At one point, an investor that had recently joined Tundra Angels told me something that was one of the highest compliments that Tundra Angels had ever received. 

Let's call this Tundra Angels investor Amelia. She had previously been an LP in another venture fund for ten years. That fund's deployment period was over. Importantly, it had not raised a second fund... which in the VC world is another way of saying that the fund didn't have enough hits in the portfolio to justify raising a second fund. Not a good outcome.

Amelia joined Tundra Angels, then came to her first pitch meeting, participated in the discussion, even asked a question during the Q&A, and went home. Some time later, Amelia also joined a Zoom discussion to do due diligence on a different company. 

At the time of that call, Amelia had been exposed to only four startups through Tundra Angels - three at the in-person pitch meeting and then one more startup via a virtual opportunity that we held. 

On this Zoom call, Amelia said something surprising. 

She said that she had only been part of Tundra Angels for two months, but that she had seen better deals in two months with Tundra Angels than she had seen in ten years with the other venture fund. 

Whoa. 

It was one of the highest compliments that Tundra Angels had ever received. 

Now, I want to be careful here. Amelia wasn't trash-talking the fund, and neither am I. But what she said landed because it was specific. “I’ve seen better deals in the four startups that I've seen in two months than all the ones I've seen in ten years."

I keep coming back to it because it illuminates something. Something that I see as one X Factor of Tundra Angels

At first glance, one of the logical questions may be: What is the difference here? 

Four companies in two months vs. X number of companies in ten years. 

Why is such a difference in quality?

There are many reasons - but I'll point to one common thread that I have observed which I is true and I believe holds merit, not only with this venture fund but many other contexts to invest in venture capital.

I am in a lot of meetings with VC fund managers, VC Partners, VC Principals, angel network managers, family offices, etc.

Here is what I have found: 

There is a colossal difference between an investor or VC that has previously run a tech startup as Founder/CEO and an investor that has not. 

Thus, I think one X Factor of Tundra Angels is this - the fact that I have founded and have run a VC-backed startup as CEO gives Tundra Angels an asymmetric edge in finding, building relationships with, and investing in startups.

I initially curate the top of funnel deal flow in Tundra Angels and select the startups to pitch for the pitch meeting. I was a founder for five years, built a software product into a regulated industry, raised venture capital, and made 1,000 mistakes and a couple good decisions. When a founder is deciding whether to come pitch Tundra Angels, that part of my background matters. It is about the fact that I have sat on their side of the table or the Zoom screen.

To be very clear, this is one X Factor to Tundra Angels’ success out of many others. Our members, our process, our brand, are also X Factors and all work together harmoniously.

In comparing Amelia’s experience of the startups she had seen over 10 years with the four startups she saw within 2 months of Tundra Angels, this X Factor is highly contributory. But, it also goes beyond this one venture fund to others that I continually come face to face with in my investing activity.

It’s this disconnect between those who “get it” and those who don’t.

It's darn hard work to continually keep abreast of the startups that are fundraising, uncovering startups before they fundraise, pursuing competitive ones and getting Tundra Angels a seat at the table. 

But that's one reason why the X Factor matters. 

Here is a second reason why this X Factor matters.

Tundra Angels is one of the startup funding sources that is quickest to build and maintain credibility with startup founders. 

By the way, employee #7 at a high growth startup doesn't cut it. 

Some of my VC peers have come to investor side as an early employee in a startup. In that case, there is context that is critically absent - that employee has zero experience tactically running a fundraise with venture capitalists. Running a fundraise wasn't this early employee's job. That was a CEO's job. You either got it or you don't. 

Furthermore, I will tell you that if I got an MBA and a second masters degree from a top 20 school and then moved into a VC Associate role, (which many, many newly minted MBA students do), I would be a horrible investor. Why? 

Because there are specific kinds of question you only know to ask if you sat in the founder seat at a company that was scaling. 

I'll give you the most recent example I have.

Recently, a startup founder forwarded me an email they had received from another VC. This VC does not possess high growth startup Founder/CEO experience but rather worked in corporate and has worked with startups throughout their career (its anyone’s guess how that affects their mindset when it comes to venture investing). The VC was deciding whether to invest in that company. As part of that decision, the VC had sent the startup founders a list of things they wanted before they would say yes. Here is a screenshot of the email: 

I read the email twice.

I'm just going to say it - I have no idea what they are asking for. I have no clue what that end deliverable actually looks and sounds like. 

But one thing was clear.

They were essentially saying, "We want you to precisely predict the future in five years and we will subjectively determine that you are either correct or or incorrect in your precision of that future. We need to get enough good vibes from everything that you put together for us. If we don't, then we won't invest." 

That is an impossible ask. There is no way to succeed at this request. Even if the founders had somehow produced the document, I'm not sure what the VC would have done with it. Held them to it? I mean, how could they?

Contrast this with Tundra Angels' process. 

On the Tundra Angels side, I am way more way more market gap, market inefficiency, category creation focused, at least in my initial conversations. 

Angel investing is more about the belief in the future that needs to be created, rather than what shows up on the pro forma. 

I am not saying you need to have been a high growth founder/CEO to be a good venture capital investor. I just have a firm conviction that it's hard to coach or invest in the game without ever playing it yourself. 

This one X Factor of being a former VC-backed startup founder/CEO experience not only matters to our investors like Amelia in terms of the quality of deals that we see. It also matters to the market - the startups that Tundra Angels is looking to fund. 

My experience of being a former VC-backed startup CEO is not lost on any founder that I speak with. 

I was emailing with a Founder and CEO of a company recently who had a note in his email where to went off the cuff and said, "Founder to founder, I hope you understand." This Founder knew me, appreciated where I came from, and knew that I could activate that former Founder/CEO headspace to understand their position on something. I totally did. Credibility built. 

Separately, I also recently spoke with another founder who reached out to see if we could talk. This type of call wasn't as much fundraising related, but very occasionally I take a call like this if I like the founder and see future potential.

The Founder told me that they were dealing with a number of challenging things related to their co-founder. This founder told me, "If I can talk to somebody who knows about business and that I feel comfortable talking with, who would that person will be? You were top of mind. And I wanted to talk with you more as a friend who knows businesses more than anything else." 

One of Tundra Angels' X Factor is the fact that I, who do the front end deal curation, have been on the other side of the funding equation - I've lived it, I get it, and that influences how we read founders and decide which deals to pursue. 

To close, this X Factor also comes in handy in a third and subtle way.

Some startup deals are so competitive that the investment firm needs to have an asymmetric edge over others VC firms in order to get an allocation into the deal. 

Tundra Angels is investing in a startup where they are raising a large funding round in the high millions. The lead VC investor is an out of state investor with a robust network of co-investors that they invest into deals with. After our commitment, when I offered to introduce the startup CEO to other VCs in my network, the CEO gave me a very rare, "Thank you, but I think we're good at this point" answer - a signal that only happens if they have way too much spoken demand for the allocation of the round available. Over the weeks, twice the CEO of the company mentioned that they might need to reduce our desired allocation. When they came back, they didn't reduce it - Tundra Angels got the allocation that we desired. 

The X Factor is one of the reasons why Amelia mentioned that she's seen higher quality deals in the last two months than in the last 10 years. 

The X Factor is one of the reasons why Tundra Angels is quick to build and maintain credibility in the startup and angel investing landscape. 

The X Factor is lastly one of the reason why Tundra Angels can get into hyper-competitive funding rounds. 

Again, that's just one X Factor out of a multitude that we are based on. Yet, it is a key reason why Amelia said she saw higher quality deals in two months with Tundra Angels than she’s seen in 10 years with another venture fund.

If you want more info to get access to these deals, just reply to this email and say, “Tell me more.”

- Matthew

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