Founder's guide to thriving during a market downturn

Leslie Feinzaig

Graham & Walker is a Seattle-based venture firm activating the potential of all women in business through programming, community, and early-stage capital investments. They started as the Female Founders Alliance and run the most popular accelerator for women in the US, dubbed by Techcrunch the “Y Combinator for female founders”.

We sat down with Leslie Feinzaig, Founder and Managing Director of G&W, to learn how she optimizes comms for new founder success and brand growth. We dive into topics like: 

  1. The reasons every team should be sending monthly investor updates
  2. Why honesty from founders is crucial to maximize utility from VCs
  3. How G&W’s portfolio companies are withstanding the markets
“A tactic like the monthly investor update sets expectations for founders to meet or exceed. It builds a pattern of trustworthiness and execution prowess.” 

Graham & Walker’s Founder-First Approach to Investing

Leslie balances several roles G&W, such as: 

  • Reviewing pitch decks, meeting with founders, and supporting G&W’s portfolio
  • Bolstering their community of prominent, engaged women founders
  • Actively deploying Fund I while raising for Fund II

G&W’s intent with Fund I is creating the next best-in-class VC fund that inclusively shapes the next generation of public companies by investing in underrepresented founders. 

As Leslie puts it: Underrepresented doesn’t mean underqualified. It just means underestimated. 

Their end goal is becoming the next Sequoia or a16z — by building a multi-generational fund, creating a (genuinely) diverse space in the industry, and supporting founders from the very start. 

They genuinely invest themselves in each person’s entrepreneurial and fundraising success by maintaining close ties with their founder community, both past and present. 

For instance, Leslie catches up with each G&W founder (live or over Zoom) at least twice a year. 

The team is currently in the process of proving their Fund I hypothesis before expanding on it via Fund II. Goals for G&W’s upcoming sophomore fund include: 

  • Writing more substantial checks and leading more rounds
  • Sitting on more boards to maintain hands-on support
  • Reserving more follow-ons as investments scale

Overall, G&W centers their day-to-day ops on: 

  1. Driving the growth of thousands of founders in their network
  2. Running programs to support as many startup needs as possible, free of charge
“We want the thousands of founders in the G&W community to have the best options for whatever they may need at their fingertips.” 

How to Set Up Founders to Thrive in the Market Downturn

The G&W team emphasizes intense preparation to operate ahead of the game. After the initial forecast in May for a market downturn, Leslie outreached to portfolio founders to prime them. 

She provided tailored recommendations and even published an article in Fast Company about the oncoming shift for VCs. At the time of our conversation, that was three months ago. 

Today, G&W routinely meets with their founders for 1:1 updates and to sync up on their specific situations. Current market conditions affect startups differently depending on their stage. 

Leslie points out that founders should proactively reach out to their investors, spanning both funds and angels, to review key business blockers and align on top growth priorities. 

Diving deeper, she recommends that in order to thrive in a downturn, founders should:

  • Actively communicate with investors — Let people know you’re on top of progress, and let them see you executing. Strengthen those relationships for your next round. 
  • Master their metrics — Know your KPIs and knuckle down on driving them. Leslie notes that it’s okay to get a little obsessive with your numbers. 
“Founders should never go quiet — especially not during a recession. When things get tough, VCs can’t help if we don’t know what’s happening.” 

Why Proactive Communication with Investors is Essential

Leslie makes a case for founding teams to over-communicate with their VCs — from the get-go and consistently throughout the partnership. She outlines two reasons: 

  1. It’s harder for VCs to assist on a problem if it’s already an emergency
  2. Founders miss out on valuable support and coaching in the small moments

Founders, especially those from underrepresented groups in the industry, can find investors intimidating to reach out to because they’re scared of letting them down. 

In response, Leslie sets an expectation with her investments from day one: “I won’t be mad if you fail. I’ll be mad if you lie to me, to your team or to yourself.” 

G&W invests in venture, not public stocks. They’re also a small fund, so their strategy has never been to throw cash at a problem. 

If a founder misses their benchmarks, she’ll try to help them tweak the business itself to grow in the right directions. If that doesn’t work, she’ll help them pivot. 

And, if the founder just doesn’t find product-market fit with one company, she’ll stick by them and potentially invest in their next project. 

She clarifies that G&W has never been a bail-out fund. They’re a “we’re here for you” fund. 

Monthly Investor Updates: A Critical Comms Strategy

Every founder should get in the habit of sending monthly investor updates with top-line KPIs, growth highlights, problem areas, requests for help, and shout-outs. 

This comms avenue can lead to a variety of benefits: 

  1. A testament to execution abilities — Once founders move onto their next fundraising rounds, having investor updates available and in their histories is incredibly helpful. 
  2. Proof of performance — Receipts build a reputation and track record. That’s essential for founders who are “untraditional”, first-timers, or otherwise likely to be overlooked. 
  3. A pattern of trustworthiness — These updates show that the founder is thinking ahead and making good on the expectations they set for themselves and their investors. 
  4. Damage control — Updates can also showcase hold-ups or delayed progress in a balanced manner — before they become massive — and allow investors to offer help. 

G&W will also leverage investor updates to push for their founders, even if it’s something as small as posting a job listing or making an intro. 

How Basic Communication Builds Trust in Young Founders

When institutional investors select a founder, they need to know there’s something beyond the initial pitch that proves they’re making a worthwhile move. 

Experienced founders can present past companies or growth trajectories as evidence that they know what they’re doing. But new founders usually lack any record of proof. 

Instead, they can leverage comms to demonstrate they’re already excellent at executing their ideas — and that they won’t just learn on the investor’s dime. 

Those comms channels (starting with a regular, reliable investor update) give VCs something to hold onto and assure them that they’re de-risking their investment. 

“Founders can pretty dramatically overestimate the value of ideas and underestimate the importance of consistent, tactile execution.” 

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Disclaimer
The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice, either on behalf of a particular security or an overall investment strategy. Information about the company is provided by the company, or comes from the companies’ public filings and is not independently verified by LTSE. Neither LTSE nor any of its affiliates makes any recommendation to buy or sell any security or any representation about the financial condition of any company. Statements regarding LTSE-listed companies are not guarantees of future performance. Actual results may differ materially from those expressed or implied. Past performance is not indicative of future results. Investors should undertake their own due diligence and carefully evaluate companies before investing. Advice from a securities professional is strongly advised.
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