Welcome to Step by Step, a 5-part series from Future Commerce to help walk you through how to launch and grow a successful business. This season, we're talking about funding. Today is episode 2. Phillip & Brian are joined by Brian O'Malley of Forerunner Ventures to discuss venture capital.

Listen now!

Show notes

Main Takeaways:

• Brian O'Malley from Forerunner Ventures joins Phillip and our own Brian in the second part of the Future Commerce Step by Step Series.
• There are many choices when it comes to venture capital, but where do you start the decision process?
• How can you make your brand stick out to venture capitalist firms?
• Founders are driving the evolution of the economy and are continuing to drive innovation.

Background and Introductions: Meet Brian O'Malley and Forerunner Ventures:

• Forerunner is one of the only firms that is dedicated to the journey of the consumer and understanding what is going on in peoples' lives.
• By partnering with companies early in their investing journey, Forerunner works with them over the years to build strong businesses that stand the test of time.
• Third-party research is available to everyone, and Forerunner does their research to get the exact data that they are looking for that goes beyond reactionary researching.
• Brian joined Forerunner about a year ago but has been in the investment field for fifteen years and has worked to translate offline retail experiences to online businesses.

Back to Basics: What is Venture Capital?:

• Venture Capital firms tend to provide early round capital to businesses that traditionally wouldn't be getting any outside money.
• The Seed Round is the first institutional round of investing where larger firms get involved outside of friends and family putting money into the business.
• Series A is when you first establish a board and start to think of your business from a corporate governance perspective. (This is when Venture Capitalists typically get involved.)
• While they do put some money into the fund, the majority of the money that Venture Capitalists put into business comes from limited partners.
• At the end of the day, you want to make more money for the limited partners than what they initially contributed, so VC firms are beholden to live up to growth promises and owe the money back to the partners.

More Than Just Money: What Else Do VCs Offer?:

• At Forerunner, they respect the entrepreneurial process and understand that it's hard to get something off the ground, so empathy is important.
• A lot of time is spent understanding the consumer so that the firm can advise the companies in their portfolio how best to reach that consumer.
• Strategic guidance is also issued to help do the right thing faster or to avoid doing the wrong thing and saving months of setbacks altogether.
• Trying to assemble the right people to accomplish goals is also a unique perspective that VC firms can provide to their portfolios.

Content is King: Brands that Want to Tell Stories:

• Some of the well-known brands that are in Forerunner's portfolio are Bonobos, Cotopaxi, Glossier, Outdoor Voices, Stadium Goods, and many more.
• Convincing consumers to spend their hard-earned money relies heavily on a brand's ability to tell its story and reach consumers on deeper levels.
• Forerunner's portfolio has done an am