Inside The Mind of a Venture Capitalist

Nobody likes fundraising, but sometimes it can mean the difference between life and death for a startup.

Last Wednesday, Project: RHINO hosted #DrinksDemos, a monthly Toronto meet-up that focuses on exploring issues relevant to startup founders.

The theme of this month’s event was “Inside The Mind of a VC” and featured panelists Greg Isenberg, partner at Good People Ventures in Montreal, and Matthew Leibowitz, partner at Plazacorp Ventures in Toronto.

This panel explored the process of raising capital, what VCs look for in a founding team, how to find the right investors, and how to get them excited about your company. There was a great turnout for the event, which also featured a product demo (video) from Brennan McEachran, founder of Soapbox.

It was fascinating to hear from both Greg and Matthew, two passionate investors with very different backgrounds and very different approaches to investing. The panel was moderated by Jeffrey Howard, Co-Founder of Toronto-based startup Here is a condensed version of the talk – full video below.

What gets you excited about a startup?

Matt: I know it’s a bit cliche, but it’s 100% true: people are ultimately the most important thing in any startup company I’ve ever been involved with. Management teams will make or break an investment – period… I also like companies that have a global reach and can sell to global customers.

Greg: We really invest based on the space… If you pick a small market to build your business in, you don’t really have room to move around. And that’s something we look for, because at the end of the day the business you start to work on is quickly going to change, so you need to be very passionate about the space you’re in and go from there.

What is the best way to reach out to you guys?

Greg: Well you can email me. The question is will I read it. And there’s an art to all of this. I mean, first of all, never cold email anyone… The trick is to find someone that I respect and get an introduction through that person. Then I’ll probably meet with you.

Matt: It’s really not that hard. Just make the call… The secret that most VCs will never say is that we need you guys. We actually don’t make any money unless we find you. We need to be investing in the next big thing, whatever that might be.

After you make an investment, what’s it like to work with you?

Matt: I’m a firm believer that if you just sit and talk with someone you can generally solve most problems. So I like to ramp up the communication. Raising money is hard, but taking one of my dollars and turning it into five or ten dollars, that’s the real hard part.

Greg: I do expect investor updates maybe once per month, and I do expect these founders to call on me when they need help. That’s really about it. We’re usually the first money in. So because of how early we are, we’re a bit more hand-off in general.  

What are your expectation around an exit? Do you ever pressure founders to be acquired or go public?

Matt: Well first of all, it always takes longer that one anticipates or budgets for. That’s a pretty general rule… To me, if you’re in it for longer than 5-7 years it’s a lifestyle business. I’m not interested in investing in someone’s lifestyle business. Most investors aren’t.

Greg: When we started our first fund, we wanted 2x return in five years, minimum… The way the math usually works for Silicon Valley companies is that 1/3 of the companies will fail, 1/3 will give you your money back, and 1/3 will give you “2-Google” x return.



The next #DrinkDemos is on March 13 and the theme is “Up And to the Right” and will explore go-to-market strategy and user-growth. Register online to attend.