Fast Lane Series: MassMutual Ventures

Our Fast Lane webinar series equips early stage B2B tech founders with the latest fundraising trends and tactics from leading venture capital investors.

In this episode of Fast Lane, Venture Lane Studio Co-Founder Christian Magel sits down with Mark Goodman from MassMutual Ventures to talk about choose a corporate VC vs. a multi-LP VC for your next round.

 

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TRANSCRIPT:

Lets cut to the, to the chase. Today we’re, we’re talking about corporate venture capital and we’re talking in a very interesting time. So today is a little bit about like what are the advantages and disadvantages or what are the, what are the great things that a corporate VC can bring to the table that maybe others can.

We’ll have a good conversation about that. Usually we’re jumping right in. You giving us a little bit of background a about yourself, where you’re coming from. Your Mark is managing partner as Mass Mutual Ventures. And love to hear a little bit about like how do you get to that job and, you know, what’s your purpose and what’s your, what’s your why that you ended up in that, in that.

Great. What’s my purpose? I’m not sure I, I have an answer to that question, but we can, we can certainly start with the role. Yeah. So I’ve, I’ve been in thank you first of all Christian in Venture Lane for the opportunity to talk to your audience today. I think it’s interesting topic and hope, hopefully there’ll be some useful information for, for folks.

I’ve been at Venture Capital for about 19 years. I joined MassMutual about nine years ago to launch a venture capital fund. At for, for the, for the corporation. So mass Mutual is a Fortune 100 financial services company. It’s 173 ish years old, so it’s, it’s been around for a while. And in part that, that That longevity is, is really one of the reasons that they wanted to start a venture capital fund.

I mean, you, you can after 170 years, you can get a little insular and life insurance is not known for being nimble and innovative. And so the idea was to open up the, the, the windows, so to speak, and and get a better sense of what’s going on outside of the walls of Mass Mutual in terms of innovation that is, To the company as we, you know, head further into the 21st century century and into the you know, into the digital era.

So our that, that, you know, starting with that statement, I think is probably covers you know, one of the starts to cover one of the touch on one of the topics, which is, you know, corporate BC versus, you know, multi all P v. And it’s important to note that we’ll, we’ll go, we’ll go into that there, so, sure.

That’s awesome. Mark, tell us a little bit about the fund and size, how big you are, what, what kind of checks you’re writing, what companies you’re looking for. Sure. So we’re 400 million fund in the us. We have some affiliate funds in Southeast Asia and London. That brings the whole platform to about a billion dollars.

Here in the US we manage 400 million. And by us, us also includes for us Canada and Israel. We do a lot in cybersecurity. We’ll, we can talk about that. In, in the Israel market we ty we are seed to growth, so we have flexibility on sort of entry point. We spend, I, I think most of our time on Series A opportunities, but we are, we have some flex.

And we do invest all the way up through pre i p o rounds. So we just we’ve got a, a, a pending 25 million check, but our, our typical entry point is three to $5 million series A. We do lead, we do follow. We don’t have a, a sort of hard and fast rule on that. So we, I don’t know, maybe half and half sort of lead and participating in, in syndicates.

Yeah. And tell, and tell us that, that’s exciting. Let tell us a little bit about the industries and, and, and, and what kind of industries, what kind of verticals are you looking into? Yeah, so I mean, we, we can look at enterprise SaaS fairly broadly and anything relevant to mass Mutual as a Fortune 100 financial services company.

So, Obviously InsureTech and, and many areas of FinTech including real estate. I have a colleague who does a lot in, in ace architecture, construction engineering, as well as other PropTech opportunities, but certainly very broadly in InsureTech real estate tech, PropTech, other areas of FinTech. And then you know, across the organization, you know, we got a big cybersecurity team, obviously as a regulated financial services company, I spend a lot of time in the, with my colleagues and in the cybersecurity startup ecosystem similarly with our data science team looking at opportunities in that realm.

So we’ve got you know, fairly, fairly broad remet in terms of industry focus. Awesome. And we’ll talk a bit later, like, what are you looking into companies and what are you looking into founders to see? Very hot topic. Obviously, last two weeks has been a turmoil for a lot of lot of startups. I would love we talked a little bit about it yesterday, but I would love to hear your opinion on what you make out of it and like with with the going away of S V B and the, the current funding environment.

What, what’s your, what’s your gauge on it? If I am an early stage in I’m an early stage company right now, what should I be worried about or not worried? Well I think the demise of S V B was in some ways a culmination of you know, the new era that was ushered in probably last summer, you know, in the wake of the of Putin’s war when, you know, the, the, the capital markets, you know, got kind of seized up a bit.

And the, the mindset among, in the venture capital world shifted. Grow at all costs because capital is, is plentiful and cheap to watch your burn. You know? How long is your runway, when is your next financing gonna be and what’s your a r gonna be? You know, it, it was a very, it was a big kind of mind mindset shift, I would say last summer as people got, you know, nervous in the new economy.

So svb you know, it’s certainly a blow to the ecosystem because SVB was. You know, a behemoth in the industry, in, in so many different ways. Obviously we, as we learned, many startup banked there as well as funds. But also they were really the leader in venture debt. So that part of the capital stack is, I would say, severely restricted now.

You know, that might be a healthy thing. You know, debt is not always the best route for early stage companies anyway. So there, there might be a healthy aspect to it. But in the near term, we already had a, a relatively tight capital market. Now you remove a major player in that capital ecosystem, so it, it really does.

Add to the constraints for us. You know, we, we’ve you know, been paying attention to cash and cash burn and runway in our portfolio. You know, we’ve been looking very closely the last few months. We didn’t really, you know, reach during the, the boom days in those valuations. So we’re not changing our strategy really too much at all.

We’re still, we’re very much open for business looking at opportunities on a daily basis. And it’s in reality. But you know, everybody has to. Yeah. How, how did, how did you guys like in concrete, like really adapt to the, to the current sit, to the, and also currently to the situation? Did, did the last two weeks change any of that, or you said like, you, you changed your behavior already about nine months ago.

Is that still valid? And, and, and that’s, that’s the way you go? Well, it was an unpleasant weekend. Yeah, as we tried to figure. You know, the, the, the, you know, it was such a, it was such a shock because it, you know, it is, I think it’s a lot of entrepreneurs on this call. It’s so hard to raise capital.

You know, it’s so hard to get those early customers and get that, those early contracts. And the easiest thing should be to put your money in the bank account and not worry about it. So to have that become of all of a sudden a risk factor and all of a sudden you did everything you could do. Yeah. You raised the capital and that was hard.

And you got the, the customers and that was hard. And all of a sudden you can’t meet payroll. Yeah, because your bank went under it. I mean, it was a real, you know, kind of a shock. And but in terms of, you know, did we have to, you know, once, once we made it through that weekend and sort of assessed where everybody was and what the, you know, what the key risks were you know, by Monday obviously it was resolved with the the F D I C stepping in.

But no, I don’t, I don’t think we’ve changed our strategy really at all. It was, it was a sort of temporary. There certainly will be repercussions in the capital markets as I, as I mentioned, but it doesn’t, hasn’t really affected us in any, in any meaningful way other than that. Yeah. Last question in, in that segment, I know that just a lot of people are, are curious, like, what, how do you think this will pan out for if you’re like an early stage company or series a company, how that will pan pan out in terms of availability of capital?

What you need to show what valuations are in. If I had a big round in 21, like, you know, what will this be in 2023? Any, any predictions? Well, yeah, I think, you know, I. Companies that raised large rounds at, at, at very high valuations relative to revenue in 2021 are obviously in a, in a tough position if they haven’t grown into those valuations.

And we’ve already seen a pretty large number of you know, flat rounds around extensions or safe notes. You know, there’s a, I guess, you know, in that, in that set of companies, you’ve got companies who are, you know, fundamentally very good companies in the, in the investment. Syndicate wants to support them, so they will be propped up at least for a period of time.

And then you have other companies where that are maybe a little bit more unclear about their future prospects and they’re, I think we will be gonna be facing some you know, down rounds and recaps and, and the return of probably some pretty, you know, tough some tough terms. And certainly the focus is you know, sustainable growth to use a buzzword, but what that just means, you know, getting to the next inflection point, the next milestone without burning too much cash so that you can raise money at evaluation, that’s a nice step up from your previous round.

It’s just, you know, back to the kind of blocking and tackling fundamentals as opposed to, Hey, we can raise, you know, we can, we can raise $20 million with very little dilution, so let’s, let’s, let’s, let’s grow at all costs. That mindset obviously needs to shift in a new. Yeah. And I think I, I just to, to summarize also what, what I heard this, this week or the last weeks is yeah, the sustainability part much, much bigger, you know, metrics and, and all of that.

Be prepared for lower valuations. So adjustments there on that side. Be prepared for tight capital rather than, you know. An abundance of, of capital. So that’s kind of just con, just, just just continues. And with, with venture debt significantly impacted, there’s just less money out there.

So probably mo more, more demand for, for, for capital. And more and more companies right now are actually getting to a point where they had follow on rounds, but they need to do their next round. They will be, it’s gotta be pretty competitive out there. So the, the good. Yeah. And I would say just maybe, maybe three more points just on that.

Yeah. So, so there were a lot of, a lot of capital flowed into the early stage venture space in 2021. Very big, you know, private equity funds that’s now flowing out, hedge funds, that’s all flowing back out. That I think is probably healthy to be honest. And I just, just for the, in case it’s useful to, to people on the, on the.

Listening in. I, I think the two kind of KPIs that I, I’ve noticed people really focusing on are net dollar retention and churn, you know, the, the converse and burn ratio. You know, h how much are you burning much, how much cash are you burning relative to the amount of, of you know, a r r you’re adding in the same period.

And people are really looking for kind of sub two x burn ratio and you know, net dollar retention, certainly above, you know, a hundred. Is what people wanna see. So yeah. Yeah, for, for what it’s worth, that’s, that’s certainly been a very bit, you know, hot topic of conversation and yeah.

Yeah. Thanks for, thanks for throwing that out there. Yeah, that I, I agree. Good one. I wanna, I wanna go back to the core of our, of our theme here. I think a lot of people probably know the venture world quite well. But they maybe have not been really in touch. And with the, with how does a, a, a corporate venture firm actually actually work?

Tell us a little bit about the, the difference between a multi LP regular venture firm and then the corporate ventures. And then yesterday we talked about there is actually a big difference between the strategic oriented and the more financially oriented one. Maybe you, you can tell us a little bit about what the, what you think are the.

Yeah, maybe I’ll start with the second part because I think it’s useful to make that distinction before comparing to multi LP funds. So the, there are two basic kinds of corporate VCs. There are strategic corporate VCs and financially focused corporate VCs, the strategic VCs. And I just saw somebody in their chat asking whether you know, they’re looking whether the corporation is looking to invest in companies where their product product roadmap has synergies.

The corporation and for strategic BC I think the answer is yes. The, the purpose of a strategic venture capital arm, which is usually associated in some way with, with the strategy group or the corp dev group, is to help the corporation get smarter and get ahead of innovation in their industry. And to the extent possible, leverage it, benefit from it, co-opt it.

Help themselves in some way by investing in these companies. So it’s a, it’s a perfectly reasonable strategic, you know, approach to investing. The financial VC obviously is that we, we have a very different approach. We are investing our, our limited partners capital, and they’re expecting top tier venture capital asset class returns on, on that in.

And so we’re just trying to invest in the best companies and we’re trying to use our corporation to the strategic benefit of our portfolio. So it flips the script a little bit. So we are a, a g PLP structure like our multi lp VC friends. We’re incentivized, motivated, compensated based on how our portfolio companies do.

So we’re trying to use mass, the mass mutual ecosystem to the benefit of our portfolio company. So it’s just a very different approach, both perfectly valid and reasonable, but it, it does speak to if you are raising capital, you really need to know what kind of corporate BC you’re dealing with. And so to, to answer the other part of your, your question obviously that, to, to, to compare the multi LP B.

With the corporate BC you have to know which you’re comparing it to. I would say from the strategic VBC to multi l pbc, very different animals. Right. I mean, I think if you’re looking for a corporate partner to for, for, for distribution or product development, or there’s some real, some real usefulness or value in having that close corporate relationship then, you know, I think that, that, that can be, you know, very.

But they are very, very different approaches. The multi LP VC is looking to make money for its LPs full stop. The strategic VC has ulterior, you know, motives for us on the financially focused corporate vc, single LP vc. I don’t think there’s much difference at all with the, with the multi lp VCs. We, we co-invest with them all the time.

We have the same motivation, we have the same interests, the same, our, our, our sole interest is to help our portfolio companies grow. That’s how we. So there’s really I’d say a huge difference between strategic bcs and multi L pbcs and almost no difference at all between a single LP corporate fund and a multi pbc.

Yeah. Oh, thanks. That’s, that’s really, that was, that was a good, good distinction. Good, good intro for this here, by the way, just reminding everybody, if you have questions, please put it in the q and a box here. We’ll get to those questions in about 10 minutes or so, 10, 15 minutes. So if you have questions, put it in the q and a box.

Write down, write down here. Mark The, the, I had experience and people reaching out to, to, to me and to us and, and ask us for advice. Like, Hey, should I take a strategic investor on board? And by the way, I’m a strategic investor. Doesn’t need to necessarily be a, a vc, right? It could be also like a regular company that says, wait, listen, I wanna have a stake in your company.

I experienced myself how much. That can be a downside if you have a strategic investor too early. Elaborate a little bit on that, on like, when you choose like a real str like somebody with a real strategic, what are the upsides and what are the downsides? I know that you’re more financially interested, but for, for people that are looking into that, what are the up and downsides with that strategic?

Well, I think the, the key is, is to be very aware and, and very intentional. Incentives, interests, and you know, the desired outcome. You know, really understanding what is the, what is the motivation and what is the intention of this strategic partner? What are they trying to get out of it? And then obviously understanding what, what benefit you would get from them, and making sure that, first of all, there’s alignment.

Second of all, that they’re not looking. Obviously everything when we do this, but looking very closely at the terms, making sure there’s no, you know, right, or first refusal on a future acquisition that that’s a real, you know, that’s really gonna take your, you know, your future value down. Make sure they’re not looking for any kind of, you know, maybe sweetheart, you know, commercial deal.

Unless it, unless it’s valuable to you, you know, obviously. So I think, I think you ju I think it’s whereas a financial investor and a startup and a management team, entrepreneur, Very much aligned in a lot of ways. You know, they’re, they’re, they, they both succeed when the company succeeds when they, when the company, you know, maximizes its potential enterprise value.

It’s a little different with a strategic vc. You know, they’re, they’re, they’re, they’re, they, they have a certain angle on the company. And if that angle aligns with, with your goals as an entrepreneur, great, go for it. But I think it should be approached with a little bit of weariness, especially on the very early stage later.

I think it, it’s, it matters. I think on the very early stage when you have very limited resources, when you might have a capital partner who’s looking for you to change your product roadmap based, based on its own needs, may maybe have a, a big time demand on you maybe other constraints. So I think it’s, you know, it’s, it’s really about transparency and understanding motivation.

Yeah. What I’ve found and what experienced myself is like you have a strategic investor and if that strategic investor really wants to buy you, there’s a, there’s really. A, a clash of interest in terms of outcome, right? Yeah. So your, your investor wants to buy you at a, at the cheapest price possible, and, and you obviously try to maximize your, your value as an entrepreneur and, and also for other shareholders.

That being said, also on the product side, you know, you figure out like, Hey, now we wanna kind of go off into this area, want to explore this here. That is not necessarily always, With, with with a strategic investor. And last but not least, sometimes the strategic investor takes already some of.

Competitiveness out of a bidding process or any, any selling process when you already have somebody sitting in there that, that, that turns off a bunch of investors that maybe are in the same space and say, well, you know, why? Why would I buy a company where my competitors already invested in? Right.

So, Totally good, but on the other hand, many, many great upsides in terms of getting access to Sure. Customer base or to the corporate. Now, let’s talk about this a little bit, and I would be interested like in your case, mass Mutual, maybe want to give us a, a couple of examples of not only that you put money into, into startups, but what is the extra value?

What are the synergies that you guys were able to provide and how you do this and how, how, how do I have to imagine? Yeah, so for us, we’ve really we’ve, we’ve, we’ve operationalized that that aspect in a particular role. So we have a person ahead of platform Samantha Sentilo who her, her sole job is working with each of our portfolio companies and helping them take maximum advantage of the mass mutual ecosystem.

And by that, we. Mass Mutual is a potential customer. Our partner, mass Mutual subsidiaries, like our global investment management subsidiary bearings, affiliates like Invesco and, and the broader life insurance, financial services ecosystem. So we actually have a person dedicated to that. And what, so what does it mean?

It means, well, getting deals. I mean, that’s what you, that’s what you need as an early stage company. So we’ve got a very good track record of. Frankly, giving our portfolio companies every unfair advantage. We can’t, you know facilitating conversations, following up being an internal champion making introductions and we’ve got a great track record of our companies our portfolio companies you know, getting deals with Mass Mutual and other affiliates and then expanding from there.

You know, we have one company that started with a, you know, about a, call it a hundred thousand dollars ac b contract. They’re now well over 300 Oh. And we, you know, obviously the company has it, it the company has to perform and they have to be the best and they have to make the case themselves. We don’t, we can’t tell our colleagues what to buy but we can certainly make sure that our portfolio companies are in the mix and getting a, you know, a fair, at least a fair hearing, hopefully an unfair hearing.

So we, many times that may can make really the difference that you have, like a good name, like MassMutual on your client list. It’s, it’s proven. Sure. It’s, it’s deployed, you know, there’s feedback, there’s testimonials. Absolutely. And in some cases you know, we’ve had partnerships too where you know, in the, on the financial services side, we’ve had you know, distribution partnerships where Mass Mutuals reach with for example, 10,000 financial advisors in the United States.

Can be, you know, very helpful in certain, you know, InsureTech Yeah. Yeah. Now what’s the right timing and, and let’s, I know that you’re, that you’re, there’s like 2, 2, 2 kind of parties in the, in the corporate VC world, but what do you think is, is a good timing for taking VC investment or corporate VC investment on now on the strategic side?

And then also more on the financial side. I mean, you guys chosen, are you actually also writing pre-series A checks or is this rather unusual? We do. Yeah. We, we we have a lot of flexibility. We do seed to growth. As I mentioned, we do focus on Series A. Yeah. We’ll do seed if we feel like we can really help the company from that seed to series a stage by, you know, leveraging MassMutual in some way or.

The ecosystem I keep calling it, but, you know, broader than just, just the corporation. We have, we have done a few seed investments and we’ve done later stage as well. You know, on the strategic side, we’ve, we’ve kind of touched on it. I think. I see, I think, you know, in the energy space, you, you, you sometimes see this, this, the, the big la the large incumbents coming in very early to help with kind of product development and distribution and that sort of thing.

But I think it seems to me that on the strategic. Maybe the later the better would be my bias, but obviously it’s situational. On the financial side, I think anytime, you know, when I think, you know, you, you, I think we should, we should be evaluated like any multi l p bbc you know, what, what can we bring, what can the, the, the, the board member or board observer.

You know, bring to the table in terms of strategy and judgment and, and connections and network and help with future capital raising and hiring and getting customers and, and even extra, the extra benefits of being part of a, of a, a big big corporate. Yeah, we, we’ve got, we’ve got you know, multi LP funds, you know, they have their great networks.

You know, we’ve got a tremendous amount of expertise, you know, in-house. As I mentioned in cyber and data science and in insurance and finance and, and all that. So you know, very deep reservoir of expertise that we can tap into for the benefit of our portfolio companies. Yeah. Mark. Just to, just to be clear, we had that question before here from, from Philip about like, how deep does the value proposition really need to be close to what, what MassMutual, for example, has on the product roadmap?

Are you saying. That plays no role because it’s, if it’s a good business, we’ll invest in it and we’ll be fine. Maybe there’s some synergies, but if not, that’s the, as long as it’s a good investment. Or are you saying it always, sometimes somehow plays a role because it needs to fit into what, what we want to do?

Yeah. No, it’s we’re looking for great companies, great management teams. And we will, we will help them in every way we can, hopefully with MassMutual. But if it’s not MassMutual, it’ll be other, you know, other companies that we’ll, we will be helpful with. You know, we, we have a, the, we certainly have strategic value to our, to Mass Mutual.

I mean, we’re, we’re showing them, when I’m looking at say, an interesting cybersecurity opportunity, I’m getting, you know, I’m asking my colleagues to do a demo and in that scenario my colleagues are becoming aware of interesting innovation that could really help them, you know, do their job better. So that’s helpful to them.

The startup gets to pitch a Fortune 100 financial services company. I get the sort of diligence data point. It’s kind of win-win. And and obviously we get the strategic value of Mass Mutual in terms of expertise and, and helping our portfolio companies. So there’s I don’t wanna say there’s no kind of strategic value to our, to our financial approach cuz but it’s, it’s a, it’s a two-way street, you know, so yeah.

Got it. Okay. Mark, I’ll go over to the questions. And by the way, guys, if you have questions, please don’t put ’em in the chat. Put them into our q and a tool right down here. Just a couple of questions and we’ll, we’ll, we’ll see how we go. Question, first question was here, you know, do you also invest in digital health and wellness?

We do, yep. Happy to take a look. Yeah. Just because I’m, I’m, I’m curious. If you had to describe like the, the, the company, the founder that is the typical startup that you would invest in or the typical team, what would they have to bring that you’re really looking out for? I’m looking, they want to, they should be strong in these areas.

What, what, what, what are these criter, what, what’s the criteria here for you guys to invest? Hmm. Yeah, good question. You. Probably a little hard to pin down, but I would say that you know, always interested to hear the journey, you know, what, what brought this person or this team, you know, to the problem they’re trying to solve.

What’s their background? Is it a good, you know, good fit for the solution? Do they have a. Have they really thought through the problem and the opportunity and the, the sort of the incumbents and the competitive landscape and the market, and have they really listened to the customer, potential customer and really understand what they’re, what they’re going after?

And have they started to assemble a team? That can you know, kind of credibly, you know, make early headway into, into the market. So I think, I think background, the way they approach the problem, the way they approach the solution, also, I think how they you know, that initially the, the the presentation, I mean, I think there’s always a fine line between kind of selling and that’s fine.

I sell, you know, we’re all selling at some, at some level. But you also want to have, you know, some, you know, trans transparency and, and you know, and honesty and. I, I wanna be sold. I wanna, I wanna understand, I wanna be en enthusi. I want to understand the enthusiasm and the excitement, but I also wanna know what are the real challenges?

What, what are you worried about? You know, what are the, sort of the problems? You know, I’m always impressed when an entrepreneur is very direct about, you know, what she’s worried about, or, you know, the, the biggest challenge is, you know, she thinks she’s facing, you know there’s, there’s a, I I want to hear the enthusiasm, but I also want to.

Really hear what the concerns are. Yeah. Yeah. Do, does somebody know what they don’t know is, is a, is probably a good way to put it. Okay. Awesome. We have we have a question here. Do you have a portfolio and portfolio operations role on your investment team to oversee and advise portfolio company growth and scale?

So growth and scale, I think you have somebody on the team. Is there somebody helping with growth and scale? That would be more the, the, the deal person usually, you know, Board or board observer or whoever the lead on the deal is would be helpful in those, in that, in that respect. Alongside Samantha, our direct, our head of platform who’s always working with you know trying to get intros to potential customers.

Yeah, just wanna put a little plug in here. Obviously this is where, where we as Evangeline Studio really focus on the, the scale and the bit forth. Mm-hmm. Having like a whole team around exactly that bit, which right now comes in really handy because nothing cures more ills than sales. I would, I would say, right.

Mark revenue solves a lot of problems. Yeah. Certainly Does Michael ask here I have Mark, we’ll do the, the how people get in touch with you a little later. Let me get to that again. Philip is asking, what, what are the KPIs that a corporate venture corporate vc is, is measured by?

What, what are the KPIs you are looking, you are looking for in, for portfolio? Yeah. So is the question about how, how we’re evaluated or well, the, what are the KPIs that C V C in MassMutual is measured by? Oh, yeah. So how, how we’re measured? Yeah. You know, really the same as you know, multi LP fund on our, on our returns, you know, return on investment in i r there must be, there must be some.

Strategic value. I, I, I must assume. Yeah. Yes, you’re that, that’s true. You know, we’re not part of strategy, we’re not part of Corp dev, so there’s no sort of formal kind of strategic reporting. And we don’t, you know, we don’t get business unit approval of our investments and all that. But the, the, the, the strategic value, I think is very significant.

Even though it’s organic, you know, it’s, it’s organic in the way. We are seeking out our colleagues’ expertise cuz that’s gonna help us make better decisions. And by doing that, our colleagues get exposed to innovation that can help them do their job better. At least make them more aware of what’s happening.

You know, kind of out in the wild. So the organization benefits we benefit the startup benefits. So I think over the nine years that we’ve had the fun, I mean, I think the strategic value to Massal, you know, and I, we, we hear this from, you know, the C-suite and, and our co. It’s really been, you know, transformative in a lot of ways because we’re there, there’s a, a massive flood of, of sort of innovative companies that are now in conversation.

Even the companies, you know, we don’t invest in, you know, we, we’ll, we make introductions that don’t lead to investment that sometimes actually lead to Mass Mutual becoming a customer. That’s happened more than once. We’re just, the deal isn’t right or just doesn’t, not a good fit from an investment point of view, but our colleagues found it to be super interesting and then they become a customer, which is great, happy.

Happy to foster that. Awesome. Yeah, and I think that also answers Dave’s Dave’s very interesting question here from, from Jesse is if you’re on a multi LP fund and what’s the story you tell your LPs to invest in companies that you are invested in? What kind of advantage does it have to have MassMutual Ventures to, to be invested there?

Is there any benefit? God, I hope so. Well, I think there’s a few, maybe the one, the top one or two. Yeah. So I think for you know, let’s say, let’s say for a very early stage company, I mean, one of the things you’re tr when you’re out talking to customers, you know, especially if you’re talking to large enterprises, they wanna have a they wanna have confidence in your stability, longevity, you know, if they’re gonna invest the time into.

You know, doing a POC and then potentially becoming a customer, they wanna know that there’s some stability there. You know, the Mass Mutual ventures, we have Mass Mutual in our name. It’s 173 year old life insurance company. There’s a sense of solidity stability, long-term thinking. We’re not going anywhere, you know, I mean, this is, this is we, we don’t.

This is maybe slightly tangential, but you know, we don’t have a sort of fundraising cycle where we have to go out every two years. And so we’re not trying to push our companies to, to do something unnatural just because it suits our fundraising story. We have one LP and our, and our one lp is, has a very long term time horizon.

And so they’re perfectly fine with us letting our c. Reach their maximum potential without any artificial kinda rush. Because we have to go fundraise and talk to LPs and try to sell our story. So we don’t have that. So I think, I think having that kind of long term, very solid perspective there.

And then for the other, the second thing I would say you know, the ways in which we can tap into. The Fortune 100 Financial, you know, the financial services ecosystem in Walker, our portfolio companies into CISOs and CIOs and whoever else is relevant. And, you know, help them start those conversations and then follow up and facilitate and, and until we kind of, you know, finally close that deal, it takes a lot to close.

The enterprise deal is everybody, you know, is everybody knows and we, we try to, you know, play a role in doing. Okay. Awesome. Good, good answer. Next questions from Ted. Hi Ted. Are there any special investment terms that a strategic will focus on versus a regular receipt? They, yeah, some of them certainly will.

We don’t our term, our term sheets are clean. Nothing nothing in them relevant to any special treatment by Mass Mutual is a potential customer or acquirer or partner or anything like. Totally clean. Now there are strategic VCs who will have terms and provisions to suit their suit, their interests and goals.

So obviously you need to be very careful. You know, you need to understand what those are. And they might be aligned with your, you know, your goals. They might not. It’s just you know, being aware of that is, is key. So for us, no, nothing but for others more. What have you seen from a strategic side that that sometimes makes you, make you probably a little bit worried about the, the startup that takes those terms.

So write a first ref refusal. I heard, yeah. Write a first refusal. Any kind of sort of, you know, most favored nation kind of clause in terms of, you know, commercial agreements. You know, if there’s potential com, you know, information rights if there’s potential competitive. You know, issues down the road.

You know, any term that would maybe prejudice a possible competitor may, might pr, may, might make a possible, possible potential customer who’s a competitor. Think twice about, you know, becoming a customer or acquiring the company. You know, anything intrusive is something obviously you wanna, you know, watch.

Do you see terms, I mean, probably not, but do you see terms slash or in influence on product and the direction that a company takes that somebody wants to have a say in? You can certainly see that. I mean, you, you know, sometimes you can see that with regardless of whether they’re investor or not, you know, these early, you know, kind of POCs or design partner.

Which is a good, you know, very good approach, but it, it’s, it’s work and you’re, you’re, you’re kind of working for them and your product roadmap is gonna be you know, very much influenced by what those early design partners or POCs are looking for. But it’s, you know, it’s a trade off. It’s also you know, benefit to the company as well.

Okay. Got it. Krishna is asking very specific question, do you invest in startups reducing risk for SMEs and cyber insurance providers from data breaches or. Yeah, I would definitely take a look. Okay, good. Addison can you please comment on the average lifespan of three years for a corporate VC change of strategy at corporate parent or people moving into new roles and all of that stuff, and, and how does that impact in impact portfolio companies?

Yeah, it’s a great question. Somebody who’s obviously paid attention to the corporate uc yeah, so the problem with strategic, yeah. The problem with strategic VCs is strategies change people change. So if you’re not if you’re we’re set up, we’re an investment fund, you know, we’re, we report up to the chief investment officer of Mass Mutual.

And we’re, we’re gonna be, you know, nine years old this summer. And we anticipate a very long, you know the, the, the person who asked the question is very, is correct that that they’re, they’re ty. Nine years is, is kind of a long time because yeah, people change, strategies change if you’re at the whim of, of well, whim maybe is a, as a, a tangent, contentious term.

But, but you know, if you’re, if you’re part of a strategy and not, if you’re, if you’re not part of an investment approach and you’re part of a corporate strategy, as corporate strategies change and people change and priorities change, Then you’re kind of at the, at the whim of the you know, changing wins there.

So yeah, it’s precarious and something to, I, I’ve seen a lot of, I’ve, I’ve co-invested with strategic VCs and in many cases the people that I co-invested with are no longer, you know, serving on the boards as board observers, no longer involved with the company. I can think of three off the top of my head where there’s been change.

So yeah, it’s. It’s it’s something to be aware of, right? Yes. So it could always happen. And I’ve, I’ve seen whole portfolios to, you know, companies getting rid of their portfolios after years and years because there was a, yeah. Ge a few years ago, ge went through a major change. Yeah, certainly can happen.

Yeah. Awesome. Guys mark actually promised to stick around for another five minutes or so after this year, but I wanna wanna make sure that we’re kind of rallying up and whoever wants to drop off can drop off. Well, first of all, thank you very much, mark. One last question for you. We will we will kind of, kind of close the official part if you wanna stick around.

And your question is still here in the q and a section. Mark promised to, to stick around a couple more minutes. But mark, tell me quickly, what is the advice, the best advice you give a founder? That you can only see from the other side that they maybe don’t see. What, what do you feel like, what comes up over and over again?

So like, hey, you know, that’s a piece of advice I would give you. Sitting on the other side. I guess a couple of things. I like to start to get to know companies, you know, pretty early. I think having if you can start having conversations with VCs, you know, before you’re in you. Full on fundraising mode.

I think that’s useful to build a relationship. I think being, you know, how you tell your story, I think spending a lot of time thinking about, you know, your narrative, you know, the presentation that, that first impression I think means a lot. I think being, being very clear and direct and open on, you know, the current state of the.

You know, that, that line I talked about between, you know, selling and, and directness yes. Communicate your enthusiasm. Yes. Communicate the vision and, and why you’re excited about it. But, you know, be, be very honest about where you are today. You know, don’t mince words. Be direct. We, we’ve, you know, if you’re on my side of the table and you’ve talked to, you know, a thousand companies, you know, there’s nothing, there’s nothing gonna be shocking.

Nothing’s gonna. Disqualifying, you know, it’s all, it’s all fine. You know, we just like to know what’s, what’s really going on. And so I think, yeah, that, that, you know, the, the directness and, and starting the relationship early and, and and you know, knowing your audience maybe would be another good thing.

Yeah, mark. And last question before we close the official part here if people want to get in touch with you said, like what Mark said there, this is, that seems like right up my alley. We as a founder view my, my company. How do people get in touch with you? Yeah, mark Admit and mass mutual.com. Maybe we can put that in the chat.

Yeah. Shoot me an email and look forward to meeting. At mass mute? Yeah. All one word. M a r k Goodman. G o o d m a n. No. No. Dot in the middle. No. Mark Goodman, mass mutual.com. Awesome. Thank you so much. Now whoever wants to drop off, you can drop off, but we have a couple really in more interesting questions.

And Mark, thanks for making that, that happen. Course. Maybe let’s find like, like short answers to this. So that’ll be getting all, all through those. For an entrepreneur, what expectations should one have on the speed from pitch to do DD to IC two decision classic a classic in a, like a, a corporate venture capital versus a, a classic financial BC Yeah.

So I would say on the, on the, sort of like our, our style of corporate vbc, the financial, corporate vc. I think we’re probably the same as a multi, multi vc, multi l pbc, I would say, you know, like when our, with our portfolio companies, you know, we always counsel, you know, give yourself about six months.

Now that doesn’t mean six months from the first call to close, but as a process, you know, get, make sure you’re, you’re like six months ahead of when you really wanna be closing. Have that deck ready and, and you know, start having those conversations. It just takes a long time. It takes longer now than it used.

We we’re, you know, from first conversation to close. You know, we can do it in 30 days. We’ve probably done it quicker at times. I think, you know, 30 is a good, you know, I think a reasonable amount of time. So yeah. So you can, you can act swiftly. I mean, there’s nothing a way for you to act swiftly.

No, no. We, we yeah. Maybe I could just, I’ll just tell you what our, you know, our process is. We, we. We have an investment committee comprised of the, you know, senior people Ms. Mutual it’s, it’s a kind of advisor consent you know, kind of portfolio committee. We, we, we generally get approval, but they, you know, put us through our paces, ask great questions, and it’s good to have these senior people, you know, sort of know our portfolio and, and so they can be helpful.

But we do our own, we’ll do our own financial model to, so we can really try to understand. What, you know, the cash needs of the business are gonna be what we think reasonable growth can be based on, you know, hires and, and, and salespeople performance and all that. We do a pretty detailed financial model.

Do a competitive analysis, you know, talk to some customers the legal due diligence, you know, can happen concurrently. But we’re we’re, you know, very efficient and you know we, we don’t, you know, talk to customers until we’re deep into the process. You know, that’s a very important, we recognize that to be a.

Important sensitive relationship for early stage companies. So that’s something we do at the, you know, kind of towards the end and more confirmatory diligence stage. But yeah, we’ve got a, I’d say very efficient process. Thank you. Thank you, Elena. We asked, or we, we answered already how to get best in touch with you.

You see Mark’s email here in, in the chat. Nathan was talking looking for KPIs that you’re looking for in seed stage companies. Now you mentioned before the, the, the net dollar retention and the burn ratio. Anything else you want to add on Mark? Yeah, so at a C stage you’re probably not gonna have much data on that, on that side.

You know, I’d say for typical series A. We like to see, you know, about a million dollars of a r or at least, you know, a million kind of insight. We like to have you know, sort of initial indications of product market fit, defined as, you know, a handful of arms length customers all validating the core value proposition, you know, of the solution.

You know, the, the go to market strategy in place, even if all the seats aren’t. But you know, there’s some flexibility there. Obviously we’re gonna, you know, if it’s, if it’s well below a million, we’re gonna, you know, spend a lot of time on the pipeline and try to understand you know, where things stand and what the line of sight is to that, to that number.

But yeah, product market fit. And I’m talking about series A now you know, product market fit and you know, that sort of early, you know, customer valid. Got it. Quick, super quick question. Are you investing in African startups, meaning probably that they have the headquarter in Africa or our geographic mandate does not currently cover Africa, unfortunately.

I actually took a trip there a little while back and I would love to invest there, but it’s not currently on our In our, in our geography could probably do an, you know, exception basis, but it’s, it’s, it’s not, it’s not, not currently, no. We do invest in Israel, as I mentioned. Got it. Okay. Lee highly our, our target customer is a mid to large financial service company.

So how do you deal with portfolio companies that are targeting your competitors as customers? Also from a potential conflict of interest per. No conflict for us. We’re looking for customers. We don’t care if it’s mass Mutual’s biggest competitor. The, the, the more, the better. We’re financial investors.

All customers are good customers from our perspective. By the way, on the, on the African question, if it’s FinTech FinTech collective in New York does you know, good, good seed stage, early stage fund that does invest in FinTech companies in Africa. So I would recommend talking to.

Great. And here last question, specific to seed stage. We’ve received advice to make sure our financial projections get us to a hundred million a r within five years, but we’d be making some grand assumptions to make that math work. Are you interested in early stage companies with more conservative projections?

I think we, we like realistic. Projection. So when we build our models, we really, we do a kind of sales productivity model, you know, so yeah, you’re hiring a certain number of sales people. You assume a, say a six month ramp up time. You assume a certain quota, you assume a certain quota attainment. You gotta pay those people, right?

So you, you’re, you’re building an op, you’re building up an opex and a cost structure. That is driving that top line. So it, it helps you really understand, well what are your capital needs going forward to, to, to actually create that top line growth. So yeah, it’s easy to Make the top line look great, but what’s going on underneath you know the gross margin or underneath even the top line, what’s going on in cogs too, you know, to, to, to get you there.

And that’s, we really wanna have that conversation because it’s, it’s in everybody’s interest to be aligned in terms of, you know, spending and growth in the next capital raise and where the company should be at the next capital raise. So that it’s a, it’s a a positive, not too dilutive. So I think, you know, being realistic about that, about projections is important.

Awesome. Mark, thank you so much. This was a very vibrant session. Lots of questions. Thank you for, for making my pleasure, your time and, and bringing them getting them all answered. Very insightful. I learned a ton about corporate venture. So reach out to Mark if you have something. You got his email address here in, in the chat.

In. In the meantime, mark, thank you so much for making the call. Thank you Christian. Really, really enjoyed it. Thank.