Silicon Valley startup investor SC Moatti is a product powerhouse. As managing partner at Mighty Capital, Moatti guides founders in AI, big data, analytics and personalized medicine towards successful exits. She also founded Products That Count, one of the largest and undoubtedly the most influential global network of product managers in the world. A former product leader at Facebook, Nokia and Electronic Arts, Moatti herself has built products beloved by billions. In an interview with Founders Network, Moatti shares tips for telling your story to startup investors, advice for founders who don’t naturally love to sell, and why it’s best for startups to avoid “dumb money.”
How you see the value of network in relation to what you do?
It’s the most important thing in the work that I do. We live in Silicon Valley, where it’s all about technology and the virtual, but at the same time, every great deal and opportunity comes from an in-person connection.
What do you look for when you invest, and how is that different than what other startup investors look for?
Rather than giving a list of criteria, I’d say we are looking for founders who understand how to properly utilize a global network of product managers. When that’s the case, I see the light bulb come on. They say: Oh my God, I can sell my service to these product managers because they are my primary buyer or influencer. Or I could hire a bunch of amazing people with 200,000 product managers. Or there’s a VP of product at Cisco or Salesforce that I want to meet because I want to sell them my company. And that makes us completely unique.
Between Mighty Capital and Products That Count, how do you manage your time?
Very carefully. I have a valuable morning routine that includes exercise, healthy eating and meditation. I usually wake up around five, and start my day at about seven with a lot of calls. Morning is my thinking and getting things done time. In the afternoons, it’s more business development thinking. At the end of the day I look back and reassess: Did I accomplish the one thing I wanted to do today, and what is it that I want to do tomorrow?
You’ve talked before about how when you invest, you want to make sure that there’s an exit possibility. How do founders prove that to you?
When I look at our current portfolio, 40% of our companies are on the IPO track, but the rest don’t have plans to IPO. So I ask every founder: what is your exit strategy? Most of them already know — like, I’m not going to settle for a $20 million exit because I want to be purchased by Google. Or I want to go public because I’m building a sustainable company. Or, you know what, with $20 million I could buy five Ferraris and that’s more than enough for me. What I’m looking for is: Are they aware of it? Are they able to justify it? And as long as it makes sense and it’s authentic, I think any answer is a great answer.
Many startup investors talk about the importance of storytelling. What’s the best way for a founder to tell their story effectively?
Most startup investors, by definition, are here because they want to make money. So the story would look like this: We are a unique team solving a difficult and big problem with a sustainably differentiated solution. We monetize our solution fairly, and as a result, our financials look very promising. We need money to get where we want to go, and this is how we plan to return that money and much more to you. That’s a great story because you’re basically telling them: We are something that you want to be a part of, we understand startup investors want to make money, and we plan on making sure you will.
What advice would you give to founders who don’t innately have the gift of networking?
If you’re a founder who thinks that it’s okay to just be doing the technical work, the chances that your company will be successful are very, very small. You may be a founder, but most likely you’re not a CEO. A CEO’s job is to sell all the time: To customers, to employees, to startup investors. So the one piece of advice I would give to more technical founders is to get sales training— go get an internship at a car dealership or a cell phone store, so you understand how hard it is to sell and how important it is for you to master the tools of selling.
There’s a sense that startup investors are pack animals who follow the leader. Do you think that’s true, and how do you think founders should leverage that?
I think it’s true if your goal is not to get smart money. If your goal is to just get dollars in, then there’s lots of ways to create FOMO. The cautionary tale is this: Recently, a founder came in to pitch me. To my surprise, mid-pitch, he told me he was considering selling the company. I was confused about why he was pitching me when he was considering selling. So I asked, “Why are you here, do you have a board? He said, “That’s the problem— the board doesn’t support me and aren’t familiar with the process.”
That’s what happens with dumb money. When people just give you the dollars, but don’t know how to help you in the trenches or to make the most out of key moments like this, you may lose your exit opportunity. So my advice is: Do not take dumb money.
When you get smart money, you have people on your side that help you see and take advantage of exit opportunities such that when they come up, you don’t waste time going on fundraising pitches, instead you focus on maximizing your exit.
Some startup founders believe you have to create scarcity when fundraising, and play the game that way. What do you think?
I think everything is a sale, not a game. So I would say applying efficient, effective selling methodology to the fundraising process is awesome. Having a pipeline, managing it, keeping the momentum, closing regularly, doing due diligence, all of that is part of a very efficient, effective sales process or fundraising process. Playing games is so short term.
SC Moatti will be giving a keynote at our Fall Conference, fnSummit. This event is for members only, if you are not a member, please visit the event page to request an invitation to join.
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