Sarah Kunst, founder and managing director of Cleo Capital, joins "Forbes Talks" at the 30 Under 30 Summit in Cleveland to offer strategic advice on launching a venture capital firm.
Category
🛠️
LifestyleTranscript
00:00 (upbeat music)
00:03 - Hi everyone, I'm Rose Marie Miller
00:04 and we are backstage at the Forbes 30 Under 30 Summit.
00:08 And I have the pleasure of speaking
00:09 with the managing director and founder
00:12 of Clio Capital, Sarah Kunst.
00:14 Thank you so much for joining me today.
00:15 - Yeah, thank you.
00:16 - So Sarah, what was your inspiration behind Clio Capital?
00:21 - You know, I had spent a lot of my career
00:23 as a startup entrepreneur, operator,
00:26 even as a venture capital investor, as a VC.
00:29 And, you know, it was interesting having spent
00:31 like a decade in the industry and seeing kind of,
00:34 you know, what was changing and what wasn't changing.
00:36 There were more and more money kind of going into venture,
00:39 but it wasn't going super early stage for the most part.
00:42 And so, you know, started Clio Capital in large part
00:45 because there really was this gap
00:47 at the earliest stages of funding,
00:49 where if you had, you know, revenue
00:51 or a lot of users, a great story,
00:52 you could go out and raise a large series A
00:55 and you could maybe raise a seed round,
00:57 but that sort of pre-seed the earliest,
00:59 there was just a huge gap there for institutional funding.
01:02 And, you know, I felt that it was the best opportunity
01:05 to make money, which is, you know,
01:07 my job at the end of the day,
01:08 but also to help, you know, back the kinds of founders
01:11 that I want to see build amazing things in the world.
01:14 - Well, we love that.
01:15 Why now tell us the how.
01:17 - Yeah, I mean, so running a venture capital fund
01:19 or starting a venture capital fund is sort of funny
01:21 because I like to joke that you make a list
01:23 of all the rich people, you know, you know,
01:24 and ask them for money.
01:25 And if they give you money, you have a fund.
01:27 And if they don't, you're going to have to make
01:28 that list longer, right?
01:29 And no doesn't mean, you know, your best friend
01:33 or your, you know, parents, it's really looking at,
01:36 you know, who have you been on panels with?
01:38 Who have you, you know, met at conferences?
01:40 Who also went to your university?
01:43 Or, you know, who did you intern for that now years later
01:47 is working for somebody else who's actually somebody
01:49 who's an investor, right?
01:50 And so it's taking a really broad view of who
01:52 in your network, you know, potentially wants to fund you.
01:55 And that's true in your fundraising for a startup as well.
01:58 You know, and then the other thing that made sense for me
02:01 in terms of the how is that I had been doing it
02:03 for a very long time.
02:05 I had worked at a big venture capital fund.
02:07 I had been on a limited partner board at my alma mater.
02:09 I had been, you know, an advisor and mentor
02:13 at a ton of startup accelerators.
02:15 So I didn't wake up one day and say,
02:17 I want to start a venture fund.
02:18 Some people do that more power to them.
02:21 But, you know, I had worked in and around the space
02:24 and then got to a point where I realized
02:25 that what I wanted to do wasn't really being done
02:28 inside of an existing fund that I could just go join.
02:31 So if I wanted to do it, I would need to start my own.
02:33 - So I'm curious, how did you approach these people
02:37 with your requests?
02:38 'Cause you know how it is, you have somebody asking for money
02:40 let me dodge them with everything I can.
02:41 How did you approach them?
02:43 - You have to corner people.
02:44 Never go up to them where they have an exit and escape.
02:46 Right?
02:47 But truly, right, to some extent that's true.
02:49 So yes, if you are, you know, I would think about this
02:53 and I would strategize and, you know,
02:54 I'd worked in New York and Silicon Valley
02:56 for a very long time.
02:57 I knew a lot of these people, but I wouldn't go up to them,
03:00 you know, at a sort of crowded, you know, cocktail party
03:03 and say, hey, I want to tell you, you know,
03:04 about my startup.
03:05 I might say, hey, or my new fund, I would say, hey,
03:07 you know, I'm in town, can we grab coffee?
03:09 Right?
03:10 And then you're, you are sitting down with them
03:11 and that is what you want to talk to them about.
03:13 Right?
03:14 Or, you know, I would, if I were sitting next to somebody
03:17 at a dinner and we were going to be sitting there for hours,
03:20 that's a lot different to start that conversation
03:22 than it is, you know, when you're seeing somebody in passing
03:24 and so, you know, when it comes to raising money
03:29 for anything, I think that people focus a lot
03:32 on sort of the ask and why they need it
03:34 and what they'll do with it and less on the strategy.
03:38 And there's a huge amount of strategy, right?
03:39 It's like when you're little and you're going to ask your mom,
03:41 you know, can I stay up past my bedtime?
03:43 You cannot go up to her when she is tired and stressed,
03:46 you just spilled something all over
03:48 and you're fighting with your sibling, right?
03:49 You're going to get a no.
03:51 You have to go up to her.
03:52 You know, my mom would always joke that like,
03:54 if she was getting a foot massage from one of the kids,
03:55 she knew that the next thing that was going to be coming
03:58 was an ask, right?
04:00 But she was more likely to say yes.
04:02 And so don't give people foot massages
04:04 before asking for money
04:05 'cause that is a different conversation.
04:06 But, you know, think about how do you prime the pump
04:10 and think through that strategy so that it doesn't feel like
04:14 at a bad time or, you know,
04:16 when there are crazy things going on in the world
04:18 or the day before, you know, a major holiday
04:20 when people are traveling and busy, whatever.
04:23 Just make a strategy and it's a lot easier
04:25 than to ask people, have them listen
04:27 and have them potentially say yes.
04:29 - Have you always been a strategic person?
04:31 - Yes, wildly strategic.
04:33 But I think it's something that some people
04:37 probably are a little bit more intuitive about than others,
04:39 but it's something that we can all learn, right?
04:42 Everybody knows that if you want a favor,
04:45 you don't go up to somebody and say,
04:46 I hate you and your hair looks stupid,
04:48 give me this thing that you don't have to give me, right?
04:50 So we all do this in our daily lives, right?
04:53 All the time.
04:54 And so when you think about it from that perspective,
04:57 it's just, you know, sort of the same thing.
04:59 I used to, one of my sort of most underutilized,
05:04 I think, hacks that people can do
05:06 is whenever you're going to meet with somebody,
05:07 you look at the top of their LinkedIn, right?
05:09 You look at where they work now,
05:11 what their job is now to see kind of
05:12 what they can do for you now.
05:13 Fine, but you already know what they do now.
05:15 They know what they do now.
05:16 Everybody knows that.
05:17 Scroll to the bottom, right?
05:18 And the number of times I've seen,
05:20 oh, they work with this charity
05:21 that I've done something for,
05:23 or, you know, they're from this place
05:25 that I might, you know, have a connection to
05:27 or like or want to visit,
05:28 or, you know, for years after I got out of college,
05:31 it was, you know, people would sort of
05:33 as have as like this tiny footnote
05:35 that they'd been in the same sorority I was in.
05:37 And I would, you know, bring it up
05:39 in a way that otherwise I might not have.
05:41 And they'd be like, I was in that sorority too, right?
05:44 And that's not something that you necessarily
05:46 lead with in a conversation,
05:48 but it creates a commonality.
05:49 And so just things like that,
05:51 when it comes to thinking about
05:53 how do you build relationships?
05:54 How do you get people to like you,
05:57 understand you, trust you,
05:59 so that then when you present your, you know,
06:02 your idea, whatever you want funding for
06:04 that, you know, you're qualified for,
06:05 you've done the work, all of that stuff is there.
06:08 But how do you sort of think,
06:11 be thoughtful about some of those other underlying things
06:14 that make it easier for them to say yes?
06:18 Because it doesn't take a ton of yeses,
06:21 but it can be very hard to get to a yes when you're good,
06:25 but there's nothing that makes you sort of stand out
06:27 from the rest of the pack.
06:29 - So could you tell me about what are your major successes?
06:33 What have been some of your biggest successes
06:35 since being the managing director
06:36 and founder of Clio Capital?
06:38 - Yeah, you know, it's funny in venture capital
06:40 because the timeline to like real success is very long.
06:44 In our industry, success is really just measured
06:46 on how much money you ultimately return to your investors.
06:49 And that takes 10 years, 15 years, you know,
06:52 from the time you invest, especially at the early stage
06:54 until the time a company, you know,
06:56 might go public or have an acquisition.
06:58 And so that's a long timeline, but along the way,
07:02 I think you can look at some of the things that you're doing
07:05 and how your companies are performing
07:08 to say it seems like this is working.
07:10 And so, you know, for me, there are companies
07:12 that I've invested in, you know, like Mill,
07:15 which is Nest, one of the founders of Nest, Matt Rogers,
07:20 you know, the thermostat that you probably have
07:22 in your home, you know, he'd sold that to Google
07:24 for 3.2 billion, and when he was thinking about
07:27 what he wanted to do next, he decided he wanted
07:29 to do something that was sort of even better for the planet.
07:32 And so Mill is a really interesting company
07:35 that works to take your food scraps,
07:37 turn them into sort of an odorless, like not gross,
07:41 like composting can be leaking everywhere type thing,
07:44 feed for animals, they then sell it to farmers
07:47 to feed to chickens, cows, things like that.
07:50 And so it's a really big, ambitious, you know,
07:52 interesting problem that he was tackling.
07:55 And I was incredibly lucky because I was able to invest
07:58 at the earliest stages because, you know,
08:00 I had met him and cultivated a relationship with him.
08:03 And so, you know, and told him, look, I'm an investor,
08:06 you know, if you ever do anything, would love to invest.
08:09 He's like, oh, you know, I don't think I'm gonna start
08:10 another company and I'm like, okay, but you probably will.
08:12 So, you know, call me.
08:14 And so I was one of the first calls.
08:15 And so, you know, that's been an incredibly successful,
08:18 you know, launch and some of the, you know,
08:21 additional fundraising they've done beyond that,
08:23 you know, it's turned into a significant, you know,
08:26 likely financial success for the fund,
08:28 while also, you know, being good for the planet.
08:33 And it's been great that it was a deal that came to me
08:36 because, you know, I was showing up
08:39 and I was relationship building.
08:40 - Well, Sarah, before I let you go, really quickly,
08:42 tell us one thing you do every single day
08:45 that you believe contributes to your success.
08:48 - One single thing I do every single day.
08:51 Honestly, I spend so much time skimming headlines.
08:55 I think when you're a venture investor,
08:58 when you're an investor, you're not usually super deep
09:01 on any one thing and certainly not at everything you see,
09:04 but you're generally expected to, and you have an edge
09:08 if you know a little bit about everything.
09:10 And so, you know, accepting that and waking up and saying,
09:14 oh my gosh, I have so many email newsletters in my inbox,
09:16 you know, I'm trying to synthesize data from Bloomberg
09:19 and, you know, CNBC and Forbes
09:21 and like all of these different sources
09:22 and all of these other, you know, other things.
09:25 How do you do it all?
09:26 And it helps if you accept that like,
09:28 you will not read the entirety of the vast majority
09:31 of the things you're looking at, but you can skim it.
09:34 And then when something catches your eye
09:36 or something comes up later, you have a place to go back to
09:38 and start to dig in more.
09:39 - Well, thank you so much for joining me today.
09:41 - Thank you.
09:42 (upbeat music)
09:44 (upbeat music)
09:47 [BLANK_AUDIO]