How can Venture Capital firms help you?

In this episode we dive into new kinds of Venture Capital firms and what they offer startups. Many startups seek venture funding, but most funds look the same. What can new types of funds offer? When are they a good fit for you? We are here to help! In this episode we answer questions including:

• How involved should a typical VC be?
• What’s more important the founders or the market?
• What are examples of an “unfair advantage” that a startup can have? 

We also hear details on Sterling Road and Near Horizon, two new kinds of venture firms started by our own Ash and Sean!

All of these questions were submitted by listeners just like you. You can submit questions for us to answer on our website TheStartupHelpdesk.com or on X/Twitter @thestartuphd - we'd love to hear from you!

Your hosts:

• Sean Byrnes: General Partner, Near Horizon www.nearhorizon.vc
• Ash Rust: Managing Partner, Sterling Road www.sterlingroad.com
• Nic Meliones: CEO, Navi www.heynavi.com

Reminder: this is not legal advice or investment advice.

Q1: How involved should a typical VC be?
For a typical investor, they should not be involved much at all. Many VCs don’t have experience operating a startup, thus, their advice can be distracting. Nonetheless, it is important to keep them regularly tuned in via monthly status updates.

For investors that have built and led startups, their help can be significantly more meaningful. With Sterling Road, Ash provides regular cadence coaching to help your startup at the earliest stages. This also includes hiring intros, customer intros, community access, and fundraising help.

Sean explains that Near Horizon gets as involved as possible, but they aren’t the CEO. You need a CEO with vision and deep knowledge of the space; Near Horizon is the booster rocket to make them better. They support the CEO with a wide range of founder-centric efforts, but fundraising and hiring remain the CEO’s responsibility.

Q2: What’s more important the founders or the market?
You need both! The table stakes for a startup:
1: The market: it needs to be a huge problem with a lot of potential buyers.
2: The founders: impressive founder with a history of success and resilience is key. The founder will make or break the company.
3: Proof: then you need a great idea, evidence that it might work, a demo, and a bunch of customer discovery.

Great founders can build businesses in small markets, but not venture-backable businesses. Weak founders can show traction in big markets but will struggle to scale. Investors are looking for a unicorn, and that is very rare. Most investors review hundreds if not thousands of startups for every one investment.

Q3: What are examples of an “unfair advantage” that a startup can have?
Ash explained that Sterling Road prizes advantages in tech, network effects, and user experience (usually based on tech, otherwise a competitor could easily copy it).

Sean emphasized that Near Horizon looks for founders with unfair advantages in distribution. You need a way to reach your customers that isn’t paid advertising.

Other nice-to-haves include:
Hiring - having a network of amazing people who want to join your team.
Customer rolodex - knowing the first dozen or so buyers.

Lightning Round

• Do founders make the best investors?
• What’s a clear indicator from a startup that can make it interesting to potentially invest?
• After three months of receiving the Near Horizon or Sterling Road golden touch, what’s the change that a startup should experience – what can they now do diffe