From the Other Side: Advice from a Founder-Turned-VC with Ridge Ventures

Before then, she was working in technical and product roles at AWS and Microsoft. So today she's going to be covering her best advice from a founder turned vc. So, Akrity, welcome. We're so thrilled to have you.

Thank you. I am excited.

Awesome. Well, as always, we like to get it kicked off with just a little bit of a quick fire for everyone to get to know you, a little bit equity and just kind of hear your take on what's going on in the market and ecosystem right now. So we'd love to hear, in the past year, what has been one of your favorite investments?

My favorite investment has been like, none of them are my favorite. All of them I equally love. So I did do the investment, but my most recent one was Recall AI, which I did last year as a Series A. The founders are phenomenal. They are young, hungry founders who look have iterated on the product for the last four years and then got onto something two years ago. They are trying to build the AWS for conversation data, which I think is exceptionally bold and interesting. But we can only imagine that video, audio and like, you know, desktop data is becoming more and more interesting and they are building the infrastructure for that. So Recall AI, they're looking to hire lots of people. So good luck if you guys are looking for jobs.

Awesome. And then what has surprised you most about venture capital in the past year?

What has surprised me is that I think what has surprised me is I think people are taking more ownership about like crazy times between 2022, 2020 to 2022, the high valuations and stuff like that. I just, I thought that the US fellow investors would just put it under the rug. But I think we're taking more ownership and we're like agreeing that we went a little and like, everybody's like in this together and trying to figure out like, and be more diligent and be more focused on trying to do deals coming out of that. So I think the whole community has come together helping each other figure that out.

Awesome. And then looking ahead to 2024, what are you most looking forward to?

Oh, lots and lots of things, actually. But if one thing springs to mind is that there will be stabilization on a bunch of the Gen AI stuff is moving so fast that we have not been able to grapple, at least I have not been able to grapple my head around it. And I think there'll be a little bit more stabilization, a little bit more learning. So there's a huge wave, exciting opportunities for us to invest in, obviously. So that's the most fun part about the job and those all come from technology which is moving at rocket speed. So both that keeping in mind, I think I'm very excited about 2024 being a bit more stable, a bit more exciting because those technologies are now real products.

Awesome. And then not trying to make you play favorites again, but would love to hear what who is one of your favorite co investors?

I think one of our favorite co investors has been the gp Dan at GP is amazing. Say in one of our upstream invest or downstream investors. Sorry has been Sam Garcia at Amplo. So there are just a bunch but this community has some really good people. So excited to be working with them here.

Awesome. Well thanks so much Akri. That was great for us to all get a little bit more of a preview into what you're working on and we're excited to hear your presentation. So for everyone, as always, today's recording will be available on our YouTube immediately after and slides will be shared on our SlideShare. So make sure that you're subscribed there and Akrity will let you take it away and get some questions lined up for you too.

Yeah. Hi everyone. This is going to be rocket speed because I think I'm going to give 20 minutes and then the rest of it is going to be questions. I speak really fast so you might have to like either call me out if I'm speaking too fast but really guys, today's topic is about. Sorry, I think I messed up on that. Yeah. Is about giving a little bit of an introduction about myself and about my fund and then why am I here telling you a little bit about my founder journey? Like you guys heard a little bit and then the VC mindset as to what are we like, what is the hidden secret behind it. There's really no secret. There's lots and lots of tips and tricks that we can take away and hopefully this is helpful to you guys. Right? So quickly, why am I here? I have spent looking at actually at this point, 10,000 pitches. It's been six years I've been doing venture capital. I've spent time with like,000 to 2000 founders and teams. I've sat on the board of about 15 to 16 companies across different stages and I've also looked at a lot, a lot of pitch competition. So from all of this I've been able to like figure out what works, what doesn't work for me and I think for every single other person, I think it's very, very different as well. So that's what I'm really here how to debug and like, you know, distill as to what that means. So my story quickly jumping into that. Nine years ago I was a founder of a B2B company that sold accounting software to small and medium sized businesses in India. We were building basically the QuickBooks for India. It was before its time, so we didn't have a crazy exit or anything like that. But just to give you all a little bit of context, we were a team of four great co founders and a team of a few more people working with us. And we pitched to about 10 to 12 VCs. Actually only three came back. But think about it, the VCs were all focused on B2B SaaS in India. They were all looking for the same kind of ownership. They were all looking for teams who had engineering and product background. So why did only three come back to us and you know, the rest didn't. So that's really what I was going to try to talk to you about at the VC mindset because I think each VC or each venture capitalist has their own criteria, their own likes and dislikes and I call it the Dating Game. I think founder and VC is just like being on Tinder, Hinge and the likes of the world where you go for the first meeting you're like, do I like this person or not? You don't know. In the first meeting you can't decide if that person is going to be a life partner. And there's a joke actually that there are more divorces than investors leaving boards. So you know what I'm talking about. There are more marriages that fail within seven years than investors having to leave the board within seven years. So this is even more important when you think about marriage and stuff like that. So let me go to the next one, sorry, this. So let me give you a little bit of context on what is Ridge Ventures. So Ridge Ventures in an early stage B2B enterprise investor. We are in our fifth fund, fund five, which is 180 million fund and we're ready to deploy because we only raised it April 2023. And since then we've been deploying pretty aggressively. We do seed series A lead and co lead. We write check sizes to about 6 million to 7 million checks. And one of the things that we do have is a huge rich revenue network. What we mean by that is that we have 330cxos in our network. We actually commit on the term sheet how many customers we'll make an introduction for and if we don't, we lose the bots seat. This is pretty unique about us and the way we've been able to do that is through the rich revenue network. When I talk about the enterprise stack, we look at across the enterprise stack from artificial intelligence to data management to next generation SaaS. So we're pretty up and down the stack. Anything Enterprise, anything SaaS, come talk to us. Very happy to discuss your company. So moving forward, back to the VC mindset, what do we look for? Honestly, I think the biggest thing for me is team market that leads to opportunity. If you have a big market with a strong team, with skill sets that I think are complementary, that's what leads to the opportunity. Because the idea might change. You know, you might have to pivot, you might have to figure out customer needs will change. But if the market is big enough and the team is complementary, I think you can use that opportunity to build that company. That's the big thing we're looking for, is future proofing what happens when you're building the company. So what is the VC mindset? I keep talking about it. To me, I break it down to today. I'm going to probably talk about three green flags and three red flags that I see when I think about the VC mindset. Okay, so the three big tips I can probably give. Like I said, it's a dating game. You're probably every investor coming into a coffee chat, just like a founder is trying to pick up on some skills, being like, hey, is this person like interesting? Not interesting? Am I excited? Am I not excited? Like things like that. There are these three practical things that maybe are the green flags in a meeting. Build things or sell things. I don't expect every founder to be either. Either be technically or product savvy and be a salesperson. You can be either or. It's very rare that we find both in the same person. And it is okay. I think you don't have to be both. One of the things that I learned when I was a founder was that I was an engineer. I didn't actually know how to sell things. I was the CEO of the company and had to relearn everything. I went talking to people about the product features I was trying to sell, but actually what I needed to do was talk about the ROI my customers were getting out of my product, talk about their problems, talk about their emotions. So building things and selling things, I think if you have that kind of a team, that's what we're looking for, is that, hey, is the team complemented enough to being like people who can build things People who can sell things. The second to me is mission led. And I don't mean it has to be impact oriented or anything like that. I think mission led is that the reason I look for mission led and I think it's a green flag. An example I'll give you is that Tanya Bowler, the CEO of lv, it's a breast pump company and she started that company when she became a mother and thought that there weren't many interesting breast pump companies out there to help women breast pump while they're driving or doing grocery shopping. So it's not an impact company. It is very much a consumer first product company. But the reason we invested in her at Octopus, my previous job was because she was mission led. And I think that really showed through when times were tough that she was like, no, this is what I really want to build and this is what I really want to give to the women of the world. And this showed up during investor pitches because people like her passion rubbed onto our passion and was like, okay, this is the excitement that we really want to go after and we want to be investing. So I think mission led is a green flag to be able to feel that you feel passionate. You generally have personal stories to talk about, right? Like why you're trying to build this, what problems did you face to build this? And it really keeps you going through the tough times. That's the mission led piece of. And the third is culture. Culture, culture. I think one of the biggest things that I've learned through my time talking to founders is that it's really important to understand what culture you want to bring to the table. Is it the Amazon Jeff Bezos who will give you like, hey, you have to work on a wooden chair and table and that needs to be built from the door so you're frugal. Or is it the Apple that hey, you're going to be tight buttoned up and not talk to each other because hey, we're ex Apple and we don't share that many secrets. Internally it is coming down from the founder, it is coming down from the team. And I think that really defines who you attract, who you. And for me, the way I judge that is who is your first or second hires, who came, who left behind things and joined you. That is really important to understand culture. And why did they leave a lucrative job at Google to come join you? There must have been something about the culture that got them going. So that's the third thing that I think are green flags. If I go to the red flags, these Also I see on founders and I end up not investing or saying no. And you know what? Most of the time, if you see any rejection email from an investor, I'll be honest with you. Nobody writes it's you even in dating. Nobody says it's you.

Right?

It's always it's. It's not you, it's me. That's, that's how like the construct of society is built. But really think about what are these things that are you might be projecting or somebody might be projecting in your, in your ecosystem that might come across to an investor and they might say no. One I have seen is not coachable. One of the classic examples was that I walked into an office with two founders who were pitching to me and one founder kept interrupting the other founder consistently about when they were trying to pitch the product, when they were trying to say anything about the numbers, trying to be like hey, this. And I kept interjecting me like, hey, actually he was trying to finish something, but he was just not having it. He thought that he needed to impress me a lot more. That to me was a bit not coachable and did not like land really well on me. Right. So not coachable is really important to be understand. Hey, are you aware of your surroundings and things like that? The second is I versus V. It is a team game. This is a marathon. It is not a sprint. Building a company is a marathon. Takes five to seven years to have great outcomes. And I versus we is one of the significant linchpin of it becoming successful versus not. Elon Musk aside, I think others. Whenever I've met founders, for me I always notice like things like we built this, we created this versus I did this, I created that. And I think that really helps me understand is the founder thinking through team behavior versus his or her behavior. And I think that makes a huge difference for me. And the third thing is not knowing your customer. I, I think this is pretty obvious, but I think I see a lot of companies getting very excited about the new technology they've built, but not the product that they're trying to solve a customer pain problem. There's a two that these are two different things. People constantly go after building the new technology. Oh my God, look at this fascinating thing. That kid can do this, but for what? For who? So what is the question that I think a bunch of founders miss asking once they build the product or build the technology because they're so excited and fascinated by their technology and their product that they forget the so what A classic example was a company in 2016 that I invested in, which was a drone company for the agricultural farm for farming. And at that time it wasn't even a thing, honestly, like now we're talking about it, but like in 2016 to be building that, that's my learning that, you know, they were just building. I was fascinated by the technology because I was new into venture and I was learning a lot and that was the wrong investment I made where I didn't know the customer, the founders didn't know their customers, they didn't know that they're not grown into the market yet. And we were just fascinated by the technology about hey, drones being on farms. That's a pretty cool like technology and product to be building. So I would say these are the three red flags that I constantly look for. So the key takeaways for me or hopefully for you guys is that look, VC is a service business. It's just like dating. Like we want to have a good impression on you, on all the founders and the founders need to have a good impression. And it's a pull and a push, push and a pull consistently till. But it's all about keeping the excitement level of the interactions consistently going upwards. If anything, the second I would say is question all these questions that you're building, like, you know, so what? When you're building the technology, so what? Who's going to use it, who's liking it, who's paying for it, things like that. Question the question around, hey, what is our culture? Why is this person leaving his Apple or her Apple lucrative job? And joining me, what is it that we're doing right or what is it that we're doing wrong? So and really the mission led pieces. Why spend eight years on something like, you know, that might. You're giving up eight years of your very lucrative 20 year olds, 30 year olds, 40 year olds, like big decades here, giving up on that to build something. So I think that's, that's really important. And then build a culture so that people are attracted and know your customer. Thank you. I think that was it. Hopefully this was useful. And I was on rapid fire for 15, 20 minutes and I'm very happy to take any questions now.

Thank you so much. Akri. We're going to have plenty of time for questions. We just, we'll get started here in just a few moments. We had some other questions come in too from folks that are tuning in and for everyone in here now we can be asking Akrity any questions about obviously things she's investing in, but also her Background as a founder, too. Agri, one question we had is we'd love to just hear kind of the investments that you're working on now. Are you primarily only working on AI investments this year? Or like, what would you say is your percentage breakdown for new.

None of my investments last year other than one were AI, and this year the same. I don't think AI is the starting point. I'm still looking for, like you said, finding the problem, the customer, the problem that we are solving for the customer. I'm really running after that. So the things I'm excited about right now is B2B marketplaces. I'm looking at a lot of export marketplaces. I'm spending a lot of time on embedded finance kind of tools for these. For these marketplaces. I'm spending a lot of time on dev tools, on figuring out what's actually happening around auto code cleanup. But then what is. What. What. What does autoclave code cleanup actually end up doing? Is there more work, less work, things like that. So there's a fair amount I would 30% AI. 30%. The traditional B2B SAS. 30%. Any new things that are coming up which might be vertical SaaS for me, and then 10% maybe I'm opening up to, like, deep infrastructure security stuff, which I spend some time on, but I've not found anything that I'm excited about recently.

Awesome. Very interesting. So awesome to hear your perspective on that. Tk, I think you're up with a question.

Yes, hi. Yeah, really enjoy that. And also big fan of sesta. So, yeah, question is, like, generally speaking, when you give founders a no for any of those three reasons that you mentioned, are you, like, explicit in saying that's what the reason is? Because I can imagine, quite ironically, it'd be tough for some people to hear that they're uncoachable.

Yeah, I think there are different types of founders, and we have to understand which founder is ready to take that feedback and which founder is not. Right. I don't think after the first meeting, you would also tell someone that they're uncoachable because I don't have that many data points to give them. Right. But after the first meeting, there are generally lots and lots of other reasons. Maybe competitive advantage or value proposition wasn't clear or like, you know, we are still struggling with trying to understand what the value proposition is. Those could be the reasons. We always give a reason. We just don't say no. We always give a reason. And through the process, if further down the line, if you've gone through diligence and we found those we share feedback more generically being like hey this is what the feedback we got from the market on references and things like that and this might be helpful for your next, next time around. So it really depends on how open and receptive the founders also through the, through the process.

Thank you so much for your question. Next up we have a question from Anastasia.

Yeah, thank you very much for your small, small presentation. It was very, very interesting and insightful. So can you please share some details? Do you have any region preferences to I mean the company who you invest are they are some market specific or they're global or some insights that will be available. Thank you.

Yeah, thanks so much for that question. We look at USA and we look at Europe as well. Mostly seed series A really when we are doing B2B a lot of them end up coming to the US given the buyers are here. So a lot like we see, we see investments I think mostly in the US and some in Europe.

Thank you.

Awesome. Jason, I think you have a couple questions about some minimum bars that you're seeing for different series. I'll let you hop in.

Yeah, I had a couple and one queued off your talk. What is helpful? So I get so many emails from founders these days and they go something like this. They go last year we're at 3 million ARR. Our business is great, our NR is 140% and then I asked what the growth is. Well last year it was 100%. Well if I could raise a little money I can get it back to 100%. And people, they're asking for some leeway because times are tougher and they want folks to believe that the pendulum will swing back from tougher times. What's your thinking on that?

Yeah, I think you're absolutely right Jason. Thank you for the question. I think that means that there is to find extra money to go the extra mile. I think you have to spend a bit extra time with investors. That is just the truth. Right you at the end of the day we're all trying to navigate these waters and we're trying to learn about it. I think the solution or maybe one of the ideas to solution is that the growth has stalled a little bit. I think the why is really important why the growth is stalled. It's not market cannot be the only, only reason. There could be other underlying reasons. So like really ask yourself like hey is it just market or is it other things that we could be doing to improve the growth? And then I think those kinds of like insights spark better conversations than putting this whole thing on market. And we just need extra money. So I think that's what we on our side would love to see is a bit second degree of like, why did the growth stall? What's actually happening? What do you think will change? Have you actually shown any changes on changing your burn? Have you cut deep to show me that, you know, you actually took this very seriously? I think those indications when we don't see and just the growth stalled, I think it's hard for us to put more money into the company. But if founders have like stepped up and been like, no, actually I cut burn, I cut my, you know, team. I know the markets are tough, the growth stall. But look, we can like restart this. I think those are very fair conversations we are having right now.

Yep. But for, and then I, I, you know, I try to really help people very clear because folks get confused these days. But if you had to, if you for a series A investment, if you're looking for your existing portfolio company that's out raising around, that's B2B ish. B2B ish business model. What's the metrics they have to achieve realistically to raise an A? What, what kind of growth and what kind of revenue? If you had to simplify, what's the metric to raise an A today?

I think that's really hard. The reason it's been simplified and thus like founders find it really tough because they're like, oh, I reached 2 million ARR and nobody's talking to me. Oh, I mean reach 300 million ARR, nobody talking to me. So I think yeah, it was bad actually advice to get a certain, like we've done deals at 500k ARR for a series A. Like what would you say to that? And like then 2 million is not getting series A. So I think.

But I think you have to combine it with growth. Right. And to the lesser extent the bottom line.

Right, right. You have to combine it with a bunch of things and not just growth. You have to combine it with burn multiples. You have to combine it with like headcount what you're building, which kind of market are you invest? Are you building in an increasing or expanding market or you replacing competitive products in a large market. Like there are lots and lots of like questions that all affect that series A investment. So simplifying it will be hard. But there are some assumptions if you take that, hey, you need to have a burn multiple of not 3x. That is crazy. Right. And then 1x is good. Like there are some benchmarks that you can play around with revenues between 1 million to 2 million million is good. 2 million to 4,3 million is great. Growth of 2.5x to 3.5x is great. Good to great. So I think there are benchmarks that you could probably like start thinking through, but I don't think there is single digit numbers that if I checkbox all of this stuff, it just gets me a Series A round for sure.

David has a similar question about Burn, a bit more specific about your recommendations on Burn. So I'll let him jump in.

Sure. Yeah, I guess. Thanks very much for the presentation. Once you've invested so you've done like a series A, you've, you've provided 5 to 6 million bucks like you said. Where do you suggest that your companies are, are burning that cash? Is it the 2021 timeframe where it was like burn it in 12 months, grow as fast as possible or use that to get to cash flow neutral as quick as you can kind of thing. And, and I'm sure it's somewhere in that scale, but how do you come to that kind of conclusion?

Yeah, so I do, I'm, I'm, I'm, I'm sorry, David. I don't know if it is between the two. What is the expectation is that once you do get Series A money, you're running after it, you, you're keeping it with you for 12, 24 months, maybe even 30 months. And you are looking to grow 3x double, double, triple, triple. Like you'll have heard everywhere, right? So you're really, if you're a 2 million business, you're probably trying to run at a rate of 6 million next year. What will 6 million get? How will you get to 6 million? Is it realistic? First of all, that's the question. Is 6 million actually realistic in, in 12 to 15 months? If that's not the case, then we need to like one of my enterprise companies are slow moving, large average sales cycles. It just will take time. So you then fund that company for not just 12 to 24 months, you fund that company for 30 to 36 months. Because to show the metrics that you need to show for the next round, Series B or to grow, you need to take 36 months instead. One of my companies grew from 100k to 2.6 million in one year. And they're looking, they can, very conveniently, if they keep working on it, can grow beyond 5 to 6 million this year because they have shorter sales cycles in quick. So it Depends on average sales cycle. It depends on how quickly you can move. On the burn side of things. I think the attitude of 2021 is not going to work, right? Like hey, just go quickly. Go burn all that cash and go quickly. I don't think that is going to work because that created bad behavior over hiring, over compensation, like all of that. And thus that didn't help actually the outcomes. And we saw those outcomes in 22, 23. So like you see the ripple effects after 12 to 24 months. But also the other way won't work of like, okay, just sit on the cash and like wait till the market gets. So there is a bit of a tap dancing and we have triggers. Like one of the things we have is we have triggers in the budget that hey, six months we will trial this particular experiment. If it doesn't work, we'll pull back and we like, you know, do these things. So like I would recommend or encourage people to build 12 to 18 months plans, 12 to 12 month budgets, and then have triggers. And watch those triggers very quickly. What assumption makes you believe that you want to hire a marketing and three salespeople and two engineers at the same time? But hey, that didn't work. Let's pull back and let's just hire one sales and one engineering. So there are triggers for you to keep track of. And I think those are the more important board discussions that people should have versus just a budget that they sign off and then 12 months later they see what's happening.

Thanks, that's great. Thank you.

Sharanya, I think you have a follow up question.

I do. Hey, you can call me ck.

I was just.

So we're, we're.

I'm just getting started. We're just getting started. Close. Closed our seat and you know, like starting our firm. I'm curious, what does average good and great look like for the first 12 months of starting a company from a revenue perspective in B2B SaaS software? Okay, without knowing the details of your business, I just, I cannot comment what good or great looks like. You could have a PLG motion. You could have an enterprise, you could have a mid to small business. You could have like something that you sell to B2B2E to employees. Like I really cannot. Or a B2B marketplace where you have GMV playing and then you have a commission game. Like there are at least seven or eight business models just within B2B for me to comment on what average or good looks like. What I would as a rule of thumb be like, hey, have you Been able to figure out that there is a product that people are willing to pay for. You've figured out who the people who are paying for it. You have figured that out. So like people are actually ready to open their wallet versus just say they'll open the wallet. There's a huge difference in that. And you've been able to show that that particular product is the product that is used by multiple people. So not like different use cases of the same product, but the same use case of the product is used by multiple people of similar Personas across five to 10 bodies to help you show that there is a little bit of a initial pull in the market, not a push. So that's the pull piece in the first year that I would really try.

To figure out one way sometimes I'm curious to get your thoughts on how I answer it now. It's changed over the years, right? Curious to get your thoughts.

Think.

We think now that so many, at least for B2B and SAS, so many companies have now IPO'd, right? It's a long list. There's 40 or 50 and I think we know the bar now like and hopefully we'll see a lot of IPOs next year, which is you got to be growing at least 30% at 200 million in revenue to IPO to have a real IPO, not a Maria database that's worth nickels and dimes or what it has to achieve escape velocity. So triple, triple double double is an interesting framework, right. To talk about. But as founders and sometimes it's a little bit scary, you got to put in a spreadsheet. You say how am I going to get. I know it's too much for the team to process. It will freak your team out. But as founders you got to be like, okay, I got eight years, 10 years, 20 years like Mailchimp or UiPath didn't even get to a million of revenue for 10 years. But I got to hit that escape velocity. And what's it going to take to do that? And there's a certain amount of honest self awareness after a couple million in revenue. You have to be. You can ignore it until then. But triple, triple, double double or triple triple double double is annoying framework and it annoys founders. But put it on a spreadsheet like you sometimes just don't get there without it. Like you have to get there is the thing. And so many we can have high fives and great jobs and good, good job, but you won't get to the IPO level if you don't get there. So that's the way I tried to explain it today. But I don't know. I don't know if that's too much to process. But I think we hid from that during the unicorn era. We hid from the realistic. What does a unicorn actually have to do to make people money because there was too much greed?

Yeah, I'm more of a. I don't know, I might be on the realist camp here. Jason. Sorry, I probably tell. I am not. I'm not. I don't advocate for triple, triple, double, double. I more advocate for the fact that can you keep through the process, make sure that you're burned to revenue, your S and M spend, your triggers, your assumptions that you're going in year on year are solid because like you said, it took 10 years for UiPath to actually. And the escape velocity piece is absolutely right. I think that's the escape. Whenever you hit it, however you hit it, that escape velocity is a piece that you're running after and not a certain revenue number every year. But for all of that, relationships matter for all of that money in the bank matters for all of this stuff. I think strong, deep relationships with people around you matter. And that I think is you can't just wake up one day and build relationships with investors. I think that's hard. I think you have to start very early on and that's unfortunate or fortunate. That is half the job of the founders that they have to spend doing because it takes time to get to this cap velocity and you have bumps and you might need more cash. So things like that is probably where I try to spend more time in the. Yeah. Fun stuff. Thank you. No problem.

Mark, I think you have a question up next.

Yep, I'm here.

Hi, Mark.

Hey.

Go blue.

I am.

Ah, there you go. So assuming enterprise SaaS here.

Right.

And I feel like a lot of us have been asking pretty similar questions in some ways, but any specific metrics and or expectations in regards to growth come to mind, you know, from a VC perspective that have changed or will have, you know, increase increased focus in 24 compared to like, you know, four years ago. Right. And I realize this is may be slightly different depending on stage, that kind of thing. Right. But anything come to mind?

I think one of the things that is definitely what did you do when things got tough? I think that behavior speaks a lot about what you're going to do looking forward. So did you cut deep? Did you change some tactic around like, you know, figuring out with the market when the market was blowing against you if you were still in business in 2022, 2023, what did you actually think? I'm more curious to learn about that behavior because that behavior tells me a lot of like forward looking behavior of your, what you're going to do. And an example would be one of my companies earlier, like I said, grew to 2.6 by burning 800k. Right. So like what did you like? They had enough money in the bank. They had their seed money in the bank before I did the series A as well. But and one of my series, one of our series C companies has a series A, A money in the bank still till series C. And we did the deal like seed was done in 2019. So it really depends on the founder's mentality that has been questioned a lot more. The founder's intent, the founders like resilience of the product is being questioned and dug deep into a lot more. And to me that means the culture piece I was talking about who's the second and third person who joined you and stayed with you through the tough times even though you probably had to pay them half the money or you know, one of my founders is considering not taking salary for the next six months because things are, things are tough right now and I think those really show up in different shapes and form. So that's one metric. If that's qualitative or quantitative, I don't know. But I think I've been seeing that a lot and seeing. I've been very impressed by the founder community in general.

Any. Anything if I can ask one. One additional.

Yeah please.

So anything specific maybe to a new how I guess how you would view a new investment. Right. As opposed to like growth and how they're doing. Right?

Yeah. I think one of the things is that raise enough because things are going to get tougher. I don't think things we're outside of the lump yet. I think there's going to be a little bit of more pain coming soon and I think raise a bit more. Folks are like oh if I just take 200k and run with it, like that's fine. No, it's okay to raise like 500k if you wanted 200k just so that you and give yourself enough time, things are not going to start showing up in three months or four months or six months. I think things are just taking time. Even in serious companies things are taking time from like sales cycle value, customers, budgets getting cut. So people are not paying for it. So that's, that's second and third is probably Someone who's starting up do more with less. It's possible like that has changed, mentality has changed. It was true even in 2020. It was it the behaviors didn't show it. But honestly it's possible. With six engineers, if somebody can get to 3 million ARR, I am confident it's a very technical product. I'm confident being an engineer previously myself that it's a reality. You don't need 15 people at seed. Like that's just not what you need. So I think doing more with less is probably the one thing I would really say. And keep that attitude through good times or bad times. I think it'll really serve everybody well.

Well, thank you. Appreciate it.

Maybe for what a to I could add maybe one specific answer because I think a you said something super interesting. I think when I started investing in SAS and Cloud, I do think if you hit 2 million in ARR with a hundred percent growth and 100% or more NR, you could get funded. Not, not, not. It's not that simple. But that's what people were looking for. There weren't that many plays with 2 million. 100%. 100%. 100%. 100% growth. 100% because it was an annuity. Right. The two would become four would become eight. 16. It might decline to 30. That was pretty good. Not only in some cases is the bar gone up, right. If you look at the incredible growth of some of the leaders. Right. Which have grown even faster. But I think what we figured out the last couple years is some of them stop growing. I didn't think anyone would stop growing with those metrics, but especially a lot of folks in B2B stop growing. And I think there is. People are worried that stuff stopped growing. And 80% of the money in from I know from SaaS investors is all in AI because they're looking for even faster growth. So I do think it depends. But when I talk to GPS I've worked with for years, they want triple digit growth at 2 million and they want some kind of AI or magic pixie dust or something because they're. They don't. We now worry a little bit about deceleration at scale. And we didn't used to worry about. We used to worry it couldn't even happen. Like you couldn't even get to 100 million, 200 million. Now there's too many portfolio companies that are at 200 million growing 12% and that was a hot company that's now stuck. And just people are. There's burnout there. So this is my View from the street. And so people want to be cut slack. They want this. But actually the bar is higher than it's ever been in my career. It's not impossible. It's just you got to check the extra boxes. Like you have to be more than great SaaS or people are going to walk away today.

Yeah, I think you're absolutely right. I think the bar is definitely higher. Yeah. Binoculars are on and you're looking at a little bit more microscopically. You're absolutely right. But. But if there's a non AI company who's growing really fast, please come to me. I'm okay with investing in non AI companies.

Yeah, you just might, lyrically, you might have to just meet five times more folks and that's okay. Like there's nothing wrong with that. Right. But literally, literally. And if you know, it took me a while, what people. The thing, the weird thing is for it's worth, then I'll be quiet. But we think that like because of the, you know, let's say there's a thousand unicorns in our space and 800 won't make it. Okay. They won't be IPO, they won't be great. Some, a lot of founders think hey, VCs must be more conservative now because of that. That's wrong. Actually VCs are looking for more. They're looking for Decacorns big funds, any fund, 500 million or higher. Your fund, Ridge's last one's 170 million. So you can be flexible in life. Okay. But forget about the multi billion dollar funds. Even a 500 million dollar fund to make money has to search for decacorns 10 billion dollar up and go on the BVP Cloud Index and do a sort of which SAS companies are worth 10 billion or more. It's not that many anymore. There used to be a lot. Some asanas, the others they're worth 4 or 5 billion box. That's after so much time. And so where do you find a Decacorn? Like it's not enough. You gotta find an OpenAI. Right. I'm not being literal, but think about it for a minute. Like if you want to de pack this, if you want to invest your time as a founder, you have to understand the business model of your customers and VCs. Right? And look who's worth 10 billion or more is tough out there. So don't get me wrong, a Ridge smaller fund can make money on just a merely a billion dollar outcome, but the big guys can't. So they're, they've tilted, they haven't given up, they're just tilting. Whether it's crypto or AI, they're they gotta find the 10 billions. It's just that otherwise they can't return a 2 billion dollar fund into 6 billion. It becomes mathematically impossible.

Agri, you've had a couple comments about board meetings, what you like to see. We had a couple questions about it too, so wanted to shift gears a little bit to that with kind of your framework of like red flag, green flags. Once you've made the investment, you're on a lot of boards, you've consulted with a lot of folks. What are kind of your top green flags that you love to see at those board meetings and maybe some red flags that put you off after these first ones.

Ooh, I think once you get on the board, once you get on the side of the founder, you're on the side of the founder. So there is no like red flags turn off on the board meeting because I'm going to spend the next seven, eight years with the company potentially. So I think there are lots and lots of green flags. There is actually a template that I always like share with the founders being like, hey, this has been very useful for me in previous boards if you want to look at that, if you've not ever like generally when I get on boards it's the first time they are starting a board because I get in very early, see it in series A. They probably don't have a board or they have a board which has been pretty unofficial, like calls on months. So like for me, every time I get on, I get a chance or I'm lucky enough to get a chance to like set, hey, this is what look good looks like and what I've seen as good look like. So just to give you a quick, quick snapshot on what that good looks like is in the beginning just having red light, yellow light and green light of things that are going well, things that are going okay that we expected them to go well, but they're going okay. And things that are like, you know, concern on the founder or the other team. So just giving that traffic light in the beginning is very, very helpful. Then obviously talking through the metrics, the financial metrics, the burn, the cash in the bank, the re, all of that household stuff which I should just read before the board meeting and know if I have any questions I can ask. But I should be reading all of that stuff before the Mode meeting, similar stuff around, any product updates that you know, I should just be reading and knowing. So like just household items that like, you know, you want to make sure that I have read before coming into the board. Those are the first, like maybe four or five slides. The second, the large part of the board is basically focused on like a topic. Like if you're struggling with top of the funnel or you're struggling with like, you know, middle of the funnel. And we discuss strategies around it. And you come with strategies, you come with like, hey, we're trying these three, four experiments. What has worked, what's not work. So that's been a really good attitude that we've worked with on boards. And it's been really, really fruitful because you get different points of view. At that point, you're getting two or three people for one hour of their time consistently focused on this. It's kind of useful. Then there are discussions around product. Maybe, hey, this is how we think. This is the product person comes in. Like, this is how we're thinking. This is what the customer and what we can add value. There is maybe competition, what we're seeing in the market, maybe what we've seen come out there from our other portfolio companies, which directions they are going. And a lot happened with the AI stuff. Like Jason was saying that, hey, since it was rapidly evolving, hey, we've seen this with other AI companies that they're doing this and this and this. So that really helped. And then the last is probably just governance and like any conversations that need to be happened on the compensation, on renumeration and things like that, which basically is the end of it. So this is how like generally board meetings are useful structured, but they change quarter on quarter. Some have month on month. So like they change based on what the need of the hour is.

Awesome, thanks so much. Equity. That was super helpful. Like several good tactics in there. We appreciate your time so much. Do you want to let folks know how to get in touch with you if they do have some non AI projects that they want to talk to you about?

Yeah, I was skating with Jason at that point, but AI or non AI, I'm really looking at B2B enterprise companies. So please reach me at. I'll type it out. It is my first name@ridge VC and it's also on my LinkedIn. So like my email is on my LinkedIn in the experience section, which people can directly reach me at.

Awesome. Thank you so much for the time and everyone. Thanks so much for your great questions and for joining another workshop Wednesday. We have another VC session next week. We are talking about AI, but we have Sadia Hedge from Unusual Ventures. She's going to be talking about kind of a topic everyone's wondering about, but pricing strategies for AI products. So Sadia is up next week and we will see you guys then. Akrity, thank you again so much for the time and we'll see you soon.

Thank you. Hopefully this is helpful. See you guys.