“Forget what you know about buying fair businesses at wonderful prices; instead, buy wonderful businesses at fair prices,” says Warren Buffet.
It could not be more true today when there are thousands of wonderful businesses created every year in the United States–and few of them have the twin discipline of fair prices. Without that, the wonderful part of their business fades fast. We’re in a new era and a new generation of value creation through venture capital. Valor began as the first woman-founded venture capital firm in Georgia. We’re making a lot more history in the decades ahead.
You can’t have a wonderful business without a dedication to a fair price at a fair time.
All founders know their business is worth “something.” Most founders decide it’s worth whatever the biggest valuation is at closing time, which aligns their interests with the most optimistic of their investors–who can also be the least engaged or most financially disconnected. Going with the highest valuation investor is often like going with the mortgage lender that will loan you the most money–you can get into the house, but keeping it gets precarious.
We’re not investing in McMansion startups–we’re investing in smart homesteads and helping them become an estate.
The smartest founders have a realistic idea about what their business is worth today and a clear connection to the processes driving their growth. That allows them to and plan for how much the business is going to be worth tomorrow in a conscientious way. We love to partner with these kinds of people– pioneers with a plan.
Here’s a deeper look at how we’re investing in 2018.
We’re focused on the early stage software founder with a hypergrowth software business.
We are one of the only venture firms that benchmarks our pipeline. We know black women are starting tech companies at an astonishing rate, at least 20% of founders are women, and one of the fastest rising segments of tech founders are Hispanic. We’re actively making sure our pipeline of dealflow reflects that reality.
Our stance in the market has gotten attention from tech founders from all types of backgrounds who are looking for a high value-add early stage investor/partner. We started the first women- and minority- pitch event in the Southeast, Startup Runway, which gives away a $10K check twice a year to a top minority founder. From our unique, full-spectrum pipeline, it makes sense that our growing portfolio is diverse, inclusive, and incredibly high growth. We don’t believe in diversity pledges. Diversity commitment lives in actions, not hashtags.
We develop a real, fact-based, face-to-face longterm relationship with founders, often participating on their board and bringing consistent product support and sales connection. One of the ways we add value is through our Innovation Activation Council, a private group of enterprise CIOs and CTOs in the U.S. that works with us to review new emerging tech for trails and betas.
We’re data-driven early stage investors. Because we’re looking at data, the stage we’re investing in is crystal clear: you have customers who pay you for a product that works. Even though you dream of a bigger, better product, and lots more customers, where you are today is clearly on the map. It’s not an idea. For a few early customers, you’ve already become a destination. We’re looking for companies that have 30% month over month growing MRR in a SaaS or PaaS model.
For you, for anyone to choose a solution other than yours is just outrageous—insane—because the value you’re building is clear not only to you, but also to your first customers, who are raging fans. You’re doing something so right it can never be done any other way once a customer has touched your approach. This is not just your belief, but it’s the market’s reaction as well in the first few quarters of your sales.
We invest in Tier 2/3 cities. So far, we’ve invested in Atlanta, GA; Effingham, IL; Brooklyn, NY; and Austin, TX. To make sure we can support our founders, the closer you are to Atlanta, the better. We are hunting founders particularly in cities where our network can help them thrive, like Atlanta, Brooklyn, Chicago, Nashville, Austin, Birmingham, and Raleigh Durham. We’re finding hypergrowth software firms in the early stage, often alongside other committed, extremely choosey, professional investors who invest in a rational valuation today.
The best way to build the future is “to invent it.” We’re investing to make money and make a future that’s more enjoyable for all of us to live in through smarter tech. Thus, the valuation we invest in matters. We’re looking to partner with founders at a fair value, relative to their progress in the market at the time of investment. From there, we can and will help them scale with capital and connections.
Our partnership has strong beliefs, always updating as the future arrives, about software and what’s going to make a difference. Our convictions are not the mainstream mania. If you’d like to know what we think, read our blog, The Real Deal, or come see us at a Valor event. We invest in:
- B2B software–your customer is primarily a business
- Currently growing 30%+ month over month
- No fashion, un-virtualizable hardware, or pure B2C
- Often a SaaS or pay-for-play business model
- Here’s one example of an industry for SaaS we are full on bullish about in 2018.
We write, or sign up for alongside professional investors we trust, Series Seed and Series A term sheets. We only invest in equity. Our term sheets are short, founder-friendly, to the point, and focused on financials.