Sarah Kunst Reveals Winning Strategies For Fundraising And Launching A Thriving VC Fund

Forbes

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.

Transcript

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]

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