RainmakeMe's strategy can be boiled down to one that invests in early stage pre-revenue startups. We are in the service business, an engaged day 1 investor, a multi-strategy opportunistic fund that is ready to hand off its role to others at Series A. We are not industry specific because no doors should be closed and 90% of the battle is finding the right people.
RainmakeMe is looking for partners. What counts most is the founder(s) behind the startup. Are they driven, can they execute, what kind of character do they have? We only work with individuals we get along with because when that happens the rest is easy :).
The Lean Startup
RainmakeMe is a firm believer of The Lean Startup. Entrepreneurs should always think of ways to be efficient, to seek validated learning and continually listen to their clients during their extreme uncertain times. There isn’t a plan or an industry that this mentality can’t be applied to and a big reason behind our non industry specific strategy. We hate to simplify the Lean Startup, but for this we think it's appropriate. There are two equally important sides to a startup business, 1) product and, 2) management. Often the management side is overlooked and that is where we intend to plug the gap. We help make a budding company operationally sound and institutionalized - that includes working on legal, HR, accounting, compliance, marketing strategies, setting up pitch decks for further funding, social media initiatives, press, sales pitches and anything and everything the founder(s) should not be focused on but needs to have a trusted set of eyes doing it for them. In some cases we work day to day with our portfolio investments - from fixing the broken toaster to trying to help seal the deal on million dollar sales. Starting your own company is hard; getting it to the next level is even harder.
Playing the Lotto: The Mainstream Startup Investment Strategy
What we like to call the “Lotto Strategy” is happening every day in our pre-revenue startup world. Many investors think they increase their investment odds of success if they invest in many startups. Pump them in and pump them out. The more tickets they buy the better their chance at hitting the winning numbers. Oh, but some have 3-month courses and mentors and a network of investors you say? Don’t misunderstand us. Some of these funds and accelerator programs are managed beautifully, have great sourcing/due diligence overlays and truly do bring value to startups and their own investors. They still have low success rates like any startup investor but there is one specific accelerator that was special enough, some say lucky enough, to source and invest in a couple companies early on that went over the moon with their values. Problem was the second movers came in and completely missed the point, decided it was all just in the numbers, started opening their programs all over the world dumping money into them without regard and....Boom! We have the Lotto Strategy which is not RainmakeMe’s strategy.
The nastiest side effect of the Lotto Strategy is stratospheric, unrealistic, often arrogant and entitled valuations founders place on themselves. However there are some positives coming out of this lotto movement. The fact is they create competition especially by offering a decent to large sized investment to startups for a small-ish equity stake in return (simultaneously an issue). This can be appealing to some entrepreneurs but what are they really giving up? Why is that deal so great and how can RainmakeMe compete?
1) We don’t take part in the Lotto Strategy because we will only invest in 4-6 startups per year (3-5 early stage and 1-2 slightly further along). Yes, we could grow and increase that number but 4-6 is the current capacity because we are more hands-on than others. We are day to day players and always a phone call, text or email away with as humanly possible immediate replies.
2) We don’t make startups move to our location. We understand they have a life and can’t just pick up and move. We give startups the time, attention, and the empathy. In addition to this founders DO NOT need to be located in Silicon Valley, New York City or any major startup ecosystem for that matter.
3) We don’t make startups sign preposterously damning contracts. We use standard stock purchase agreement terms, convertible notes and SAFE's and are flexible when it comes to altering terms. Although at one time we were only believers in equity, read more here East Coast vs West Coast, we have taken a more laid back approach because it makes sense for both sides of the table.
4) It’s cheap talk to say we will introduce you to our network of investors. Everyone knows someone that has the money or has the power to invest money. Each time a startup approaches investors it’s like starting from scratch. We get this. Where you came from or what you have done doesn’t mean much. Even knowing the person won’t get you very far. What will get you far is being prepared beyond just knowing your product and market.
5) 99.99% of startups will more than likely not be accepted to top tier and higher end accelerator programs. Unfortunately, these are the only programs startups should consider. Although RainmakeMe does not have a set program you will certainly increase your chances of being accepted if you can use our investment, management and guidance to apply your product, prove the concept and build a track record of data points.
6) RainmakeMe is there to make sure startups actually start. Sounds silly but actually starting is one of the biggest problems we see today. Everyone has a “startup” but no one has gone out and actually started doing anything - like finalizing 1 sale or making $1. It’s time to stop the edits, the research, the constant pivoting. It's time to make a deal and we will make the push with you.
Ideas are Cheap
They can feel that way but that's a great way to make entrepreneurs feel meaningless and that's not what we are here for. In truth saying that is a cheap way to be counterproductive. RainmakeMe is the professional investor and needs to figure it out and figure it out without slapping people in the face.
Execution is Everything
This is something we monitor on all levels. From the first contact to the last contact and everything our due diligence process uncovers. Who is this person that we never knew until recently that wants us to invest in their business? What have they accomplished, have their goals been met and what is the likelihood they can do it again? Is the entrepreneur willing to change, to take advice and to pivot when the opportunity arises? Are they a good person? We won't like you just because you accept change or pivot. There is the matter of actually doing it the right way we are always on the lookout for. Perhaps just as important and 100% correlated to execution is an honest entrepreneur. We frown on entrepreneurs that can't be honest with themselves and with investors. It’s simple….you lie and it won’t check out.
RainmakeMe the Partner
Previously noted, RainmakeMe is in the service industry. Take a moment to consider what that means compared to standard investors. We are here to hustle on behalf of the portfolio company, to get things done, to be more than just capital. We will collaborate side by side and help founder(s) control their destiny. Simply said, we are missionary founders ourselves and look for startup founders that are as well. Mercenaries need not apply because this is incredibly hard work that takes time, patience, the right attitude and team. A team RainmakeMe wants to be part of.