Tuesday, August 27, 2019

Startup-People of Seattle: Lawrence I Lerner (VC)

The blog-series “Startup People of Seattle” introduces some of the key personas in the ecosystem to learn more about what they are doing, to share their thoughts and ideas, and to promote networking. 

In our fourth interview, meet Lawrence I Lerner:
“Founding a company together is a relationship. Thus, cofounders want to make sure they are a good personal fit.”
Lawrence I Lerner has been actively involved in leadership roles in 15 startups. Today, he is General Partner of a Seattle-based Venture Capital fund.

Q: Could you please shortly introduce yourself?
A: I started my career as a 2nd gen internet developer coding since the mid-80s. I have always worked with edge technologies trying to find ways to make technologies every day. I’ve been involved with designing, building, and promoting leading edge payment systems since the late 80s.
Q: Having had such a long career with startups, what have you learned about entrepreneurship? What makes startups successful and what are common mistakes founders make?
A: It is always about the team. The team should have the relevant skills and startup experience. Aside from that, one thing cofounders must realize is that they will work together for several years and they will go through difficult times together. Founding a company together is a relationship. Thus, cofounders want to make sure they are a good personal fit. Too often they do not explore this enough before deciding to cofound a company. Cofounders may connect at a meetup for example, think greatly of each other’s expertise, and decide to start a business together. Later they discover habits in each other that are incompatible, and the team has issues. When we observe teams during a pitch, watching their body language is key. 
Another important thing for startup success is that the entrepreneur understands the market place and trends, and that he has a clear strategy in mind how to get into the market place. Data is very important, and many entrepreneurs are not concerned enough with that. The same applies to finances. To give an example, a business owner I know owns a spa. Looking at data we could discover that most appointments are booked on Sunday afternoons. Given this, it makes sense to target most advertising resources on Fridays and Saturdays. It’s a simple example but indicates the power of knowing your data.
When it comes to finances, an entrepreneur must have a deep understanding of how they will use the proceeds from an investment. How it’s distributed (e.g., salaries) and how long it will last. Interestingly, founders often ask for too little money. Investors want startups to survive 18-24 month with the money rather than the startups having to come back to ask for more money frequently.
Q: What criteria should a startup look at to evaluate a potential investor?
A: Startups should gain more than just funding. They should be able to leverage the investor’s experience and network, so there should be synergies. Investors who think like founders (possibly from previous experience) are aware of the different needs of early stage companies. If they ask the right questions, that can also be very valuable to a startup. Another important aspect is, again, the human connection. Likewise, the relationship between cofounders, the relationship between startup and investor is a long-term relationship. So there needs to be trust etc.
Q: In your current role, you are General Partner of a Venture Fund. Could you talk a bit about the company?
A: The fund was formed about two years ago. Our investment thesis is to invest in blockchain infrastructure, such as wallets. Outside the blockchain world, streets provide transportation infrastructure for example, just so you better understand what I mean when I say we invest in infrastructure.
Q: What documents do you ask for from entrepreneurs when evaluating startups?
A: We ask for sales plan, business strategy, management bios, technology, and financial projections. We also check whether they are good at accepting critical feedback and we want to make sure they did their legal homework. This is important particularly in blockchain.
Q: Lastly, somewhat unrelated to the other questions, what recommendation would you give a college student interested in a career in a VC firm after graduation?
A: Have one thing that you are very good at. This could be finance or market analysis for example. Networking is also a very valuable skill to have. Another thing I learned is to ask questions instead of telling people things. For example, instead of telling an entrepreneur that he is not prepared for a sudden peak in demand, I would ask something along the lines of ‘What would you do if tomorrow you received 10,000 orders?’ 

Here are some things I learned from this interview:
  • Cofounding a startup is a long-term relationship. Making sure there is a personal fit between cofounders is important.
  • An entrepreneur must have a deep understanding of a startup’s financials and the marketplace, and how to enter the marketplace.
  • Making data-driven decisions is key.

About Seattle Angel:
A strong ecosystem creates an environment that allows startups to thrive. Seattle Angel’s goal is to strengthen Seattle’s startup ecosystem by increasing the access to funding for entrepreneurs to push their ideas further.

Seattle Angel Conference:
SAC round XVI is about to start. Are you an entrepreneur looking to get about $200k in angel funding? Are you curious to learn more about pitching, to polish all the documents needed for investments and to receive great feedback? Or are you an accredited business angel who wants to learn more about angel investing and due diligence? In any of these cases you should consider reaching out to us. You can find more information here: https://www.seattleangelconference.com/
For any questions please reach out to: sechrest@gmail.com

About the author: Sven Goepfrich

Sven Goepfrich is currently finishing his MBA in Syracuse. His studies focus on technology, innovation and entrepreneurship. At his school, he is working for the department of finance. Sven was actively interning with the Seattle Angel Conference in summer 2019. He is currently looking for full-time career opportunities in this field.

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