founders. Here are the things we’ve learned ‘founders really care about’. Funds that; can act quickly (or at least match their timeline), do what they said they were going to do (integrity), provide strong signal to the market (top tier brand), are strategic (can make introductions), have scale (can make large follow-on investments) are helpful (are willing to do work for them) and are founder friendly (references from other founders validate).
Some investors question whether post-investment support is a good use of time. The argument is that the good ones will be great with or without you, and the bad ones won't matter for your returns. We have found an important and rare differentiator by simply helping founders through tough times. This seems to be the difference in winning some of our top deals in Fund III.
NY Climate Week Debrief
We’re no strangers to headlines about climate investment declining or “tourist” VCs leaving the category after 2021–2022. But after a week in New York at Climate Week, something interesting is clear: there is increasing overlap between what large asset managers are investing in and our climate portfolio. Last year, it was mainly data centers and energy efficiency, but now large institutions realize modernized infrastructure is essential to every country’s ability to compete. There is a once-in-a-generation CAPEX cycle underway channeling billions of dollars toward technologies that make our economy more efficient, affordable, resilient, domestic and lower-carbon.
