Investors at Laconia Capital "look at all the boring stuff that makes money"
They know and love B2B SaaS across multiple sectors
Last week we sat down with Mirit Lugassi and Geri Kirilova of Laconia Capital for a lunch with pre-seed/seed founders. Laconia Capital focuses on early-stage startups using software to solve high-pain problems. They invest in pre-seed and seed rounds, specifically in B2B software across various sectors, including retail, fintech, SMB tooling, vertical SaaS, and healthcare. Their investment range is $250k to $1 million, typically aiming for 4-6 investments per year.
Beyond the basics, we learned so much more about how they operate and what makes them such a special partner for founders. They shared a lot more valuable context that doesn’t fit neatly on a website page, so if they’re on your target list, it’d be worth watching the whole recording or at least reading more of their insights below.
The everchanging Seed to Series A gap
Initially, there was a noticeable gap between seed funding and Series A rounds, with many startups struggling to bridge this gap after raising initial funds from friends, family, and angels. As the market evolved, Series A investors began requiring higher revenues, creating an "in-between" period for startups needing more funds. Over the past 10 years, seed funding has became more abundant as a proper institutional round of its own and with many new seed funds cropping up.
The latest market downturn has caused a pullback on that frenzy and funding isn’t as free-flowing as it was in ‘21-22. The definitions and milestones for funding stages are constantly changing, making it challenging for seed-stage companies to plan effectively.
The common thread: know your market
One of the shared traits of successful startups they’ve invested in is that they all demonstrated a deep understanding their initial customer base and clearly defining their ideal customer profile (ICP). By conducting thorough customer research, discovery, and problem validation before raising substantial funds, these companies were able to scale quickly and achieve critical mass.
Balancing venture-scale vs. profitability
If you’re going for scale, it’s pretty impossible to reserve the optionality of getting to break-even or profitability. It’s not really possible for pre-seed and seed companies to build a venture-scale business AND achieve profitability before reaching Series A - they really have to pick which direction and metric to go all in on. If going for venture scale, founders must focus on hitting the right key milestones, validating the right things, prove their value, and secure long-term investor buy-in to support their growth trajectory. Going for profitability would mean building an entirely different business.
Investment KPIs to focus on, qualitative vs quantitative
Over time, their approach has evolved from relying on standard (and somewhat arbitrary) parameters to a more flexible, qualitative assessment of startups. Instead of rigidly checking predefined boxes, Laconia now focuses on understanding the underlying reasons and risks they need to validate. This shift is especially important at earlier stages, where qualitative indicators often provide more meaningful insights into a startup's potential. By prioritizing these nuanced evaluations, they aim to make more informed and effective investment decisions.
“We look at all the boring stuff that makes money”
Laconia is focusing on several key sectors, including healthcare, vertical software, fintech, e-commerce, entertainment and retail tech. Their investment strategy emphasizes identifying founders with unique insights derived from deep industry experience. While their approach is highly qualitative and often intuitive, they prioritize startups that address significant customer problems. Despite the current trend of branding around AI and generative AI, they always return to fundamental questions: Who is the customer? What do they need? Why do they care? How does this solution validate their problem? This customer-centric perspective guides their investment decisions.
How Laconia epitomizes the term “founder-friendly”
While some funds have a very specific strategy that strictly defines their ownership targets, Laconia is much more flexible in how they’ll partner with founders. The fund is comfortable with both leading and following on in investment rounds and respect a founder’s desire to bring together investors who each bring their own expertise. (E.g., a founder might like Laconia Capital on the cap table for their extensive experience building B2B SaaS companies, but also want someone with very specific domain expertise in their particular niche.)
Laconia even shared that there have been times when founders have had multiple term sheets from competing investors and went to Laconia for guidance on how to weigh the options and how to handle them.
When you’re looking for an investor to feel like a true partner - this is what it should look like!
Full video of the interview
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