In a recent fireside chat moderated by Leslie Feinzaig, Monique Woodard, founder of Cake Ventures, shared her unique investment thesis and insights into the evolving landscape of venture capital. Here are the key takeaways from their engaging conversation.
Cake Ventures’ Investment Thesis
Monique Woodard’s Cake Ventures operates with a distinctive thesis that focuses on the intersection of technology and demographic changes. She identifies three primary areas of opportunity:
- Aging and Longevity: With 10,000 people turning 65 every day in the US, there’s a growing need for solutions that help people age in place and live healthier, happier lives.
- Increased Spending Power of Women: Women’s increasing economic influence drives the success of billion-dollar companies, especially in women’s health and B2B healthcare solutions.
- Rise of a New Majority: As people of color become the majority in the US, there’s significant potential in catering to diverse markets, such as Mama Foods, which serves the Latino community with a specialized grocery delivery service.
Exciting Opportunities
Monique highlighted several exciting opportunities within these layers. For instance, in the female economy, she invests heavily in women’s health, focusing on B2B solutions to enhance healthcare delivery. One of her recent investments is in a fertility company that aligns with this focus.
In the context of the new majority, Monique invested in Mama Foods, a grocery delivery service tailored to the US Latino market, capitalizing on the growth potential within this demographic.
Sourcing Deals
When it comes to sourcing deals, Monique emphasized the importance of networks. Recommendations from founders within her portfolio and other VCs play a crucial role. Additionally, Cake Ventures’ thought leadership, demonstrated through white papers on topics like the aging economy and the female economy, attracts potential deals. Monique also personally reaches out to promising founders, setting her apart from many VCs who delegate this task.
Building Relationships with Founders
Monique prefers to build relationships with founders over time, observing their execution on stated goals. While she doesn’t require long-term relationships before making investments, she values a demonstrated ability to achieve milestones.
Evaluating Startups
Team quality is paramount for Monique. She looks for founders with unique insights into market opportunities and the ability to build substantial companies. Personal experiences or deep industry knowledge often distinguish successful founders.
Common Reasons for Passing on Deals
Monique shared that passing on deals can be due to various reasons, often unrelated to the startup’s quality. Reasons include existing investments in similar companies, incomplete teams, especially lacking technical talent, and heavy reliance on outsourced technology.
Advice for Founders
Monique advises founders to have a strong grasp of their metrics and competitive landscape. Understanding how their business operates and how competitors address similar problems is crucial. She also stressed the importance of customer validation and building an MVP before seeking funding.
Traction Expectations
Expectations for traction have evolved, with higher bars set for revenue and customer validation. Monique expects preseed companies to have built something, received customer feedback, and demonstrated some level of market demand.
Navigating Pivots and Endings:
When to Pivot
Communication is Key: Monique emphasized the importance of maintaining regular and transparent communication with investors. Founders should clearly explain what isn’t working, the experiments they’ve conducted, and why a pivot might be necessary. If a founder goes silent and then announces a pivot, investors are less likely to be supportive.
Timing and Trust: She advised that pivoting should be about finding a better path to building a scalable business. Investors are generally supportive if they see the pivot as a strategic move to achieve the overarching goal of creating a successful venture.
Advising Founders at the End
Empathy and Directness: Monique highlighted the importance of approaching these conversations with empathy. Investors should help founders assess whether there is still a viable path forward or if it’s time to consider shutting down.
Portfolio Perspective: Investors expect some companies in their portfolio to fail. It’s crucial for founders to understand that they are not letting investors down by deciding to stop working on a business that isn’t progressing. This realization can help founders move on to more promising opportunities.
Shifting Mindsets
From Scarcity to Abundance: Monique discussed the scarcity mindset, particularly among women founders and VCs. She encouraged a shift towards an abundance mindset, where collaboration and sharing opportunities can benefit everyone. Introducing peers to potential investors shouldn’t be seen as a threat but as a way to collectively rise and succeed.
Milestones at Different Stages
Preseed Stage:
- Complete team, especially with technical capability.
- Understanding of the market.
- Early signals of customer interest.
Seed Stage:
- Revenue generation.
- Defined and refined go-to-market strategy.
- A functional product beyond the MVP phase.
- Early customer adoption.
- Good unit economics.
Series A Stage:
- Greater product-market fit.
- Improved unit economics.
- More advanced customer adoption and market penetration.
Monique Woodard’s insights underscore the importance of aligning with demographic trends and the critical role of execution and market understanding in building successful startups. Her insights offer a comprehensive guide for founders on navigating critical moments in their startup journey, emphasizing the importance of communication, strategic pivots, and realistic milestones.
Watch the full replay on YouTube: Fireside Chat Replay.
Watch the replay here:
About Graham & Walker
Graham & Walker is a venture firm that activates the potential of all women in business through programs, community, and direct investments. We are on a mission to reshape the Nasdaq by investing in tech companies founded and led by women. For more information, please visit https://grahamwalker.com
