VC Heidi Roizen: "Find a thing that people need and build it better than anyone else"
And more wisdom from a Threshold Ventures partner and tech veteran
There are very few people in tech who have as extensive experience as an operator, investor and board member as Heidi Roizen. In the past 40 years, she founded and exited a software startup, worked at Apple, worked in venture capital and sat on 40 boards. So we were pretty thrilled that she shared her wisdom with our community in a recent interview.
We covered topics including her macro outlook to tactical advice for founders. Read on for some of the highlights.
Threshold's approach to investing
Threshold aims to be highly collaborative with entrepreneurs. The firm has a small, tight-knit team that can make decisions quickly. They focus on healthcare and enterprise SaaS, sticking to areas of expertise to provide relevant networks and support. As Series A investors, they are often the first institutional investors on the board, and are closest to the founders on the cap table, so they are the investors who are most closely aligned.
Heidi has a broad scope, not limited to specific sectors, but often working with more capital-intensive, deep-tech companies. She focuses on being a "people whisperer" to help with team dynamics and avoid common startup pitfalls. With her experience of over 40+ years, she can provide perspective on patterns she's seen play out before.
Building an enduring business
The first, most important thing any founder has to do is simple: find a thing that people need and build it better than anyone else.
Building an enduring company on top of that is a people business. Stay focused on your goals, hit key milestones and surround yourself with quality people.
Establish and live strong cultural values. We’ve seen too many stories lately of founders who have lost their way (like Sam Bankman-Fried). Most started with positive intentions but little by little, corners were cut and integrity slipped away. It’s better to "exit with honor" if needed vs. continuing down a bad path.
A common founder pitfall is not defining founder roles and equity splits clearly. Many will assume equal co-founder stock before contributions are made. But co-founder relationships can change, and people often don’t prepare for those changes. This can lead to messy cap tables, which then create further problems down the road for anyone who might join the cap table (investors, employees, etc.). It’s important for co-founders to clarify roles, responsibilities and equity early on.
Navigating economic cycles
Though it’s critically important for founders to focus and build, they also need to understand the reality of the broader market dynamics, since most startups rely on outside capital.
Companies that can balance growth and profitability have more flexibility. However, capital-intensive startups are very impacted by market shifts. They need to understand and react to the cycles.
It’s important for startups of all stages to not let your runway get below 9 months, or you lose leverage in fundraising or acquisitions. So founders have to be thinking way ahead.
Corporate governance
Governance isn't exciting until there's a problem. It helps ensure investor money is responsibly managed. Great boards can provide helpful guidance to founders - and independent directors are especially valuable for moderating conflicts.
Form a board when you take institutional money for the first time. Aim for a balance between investors and founders initially. Add an independent director early for a non-conflicted perspective. Build relationships based on understanding everyone's motivations and goals.
For More of Heidi’s Wisdom
Check out The Startup Solution with Heidi Roizen, her excellent podcast featuring bite-sized, 15-min episodes each tackling a real-life startup issue.
Check out Heidi’s HBR Case on the importance of relationships. If you focus on people first and transactions second, you'll find more success and fulfillment. Building a reputation based on delivering value and respect serves you well long-term.
Thank you again, Heidi, for stopping by! And to all our founders reading - remember Heidi and her advice when raising your series A.
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Upcoming Lynx Collective Programming
All upcoming programming can be found at lu.ma/lynx
Startup Bootcamp: Building An Authentic Culture (NYC, March 5, 4 pm ET) - In this session, we’ll focus on how to build the right culture for your startup.
Startup Founders and Operators Lunch (NYC, March 6, 12 pm ET) - Join us for lunch with other NYC startup founders and operators.
How to Quit Your Job and Launch Your Startup (NYC, March 7, 6 pm ET) - This session is for people who want to transition from their current job to launching their startup.
Inside Union Square Ventures with Jared Hecht (NYC, March 20, 5:30 pm ET) - A fireside chat and Q&A with Jared Hecht, the newest partner at Union Square Ventures at their NYC offices.
Startup Founders and Operators Lunch (NYC, March 27, 12 pm ET) - Join us for lunch with other NYC startup founders and operators.
Startup Bootcamp: How to Recruit the Best People (NYC, April 3, 3 pm ET) - Recruiting is one of the most important areas for founders to focus. This session will focus on how to attract, assess and close the best people to join your team.