Kristin Gunther, Vice President at Revolution Growth, takes the time to talk to Nasdaq about life as a Venture Capitalist.
How did you get started in venture capital, and what drew you to the field?
I have worked in various finance and investing roles since graduating from college – M&A, restructuring, sales & trading. It wasn’t until I took time in business school to reflect on my career that I realized that helping companies grow and navigate challenges was what I found most fulfilling. This led me to join a private equity firm after getting my MBA, and after doing that for five years (including a nine-month stint as CFO of one of our portfolio companies), I joined Revolution.
I had been introduced through a friend and I admired the companies they had invested in and the values of the firm. I was excited to bring my investing and operational skills to the firm as they sought out the next crop of iconic companies.
Describe a typical day in your life as a VC.
Part of why I love my job is that there truly is no typical day. One day I’m in my office supporting negotiations for an exit and the next day I’m 1,000 miles away touring the facility of a potential investment. Venture capitalists have to wear a lot of hats, constantly draw on prior experiences to advise teams, and quickly get to the heart of why a company may or may not be successful.
During a typical week, I will be in the office for a few days doing a mix of diligence calls and portfolio company support (usually capital raises, partnership strategies, and exit planning), and out of the office for a few days at a board meeting, conference, or site visit.
What do you look for in a company when considering a potential investment? What makes a company stand out?
I like to focus on companies that creatively improve consumer experiences in commerce, healthcare, and media. To me, the most important factors are the team and the business model. I try to get a sense early on for whether the founder is self-aware, fully committed to building a big business, and able to recruit high-quality team members. Often even the most experienced or impressive-on-paper founder lacks one or more of those traits.
As for business model, a company can have the best idea in the world, but if they are selling through the wrong channel or haven’t developed infrastructure to properly scale, that’s a problem. By the time they make it to us, they should have that figured out.
Scopely, a free-to-play mobile gaming company in LA, is a good example of both of these. The founder, Walter Driver, is incredibly driven to create a billion dollar plus company and has surrounded himself with some of the highest quality talent in the business. And, rather than focus on creating a hit game (risky) or develop a particular game (commoditized), they focus on being the monetization layer that, through AI-driven personalization and live operations, delights users so they will pay for items/access within the game.
What stage do you focus on and how much capital do you look to deploy for each portfolio addition?
Our initial investment is usually $25-$50M and we tend to invest in Series B or later rounds. The companies we target are growing quickly and are at scale within their given industry. We also reserve capital for follow-on investments in our companies to support them in their growth.
How many companies have you invested in, and are you looking at expanding your portfolio or keeping it relatively where it is? Why?
Revolution has invested in nearly 150 companies across our three funds – Revolution Growth, Revolution Ventures, and Revolution’s Rise of the Rest Seed Fund. We are actively making investments from all three funds, but Revolution Growth typically makes 3-5 investments per year.
What do you wish more companies seeking VC investment knew? How could they make themselves more attractive to people such as yourself?
I wish more companies in this environment understood the downside of raising at too high a valuation. I certainly understand the temptation, but seeking the highest valuation is a short-sighted strategy, in my opinion. Doing so means that everything has to go right, otherwise you have unhappy investors and a subsequent fund-raise that’s a lot harder than it should be. I also wish more founders had a better grasp of their true unit economics. Vision is important, but articulating in detail why the business is actually a business vs. a fundraising vehicle is super important at the growth stage.
What are some of the challenges about being a VC that would surprise people?
When I started at Revolution, I assumed companies would be banging my door down asking for capital. They would be selling me on their companies and why they deserved funding. I quickly learned that all money is green and that in a world of abundant capital like we have today, its up to the VC to explain how they can add value or uniquely help the company. I feel fortunate to be a part of a firm like Revolution with a strong brand and investment thesis that founders want to partner with.
Can you provide a few examples of companies that you are working with that excite you because of their business concept or leadership?
I work closely with our investment, Revolution Foods, which provides healthy meals to schools and communities around the country. I love this company because, as a mom with an elementary aged child, I know how much of a difference nutrition makes in a child’s behavior and his or her capacity to absorb information. It’s an example of a company where the cofounders, Kristin Richmond and Kirsten Tobey, have truly made the brand what it is today. They encountered a problem they experienced as moms, came up with a vision to solve it, and have executed on their vision to create a nationwide provider of clean label food.
What advice would you give a company before their first pitch meeting?
I always cringe when I watch Shark Tank and the founders aren’t prepared for the obvious questions. They ask the same questions every episode for a reason and founders should be prepared. So do we. Some of the questions I usually ask are, how are you going to scale to $1bn? Are there gaps in your senior team? What keeps you up at night? What could go right and what could go wrong? How exactly will your margins improve/customer acquisition cost come down, etc? When founders provide honest, but straightforward answers to these questions, I know they have a good grasp of their business.
What advice would you give your younger self?
Earlier in my career I always second guessed job transitions and whether I had made the right move. I thought a lot about what might have been if I had stayed in a former role, if I hadn’t taken the time to go to business school, etc. What I’ve realized over time is that as long as you are still learning and you take the time to reflect on what drives you, you’ll land in a good place professionally. Maybe a little later than you’d like, maybe in a different way than you’d envisioned, but ultimately being challenged and being purposeful are powerful determinants of success. 23-year-old Kristin did way too much hand-wringing!
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.