203. Raising Fund III, A Framework to De-risk Your Startup, & When to Explore vs. Exploit (Leo Polovets)

Leo Polovets of Susa Ventures joins Nick to discuss Raising Fund III, A Framework to De-risk Your Startup, & When to Explore vs. Exploit. In this episode, we cover: Give us an update on your investments at Susa since we last chatted? How has the thesis at Susa evolved over the past couple of years? Do each of the GPs at Susa have specialty areas of focus? This year Susa closed on 2 new funds - Susa III a $90M early stage fund, along with your first opportunity fund to which investors committed $50M. What was the elevator pitch to LPs and what worked well in the first two funds that resonated with LPs, leading to the successful raise? What would you have done differently in Fund I and Fund II if you could go back? What it takes to raise a Series A... often founders will have a singular focus on the vanity metrics -- they assume if they hit $2M in ARR they'll attract the A round at an attractive multiple from Tier 1 investors. But, we've seen this play out and it's not all that's required. Why is a singular focus on ARR a poor approach to raising money? Leo, you have an original framework here focused on de-risking the the major risks centers facing a startup. What are the high-level principles? The 9 risk centers that you've identified include Product Market Fit, Product Quality, Team, Recruiting, Sales, Market, Funding, Short-term Competition, and Long-term Competition -- can you pick one of these areas and walk us through an example? What are the common mistakes founding teams make with regard to these risks? Talk a bit about the balance between testing and execution?  How should founders balance figuring out the best path forward with running fast in the direction they think is best? Increasingly our founders have been sending us dealflow, operating as scouts, making angel investments in early stage companies. Where do you stand on this -- distraction that should be avoided or net benefit to those involved? In what ways have you changed most as an investor since the early days? One piece of advice for founders -- what is it?   To listen more, please visit http://fullratchet.net/podcast-episodes/  for all of our other episodes. Also, follow us on twitter @TheFullRatchet for updates and more information.