Venture capital is a pillar in the business industry, as it serves as the fuel to ignite a start-up business. However, the industry is evolving and modern times have called for modern strategies. Consequently, its structures have been rebuilt, familiar terms have gained new meanings, and ecosystems continue to expand.
On this episode of The BARE Ventures Podcast, Samir Vig introduces founder and partner of Story Ventures, Jake Yormak. Yormak's experience and expertise provide clarity on the current state of the world of venture capital. Vig and Yormak discuss the key details within this broad topic.
Listen to the full episode with host Samir Vig and Jake Yormak here.
Story Ventures: How Jake Yormak Found his Passion
A former New York-based lawyer at Cravath, Swaine & Moore, Yormak focused on mergers and acquisitions, capital markets, and leveraged finance. Transitioning to another firm, Gunderson Dettmer, his focus shifted to early-stage startup tech companies.
After Yormak noticed the city's industry environment evolving from the corporate world to the tech world, he started Story Ventures with his brother, Brian Yormak. Just shy of six years ago, Story Ventures was established.
The Focus of Story Ventures
Story Ventures is an early stage venture fund that invests in entrepreneurs with big visions that leverage technology and the proliferation of data to change the way people interact with the world. Targeted sectors include cybersecurity, energy infrastructure, telecom, payments, lending, computer processing, data analytics/visualization, autonomous vehicles/connected car, computer vision, and urban infrastructure.
In short, they aim to fund companies that will excel in and change their target sectors.
Data Automation: The Increase of Investors and its Evolvement
A key influence on launching Story Ventures was the lack of data and automotive technology investors in New York City. However, that has changed.
"It's still in the early days...specifically outside the bay area," Yormak states.
Venture capital has grown exponentially, as more new funds enter the market and raise larger pools of capital than ever before. In addition, the pace of company creation has had a staggering increase.
Pre-seed and Seed Stage Funding
Pre-seed funding is a critical phase in the evolution of a new business, and Yormak emphasized the differences between pre-seed and seed funding between then and now.
"Three years ago, I would have told you it was less than one million dollars," Yormak explains. "But now you see pre-seeds at $1.5 to $2 million dollars."
Seed rounds can far exceed this and even begin to resemble what some traditionally would view as a Series A.
Product-Fit Market Validation
Validating product market fit is a key step to attracting investors. Strong growth, gaining market share and product enhancement serve as evidence of the momentum Yormak speaks of.
"What I see in this market is that Series A venture capitalists (VCs) are much more interested in momentum than they are the absolute metric," says Yormak.
Evolution of early stage founders, investors and structures
Changing day by day and second by second, the world of investing makes it difficult for old strategies to work with the modern investing industry framework. Vig opens up the topic of the evolution of founders, investors, and structures, with his viewpoint on classifications of a company. The progress of a business is now how the market is beginning to classify business phases, rather than the traditional letter classification.
"The lines are blurred now, and it's tough to call something a letter just by where it is," Vig states.
Yormak supports Vig's viewpoint by revealing the structural changes over time. What used to be classified as a series A in the past, would now be classified as a seed fund, for example.
The Next Chapter for Story Ventures
As the discussion on the evolution of early stage founders, investors and structures continues, the spotlight is put on the future of Story Ventures. Vig invites Yormak to give listeners a glimpse on the next chapter of his company.
"We just want to be the best," says Yormak. "Being the best means we have to be flexible, because if you're just going to do the same thing over and over again, it's very hard to maintain that edge."
In terms of what Story Ventures looks for when it comes to building their portfolio, it's in the "sweet spot" of automation and data technologies, with a high priority in commercial, technical and detail orientation.
"There is a network of active venture capital," explains Yormak. "If you manage to build a fund that survives for five years or more, you can start to benefit from it..."
Entrepreneurs are encouraged to dive into the opportunities that first check investors may bring, or in other words, align visions with the right venture capitalist. Investing now should be more of a mutual diligence.
Bringing together founder, operator and investor experience, BARE Ventures as a firm strives for a well-balanced approach to fund management. With an institutional investment background, BARE Ventures focuses on proven traditional methodologies combined with emerging learnings in the ever-changing venture capital landscape.
Learn more at https://www.barevc.com/.
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