Why are we early stage investors?
Motivate’s aim is to provide early access to capital in order to help founders prove out a thesis, find early indications of product-market fit, and achieve important traction to secure the next round of funding.
Early stage investing is what we know and love. We’ve spent our entire careers building and investing in early stage companies and funds that support them. Not only have we refined our craft over decades, but we truly find joy in helping founders navigate what can sometimes feel like an overwhelming number of choices and directions. And when it works? There is simply nothing more exciting than being involved with an early company hitting its stride and taking off.
What is our history as investors?
Motivate’s General Partners have been investing their own capital in seed-stage companies since 2011. As part-time angel investors, GPs have made over 100 direct early stage investments with significant success. Our personal portfolio total market cap exceeds $40B across many verticals, including FinTech, HRTech, EdTech, Travel, Logistics, and Food.
Notable early stage personal investments* include:
Chime ($9m pre)
TradingView ($3m pre)
HomeChef ($9m pre, sold for $730m)
Trace ($9m pre)
Hallow ($4m pre)
NoRedInk ($5m pre)
Public.com ($20m pre)
The General Partners have also made more than 30 LP investments into early stage venture funds.
What do we look for in a potential investment?
Here’s a glimpse into what excites us when we consider an investment:
- Large and growing market, preferably untapped
- Impressive team of domain experts who are passionate about their mission and exhibit resilience and resourcefulness
- Strong, defensible margins from recurring or predictable revenue
- Customer acquisition advantages
- Capital efficiency and scalability
- Strong network effects and product led growth
- Multiple potential paths to exit
- BONUS: Accelerating growth rates and engagement metrics
What do we avoid?
While we don’t explicitly overlook any industry or sector, here are some “turn-offs”:
- Incrementally-better solutions in crowded markets
- Technology that relies excessively on 3rd party data/access
- Businesses chasing declining, not emerging, trends
- Poor historical stewardship of investor capital
- “Solutions looking for problems”
- Products that require significant investment or long runways before going to market
What stages do we invest in?
We make initial investments in financing rounds that precede the Series A (Pre-Seed and Seed, effectively). We reserve follow-on capital for our companies who are executing on plan. We typically will deploy the bulk of our capital into seed-stage companies.
We rarely invest off a cocktail napkin unless we’ve worked with the founder already, but we are very comfortable being the first institutional money in the business.
Timeline to fund? Average check size?
We can move quickly as necessary when it makes sense. We are nimble and are built for speed.
For pre-seed companies, our average check size is $250K-$750K. We do not have ownership targets at the seed stage, but on average we buy 10% of a business at that stage.
For seed stage companies, we ideally like to purchase around 15% ownership with $1.5-3M investments.
How do we work with our companies post-investment?
As entrepreneurs ourselves, we share an appreciation for building sustainable businesses and know that all too often, founders can feel alone. So we do our best to be accessible via email, phone, or our MVC Founders group (available to portfolio company founders).
We facilitate introductions to our community of fellow entrepreneurs, accelerators, and co-investors to help solve problems, connect with customers, and ultimately, raise the next round of capital.
We certainly understand the goal of our entrepreneurs is to build a successful business, so we respect the balance between actively supporting our companies and staying out of their way.
What are some of the beliefs about the future that guide our investment decisions?
We are generalist investors, believing our founders will help shape our vision of the future more than anything. However, we do invest based on a core set of thematic beliefs about the future, such as:
Democratization of Information
- Centralized authorities in areas such as education, money, government, and commerce continue to be less important as the availability of information becomes decentralized and democratized.
- Consumer preferences are trending against big brand loyalty. While easier to acquire customers, brands will find it more difficult to retain them, opening the door for micro- and highly specific brands to emerge.
- Democratization and disintermediation will redefine slow-moving industries including Manufacturing, Legal, Real Estate, Recruiting, and Logistics.
- Trusted communities will be more important than institutional brand equity in the customer journey.
- 90% of all the data in the world was produced in the last two years and data production continues to accelerate. Finding data is no longer the challenge; rather qualifying, sorting, and using that data is the new challenge and opportunity.
- The evolving data interplay between physical things (Internet of Things) could become as significant as the internet itself.
- Consumers will continue to demand more control over their data.
- The importance of societal structures we’ve built around scarcity will continue to decline.
- A workplace aligned with social and personal causes will become as important as the work itself.
- Debates over the use of Free Time will increase in importance.
Artificial Intelligence and Machine Learning
- Artificial Intelligence will help solve complex problems previously thought to be unsolvable.
- AI will end the need for millions of jobs and will also create as many millions of jobs.
- Science will allow humans to double their lifespan within the next 25 years. Society will be forced to decide if that’s what it wants and opportunities will arise with the challenges that accompany significantly increased lifespans.
- Traditional Education is losing relevance, but the need for other forms of education and lifelong learning is gaining rapidly.
What do our most successful investments have in common?
The best outcomes are sourced from a broad, diverse network of supporters and so we heavily leverage our 500+ co-investor and expert network to assist in sourcing and evaluating opportunities. Many of our biggest wins have come from warm connections from investors and entrepreneurs with whom we’ve worked.
A few other observations about the winners in our portfolio:
- The valuation was appropriate for the growth stage when we invested.
- Geography has little to do with success – great companies are everywhere.
- There were very early signs of Product-Market-Fit (PMF) and traction when we invested, though not necessarily in dollar terms.
- The companies were either first-movers or fast-followers in an emerging trend.
- There were some clear early unfair advantages in areas like product, customer acquisition strategy, etc.
What have we learned from our failures?
Humble in victory and honest in defeat, here are a few of the lessons we’ve learned from our losses:
- Team dynamics and culture are critical, no matter the stage.
- Avoid products that customers don’t want. Remember the difference between “need to have” and “nice to have.” Is it a vitamin or a pain-killer?
- Founders should be the best salespeople in the business. If they can’t communicate their value prop quickly, how can customers and early teammates be expected to buy in?
- Heavy churn must be solved quickly.
- Make sure the company is raising enough money to succeed.
- Beware of “over-investment” – raising too much money is a good way to mask underlying issues in a business.
I'm looking for funding. Can we chat?
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How can I get involved?
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