May 26, 2025 • 43 mins
In this episode of Investing in Accessibility, co-hosts Kelvin Crosby and Chris Maher dive deep into the investment process at Samaritan Partners, exploring how they evaluate businesses in the disability sector. The conversation covers the fund's unique structure as a public benefit fund, focusing on social good while achieving strong financial returns.
Chris breaks down the key criteria Samaritan Partners uses when considering potential investments, including the importance of social impact, the strength of the founding team, and the scalability of the business model. Kelvin and Chris also cover topics such as starting relationships with VCs early, the importance of product-market fit, finding the right commercial model, due diligence is a two-way street, and more. This episode provides invaluable insights on building lasting partnerships and scaling your business for both social impact and financial success.
Links & Resources:
Chris Maher: LinkedIn
Samaritan Partners: Website
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American Sign Language (ASL) and Captioning for each episode will be provided on our YouTube channel. Go to handle @SamaritanPartners.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Kelvin Crosby (00:06):
Welcome to Investing in Accessibility, a
Samaritan Partners podcast.
We're not waiting for change,we're investing in it.
Join us as we speak withentrepreneurs and thought
leaders that are focused oncreating a more accessible world
(00:28):
.
Hey, so good to see you, eventhough I can't see you, it's
another beautiful day in theneighborhood and I'm so excited
that you're here at Investingin Accessibility.
I'm your host, Kelvin Crosby,and man, we're going to be
diving into our co-host's braintoday.
I mean, it could be dangerousor it could be quite informative
(00:49):
.
So we're going to find out whattoday's show is all about in
regards to what does SamaritanPartners really look at when
they invest in businesses andmaking sure that it meets their
venture capitalist goals.
So, Chris Maher, welcome toInvesting in Accessibility, man.
Chris Maher (01:07):
Hey, Kelvin, how are you, my friend, good to see
you, as always, and to be withyou.
Kelvin Crosby (01:11):
Yep, I'm excited about today.
I think this is going to openpeople's eyes, literally and
figuratively.
It might even give people theireyes back.
Hey, you know, that would becool if I could see again.
Chris Maher (01:24):
That would be and hopefully it won't be craziness.
There will be some stuff tounderstand here and at least get
a view into how we think aboutinvestments at Samaritan and the
types of companies we look atand the types of companies we
ultimately invest in.
Kelvin Crosby (01:43):
Yeah, and I think that's going to be really,
really important for those thatare potentially looking for
investment from SamaritanPartners to really understand
are you meeting the model thatSamaritan partners is going for.
So let's dive right into it.
When a company reaches out toyou and they say, oh, I want to
(02:10):
have you look at my company andsee that we would be a good fit,
let's start from the beginning.
Chris Maher (02:15):
Sure, and so so I think at at a, at a high level,
I mean one companies know prettyclearly that Samaritan Partners
invests in the disabilitysector, so companies that are
serving the disability community, and so if they've done any
(02:36):
homework at all, if they're notserving the community, then they
should not be reaching out.
So let's start with how we setup the fund, and this was
intentional and we set up,obviously, the fund is a social
impact fund, but we took it astep further and legally
structured the fund as what'scalled a public benefit fund.
(02:58):
And what that means is thatthere is a stated public good or
social good with the fund,which really means that there's
a stated social good with theinvestment focus of the fund.
And that definition and focusis early stage for-profit
(03:18):
companies, obviously, that areproviding products and services
to and or creating employmentopportunities for people from
the disability community.
And the reason that I chose todo it that way has a lot to do
with a concept called ConsciousCapitalism, which is not a
(03:38):
concept that I created.
It was actually originallycoined and developed and written
about by John Mackey, who isthe founder and CEO, the
original founder and CEO ofWhole Foods, the supermarket
chain.
And that whole idea is thatbusinesses can be about more
(04:00):
than just profit.
They can also be about purposeand mission, and so part of that
is also about stakeholderalignment.
And so, by setting up the fundas a public benefit fund, it
creates alignment across all thekey stakeholders, from the
get-go.
Me and my fund, all of my LPsor investors, which can be
(04:23):
individuals, families,organizations, institutions and
the companies we invest in, and,ultimately, the community that
we aim to serve, which is thedisability community.
So two key aspects of thatconcept of conscious capitalism
is having that higher purpose,so purpose along with profit,
(04:43):
and you can do both of thoseside by side.
The stakeholder alignment it'snot just about shareholders,
which is really kind ofdeveloped over the last several
decades, where it's become muchmore about the shareholder, and
this is about employees,customers, investors, the
community that you're focused onserving.
(05:04):
It's also about values, right.
So this concept of consciousculture is really about it's
values-based, it's behavior-led,and then, ultimately, it's also
about leadership.
Leadership is a key componentof this right that there's a
strong moral compass.
There's integrity it is aboutleading by example around profit
(05:31):
and and and purpose.
And so at a high level, justphilosophically, that that's
where I approached the fund andcertainly the companies that we
look at.
We're hoping and looking for asimilar philosophical approach,
and that's typically not aproblem with people who have
entrepreneurs that have startedcompanies that serve the
disability community.
Most of the time, thosefounders I'd say 99% of the time
(05:53):
those founders have a verydirect connection to the
problems that they're trying tosolve.
In many cases they have livedexperience with that area of
disability that they arebuilding products and solutions
for or creating employmentaround, and so that's typically
not an issue.
But philosophically, at a highlevel, that's where we start.
We believe that companies canbe for-profit organizations
(06:17):
driving a social mission and doboth very well and be successful
.
There's a growing body ofresearch.
You look at two decades ago andthe whole idea of social impact
investing and mission-drivenfor-profit businesses and ESG
and all of that.
There wasn't a lot of dataaround, can you really succeed
financially while having asocial mission?
(06:38):
Well, fast forward now, acouple of decades, and there is
actually a large body ofevidence that shows, over the
long term, companies that arefocused on mission and purpose,
in addition to profitability,over the long term actually
perform better than companiesthat are just solely focused on
(06:59):
profit.
In the short term, a lot ofcompanies that are just focused
on profit will look better andperform better than companies
that also have a purpose and amission, but over the long term,
the companies that are focusedon both and managing both are
actually performing better.
(07:19):
I think there's a couple ofreasons for that.
I think one is that there's ademographic change that is
happening in the country.
I look at my oldest daughter,who's about to graduate college.
She and her friends, they votewith their wallets.
If there are companies that arenot treating people and or the
world nicely, they're not goingto buy their brands or interact
with those companies.
Kelvin Crosby (08:09):
As we look at all of this one of the things is
really understanding yourbusiness.
But one of the things that I'vealways run into issues with in
the VC world is knowing theright time to approach a VC, and
so let's talk about the termearly stage capital.
So is that a seed run?
Is that a round A?
Is that pre-seed?
(08:31):
What does that mean in yourterms?
Because I think that'ssomething that a lot of
entrepreneurs that are lookingto reach out to you could really
benefit from understanding,like when is the right time, if
they feel like high level thatthey're meeting what you're
looking for, is the best time atwhat stage of their business?
Chris Maher (08:53):
It's a great question and I think that, so
I'll answer that in a couple ofparts.
So first, it's I believe thatentrepreneurs should start to
develop conversation anddialogue and relationships and
build rapport with VCs andinvestors, maybe individuals,
(09:13):
professional angels, as quicklyas they can.
Because as investors, a lot oftimes you're investing in the
people behind the business asmuch as you are the business
itself.
And so, as an investor, Ireally spend a lot of time
getting to know the founders andthe leaders of the organization
(09:33):
because that's going to give mea view into them as operators.
And so start early.
You may not be asking for money, but you just want to introduce
yourself, you want to introduceyour company, look for some
advice and some guidance so thenwhen you're ready to, when you
are ready to raise, you canreach out, and there's already a
relationship there.
(09:54):
So I think the earlier thebetter to develop those
relationships and to start thatdialogue.
What's really interesting in thepresent venture market is the
definitions of, you know, angelfriends and family, pre-seed,
seed, series A.
Those lines have gotten alittle blurred.
You know, back in the day,pre-seed for the most part meant
(10:16):
pre-revenue and there was a lotof investors that were focused
on that super early stage.
Hey, we're finding companiesthat are pre-revenue, that might
even be pre MVP of a product,but they've got a prototype or
maybe it's just a great idea andthey want to be one of the
first checks in and they'regoing to place a lot of bets
there and hope that a few or ahandful of them can can hit it
(10:40):
and and and then they'll maketheir return.
But there's a volume play there.
Anecdotally, what I've seenfrom talking to other investors
and talking to entrepreneurs,some of those early stage
investors have now shifted alittle bit to wanting to see
some revenue, to see a littlebit of that, as they call it,
product market fit, where you'vegot clients that are signing
(11:01):
contracts and paying you moneyto at least a little bit of that
.
But you typically have kind oflike, hey, I'm a founder, I've
got an idea, I'm going to eitherself-fund, kind of like what
you did, find some friends andfamily to provide some capital
so I can just go build myproduct or a prototype.
And then you get to precedewhere you're ready to go to
market Historically like, hey,I'm ready to go to market, I
(11:22):
need to raise some capital so Ican get to finish my product,
then start getting my firstclients.
And then you'd get to seedwhere, hey, I've got revenue,
but now I want to accelerate myrevenue, I want to hire more
salespeople and put more dollarstowards my marketing, build out
my product roadmap.
And then you get to series A,which is where, hey, we're going
to go raise an even largerchunk of money to really
(11:44):
accelerate this opportunity,because we have shown that we've
not only got product market fitbut we are starting to scale.
And then we really want toscale that as quickly as we can,
as we talked about in aprevious episode, where, when
you've got venture money comingin, scaling that growth as
quickly as you can to get tothat liquidity event or exit
becomes very important for youas an entrepreneur.
Kelvin Crosby (12:07):
As I'm understanding, because I want to
make sure we're all clear here.
So really, the best time toreach out is as soon as you are
ready to move forward with youridea, your business, your
concept to nurture therelationship.
And you're playing the longgame with this relationship.
(12:28):
You're not playing the bangbang, thank you, ma'am, type of
game on this type ofrelationship.
It's going to be sending youlike information, like, oh, here
we are, here, here's this,here's that, and oh, can we get
a meeting just to see what yourthoughts on this next idea that
we're working on, on thisdevelopment.
And so where do you startfinding yourself?
(12:52):
Like okay, so they've, theybuilt this relationship with me,
or I built this relationshipwith them.
We're starting to build trust.
I'm starting to see fruit fromwhat they're doing, whether it's
pre or post revenue.
Like where did that?
Like you're like all right, nowwe can start having a money
conversation.
Chris Maher (13:13):
Yeah, and so I think you're spot on.
And as an investor, what I tryto do is add value before I've
invested, especially if I likethe founders and I like the
business that they're in.
Because if I can do that beforeI'm an investor and on their
cap table, hopefully when theydo raise money they're going to
reach out, I'm going to be oneof their first phone calls and
(13:34):
they're going to say hey, we'rekicking off our round.
There's a spot in it for you,for Samaritan, if you want it,
because I've, I've shown themthat I've, that I've added value
.
And so.
But when they kick off thatround and, as you said, there
are some VCs they don't come inuntil, say, series A, so later
stage.
But you want to get to knowthem when you're at the pre-seed
(13:56):
and seed stage and you want tokeep them abreast, as you said,
keep them in the loop as you'reprogressing and things are
getting better and betterhopefully.
So when you do kick off your A,they're already comfortable
with you, they've got a reallygood feel for your business and
they're, hopefully, the duediligence process is easier and
shorter and there's a rapportthere.
(14:17):
But once there's a company thatkicks off around and for us we
invest between pre-seed andseries A.
We also reserve capital forfollow-on investment as
portfolio companies grow.
But if a company that we'reinterested in is kicking off
around, then we go through a duediligence process.
There's kind of two steps tothat, or at least the way that
(14:40):
we approach it.
So one is looking at somewhatof a higher level around three
things.
One is the first place wealways start is what's the
social good or the social impactthat they're driving, right?
So what are those products andservices or those employment
opportunities they're creating,that they're driving for the
community, and what's theirability to do that at scale and
(15:03):
in a sustainable way?
That's the first thing we lookat, if we can check that box.
Then the second thing we look atactually are the founders and
the team behind the business.
My experience as anentrepreneur and I spent 25
years as an operator and leaderof a variety of VC-backed
businesses is the people behindthe business at that early stage
(15:24):
are a critically importantdeterminant in the success of
that business in the future.
And so getting to know thatleadership team and the founders
really well, because you'regoing to be partners with them
and they're going to be drivingthe bus, but you're hopefully
they're helping them along theway.
You want to get a very goodfeel for those people, and for
(15:45):
me, integrity and honesty andtransparency and partnership,
coachability is really, reallyimportant, especially if it's a
first time founder and someonewho hasn't done this before or a
team that has not done thisbefore.
So that's the second thing welook at, and if we're
comfortable with the team, thenthe third thing we look at is we
(16:05):
really start to dig into thecommercial model.
So is it direct to consumer?
Is it B2B or B2B2C?
Is it recurring revenue,subscription services, is it
more episodic or transactional?
And then we go to that.
And then we go even deeper thanthat on the diligence side.
But the first part is socialimpact, ability to scale it in a
(16:31):
sustainable way, the peoplebehind the business.
And then what's the commercialmodel and what's their
go-to-market?
How are they going to makemoney or generate revenue?
Kelvin Crosby (16:39):
This is really good information.
I mean, I'm really realizing,wow, okay.
So nurturing the relationshipwith the VC is really really
important early on and, honestly, one of my biggest mentors in
helping me get started is sayingyou never ask for the dollar.
(17:01):
You're always asking what doyou think about my product and
how would you make it better?
And giving that VC, that personthat you're meeting with, or
the group of people to be a partof the team, and not
necessarily they're giving youfunding, but they feel and have
(17:23):
the, they build an emotionalattachment to your idea.
And I think this is reallyreally, really important because
, at the end of the day, ifyou're going to be a social gig
product or a service or aprogram, you got to have this
soft skills in place, because Ifeel like there's a lot of
(17:44):
entrepreneurs that don't, andthis is really really important
when you're thinking about allof this.
So just to kind of make surewe're all on track here.
So first thing is that you needto start the relationship with
the VC early on, nurture therelationship and then, as you
get ready to do your round andyou meet Samaritan Partners
(18:08):
requirements, then you can startshowing, oh, we're going to do
a round, would you like to beinterested in it?
And then that opens up the door.
You're not asking for money yet, you're still building that
relationship.
And if the VC really sees, oh,we've been a part of this, it's
been fun watching them grow,mature, become the product that
(18:30):
or a service or program thatthey become, and then what's
next?
At that point, Chris, you'vedone your due diligence, Chris,
and you're like okay, I'm ready.
What's the next step in thatprocess?
Chris Maher (18:44):
Sure, before I answer that, because you've said
a couple of really importantthings in what you just said.
The diligence and theevaluation.
It's a two-way street.
So, of course, VCs we're doingour due diligence on the company
, on the people that are behindthe company, but founders need
to do the same due diligence onthe investors, whether it's an
(19:06):
individual or it's a venturecapital firm, because it's a
partnership, right, and so youwant to make sure that you're as
comfortable with them as theyare with you.
And that's partly can they giveyou money?
But it's also how else whatother value can they bring to
the table, right?
So when you're meeting theseVCs early on, yeah, it's giving
(19:28):
them a chance to meet you and toget comfortable with you, but
it's also a chance for you toget to meet them, and you'll
notice very quickly if VCsreally mean it.
I'm like, hey, I know you'renot raising now, but how can I
help?
Can I make some introductions?
You know, do you want to pickmy brain about anything you're
doing around your go-to-marketor your product?
Take them up on that.
It's because it's a little bitof a test.
(19:49):
And if they follow through, ifyou'd say hey, you know, I'd
love an introduction to thiscompany or that company.
Well, see if they followthrough.
If they don't, you know thatmight be a sign of what they're
going to be like as a member ofyour cap table.
And so it is a two-way street.
You got to be doing yourevaluation along that journey as
(20:09):
well.
What I have found, which is sorefreshing and I admire it so
much, I'd say 99% of theentrepreneurs in this disability
space that I meet, theyactually talk a lot about.
I don't want to just take moneyfrom an investor.
I want to make sure that thatinvestor and that money comes
(20:31):
with an understanding of ourmission, that they believe in
the social mission.
We've got a kindred spirit interms of what we're trying to do
in terms of our social impact,and ideally, they could also add
value, either operationally orstrategically, product,
go-to-market, introductions, etcetera.
And I admire that because I wasCEO of a company once where we
(20:52):
were running low on capital andI needed to go raise money and I
couldn't be too choosy and Ihad to take money from a venture
capitalist who I knew wasn'tthe right partner for the
business and that they weren'tgoing to be helpful other than
giving us money and letting usto continue to run the business.
But I had to take that moneybecause I was in that situation
(21:13):
and so I admire entrepreneursthat one are thinking about it's
more than just money, but alsothat can build a business and
put themselves in a positionwhere they can be choosy about
who they bring onto their captable.
So, now to your question aboutwhen a company says hey Chris,
we're raising money, I've got arelationship and we're ready to
go.
That's when you really start todig into the commercial model
(21:37):
and also the social model of howare they going to be able to
scale the delivery of the goodthat they're doing in terms of
their products and services, butalso how are they going to
commercialize, how are theygoing to generate revenue and
ultimately profit?
My personal background and wherewe lean as a fund is more in
the business to business orbusiness to business to consumer
(22:00):
recurring revenue, so techenabled software and services,
so that subscription orrecurring revenue model.
I've done some direct toconsumer in my career.
It's really hard, it takes timeand it takes a lot of money to
go out there and acquirecustomers direct to consumer,
(22:20):
one by one.
You have to spend a lot ofadvertising and marketing
dollars and kind of get on thishamster wheel of customer
acquisition, and so we certainlyskew towards certain types of
business models, for sure.
Now, that's not to say that wewouldn't invest in a company
that has a direct-to-consumerelement to it, but we're really
looking for them to bemonetizing or commercializing,
(22:43):
mostly on the enterprise side,the B2B or the B2B2C side, and
that's just our personalpreference, right, there are
some VCs out there that all theydo is direct-to-consumer.
There's other VCs out therethat don't mind that it's a more
transactional, one-off purchasebusiness.
We tend to like subscriptionbusinesses.
One, we're familiar with it.
Two, we've got experiencerunning those businesses and
(23:04):
growing businesses like that.
But three, from a financialreturn standpoint, recurring
revenue businesses tend to get abetter multiple than a one-off
transaction business or a purelyservices business.
Kelvin Crosby (23:17):
So now, your model, your social, your social
impact, so there's that you're amajor component for Samaritan
Partners, is that's, that'sgoing to be a number one thing.
But then how are you going toscale it?
Is it going to be B2B love that?
Is it going to be B2B, or arethey going to be B2C or B2B2C?
(23:38):
I mean, try to say that fivetimes fast, that's a tongue
twister.
But all that to say, reallythinking about your model will
make a major difference inregards to your relationship.
And thinking, especially whenyou're early stage, you can kind
(23:59):
of adjust your model early onwithout having to make major
like, well, this is where we'reat, we're stuck here.
I mean, I'm not going to bringany businesses into this that I
know that I'm very close to.
There's one business that I amvery, very close to that I work
with all the time, and theytried to change their model and
(24:22):
it messed up their community,and now they've had to reel back
and put back in the old modeland then had to figure out a
skill, a different direction,and so picking the right model
is a really important thing.
Chris Maher (24:40):
I was just going to say.
I think you're touching onsomething that's really
important and I think what youwere just talking about there is
a concept that not enoughentrepreneurs think about early
in the process when they'refounding a company and in the
early stages of building.
And it's product market fit.
So in our previous episodeabout a lifestyle versus an exit
(25:02):
business, we talked a bit aboutaddressable market, what your
total addressable market is, theTAM.
That's an important thing thatprofessional investors, VCs look
at to decide whether or notit's venture worthy in terms of
investment.
Is the market that you'retargeting big enough?
And, as we talked about withSee Me Cane and you were so
(25:22):
smart and you you did that youwent through that process and
said, hey, this is pretty nichein terms of what I'm doing.
Another thing that's criticallyimportant that VCs look at a lot
is it's what's called productmarket fit, and that's where you
were going with your commentsbefore.
And so you want to make surethat you actually have a
solution where there's a problem.
(25:44):
And so are you solving aproblem that is worth solving
and making sure that you've gota product market fit.
I was part of a company thathad incredible technology.
It was a beautiful marketplace,but it was a solution looking
for a problem.
We didn't have product marketfit, and that made it really
(26:07):
really hard to grow the business.
And so identifying that productmarket fit, you know, is the
problem that you're solving forworthy of being solved for, and
is it a big enough problem?
But if you're building asolution and then going out and
looking for the problem that itsolves, you're going to be in a
tough spot.
(26:27):
And so getting out in themarket, talking to prospective
customers, getting theirfeedback, doing that due
diligence of your own to makesure that what you're building
is really something that isgoing to solve a problem is
critically important in thatprocess, and professional
investors like venturecapitalists take a very hard and
(26:49):
deep look at that.
Kelvin Crosby (26:50):
This is so important.
So, just to give people anexample of figuring out your
product market fit, because Ithink some people they're not
even sure what that means, and Imean, obviously, if you come to
a VC, you might want tounderstand what that is.
And like, for example, the SeeMe Cane.
See Me Cane is designed forvisually impaired individuals to
(27:13):
solve a problem that one out ofthree visually impaired people
get hit by cars.
And I went and did myinterviews.
I think I'm now at about 500people now, some recorded and
some not, And out of the 500, Ihave about 400 that have been
hit by cars.
(27:33):
You know, and that kind ofthrows off my numbers a little
bit, we got to one out of threepeople get hit by cars.
But this is a problem that I'msolving.
And so, thinking about that inwhat you're doing in regards to
your product, is it or a serviceor a program?
What problem are you solvingbefore you go looking at to
(27:57):
build your idea, concept orwhatever you're doing to really
grow your business?
And so I think this is really,really important to have that
idea, so that that is a problemthat I'm solving and hopefully
that's helpful for you tounderstand.
Like, this is what you need todo and this is how you will do
that.
Chris kind of talk about okayfor Samaritan Partners, are you
(28:19):
guys investing in pre-revenue orpost-revenue businesses?
Chris Maher (28:24):
For what we do at Samaritan as an investor, how do
you mitigate the risk aroundproduct market fit?
For us, we don't invest inpre-revenue companies, at least
as of right now.
So of the six companies we'veinvested in so far, all of them
(28:44):
were revenue generating at thetime that we invested and a
couple of them, their roundswere called pre-seed but they
still had signed contracts,paying customers, low six
figures in revenue so they haddemonstrated at least some
product market fit to an extent,whereas if you're pre-revenue
(29:05):
as an investor, you're taking onmore risk.
And so that's just ourpreference and our decision as
investors at Samaritan is we'renot investing in pre-revenue
companies at this point.
So it's a really good questionand it's something that
entrepreneurs need to probeabout and really flesh out when
(29:26):
they're talking to VCs.
Typically, when you're anentrepreneur raising a round,
you need to find a lead investor, and there's a couple elements
to that.
The lead investor typically iswriting the largest check, but
they're also helping to set thevaluation of the round.
And that's a negotiation, right.
(29:51):
Like entrepreneurs may say, hey, we're raising $2 million and
we think you know and where weare as a business and where our
revenue is, we think it'sjustified that the pre-money is
$10 million.
Well, you may find a leadinvestor that says hey, we're
willing to invest half of that.
You know you're raising twomillion, we'll lead with a
million, but we think thevaluation is only nine million.
And so when you're talking toinvestors or prospective
(30:14):
investors, as an entrepreneuryou want to get a sense of
what's their check size, what'stheir typical check size?
Do they lead rounds?
And if they do, what's thetypical check size on that?
For us right now, at Samaritan,we are only what's called
co-investing.
So we're not.
We haven't led any rounds yet.
That's not to say that we'renot open to that, but we haven't
(30:34):
at this point, so we have onlyco-invested.
So for us as investors, we wantto get to know the other
investors in the round,especially the lead investor,
because the lead investor isgoing to set the valuation and
the terms of that round.
And so, as an entrepreneur, youwant to identify.
You may talk to Samaritan andwe'd be like yep, hey, we're in
(30:57):
for X amount, but we're notgoing to lead.
Great, Chris, I can put youdown for that.
And then you've got to go findto lead.
But if you can get a number ofpeople of co-investors lined up.
That, in many instances, canhelp you find the lead, because
a lead will feel morecomfortable to lead if they know
that you've already got therest of the round filled with
(31:19):
co-investors.
So it's really important as anentrepreneur, and listen, VCs
are used to these questions.
You should not be afraid to askthese questions.
You should ask like hey, what'syour average check size?
Do you lead?
Do you only co-invest?
Those are all things thatshould be on your list of
questions when you're talking toVCs.
Kelvin Crosby (31:40):
What is Samaritan's average check size?
Chris Maher (31:43):
So for us, as I said earlier, we're investing in
so far pre-seed to Series A.
We try to take a diversifiedapproach to that.
Of our six investments so far,we've invested in two at
pre-seed, two at seed and two atSeries A.
Our checks so far have beenbetween $50,000 and $300,000.
And again, the intention isthat we will reserve capital for
(32:04):
follow-on investment asportfolio companies grow.
Those check sizes kind of lineup pretty nicely with the stages
.
So pre-seed, our checks are onthat smaller range up to A,
where those checks are at thelarger range.
And again, that's a perfectquestion to ask a VC when you're
(32:26):
having that conversation aboutinvesting.
Kelvin Crosby (32:29):
Well, I think this is really insightful
because, at the end of the day,knowing what you're getting into
is extremely important.
I mean, I know and I want toencourage you, obviously, if
you're an entrepreneur andyou're really thinking about
going after investment money asChris said earlier do not bring
(32:51):
in the wrong investor.
Really, make sure it's theright investor, even though it
might be painful having to waitanother couple of months.
I mean, I'm telling you thepain is real, the difficulty is
real, the struggle is real.
But do not allow that pain,that struggle, that difficulty
(33:16):
of the funds to bring in thewrong investor.
Because for me, I brought inone investor and I pretty much
don't need another, because thisguy will carry me pretty much
all the way through the rest ofthe way.
I mean, so that's where makingthe right investment and the
right decision for your businessis extremely important.
(33:41):
So I encourage you to look atyour company and really look at
it and say is Samaritan Partnersmeeting my goals, my mission
for my business and all of that?
But first of all, make surethat you're not trying to just
grasp at money so that you canpay your payroll.
(34:02):
Yeah, you got to pay payroll.
Yes, you got to pay yourpayroll.
Yes, you got to pay your bills.
Yes, you got to build theproduct or service or the
program Like you got to do allthat.
But there's ways to do thatwithout taking the wrong
investment.
Chris Maher (34:17):
So, Kelvin, can I make a couple comments here,
because I think you make somereally, really good comments.
Your key investor for yourbusiness believes in you and
believes in the social missionof your business and has been
happy to support you financially, which is critical, right?
Am I making an assumption thatthey're not really involved
(34:40):
operationally?
They trust that you are goingto drive the business because
you're the subject matter expert.
So that's wonderful.
I think of investors as comingin kind of three flavors.
And this was my experience as afour-time CEO, president of
different organizations over thelast 25 years and working with
(35:01):
venture capitalists andinvestors.
And generally speaking, for me,they came in three flavors and
I think it's kind of applicableto anybody.
You've got the investor likeyours, which they bring capital
to the table, they believe inthe mission of your business and
the impact that you're strivingfor, but they're kind of a
(35:23):
silent partner.
They leave it up to you to runthe business, Right.
and that's a great investor tohave.
You don't want every investorto kind of be involved
operationally and kind ofpitching in and trying to help
you to do what you do.
But if you can have an investorthat can give you capital,
believes in the mission of yourbusiness and then lets you do
your thing, and you just they'relike you know what, Kelvin, you
(35:46):
know what you're doing, here'smy money, I believe in what
you're doing, let me know how Ican help, but they're pretty
much a silent investor.
That's a great investor to haveand you want some of those
people on your cap table.
On the other end of thespectrum, you've got the
investor that brings capital tothe table.
In the situation of the part ofthe market that you and I are
in which is mission-driven andsocial impact for-profit
(36:07):
businesses, you want thatinvestor to believe in the
social mission of your businessand the impact that you're
driving.
And, thirdly, they also canbring operational or strategic
value to the table.
They've got operationalbackground of their own.
They know go-to-market, theyknow product development,
marketing, et cetera or maybethey're just subject matter
(36:31):
experts on your space.
They've got tons of connectionsacross the industry and they
can help you strategically fromthat standpoint.
That is also a fantasticinvestor to have on your cap
table.
The dangerous investor is theone that falls in between those
two things.
They bring money, they're not asilent partner, but they want
(36:52):
to get involved and they thinkthey know better, but they
really don't.
And that can be a verydistracting and disruptive and
counterproductive investor whosticks their nose in things they
don't really understand yourbusiness or the market.
They're pushing you and yourteam to do things that, honestly
, are just spinning your cycles,but you have to do it because
they've asked for it.
Those are the type of investorsyou really need to try to
(37:15):
uncover in the process of yourfundraising and, in my opinion,
if at all possible, avoidbringing those people onto your
cap table.
I unfortunately, over my career, have worked with investors
like that and it can be reallyreally challenging.
So kind of three flavors ofinvestors that I think
(37:36):
entrepreneurs really want to tryto identify when they're going
through that fundraising process, two of which are great to have
on your cap table, one of whichcan possibly be problematic for
you.
Kelvin Crosby (37:47):
So that's an important thing.
I mean, if you want apples,oranges or bananas depending on
what one you want and how you'regoing to run your business.
I couldn't resist that one.
Chris Maher (37:58):
That's a good one.
I like it.
I like it.
Kelvin Crosby (38:03):
I mean, this has been fun.
I mean, if you want more ofthis, let us know on the
LinkedIn post that you're likewe love this episode and would
want more like this.
Let us know.
Chris Maher (38:19):
You and I have talked about this, but two, I
think, interesting conversationsoff of the back of this one
that you and I have had is let'sgo get a couple of other VCs,
and VCs focused in and aroundour sector, and let's talk to
them about how they'reapproaching the investment
process, so like a little minipanel and then let's also get
(38:43):
some entrepreneurs who havesuccessfully raised money, or
maybe who are going through theprocess of raising money, and
get them to talk about thatexperience.
Just a thought, but it would beinteresting, if our audience
would like to, for us to do oneor both of those episodes as
follow-ups.
Kelvin Crosby (39:01):
Put in the comments that we want more of
this style of episode where wetalk about VC world, we talk
about entrepreneurs and whattheir experience is going
through this process.
So if this is something thatyou are like, we want more of
this.
So go to LinkedIn, go to ChrisMaher and right there and we'll
(39:23):
have a link in the descriptionon the podcast notes and you can
click on directly to that post.
You hit there and then just putin the comment saying we want
more of that or something likethat.
So we know that you guys wantmore of these type of podcasts
as well.
So we can bring in VCs and seewhat their thoughts are.
(39:44):
We can bring in entrepreneursthat are currently in the rounds
of seeds and all the differentlevels and see what how that
looks and provide support andall those different things.
So if this is something thatyou'd like, check out that
LinkedIn link in the descriptionor go to Chris Maher's post on
LinkedIn.
Chris, is there any last minutethings that you want to say
(40:07):
before we wrap up?
Chris Maher (40:10):
No, I've enjoyed this conversation with you today
and I think that forentrepreneurs, and you said this
earlier, it's like start thedialogue and the relationship
early with especiallyprofessional investors, to get
to know them, build a rapport.
They get to know you, you getto know them.
It's a two-way street.
(40:30):
You're both doing due diligenceon each other.
Try to uncover who's reallygoing to add value, whether
they're just bringing capital orthey can also bring some
additional operational orstrategic value to the table,
because it's important who youbring onto your cap table, and
you ideally would have investorswho can help you grow your
business.
It's not just money.
(40:51):
Some of them will be justbringing money, but others you
really want to help you driveyour business forward and to
scale it as best you can.
And then it's business modelright.
You got to think.
You got to think aboutaddressable market early on.
You have to really think aboutproduct market fit.
What is the problem you'reactually solving?
Is it really a big enoughproblem to be solved?
(41:12):
Don't just be buildingsolutions, searching for a
problem.
Get out there and talk to theprospective customers or the
clientele and get that feedbackas early in the process as
possible and then continue toget that feedback as you move
forward.
And then think about how you'regoing to commercialize it.
Is it direct to consumer, is itB2B, is it B2B2C, is it
recurring revenue, is it one-offtransactions?
(41:34):
And I know that sounds like alot, but that's the life of an
entrepreneur.
Like Kelvin, in our lastepisode, like you've done all of
that right, you've thoughtthrough all of that multiple
times as your business hasprogressed, and that's the life
of an entrepreneur.
It's going to be up and down.
It's a rollercoaster ride,right, my friend?
I've been there.
You're there right now.
(41:55):
It is a rollercoaster ride andyou need to not get too high
when things are going well andnot get too low when things
aren't going great and surroundyourself with great people and
that's not just the people inyour business helping you manage
it every day, but also,hopefully, investors that are on
your cap table that can alsosupport you in that process and
(42:16):
in that mission.
Kelvin Crosby (42:17):
That wraps up investing in accessibility.
As I always say, go live beyondyour challenges and I will see
you in two weeks.
Thank you for listening toInvesting in Accessibility, a
Samaritan Partners podcast wherewe invest in change for
(42:37):
accessibility, not wait forchange.
If you want to follow us, youcan find us on YouTube or
LinkedIn at @Samaritan Partners.
If you would like to invest inSamaritan Partners, email Chris
at chris@samaritanpartners.
com.
If you'd like to learn moreabout us, go to www.
samaritanpartners.
com.
You can take the first step ininvesting in change by giving us
(43:01):
five stars and sharing thispodcast with everybody that you
know, so we can spread the word,so that we can give access to
all, by Investing inAccessibility.
Welcome to Investing in Accessibility, a
Samaritan Partners podcast.
We're not waiting for change,we're investing in it.
Join us as we speak withentrepreneurs and thought
leaders that are focused oncreating a more accessible world
(00:28):
.
Hey, so good to see you, eventhough I can't see you, it's
another beautiful day in theneighborhood and I'm so excited
that you're here at Investingin Accessibility.
I'm your host, Kelvin Crosby,and man, we're going to be
diving into our co-host's braintoday.
I mean, it could be dangerousor it could be quite informative
(00:49):
.
So we're going to find out whattoday's show is all about in
regards to what does SamaritanPartners really look at when
they invest in businesses andmaking sure that it meets their
venture capitalist goals.
So, Chris Maher, welcome toInvesting in Accessibility, man.
Chris Maher (01:07):
Hey, Kelvin, how are you, my friend, good to see
you, as always, and to be withyou.
Kelvin Crosby (01:11):
Yep, I'm excited about today.
I think this is going to openpeople's eyes, literally and
figuratively.
It might even give people theireyes back.
Hey, you know, that would becool if I could see again.
Chris Maher (01:24):
That would be and hopefully it won't be craziness.
There will be some stuff tounderstand here and at least get
a view into how we think aboutinvestments at Samaritan and the
types of companies we look atand the types of companies we
ultimately invest in.
Kelvin Crosby (01:43):
Yeah, and I think that's going to be really,
really important for those thatare potentially looking for
investment from SamaritanPartners to really understand
are you meeting the model thatSamaritan partners is going for.
So let's dive right into it.
When a company reaches out toyou and they say, oh, I want to
(02:10):
have you look at my company andsee that we would be a good fit,
let's start from the beginning.
Chris Maher (02:15):
Sure, and so so I think at at a, at a high level,
I mean one companies know prettyclearly that Samaritan Partners
invests in the disabilitysector, so companies that are
serving the disability community, and so if they've done any
(02:36):
homework at all, if they're notserving the community, then they
should not be reaching out.
So let's start with how we setup the fund, and this was
intentional and we set up,obviously, the fund is a social
impact fund, but we took it astep further and legally
structured the fund as what'scalled a public benefit fund.
(02:58):
And what that means is thatthere is a stated public good or
social good with the fund,which really means that there's
a stated social good with theinvestment focus of the fund.
And that definition and focusis early stage for-profit
(03:18):
companies, obviously, that areproviding products and services
to and or creating employmentopportunities for people from
the disability community.
And the reason that I chose todo it that way has a lot to do
with a concept called ConsciousCapitalism, which is not a
(03:38):
concept that I created.
It was actually originallycoined and developed and written
about by John Mackey, who isthe founder and CEO, the
original founder and CEO ofWhole Foods, the supermarket
chain.
And that whole idea is thatbusinesses can be about more
(04:00):
than just profit.
They can also be about purposeand mission, and so part of that
is also about stakeholderalignment.
And so, by setting up the fundas a public benefit fund, it
creates alignment across all thekey stakeholders, from the
get-go.
Me and my fund, all of my LPsor investors, which can be
(04:23):
individuals, families,organizations, institutions and
the companies we invest in, and,ultimately, the community that
we aim to serve, which is thedisability community.
So two key aspects of thatconcept of conscious capitalism
is having that higher purpose,so purpose along with profit,
(04:43):
and you can do both of thoseside by side.
The stakeholder alignment it'snot just about shareholders,
which is really kind ofdeveloped over the last several
decades, where it's become muchmore about the shareholder, and
this is about employees,customers, investors, the
community that you're focused onserving.
(05:04):
It's also about values, right.
So this concept of consciousculture is really about it's
values-based, it's behavior-led,and then, ultimately, it's also
about leadership.
Leadership is a key componentof this right that there's a
strong moral compass.
There's integrity it is aboutleading by example around profit
(05:31):
and and and purpose.
And so at a high level, justphilosophically, that that's
where I approached the fund andcertainly the companies that we
look at.
We're hoping and looking for asimilar philosophical approach,
and that's typically not aproblem with people who have
entrepreneurs that have startedcompanies that serve the
disability community.
Most of the time, thosefounders I'd say 99% of the time
(05:53):
those founders have a verydirect connection to the
problems that they're trying tosolve.
In many cases they have livedexperience with that area of
disability that they arebuilding products and solutions
for or creating employmentaround, and so that's typically
not an issue.
But philosophically, at a highlevel, that's where we start.
We believe that companies canbe for-profit organizations
(06:17):
driving a social mission and doboth very well and be successful
.
There's a growing body ofresearch.
You look at two decades ago andthe whole idea of social impact
investing and mission-drivenfor-profit businesses and ESG
and all of that.
There wasn't a lot of dataaround, can you really succeed
financially while having asocial mission?
(06:38):
Well, fast forward now, acouple of decades, and there is
actually a large body ofevidence that shows, over the
long term, companies that arefocused on mission and purpose,
in addition to profitability,over the long term actually
perform better than companiesthat are just solely focused on
(06:59):
profit.
In the short term, a lot ofcompanies that are just focused
on profit will look better andperform better than companies
that also have a purpose and amission, but over the long term,
the companies that are focusedon both and managing both are
actually performing better.
(07:19):
I think there's a couple ofreasons for that.
I think one is that there's ademographic change that is
happening in the country.
I look at my oldest daughter,who's about to graduate college.
She and her friends, they votewith their wallets.
If there are companies that arenot treating people and or the
world nicely, they're not goingto buy their brands or interact
with those companies.
Kelvin Crosby (08:09):
As we look at all of this one of the things is
really understanding yourbusiness.
But one of the things that I'vealways run into issues with in
the VC world is knowing theright time to approach a VC, and
so let's talk about the termearly stage capital.
So is that a seed run?
Is that a round A?
Is that pre-seed?
(08:31):
What does that mean in yourterms?
Because I think that'ssomething that a lot of
entrepreneurs that are lookingto reach out to you could really
benefit from understanding,like when is the right time, if
they feel like high level thatthey're meeting what you're
looking for, is the best time atwhat stage of their business?
Chris Maher (08:53):
It's a great question and I think that, so
I'll answer that in a couple ofparts.
So first, it's I believe thatentrepreneurs should start to
develop conversation anddialogue and relationships and
build rapport with VCs andinvestors, maybe individuals,
(09:13):
professional angels, as quicklyas they can.
Because as investors, a lot oftimes you're investing in the
people behind the business asmuch as you are the business
itself.
And so, as an investor, Ireally spend a lot of time
getting to know the founders andthe leaders of the organization
(09:33):
because that's going to give mea view into them as operators.
And so start early.
You may not be asking for money, but you just want to introduce
yourself, you want to introduceyour company, look for some
advice and some guidance so thenwhen you're ready to, when you
are ready to raise, you canreach out, and there's already a
relationship there.
(09:54):
So I think the earlier thebetter to develop those
relationships and to start thatdialogue.
What's really interesting in thepresent venture market is the
definitions of, you know, angelfriends and family, pre-seed,
seed, series A.
Those lines have gotten alittle blurred.
You know, back in the day,pre-seed for the most part meant
(10:16):
pre-revenue and there was a lotof investors that were focused
on that super early stage.
Hey, we're finding companiesthat are pre-revenue, that might
even be pre MVP of a product,but they've got a prototype or
maybe it's just a great idea andthey want to be one of the
first checks in and they'regoing to place a lot of bets
there and hope that a few or ahandful of them can can hit it
(10:40):
and and and then they'll maketheir return.
But there's a volume play there.
Anecdotally, what I've seenfrom talking to other investors
and talking to entrepreneurs,some of those early stage
investors have now shifted alittle bit to wanting to see
some revenue, to see a littlebit of that, as they call it,
product market fit, where you'vegot clients that are signing
(11:01):
contracts and paying you moneyto at least a little bit of that
.
But you typically have kind oflike, hey, I'm a founder, I've
got an idea, I'm going to eitherself-fund, kind of like what
you did, find some friends andfamily to provide some capital
so I can just go build myproduct or a prototype.
And then you get to precedewhere you're ready to go to
market Historically like, hey,I'm ready to go to market, I
(11:22):
need to raise some capital so Ican get to finish my product,
then start getting my firstclients.
And then you'd get to seedwhere, hey, I've got revenue,
but now I want to accelerate myrevenue, I want to hire more
salespeople and put more dollarstowards my marketing, build out
my product roadmap.
And then you get to series A,which is where, hey, we're going
to go raise an even largerchunk of money to really
(11:44):
accelerate this opportunity,because we have shown that we've
not only got product market fitbut we are starting to scale.
And then we really want toscale that as quickly as we can,
as we talked about in aprevious episode, where, when
you've got venture money comingin, scaling that growth as
quickly as you can to get tothat liquidity event or exit
becomes very important for youas an entrepreneur.
Kelvin Crosby (12:07):
As I'm understanding, because I want to
make sure we're all clear here.
So really, the best time toreach out is as soon as you are
ready to move forward with youridea, your business, your
concept to nurture therelationship.
And you're playing the longgame with this relationship.
(12:28):
You're not playing the bangbang, thank you, ma'am, type of
game on this type ofrelationship.
It's going to be sending youlike information, like, oh, here
we are, here, here's this,here's that, and oh, can we get
a meeting just to see what yourthoughts on this next idea that
we're working on, on thisdevelopment.
And so where do you startfinding yourself?
(12:52):
Like okay, so they've, theybuilt this relationship with me,
or I built this relationshipwith them.
We're starting to build trust.
I'm starting to see fruit fromwhat they're doing, whether it's
pre or post revenue.
Like where did that?
Like you're like all right, nowwe can start having a money
conversation.
Chris Maher (13:13):
Yeah, and so I think you're spot on.
And as an investor, what I tryto do is add value before I've
invested, especially if I likethe founders and I like the
business that they're in.
Because if I can do that beforeI'm an investor and on their
cap table, hopefully when theydo raise money they're going to
reach out, I'm going to be oneof their first phone calls and
(13:34):
they're going to say hey, we'rekicking off our round.
There's a spot in it for you,for Samaritan, if you want it,
because I've, I've shown themthat I've, that I've added value
.
And so.
But when they kick off thatround and, as you said, there
are some VCs they don't come inuntil, say, series A, so later
stage.
But you want to get to knowthem when you're at the pre-seed
(13:56):
and seed stage and you want tokeep them abreast, as you said,
keep them in the loop as you'reprogressing and things are
getting better and betterhopefully.
So when you do kick off your A,they're already comfortable
with you, they've got a reallygood feel for your business and
they're, hopefully, the duediligence process is easier and
shorter and there's a rapportthere.
(14:17):
But once there's a company thatkicks off around and for us we
invest between pre-seed andseries A.
We also reserve capital forfollow-on investment as
portfolio companies grow.
But if a company that we'reinterested in is kicking off
around, then we go through a duediligence process.
There's kind of two steps tothat, or at least the way that
(14:40):
we approach it.
So one is looking at somewhatof a higher level around three
things.
One is the first place wealways start is what's the
social good or the social impactthat they're driving, right?
So what are those products andservices or those employment
opportunities they're creating,that they're driving for the
community, and what's theirability to do that at scale and
(15:03):
in a sustainable way?
That's the first thing we lookat, if we can check that box.
Then the second thing we look atactually are the founders and
the team behind the business.
My experience as anentrepreneur and I spent 25
years as an operator and leaderof a variety of VC-backed
businesses is the people behindthe business at that early stage
(15:24):
are a critically importantdeterminant in the success of
that business in the future.
And so getting to know thatleadership team and the founders
really well, because you'regoing to be partners with them
and they're going to be drivingthe bus, but you're hopefully
they're helping them along theway.
You want to get a very goodfeel for those people, and for
(15:45):
me, integrity and honesty andtransparency and partnership,
coachability is really, reallyimportant, especially if it's a
first time founder and someonewho hasn't done this before or a
team that has not done thisbefore.
So that's the second thing welook at, and if we're
comfortable with the team, thenthe third thing we look at is we
(16:05):
really start to dig into thecommercial model.
So is it direct to consumer?
Is it B2B or B2B2C?
Is it recurring revenue,subscription services, is it
more episodic or transactional?
And then we go to that.
And then we go even deeper thanthat on the diligence side.
But the first part is socialimpact, ability to scale it in a
(16:31):
sustainable way, the peoplebehind the business.
And then what's the commercialmodel and what's their
go-to-market?
How are they going to makemoney or generate revenue?
Kelvin Crosby (16:39):
This is really good information.
I mean, I'm really realizing,wow, okay.
So nurturing the relationshipwith the VC is really really
important early on and, honestly, one of my biggest mentors in
helping me get started is sayingyou never ask for the dollar.
(17:01):
You're always asking what doyou think about my product and
how would you make it better?
And giving that VC, that personthat you're meeting with, or
the group of people to be a partof the team, and not
necessarily they're giving youfunding, but they feel and have
(17:23):
the, they build an emotionalattachment to your idea.
And I think this is reallyreally, really important because
, at the end of the day, ifyou're going to be a social gig
product or a service or aprogram, you got to have this
soft skills in place, because Ifeel like there's a lot of
(17:44):
entrepreneurs that don't, andthis is really really important
when you're thinking about allof this.
So just to kind of make surewe're all on track here.
So first thing is that you needto start the relationship with
the VC early on, nurture therelationship and then, as you
get ready to do your round andyou meet Samaritan Partners
(18:08):
requirements, then you can startshowing, oh, we're going to do
a round, would you like to beinterested in it?
And then that opens up the door.
You're not asking for money yet, you're still building that
relationship.
And if the VC really sees, oh,we've been a part of this, it's
been fun watching them grow,mature, become the product that
(18:30):
or a service or program thatthey become, and then what's
next?
At that point, Chris, you'vedone your due diligence, Chris,
and you're like okay, I'm ready.
What's the next step in thatprocess?
Chris Maher (18:44):
Sure, before I answer that, because you've said
a couple of really importantthings in what you just said.
The diligence and theevaluation.
It's a two-way street.
So, of course, VCs we're doingour due diligence on the company
, on the people that are behindthe company, but founders need
to do the same due diligence onthe investors, whether it's an
(19:06):
individual or it's a venturecapital firm, because it's a
partnership, right, and so youwant to make sure that you're as
comfortable with them as theyare with you.
And that's partly can they giveyou money?
But it's also how else whatother value can they bring to
the table, right?
So when you're meeting theseVCs early on, yeah, it's giving
(19:28):
them a chance to meet you and toget comfortable with you, but
it's also a chance for you toget to meet them, and you'll
notice very quickly if VCsreally mean it.
I'm like, hey, I know you'renot raising now, but how can I
help?
Can I make some introductions?
You know, do you want to pickmy brain about anything you're
doing around your go-to-marketor your product?
Take them up on that.
It's because it's a little bitof a test.
(19:49):
And if they follow through, ifyou'd say hey, you know, I'd
love an introduction to thiscompany or that company.
Well, see if they followthrough.
If they don't, you know thatmight be a sign of what they're
going to be like as a member ofyour cap table.
And so it is a two-way street.
You got to be doing yourevaluation along that journey as
(20:09):
well.
What I have found, which is sorefreshing and I admire it so
much, I'd say 99% of theentrepreneurs in this disability
space that I meet, theyactually talk a lot about.
I don't want to just take moneyfrom an investor.
I want to make sure that thatinvestor and that money comes
(20:31):
with an understanding of ourmission, that they believe in
the social mission.
We've got a kindred spirit interms of what we're trying to do
in terms of our social impact,and ideally, they could also add
value, either operationally orstrategically, product,
go-to-market, introductions, etcetera.
And I admire that because I wasCEO of a company once where we
(20:52):
were running low on capital andI needed to go raise money and I
couldn't be too choosy and Ihad to take money from a venture
capitalist who I knew wasn'tthe right partner for the
business and that they weren'tgoing to be helpful other than
giving us money and letting usto continue to run the business.
But I had to take that moneybecause I was in that situation
(21:13):
and so I admire entrepreneursthat one are thinking about it's
more than just money, but alsothat can build a business and
put themselves in a positionwhere they can be choosy about
who they bring onto their captable.
So, now to your question aboutwhen a company says hey Chris,
we're raising money, I've got arelationship and we're ready to
go.
That's when you really start todig into the commercial model
(21:37):
and also the social model of howare they going to be able to
scale the delivery of the goodthat they're doing in terms of
their products and services, butalso how are they going to
commercialize, how are theygoing to generate revenue and
ultimately profit?
My personal background and wherewe lean as a fund is more in
the business to business orbusiness to business to consumer
(22:00):
recurring revenue, so techenabled software and services,
so that subscription orrecurring revenue model.
I've done some direct toconsumer in my career.
It's really hard, it takes timeand it takes a lot of money to
go out there and acquirecustomers direct to consumer,
(22:20):
one by one.
You have to spend a lot ofadvertising and marketing
dollars and kind of get on thishamster wheel of customer
acquisition, and so we certainlyskew towards certain types of
business models, for sure.
Now, that's not to say that wewouldn't invest in a company
that has a direct-to-consumerelement to it, but we're really
looking for them to bemonetizing or commercializing,
(22:43):
mostly on the enterprise side,the B2B or the B2B2C side, and
that's just our personalpreference, right, there are
some VCs out there that all theydo is direct-to-consumer.
There's other VCs out therethat don't mind that it's a more
transactional, one-off purchasebusiness.
We tend to like subscriptionbusinesses.
One, we're familiar with it.
Two, we've got experiencerunning those businesses and
(23:04):
growing businesses like that.
But three, from a financialreturn standpoint, recurring
revenue businesses tend to get abetter multiple than a one-off
transaction business or a purelyservices business.
Kelvin Crosby (23:17):
So now, your model, your social, your social
impact, so there's that you're amajor component for Samaritan
Partners, is that's, that'sgoing to be a number one thing.
But then how are you going toscale it?
Is it going to be B2B love that?
Is it going to be B2B, or arethey going to be B2C or B2B2C?
(23:38):
I mean, try to say that fivetimes fast, that's a tongue
twister.
But all that to say, reallythinking about your model will
make a major difference inregards to your relationship.
And thinking, especially whenyou're early stage, you can kind
(23:59):
of adjust your model early onwithout having to make major
like, well, this is where we'reat, we're stuck here.
I mean, I'm not going to bringany businesses into this that I
know that I'm very close to.
There's one business that I amvery, very close to that I work
with all the time, and theytried to change their model and
(24:22):
it messed up their community,and now they've had to reel back
and put back in the old modeland then had to figure out a
skill, a different direction,and so picking the right model
is a really important thing.
Chris Maher (24:40):
I was just going to say.
I think you're touching onsomething that's really
important and I think what youwere just talking about there is
a concept that not enoughentrepreneurs think about early
in the process when they'refounding a company and in the
early stages of building.
And it's product market fit.
So in our previous episodeabout a lifestyle versus an exit
(25:02):
business, we talked a bit aboutaddressable market, what your
total addressable market is, theTAM.
That's an important thing thatprofessional investors, VCs look
at to decide whether or notit's venture worthy in terms of
investment.
Is the market that you'retargeting big enough?
And, as we talked about withSee Me Cane and you were so
(25:22):
smart and you you did that youwent through that process and
said, hey, this is pretty nichein terms of what I'm doing.
Another thing that's criticallyimportant that VCs look at a lot
is it's what's called productmarket fit, and that's where you
were going with your commentsbefore.
And so you want to make surethat you actually have a
solution where there's a problem.
(25:44):
And so are you solving aproblem that is worth solving
and making sure that you've gota product market fit.
I was part of a company thathad incredible technology.
It was a beautiful marketplace,but it was a solution looking
for a problem.
We didn't have product marketfit, and that made it really
(26:07):
really hard to grow the business.
And so identifying that productmarket fit, you know, is the
problem that you're solving forworthy of being solved for, and
is it a big enough problem?
But if you're building asolution and then going out and
looking for the problem that itsolves, you're going to be in a
tough spot.
(26:27):
And so getting out in themarket, talking to prospective
customers, getting theirfeedback, doing that due
diligence of your own to makesure that what you're building
is really something that isgoing to solve a problem is
critically important in thatprocess, and professional
investors like venturecapitalists take a very hard and
(26:49):
deep look at that.
Kelvin Crosby (26:50):
This is so important.
So, just to give people anexample of figuring out your
product market fit, because Ithink some people they're not
even sure what that means, and Imean, obviously, if you come to
a VC, you might want tounderstand what that is.
And like, for example, the SeeMe Cane.
See Me Cane is designed forvisually impaired individuals to
(27:13):
solve a problem that one out ofthree visually impaired people
get hit by cars.
And I went and did myinterviews.
I think I'm now at about 500people now, some recorded and
some not, And out of the 500, Ihave about 400 that have been
hit by cars.
(27:33):
You know, and that kind ofthrows off my numbers a little
bit, we got to one out of threepeople get hit by cars.
But this is a problem that I'msolving.
And so, thinking about that inwhat you're doing in regards to
your product, is it or a serviceor a program?
What problem are you solvingbefore you go looking at to
(27:57):
build your idea, concept orwhatever you're doing to really
grow your business?
And so I think this is really,really important to have that
idea, so that that is a problemthat I'm solving and hopefully
that's helpful for you tounderstand.
Like, this is what you need todo and this is how you will do
that.
Chris kind of talk about okayfor Samaritan Partners, are you
(28:19):
guys investing in pre-revenue orpost-revenue businesses?
Chris Maher (28:24):
For what we do at Samaritan as an investor, how do
you mitigate the risk aroundproduct market fit?
For us, we don't invest inpre-revenue companies, at least
as of right now.
So of the six companies we'veinvested in so far, all of them
(28:44):
were revenue generating at thetime that we invested and a
couple of them, their roundswere called pre-seed but they
still had signed contracts,paying customers, low six
figures in revenue so they haddemonstrated at least some
product market fit to an extent,whereas if you're pre-revenue
(29:05):
as an investor, you're taking onmore risk.
And so that's just ourpreference and our decision as
investors at Samaritan is we'renot investing in pre-revenue
companies at this point.
So it's a really good questionand it's something that
entrepreneurs need to probeabout and really flesh out when
(29:26):
they're talking to VCs.
Typically, when you're anentrepreneur raising a round,
you need to find a lead investor, and there's a couple elements
to that.
The lead investor typically iswriting the largest check, but
they're also helping to set thevaluation of the round.
And that's a negotiation, right.
(29:51):
Like entrepreneurs may say, hey, we're raising $2 million and
we think you know and where weare as a business and where our
revenue is, we think it'sjustified that the pre-money is
$10 million.
Well, you may find a leadinvestor that says hey, we're
willing to invest half of that.
You know you're raising twomillion, we'll lead with a
million, but we think thevaluation is only nine million.
And so when you're talking toinvestors or prospective
(30:14):
investors, as an entrepreneuryou want to get a sense of
what's their check size, what'stheir typical check size?
Do they lead rounds?
And if they do, what's thetypical check size on that?
For us right now, at Samaritan,we are only what's called
co-investing.
So we're not.
We haven't led any rounds yet.
That's not to say that we'renot open to that, but we haven't
(30:34):
at this point, so we have onlyco-invested.
So for us as investors, we wantto get to know the other
investors in the round,especially the lead investor,
because the lead investor isgoing to set the valuation and
the terms of that round.
And so, as an entrepreneur, youwant to identify.
You may talk to Samaritan andwe'd be like yep, hey, we're in
(30:57):
for X amount, but we're notgoing to lead.
Great, Chris, I can put youdown for that.
And then you've got to go findto lead.
But if you can get a number ofpeople of co-investors lined up.
That, in many instances, canhelp you find the lead, because
a lead will feel morecomfortable to lead if they know
that you've already got therest of the round filled with
(31:19):
co-investors.
So it's really important as anentrepreneur, and listen, VCs
are used to these questions.
You should not be afraid to askthese questions.
You should ask like hey, what'syour average check size?
Do you lead?
Do you only co-invest?
Those are all things thatshould be on your list of
questions when you're talking toVCs.
Kelvin Crosby (31:40):
What is Samaritan's average check size?
Chris Maher (31:43):
So for us, as I said earlier, we're investing in
so far pre-seed to Series A.
We try to take a diversifiedapproach to that.
Of our six investments so far,we've invested in two at
pre-seed, two at seed and two atSeries A.
Our checks so far have beenbetween $50,000 and $300,000.
And again, the intention isthat we will reserve capital for
(32:04):
follow-on investment asportfolio companies grow.
Those check sizes kind of lineup pretty nicely with the stages
.
So pre-seed, our checks are onthat smaller range up to A,
where those checks are at thelarger range.
And again, that's a perfectquestion to ask a VC when you're
(32:26):
having that conversation aboutinvesting.
Kelvin Crosby (32:29):
Well, I think this is really insightful
because, at the end of the day,knowing what you're getting into
is extremely important.
I mean, I know and I want toencourage you, obviously, if
you're an entrepreneur andyou're really thinking about
going after investment money asChris said earlier do not bring
(32:51):
in the wrong investor.
Really, make sure it's theright investor, even though it
might be painful having to waitanother couple of months.
I mean, I'm telling you thepain is real, the difficulty is
real, the struggle is real.
But do not allow that pain,that struggle, that difficulty
(33:16):
of the funds to bring in thewrong investor.
Because for me, I brought inone investor and I pretty much
don't need another, because thisguy will carry me pretty much
all the way through the rest ofthe way.
I mean, so that's where makingthe right investment and the
right decision for your businessis extremely important.
(33:41):
So I encourage you to look atyour company and really look at
it and say is Samaritan Partnersmeeting my goals, my mission
for my business and all of that?
But first of all, make surethat you're not trying to just
grasp at money so that you canpay your payroll.
(34:02):
Yeah, you got to pay payroll.
Yes, you got to pay yourpayroll.
Yes, you got to pay your bills.
Yes, you got to build theproduct or service or the
program Like you got to do allthat.
But there's ways to do thatwithout taking the wrong
investment.
Chris Maher (34:17):
So, Kelvin, can I make a couple comments here,
because I think you make somereally, really good comments.
Your key investor for yourbusiness believes in you and
believes in the social missionof your business and has been
happy to support you financially, which is critical, right?
Am I making an assumption thatthey're not really involved
(34:40):
operationally?
They trust that you are goingto drive the business because
you're the subject matter expert.
So that's wonderful.
I think of investors as comingin kind of three flavors.
And this was my experience as afour-time CEO, president of
different organizations over thelast 25 years and working with
(35:01):
venture capitalists andinvestors.
And generally speaking, for me,they came in three flavors and
I think it's kind of applicableto anybody.
You've got the investor likeyours, which they bring capital
to the table, they believe inthe mission of your business and
the impact that you're strivingfor, but they're kind of a
(35:23):
silent partner.
They leave it up to you to runthe business, Right.
and that's a great investor tohave.
You don't want every investorto kind of be involved
operationally and kind ofpitching in and trying to help
you to do what you do.
But if you can have an investorthat can give you capital,
believes in the mission of yourbusiness and then lets you do
your thing, and you just they'relike you know what, Kelvin, you
(35:46):
know what you're doing, here'smy money, I believe in what
you're doing, let me know how Ican help, but they're pretty
much a silent investor.
That's a great investor to haveand you want some of those
people on your cap table.
On the other end of thespectrum, you've got the
investor that brings capital tothe table.
In the situation of the part ofthe market that you and I are
in which is mission-driven andsocial impact for-profit
(36:07):
businesses, you want thatinvestor to believe in the
social mission of your businessand the impact that you're
driving.
And, thirdly, they also canbring operational or strategic
value to the table.
They've got operationalbackground of their own.
They know go-to-market, theyknow product development,
marketing, et cetera or maybethey're just subject matter
(36:31):
experts on your space.
They've got tons of connectionsacross the industry and they
can help you strategically fromthat standpoint.
That is also a fantasticinvestor to have on your cap
table.
The dangerous investor is theone that falls in between those
two things.
They bring money, they're not asilent partner, but they want
(36:52):
to get involved and they thinkthey know better, but they
really don't.
And that can be a verydistracting and disruptive and
counterproductive investor whosticks their nose in things they
don't really understand yourbusiness or the market.
They're pushing you and yourteam to do things that, honestly
, are just spinning your cycles,but you have to do it because
they've asked for it.
Those are the type of investorsyou really need to try to
(37:15):
uncover in the process of yourfundraising and, in my opinion,
if at all possible, avoidbringing those people onto your
cap table.
I unfortunately, over my career, have worked with investors
like that and it can be reallyreally challenging.
So kind of three flavors ofinvestors that I think
(37:36):
entrepreneurs really want to tryto identify when they're going
through that fundraising process, two of which are great to have
on your cap table, one of whichcan possibly be problematic for
you.
Kelvin Crosby (37:47):
So that's an important thing.
I mean, if you want apples,oranges or bananas depending on
what one you want and how you'regoing to run your business.
I couldn't resist that one.
Chris Maher (37:58):
That's a good one.
I like it.
I like it.
Kelvin Crosby (38:03):
I mean, this has been fun.
I mean, if you want more ofthis, let us know on the
LinkedIn post that you're likewe love this episode and would
want more like this.
Let us know.
Chris Maher (38:19):
You and I have talked about this, but two, I
think, interesting conversationsoff of the back of this one
that you and I have had is let'sgo get a couple of other VCs,
and VCs focused in and aroundour sector, and let's talk to
them about how they'reapproaching the investment
process, so like a little minipanel and then let's also get
(38:43):
some entrepreneurs who havesuccessfully raised money, or
maybe who are going through theprocess of raising money, and
get them to talk about thatexperience.
Just a thought, but it would beinteresting, if our audience
would like to, for us to do oneor both of those episodes as
follow-ups.
Kelvin Crosby (39:01):
Put in the comments that we want more of
this style of episode where wetalk about VC world, we talk
about entrepreneurs and whattheir experience is going
through this process.
So if this is something thatyou are like, we want more of
this.
So go to LinkedIn, go to ChrisMaher and right there and we'll
(39:23):
have a link in the descriptionon the podcast notes and you can
click on directly to that post.
You hit there and then just putin the comment saying we want
more of that or something likethat.
So we know that you guys wantmore of these type of podcasts
as well.
So we can bring in VCs and seewhat their thoughts are.
(39:44):
We can bring in entrepreneursthat are currently in the rounds
of seeds and all the differentlevels and see what how that
looks and provide support andall those different things.
So if this is something thatyou'd like, check out that
LinkedIn link in the descriptionor go to Chris Maher's post on
LinkedIn.
Chris, is there any last minutethings that you want to say
(40:07):
before we wrap up?
Chris Maher (40:10):
No, I've enjoyed this conversation with you today
and I think that forentrepreneurs, and you said this
earlier, it's like start thedialogue and the relationship
early with especiallyprofessional investors, to get
to know them, build a rapport.
They get to know you, you getto know them.
It's a two-way street.
(40:30):
You're both doing due diligenceon each other.
Try to uncover who's reallygoing to add value, whether
they're just bringing capital orthey can also bring some
additional operational orstrategic value to the table,
because it's important who youbring onto your cap table, and
you ideally would have investorswho can help you grow your
business.
It's not just money.
(40:51):
Some of them will be justbringing money, but others you
really want to help you driveyour business forward and to
scale it as best you can.
And then it's business modelright.
You got to think.
You got to think aboutaddressable market early on.
You have to really think aboutproduct market fit.
What is the problem you'reactually solving?
Is it really a big enoughproblem to be solved?
(41:12):
Don't just be buildingsolutions, searching for a
problem.
Get out there and talk to theprospective customers or the
clientele and get that feedbackas early in the process as
possible and then continue toget that feedback as you move
forward.
And then think about how you'regoing to commercialize it.
Is it direct to consumer, is itB2B, is it B2B2C, is it
recurring revenue, is it one-offtransactions?
(41:34):
And I know that sounds like alot, but that's the life of an
entrepreneur.
Like Kelvin, in our lastepisode, like you've done all of
that right, you've thoughtthrough all of that multiple
times as your business hasprogressed, and that's the life
of an entrepreneur.
It's going to be up and down.
It's a rollercoaster ride,right, my friend?
I've been there.
You're there right now.
(41:55):
It is a rollercoaster ride andyou need to not get too high
when things are going well andnot get too low when things
aren't going great and surroundyourself with great people and
that's not just the people inyour business helping you manage
it every day, but also,hopefully, investors that are on
your cap table that can alsosupport you in that process and
(42:16):
in that mission.
Kelvin Crosby (42:17):
That wraps up investing in accessibility.
As I always say, go live beyondyour challenges and I will see
you in two weeks.
Thank you for listening toInvesting in Accessibility, a
Samaritan Partners podcast wherewe invest in change for
(42:37):
accessibility, not wait forchange.
If you want to follow us, youcan find us on YouTube or
LinkedIn at @Samaritan Partners.
If you would like to invest inSamaritan Partners, email Chris
at chris@samaritanpartners.
com.
If you'd like to learn moreabout us, go to www.
samaritanpartners.
com.
You can take the first step ininvesting in change by giving us
(43:01):
five stars and sharing thispodcast with everybody that you
know, so we can spread the word,so that we can give access to
all, by Investing inAccessibility.
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