Ben Narasin, Founder and General Partner at Tenacity Venture Capital, joins the pod this week to talk about his journey from young entrepreneur to seasoned investor. Instead of a spray and pray investment approach, Ben takes pride in Tenacity’s strong investment vetting processes and dedication to the entrepreneurs they invest in. Talking points for this episode include last quarter metrics for Tenacity, advice for startups looking to get funded, and how Ben was involved in Softeq’s most recent Demo Day.
[00:00] Podcast starts - Debunking the Success of Spray & Pray Investing
[01:00] Becoming an entrepreneur at 12 years old
[08:04] Transitioning from entrepreneurship to investment
[14:21] Investing in superstars instead of spraying & praying
[18:35] Getting through the frog kissing game of investment
[28:59] Being involved in Softeq’s latest demo day
How many companies did Tenacity look at last quarter and invest in?
Ben is proud of Tenacity’s success, but he’s also practical about the investment opportunities he chooses to take. In the first quarter of 2023, 2,149 companies pitched to Tenacity and only 3 were funded. For Ben, this feels like the right amount because Tenacity is not adhering to the spray and pray approach where investors make lots of small investments across large categories of startups. Instead, Ben is happy to see that only the top of the top get chosen.
“We tell this to our founders all the time, including people that are pitching us. If we're seeing 8,000 companies and funding eight, we're not interested in the top 1%. We're in the top one bip. We want absolute superstars.”
How do you get a startup founder to take the time to pitch to Tenacity knowing their odds are 8 out of 8,000?
Choosing the top of the top startup founders is a goal for Tenacity because Tenacity is willing to go all in on helping their founders raise their series A funding. Ben cares about connecting founders to those venture capitalists that will lead them to success and he’s not afraid of how stiff the competition can be to get into Tenacity. If you make it through the gauntlet to get funded, Ben is here to put in the extra mile to make sure these startup projects are successful.
“My promise to all my founders is I will help you raise your series A if I think you're ready, not if you think you're ready. I'm not going to sacrifice the chance to have all my other great founders get that because I pretended you were ready. I'm a harsh parent in that way, but we've helped a lot of people do a lot of great stuff.”
What do you think startups should keep in mind when working with an investor?
Something Ben wants to emphasize to startup founders is to actually do your due diligence on an investor, not just say you did. Ben explains that a lot of founders do the bare minimum of research on an investor, but don’t go the extra mile to speak with those that have worked with them previously and to understand their investment style. Additionally, Ben urges entrepreneurs to understand that they’ll always be working harder and longer than their investors, no matter how much an investor swears to always be there.
“Work-life balance is a myth for entrepreneurs. There is no investor on the planet that's going to be there for even a single digit percentage of the time that you're going to be in. They should be available to you when they're needed, they should be able to give you trusted counsel, but you have to be as careful as you can.”
Since you have such a narrow filtering process at Tenacity, what are the primary things you're looking for from a startup founder?
Ben believes he needs 5 things to make an investment: people, people, people, a great idea, and a huge market. Although the saying is meant to be more comedic than advisory, Ben really does believe that hardworking individuals with strong ideas are the most important part of investing. There’s never a specific type of entrepreneur or founder being sought after at Tenacity, Ben explains, because what matters most is tenacity, intelligence, and drive.
“I created this thing called The Ben Rule, because I was always jealous of Moore for having Moore's Law, and it’s if you take what you need, not want, but what you need inside to consider yourself a success, put a dollar amount on it, and that's the number you're gonna say yes to.”