Not every “perfect storm” ends poorly.
Or at least that’s the thinking behind Andy Cloyd’s investment in Summersalt, a women’s swimwear brand that he claims has “been a rocket ship.” Cloyd, a Principal and venture capital firm, Cultivation Capital — which invests in early stage start ups — says he stumbled into the field of investing and, in an ultra competitive market for investor dollars, looks for “perfect storm” founders executing on an idea.
Grit Daily caught up with Cloyd to pick his brain on investing and what names top his list of good ideas.
Grit Daily: For the uninitiated, how do you become a “venture capitalist?”
Andy Cloyd: Being honest, my path into the industry was equal parts ignorance and luck. I started my career in a traditional management consulting gig and decided that, at 23, spending five days a week onsite at a big pharmaceutical company was the not the place I wanted to be, so I started to look for opportunities to get into the tech/startup world. In what became a truly life changing moment, I stumbled across a program called Venture for America that matched recent college grads with opportunities in the startup world outside of the traditional tech hubs of Silicon Valley, New York, and Boston. After an extensive interview process, I was lucky enough to be selected to join the next cohort of the fellowship.
At first I intended to go into sales at a “Saas” or “software as a service” company but stumbled across Cultivation Capital in the Venture for America network and thought that although I knew very little about early-stage investing at the time, VC might be a good way to drink from the firehouse and learn a lot about the startup world at an incredibly rapid pace. On a trip to St. Louis, I was lucky enough to get to meet several the brilliant partners at Cultivation Capital and, ultimately, decided that Cultivation was where I wanted to spend my next few years. From there, the rest is history; my thesis played out, and it’s been an incredibly rewarding learning experience that I’m abundantly grateful for.
GD: What are some key metrics that you look for when vetting a startup?
AC: Given that I am still in the early innings of my investing career and still have a lot to learn, this is something that is constantly evolving. Admittedly, I was quite misguided initially, placing an over emphasis on brand name customers and took decks financials as gospel; I have since started to develop a healthy dose skepticism which leads me to ask the right questions that help get to the bottom of an opportunity much more quickly.
Although this is not an original idea, I think two questions that have led me in a good direction are: Why this team and why now? The world has grown so ultra competitive. It takes a truly special group solving a problem that wasn’t ready or able to be solved in the past — or didn’t exist — but, for whatever reason, is uniquely able to be solved today to build a sustainable competitive advantage and lead to a favorable outcome.
Since we are early stage investors, we sometimes don’t have adequate sample sizes to meaningfully leverage traditional SaaS metrics fully in our initial analysis, but we need to know that the team has a clear understanding of the levers that will drive those metrics in the future and have an idea of what they might look like at scale.
GD: What verticals do you think are most ripe for consumer-led disruption in the next twelve months?
AC: Personally, I’ve been spending a lot of time looking at real-estate and construction tech. There is just so much value wrapped up in those assets worldwide, yet it remains one of the least productive industries and continues to lag on the technology adoption curve. The industry is ripe for disruption on so many parts of the value chain from design to construction to property management and ultimately, on the real estate transaction itself.
Even just with companies I have on my radar, I’m already feeling the early stages of disruption coming, and I look forward to partnering with the best of the best in the space to help them bring that disruption to market as quickly as possible.
GD: What is your favorite investment that you’ve made to date? What were your expectations for that startup when you first invested in them?
AC: Not to say that I don’t love all of the founders and companies that I have invested in, but unequivocally, my favorite investment to-date would have to be Summersalt, the direct-to-consumer women’s swimwear and travel-leisure brand. Lori Coulter and Reshma Chamberlin are one of those rare “perfect storm” founding teams where as soon as you meet them, you just know there is something unique about them that will lead them to success. Unlike many other direct-to-consumer brands in the market today, Summersalt has so much more than just a great acquisition and marketing engine.
On the founding team alone, they have over twenty years of deep design, sourcing, and supply chain experience that has allowed them to rapidly iterate on product and distribution to respond to changing consumer demands while maintaining healthy margins to scale the business in a sustainable way. We were one of the first commitments on their seed round in early 2018 and participated in their Series A led by Founders Fund later that year. It’s been a rocket ship since, and we are just getting started.
GD: What are your words of wisdom for any founder that is in fundraising mode?
AC: Don’t get discouraged by a “no,” or even 100 “nos.”
There are so many reasons why an investor might say no (or nothing at all), and to be honest, a good number of those reasons probably have little to do with your businesses. In the same way that a you as a founder can’t concurrently do every single thing perfectly across the entire business, neither can a VC. Sometimes, it’s just a bad time in the fund life or even just a bad day for the team. We try to minimize these situations by building repeatable, metrics driven processes, but we are all human and make mistakes.
Each time you pitch is idiosyncratic; don’t let past performance affect the next meeting. Keep at it and find that investor that truly gets it and believes in what you are doing. Those are the folks that will be the partners you want and need on your side during the inevitable highs and lows.
GD: What’s so appealing about being a “venture capitalist?”
AC: The people I get to work with every day, in particular, the entrepreneurs. Although society has crafted this persona of the tech entrepreneur being a 21-year-old scrappy developer in their room with nothing to lose, in reality, most of the founders I encounter are experienced industry experts with high opportunity costs that have given up stability, comfort, and wealth to pursue their dream of building a business solving a real problem they felt first-hand at some point in their career.
Not to mention, many of these folks have families at home who also are making a sacrifice in pursuit of their family member’s dream of building the company. It’s a really invigorating environment to be in every day, and I love the opportunity to help and support these inspiring founders on their journey.
Looking for more venture capital coverage? Check out the latest investment in iFarm.