As a partner at Emergence Capital, Joe Floyd has over 10 years of experience in working with and investing in startups. With expertise in building cloud startups, Joe has invested venture capital in some of the frontrunners of today’s cloud application market.
I recently had the opportunity to sit down and chat with Joe. We talked about his perspectives on the venture capital process, how he finds startups that interest him and when he knows he’s found the right product.
Throughout the talk, Joe offers a number of valuable pieces of advice for startup founders seeking an investment. Here are a few:
VCs Want A Product/Market Fit
Joe says, “I’ve seen a lot of companies that have a few hundred customers but they’ll have one customer with 60%, another customer with 30% and a whole bunch of cats and dogs. If that’s the case, they haven’t really figured out their product/market fit. They may have the numbers but aren’t quite there”.
They Also Want To See Focus
Joe says of companies he doesn’t think are ready for investment, “It could be that you’re solving lots of disparate problems as opposed to having one solution that you sell into your customer base. Some companies have a handful of products that solve different problems and some other science experiment on the side. That generally doesn’t work for VCs”.
When Is A Startup Ready For VC Investment?
“It’s hard to actually pinpoint when it happens,” Joe says of companies that start to gain traction, “You’ll have founders tell you, ‘Hey, the market is starting to pull us’. That’s when you know you’ve found product/market fit…when you’ve found a diverse solution where instead of every quarter being an exercise of pushing up the hill to get to the quarter, the market just starts to pull you in”.