Catalant

Oct 31, 2023

I write about the freelance revolution and the future workforce. You'll be asked to sign into your Forbes account. Oct 31, 2023, Got it! getty According to Pitchbook , there are currently 320,000 venture capital executives, 148,000 VC backed companies, 662,000 venture capital deals, and 28,000 venture capital funds. Crunchbase estimates the total invested by VCs in 2022 at about $445 billion, a 35% decline from the $681 billion invested in 2021. What do VCs actually do? Simply put, Venture capitalists (VCs) provide investment capital to early-stage startup companies in exchange for a stake in the company. VCs play a wide range of roles: sourcing investment opportunities, providing capital, and supporting their portfolio companies with guidance and access to industry experts to help the startup succeed. This might include strategic advice, introductions to potential customers or partners, or help with key hires. Most focus on particular industries or sectors. While the largest VCs have amassed investment “war chests” of multi-billion dollars – for example, Andreessen Horowitz manages almost $30b in assets - the investments and support of smaller and more agile VCs can be transformational for young companies. Big Sky Capital was profiled recently in Forbes. Among other young VC funds, Asymmetric is certainly among the best known and most successful. It was a pleasure to catch up with Rob Biederman, CEO and co-founder of Asymmetric. Here’s what he had to say in a wide-ranging conversation. 1. Rob, you’ve had quite a career: Princeton student government, private equity investor at Goldman Sachs and Bain Capital , Founder co-CEO of Catalant , and now Managing Partner of Asymmetric . What knits these roles all together? “I’m fascinated by the mechanics of business: how companies get started, grow, compete, and evolve. As undergraduate student president at Princeton I took an entrepreneurial direction, starting services for students in the campus center. As a private equity associate, I gravitated to post-close involvement, although on the deal side of the business. So co-founding Catalant was logical and running an operationally focused VC firm felt like the right next step. It’s no secret founders today have choices for where they get capital; we’ve tried to imbue the Asymmetric process with empathy and support for our management teams from a streamlined and issue-focused deal process to constant post-close volunteerism with our portfolio companies. I’m surprised by how many VC firms lack founding and operating DNA!” MORE FOR YOU 2. What is it about the VC role that founders often misunderstand or don’t realize? “I bring a helpful perspective to this question as co-founder of Catalant, and now Chairman. We raised around $125 million from unusually good VCs, including David Fialkow at General Catalyst , Dan Nova and Craig Driscoll at Highland Capital , Bill Helman at Greylock , Jeremiah Daly now at Elephant and Mark Cuban. As a founder I lacked empathy for VC’s complicated dance card e.g., managing a portfolio of a dozen or more companies, running a firm, fundraising, and pursuing new investments. I’ve learned the VC job is harder than it looks. I think founders don’t realize how emotional investment decisions can be. The math has to work, but choosing to embark on a decade-long professional relationship is deeply personal. As a founder, pre-investment, I definitely over-indexed to numbers and economic justifications, and spent relatively too little time focused on selling myself.” 3. What investments are you and the Asymmetric team focused on? Is there a particular category or categories? What about the areas of investment that attracts you? “We focused on pre-seed and seed in B2B software including digital health and fintech. Early-stage investment is as close to an all-weather investment strategy in private markets, and we like the dynamics of early-stage right now. Other firms have signaled their intention to pause or slow their investment pace; growth investors have similarly retreated. Given the historical VC boom that follows downturns, we see the next couple years as exciting for early-stage funds who are willing and able to deploy thoughtfully while others don’t. We also see options vesting at established companies, making potential founders feel like they can start something new. Founder quality is our first and most important filter. We will always back an elite founder over an average one with the perfect idea. We are fortunate to partner with sophisticated and long term-oriented family offices on the east coast. They know building a serious enterprise takes time and are focused on our ultimate multiple of invested capital. They seek to compound existing capital to multiply their philanthropic endeavors, and we are aligned with that mission.” 4. I know you are interested in the future of work and have invested in great companies like Torc . What themes excite you? “We believe that companies will address the long tail of needs with more innovative solutions. One particularly strong theme is flexible approaches to talent. With companies like UpSmith , Torc and Halo , we see growing demand from enterprises to engage with outside resources in a novel way. The future of work is broader than just new approaches to talent: two of our software investments, Natter and Supermanage , use AI to help companies engage and manage their existing talent more effectively. Another one of our portfolio companies, Upbound , employs AI to dramatically scale the efficiency of outbound growth teams.” 5. Some VCs lead investments and others participate and spread the risk. For people who don’t know Asymmetric well, what’s your strategy and why? “The lion’s share of our portfolio is investments where we are sole lead or co-lead. We aim to own 10% to 20% of the companies we invest in at pre-seed or seed stage. A small minority of our portfolio is made up of smaller, non-lead investments where we want a front row seat to watch the company, get to know the founders, and evaluate more significant investment downstream. In virtually every investment we try to be the closest advisor to the founding team.” 6. What’s the broader relationship between Asymmetric and a given portfolio company? How do you help beyond providing money? “Asymmetric’s engagement with portfolio companies is a key differentiator for us. Our team members generally have founding and operating background: we are very operator centric. We want to meet founders as early as possible and work together to craft a business model that targets the most addressable, ripest markets. Once up and running, we plug-in on go-to-market strategy, critical hires, and financial and operational guidance. We are regularly told we’re the most hands-on investor in our companies’ cap tables. We summarize our portfolio approach in a single word: empathy. Going from zero to 1 has many challenging moments, and we stand shoulder to shoulder with our founding teams for those critical trials.” 7. What are the toughest aspects of a VC relationship with an investment that’s troubled? When and how do you intervene when you see signs of difficulty? “Challenging investments are part of the playbook in early-stage venture. No firm bats 1000. We focus where help is needed, assess how we can help, and whether it’s needle moving. We may provide temporary finance or operations support from among our own team members. For us, a requisite aspect of temporary plug-in engagements is to set the company on the right path. In other instances, an outside observer may be the best judge of whether a company has reached product-market fit. In one case, we helped a founding team pivot their value proposition to a better approach more likely to gain traction.” 8. How has your experience as a founder made you a better VC? “Founding and growing a company is hard work, but very rewarding. On an average founder day, more often goes wrong than right. At Asymmetric, we lean into it. We want founders to call us when things aren’t going well, so we can help. We believe healthy professional relationships are based on trust and empathy, so we open the door for founders to tell us how we can help. For other firms, that means referrals to headhunters and fundraising assistance. We don’t outsource the things that matter most to our portfolio companies, and by extension to us.” 9. Can you advise founders: what should they look for in a VC? “Relationship strength, trust, and honesty. It’s easy to be romanced by buzzy names or big valuations. It is tempting to partner with a big established brand … but will you be a priority? At the end of the day, VC funding is a long-term investment and often a decade-plus partnership. Look at the addition of the VC firm to your cap table and board of directors in the same way you consider a key hire. Do you want that person to be at the table with you five years down the line? Does their term sheet and working style have your team’s best interests in mind? Take the time to get to know a firm and their team closely before making a decision. The time you invest will be repaid many times over if it results in the right match.” Viva la revolution!