VC Associates: Your Path to the Partners
If you’re hoping to get venture funding for your startup, one of your first contacts may be an associate, like Matthew Goldstein of Trinity Ventures in Menlo Park. While you’re probably thinking mostly about a firm’s partners, getting to know an associate like him could be a key to landing the funding you want.
Goldstein is one of two associates who form Trinity’s team along with eight partners. The firm focuses on two kinds of technology investments: Its consumer practice looks for investments in gaming, social media, e-commerce, digital media and advertising technology, while the enterprise area focuses on Software as a Service, cloud infrastructure, security and enterprise mobile. Each partner has an area of specialization. Goldstein supports those in the enterprise practice by researching both companies the firm has invested in and those that it’s considering. Phil Carter, the other associate, supports partners in the consumer area.
Trinity makes 12 to 15 new investments per year. Of those, about five will receive a second round. Some of its recent enterprise investments include RJ Metrics, which makes e-commerce analytics software; Jama Software, whose suite of products helps manage technical product delivery and testing; and RadiumOne, which produces Big Data products that automate information gathering. (Although it no longer works in consumer retail, Trinity is known for being the first institutional investor in Starbucks.)
Don’t think that Goldstein’s supporting role means you should consider him ancillary. As an associate, he provides partners with market intelligence and meets with companies that could be the next big deal. He presents potential new investments, researching the fields, the competition and the general market. He spends a lot of time building networks and meeting people in Trinity’s areas of specialization. Most importantly, he can be a startup’s first contact with the firm.
“It’s a good idea to talk to a VC six months to a year before you’re even sure of an idea,” Goldstein says. That relationship can be both a proving ground to determine a potential portfolio company’s worth, and also provide the startup with a sounding board for adjusting its strategy.
But don’t interpret sitting down with an associate as meaning an investment’s around the corner. “The chance that a day one conversation is going to lead to a check is very small,” Goldstein says.
“It’s important that the entrepreneurs have advocacy and one of the best ways to get advocacy is to take a meeting with an associate like me,” Goldstein observes. Although in some firms, the partners act independently, all deals Trinity Ventures make are discussed among the full staff.
In addition to putting in a good word, associates can help startups craft their presentation to the VC’s board. “It reflects poorly on me if I bring in a company and they bring a bad pitch,” Goldstein says. “We’re also giving you that backchannel feedback because our incentives are aligned.” Goldstein also has a personal stake in choosing winners. “You don’t become a partner until you do a deal that makes a ton of money for the firm,” he explains.
Before reaching the partner level, Goldstein will need to take the interim step of becoming a principal, who’s treated like a partner in that he’ll have his own area of expertise. Plus, he’ll spend far less time supporting the partners on their deals. To that end, he’s researching the enterprise mobile space, a practice area that’s relatively new to Trinity.
If after spending the time and working with an associate your check doesn’t go into the mail, all is not lost. Goldstein is likely to refer companies to other VCs if his relationship doesn’t lead to an investment from Trinity. From his own perspective, that reference could end up bringing him a new portfolio company down the road.