September Capital

The Tides Recede and Then Return

Skip’s intuition had been right. ElectricCity was crushing it. The EC app was touching tens of millions of consumers every week. And not touching them lightly. People came back time and time again, day in and day out, for dozens of minutes at a time. The numbers were stunning. And the founders were just the sorts of guys September Capital loved to back. They were super passionate about what they were building, but they didn’t need to sing their own praises. Their success hadn’t made them cocky, it had made them more driven than ever. 

But just as Skip got excited about the prospects of working with the ElectricCity team, his partners started dropping like flies.  First Noah dismissed himself, again with an apology.  He had another meeting waiting for him and slid out the door quietly. Then Dan bowed out, with next to no explanation. And Munjal too. The exit of Skip’s partners was so rapid and so abrupt, Skip began to wonder if it was some sort of practical joke.  At any second his partners would hop back in with big smiles on their faces and let him in on the joke.  But seconds and then minutes passed and no one returned.  So Skip was left to pick up the pieces. 

The ElecticCity founders proved consummate professionals.  They appeared undaunted by the waning number of partners present to hear the story.  Like the tides, Skip’s partners had come and gone. Perhaps if Skip extended the meeting for long enough, the tides would come in once again. It was a theory.  But not one Skip was willing to test.  Rather, he pretended the partner exodus was business as usual and engaged with the founders around their business.  With each answer, Skip found the story more compelling.

Just that past weekend, Skip had attempted to explain the venture capital business to his mother.  Her husband, Skip’s father, had been a banker.  And Skip’s mother was used to seeing investments made and sold in rapid succession.  Venture capital was different.  Skip had explained to his mother that even though he might receive 1,000 business plans in a year and meet with 100 or more companies, that he would likely only get excited enough to fund a company or two in any given year. Skip sat thinking about this conversation while listening to the one in a thousand pitch. He was sold. 

As Skip thanked the ElectricCity team for coming by, he attempted to salvage what little he could of a first impression.  In comparison to his AWOL partners, he was the very paradigm of a solicitous investor. But that gave him little comfort. He was hugely smitten with ElectricCity and its founders and bordered on giddy at the prospect of working with them. But Skip knew that unless his partners were as excited about ElectricCity as was he, there would be little hope of funding the company. He crossed his fingers and went off to gather his partner for an impromptu investment committee meeting. He had one and only one agenda item: fund ElectricCity.

Skip managed to reconstitute his partnership, gathering Noah and Munjal in Dan’s office. He stood nervously awaiting the verdict of his partners.  Skip started things off.  “So, what did you think?”

Noah, Munjal and Dan glanced at each other then their feet then the ceiling and back again.  But none would start. The silence was killing Skip. He knew he needed a majority of the partners to support an investment or he wasn’t going to get it done. And so far he could not place any one of them in his camp. He resisted the temptation to say “SO!” and simply held his ground. 

At long last, Noah piped in.  “What’s your take on the team?”

Very clever. Very clever indeed. Rather than commit to a position, Noah had deflected. He forced the question back on Skip.  Skip was not amused.  But he jumped in with his unequivocal support for the team.  He praised the founders for their technical skills, their business savvy, their product intuition.

Then Dan piled on. “How do you anticipate they’ll monetize their traffic?”

Again a question devoid of any buy signal.  By now Skip was having heart palpitations.  But he answered the questions calmly.  He pontificated on the many ways in which ElectricCity was already making money and the large number of additional monetization options that lay before them. Skip expressed his view that making money would be no problem here.  He then looked around the room for support but was confronted by only blank stares.  

Another interminable stretch of silence ensued before Dan abruptly declared, “well I love it.”

And the dam was broken.  Each of Skip’s partners declared his great adoration for the team and the business.  And each expressed his strong desire to invest in the company. In a partnership where unanimity was rare, Skip’s partners spoke with one voice.  And that voice was saying, “why are you still standing here? Go invest in the company.”

Skip strode out of Dan’s office a little light-headed with excitement.  While Skip recognized that this was merely the first chapter in what would likely be a very long book, he could not wait to read more.