Venture capital used to be a cottage industry, with very few investing in tomorrow’s products and services. Oh how times have changed. While there are more startups than ever, there’s also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We’re highlighting key members of the community to find out.
Brittany Laughlin is a Partner at Lattice Ventures.
Laughlin served as General Manager at Union Square Ventures, an early stage venture capital firm with $1B+ under management. Some portfolio companies include Etsy, Twitter, SoundCloud, Tumblr, Lending Club, and Kickstarter. Her entrepreneurial endeavors include founding VetsinTech NYC, transitioning military veterans into technology jobs, and founded gtrot, a social travel recommendation engine sold to Groupon.
She has a BA in Marketing and International Business from NYU Stern. Laughlin writes about building great companies, venture investing, tech, and travel.
VatorNews: What is your investment philosophy or methodology?
Brittany Laughlin: I was an an entrepreneur, and I built two businesses before I started in venture capital. One of the companies was venture backed, and one of them wasn’t. Then I was approached by Union Square Ventures to join their investment team and to work with their portfolio companies. There were about 43 when I started, and we ended up with around 65, so I saw companies go from two people to 4,000 people, and everything from exits to IPOs to shut downs. So my perspective, even before staring Lattice, which was over a year ago, was just on how companies can successfully scale and grow. I had done it firsthand myself as an operator, and then getting that perspective of: how does it happen from zero to IPO? I always think of investing as a very long term activity, and that really supporting the entrepreneurs at the early stages is key in order to get them to the next level of funding. From there they can go on and build bigger businesses and continue to enhance the ecosystem that way.
The philosophy at Lattice is making sure that the early stage entrepreneurs get the support, the connections, the talent, and the long-term perspective that they need to be successful over a long period of time.
VN: What do you like to invest in? What are your categories of interest?
BL: If we can empower more innovation at the edges, that is a good place to be. Technology is a very democratizing tool, so if we can use the power of Internet to better connect people to job opportunities, to economic opportunities, to collaboration opportunities, that’s where the real power lies, in the underlying technology.
I spend a lot of time looking at things in labor; how do you help reduce the friction that it takes from what are specialized skill sets to be able to produce value? Market places; how can you enable anyone to participate in an e-commerce-like setting so they buy or sell goods, even if they don’t have a longstanding track record or reputation? Growth creation and retention, which is more in the fintech space, and what tools are accessible to everyone? There’s a large population in the U.S. that doesn’t have any financial relationship with any institution. They’re functioning mainly on a cash basis or a short term loan type basis, so I think that there’s a lot of opportunity to use the low cost of technology to enable everyone to have the opportunity to access better financial tools and more capital.
VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?
BL: I have a lot of experience working on investments at Union Square Ventures, and then with Lattice Ventures over the past year. One of the long term companies I worked with, where it was pretty incredible to see their success, was Twilio. The founder of Twilio built the business all the way through the IPO. He was always very mindful of staying focused and remaining committed to what their early plan was, which was to make it incredibly easy to use SMS, or telecommunications technology, in apps and empowering developers with those tools. It’s pretty remarkable to be a founding CEO and then take it to IPO.
I was part of Twitter. I got to know them when they were pre-IPO. Lending Club was another one. Working with Kickstarter created a really great perspective on how you empower more communities that maybe would not be able to function without the type of tech that existed. Kickstarter has done an incredible amount of impact impact in the arts, simply by creating a tool that allows patrons to support the projects that they care about. That has been a really inspiring team to work with and to continue to support them as they continue that vision.
Out of the current portfolio I’m working in, one in particular is Planted. They’re working in the labor space, and my business partner, Vanessa Pestritto, and I have known the founders for over three years. Susan Zheng and Connie Wong started this business at NYU undergrad; they recognized that college students getting out may not have technical skills, but they have they a lot of talent that companies are looking for. The matching process is really slow, expensive and pretty outdated so they built technology, not only to match entry level, nontechnical hires at some of the top companies, but they’re actually using machine learning and data to make it even more seamless. They’re taking a process that can be anywhere from 45 days plus to 10 days. Candidates are pre-screened, they are matched with companies, and then the company is making that hiring decision that quick because there’s so much good data and good matching happening. We’re really proud of that. It’s a really smart use of technology that can bring lot of value to people who are looking for a job. That’s a pretty life changing event.
Our first investment was a company called Alice Financial, and they were thinking about where there’s money left on the table, especially for part time workers. They realized that pretax transit benefit are usually not utilized by part time workers but it can have a significant impact on the amount of take home pay. Simply by buying your MetroCard in advance through your payroll, instead of purchasing it with aftertax dollars, you can save a significant amount of money. Not only does the employee save money but the employer also saves money on payroll tax. They looked out there, and there were tools serving this market, but none of them focused on part time and the implementation was very clunky; it required employers to pay $115 for MetroCard upfront at the beginning of the month, which, if your paycheck is not consistent because you’re working an hourly job, can be a large sum of money to outlay at the beginning of the month versus being able to pay for that MetroCard over time, throughout multiple paychecks. They recognized that having more of a lend type product, alongside the pretax benefits, was actually very easy to do with technology, it was just seeing the right company implement it and get it out to the market, which is something that they’ve done really well. They continue to think about other pretax dollar opportunities, like child care, parking and car expenses.
VN: What do you look for in companies that you put money in? What are the most important qualities?
BL: We are thesis driven investors. In terms of the entrepreneurs, we look for people who have some attachment to the problem. It’s very often easy for an entrepreneur to get excited about an idea because they think there’s an opportunity but it’s hard for them to stick with that idea over time unless they feel some kind of personal connection. Either they’ve worked in the industry, or they have prior experience where they saw this problem first hand. We look for a kind of obsession with the problem because it’s going to be a long road ahead and if they don’t have that passion early on for what they’re solving then it’s really hard to keep them motivated as times get harder as they grow.
We look for entrepreneurs that are able to build a team, because that’s such a key component: no business grows without a team. If the entrepreneur doesn’t have a certain skill, they can show that there are people around the table that do. We want them to be smart, hardworking, passionate, things that are required in any entrepreneur, but those are things we specifically hone in on and make sure they have.
VN: What kind of traction do you look for in your startups? And can you be specific? Are you looking for a number of customers or order volume?
BL:…