Frequently asked questions
Generally, two of us partner on every investment. The typical process is...
Pre-seed & Seed
- Initial meeting with the lead investor
- Follow-up meeting with the deal buddy included
- Present to the rest of the investment team
- Founder references
Large Seeds & Series A
- Initial meeting with the lead investor
- Follow-up meeting with the deal buddy included
- 2-3 Customer/user calls
- We meet other key members of your team
- Present to the rest of the investment team
- Founder references
This, of course, varies depending on stage. In most cases, there are “in between” steps focused on getting to know each other. Investments correspond to 10-plus year investments, so we believe it’s important to spend time building a relationship.
We’re market takers, not market makers: we aim for the standard ownership targets for lead investors. Ownership helps us prioritize our time as investors. The factors we’re considering are TAM/company upside, execution risk, founder dilution, stage, and check size. I recognize this answer isn’t precise, but the truth is it depends. 😉
If you’re curious about typical venture fund economics, read this blog post. Our goal is to achieve enough ownership that cumulative fund returns will return our fund multiple times.
We don’t subscribe to the “$1M ARR” myth for Series A investing. The truth is we’ve led rounds in pre-revenue companies and passed on companies with multiple millions in revenue. Here’s how we generally think about progress according to investment rounds:
Pre-seed ($500k-2M) Product is at least something customers/users can play with; the team is complete given what the team hopes to accomplish by the next round; usually, there are a few paid pilots or design partners.
Seed ($2-6M) Product is in the hands of a few customers; early paid engagements and convincing signs of product-market fit; clarity about ideal customer profile (ICP)
Series A ($6-15M) Product is live; paid customers; proof of repeatability; the team has someone who is commercial-minded and/or capable of driving the GTM motion; higher degree of confidence about product-market fit
85% of our investments are in companies at the Seed and Series A rounds. 15% of our investments are in companies at the Pre-seed and Series B rounds.
We lead or co-lead rounds most of the time.
If we lead or co-lead at the Series A, yes. For seed stage companies, it depends on the maturity of the company. In either case, we do believe it is important to organize “mock” board meetings at a minimum. We seldom take board seats in pre-seed rounds or when we follow.
VVUS is part of a global network of funds with independent General Partner (GP; investors) and Limited Partner (LP; the investors in our funds) entities. There are 5 geographically dispersed, independent funds that share the name Vertex Ventures: Vertex Ventures Israel, Vertex Ventures Southeast Asia & India, Vertex Ventures China, Vertex Ventures HC, and a growth fund that invests within the Vertex network. While every fund has a diverse set of LPs, we all share Vertex Holdings as an anchor investor. Vertex Holdings is a wholly-owned subsidiary of Temasek.
Our HQ is in Palo Alto and we also have access to a San Francisco office.
There are two reasons:
- It’s important to understand how your customer perceives the value of your product, why they picked your product over competitors/substitutes, and who was involved in the decision.
- We want to observe the delta between what you make and what you sell.