With a new decade upon us, many entrepreneurs have resolved to launch their new concepts or expand their businesses over the next ten years ahead. Doing so requires the investment of capital. And it may take ten years to see a return. One venture capital firm upholds the philosophy of “investing in people who have the decades-long conviction necessary to solve big problems.”
Enter, Caitlin Fiordirosa, partner at Drive Capital. Grit Daily News caught up with her to gain some insights into investing, how venture capital is changing and what makes an entrepreneur stand out from the crowd. We also wanted to learn more about why they’re bullish on the midwest.
Grit Daily: Thanks for taking some time with us today, Caitlin. Tell us about your path where your career began as an analyst and now you’re investing.
Caitlin Fiordirosa: After cheering on the Fighting Irish in Cincinnati all my life, I had the opportunity to go to Notre Dame and really explore career opportunities in the realm of finance, a field I was always really interested in. As an intern at JP Morgan’s investment bank, I had the good fortune of being trained by really strong mentors and financial professionals. The skills and experience that I acquired there during my two summer stints formed the bedrock of my professional development and I’m definitely grateful for that. Not only was it an excellent training ground for me, but it also proved to be an incredible place for networking and learning about investing. Many of the friends and mentors I made during my internships at JPM remain some of my strongest friendships and relationships today.
GD: How did you make the switch to the buy-side of investing?
CF: While at JPM, I met the Vista Equities Partners team and immediately connected with their approach to investing and the strong culture at the firm. Vista is a very operationally-focused investment firm, partnering directly with entrepreneurs to solve problems in legacy industries ripe for disruptive innovation. I had a phenomenal experience investing at Vista and was able to work with world-class executives and leaders in both earlier-stage as well as very large companies. I originally learned of the Drive Capital team through a friend at JPM who had joined as a partner. The partnership is full of really incredible investors and company-builders, which is what fueled the drive to $1.2 billion in assets under management today. Investing at that level is what gives our partners the ability to optimize for thesis alignment rather than a specific check size or stage of the company. I officially accepted an offer to join as a partner in April 2019, and it’s been a fantastic experience that’s exceeded my high expectations. Our portfolio is really rich with innovation, including over 40 companies from all over North America. We’re in an amazing position now of helping our entrepreneurs build their market-defining companies in cities that are optimized for being close to their customers and close to rich pools of engineering talent, to disrupt massive markets.
GD: Your personal mantra caught my attention: “Not Dead, Can’t Quit.” What would you like to share about motivation to inspire other investors and entrepreneurs reading this?
CF: Thank you! Every time that I see it, read it or think about it, I feel grateful to be here and in this position and feel a sense of responsibility to hustle as hard as I can to be as helpful as possible for our entrepreneurs. It definitely helps provide perspective when the inevitable headwinds with investing come too.
GD: What makes you a good fit for a VC role?
CF: I’ve always had an entrepreneurial bug which is what got me excited about training at JPM and Vista, to prepare for something more entrepreneurial. As a child, I ran camps and side hustles like that in my backyard but that’s unfortunately as successful as I became as an entrepreneur! Now, I’m in the fortunate position where I can help fuel entrepreneurs to execute on their mission and help spark the next disruptive innovation by investing.
GD: Drive Capital has adopted a unique philosophy that “The midwest is the Opportunity of our Lifetime,” but how do you approach investing differently?
CF: Our philosophy doesn’t limit our geographical focus. We’re investing in companies disrupting massive industries, and we think the midwest, with its engineering talent and large corporate customers that are located here, creates really rich soil for those startups to grow into big successful companies. One of the ways that we’re different from other capital firms is that we haven’t limited our technology or industry focus. Our portfolio spans AI, robotics, insurance, healthcare, etc. We try to be nimble, flexible and creative when it comes to partnering with our entrepreneurs.
GD: Your tagline at Drive Capital is, “True partners are all-in. They are humble and curious, and always tell the truth.” That’s powerful, and unusual for a VC to have a tagline like this. Tell us about it.
CF: The culture at Drive is really impressive on multiple levels to me. Holding ourselves accountable for living up to the same ideals that we seek in our founders makes us better partners. Humility is really needed in the startup world to stay resilient and realistic, which is what we need to be. Building businesses can be a long road. It’s hard, and legacy approaches within these markets often seem intractable with entrenched players making disruption enormously challenging. If you get caught up believing in the power of your own magic, you’re going to find it tough to stay grounded and on the path for the long-haul. Embracing a “debugging” and open mindset, staying curious – those are other critical aspects of resiliency.
GD: Most entrepreneurs enter discussions hoping to immediately close the deal, but it rarely works out that way. What do you tell entrepreneurs that you’re looking for with respect to investing?
CF: That’s a tough question because there are so many variables. Each answer is situation dependent. What separates a great pitch from a mediocre one is clarity of purpose and clear answers. It’s okay to say you don’t know or to say, “here’s where we are today, but we know this needs to be improved”. Understanding unique insights the entrepreneur has into the industry they’re trying to disrupt or serve is really helpful, as well as understanding why they are launching their company at this time. The bottom line is that nature hates a vacuum which always leaves us to ask, “Why didn’t it exist before now?” It’s also always helpful to dig into the team dynamics to explore how teams are thinking about the approach to the business.
GD: You’ve likely seen hundreds of startups pitch. Are there any warning signs that you look for?
CF: There are no specific warning signs. We do probe to try to find any misalignment between ideals and values. If an entrepreneur doesn’t appear to be particularly keen on forming a partnership, then we slow things down to give us time to get a deeper look so that we can better understand the situation and make an informed decision about investing.
GD: How has investing changed over the last few years? Are there any key trends that you’ve noticed?
CF: The public markets have made it clear that they are not going to accept prioritization of growth over profitability which has translated to a slow-down on optimizing for “blitzscaling.” Ensuring there is a path toward profitable unit economics and sustainable growth is key to building a truly massive business.
GD: Since you’re one of only a relatively small group of women investing, do you have a message for other aspiring female investors?
CF: The nature of finance is that there are simply a few women in general. Anyone who is interested in acting on their entrepreneurial spirit who is interested in investing and venture capital, I’d absolutely encourage you to take the risk and pursue it. Having the opportunity to encourage entrepreneurs to pursue their passion and take risks is incredibly rewarding. When that individual finds a way to combine their personal interests, skills, passion, and experience with an emerging market opportunity, the potential is virtually unlimited.