I wasn’t lying about being “knee-deep”

The Real Essence of Cash Flows

At Wright, our margin is in the equity we get in the venture. As a result, we run tight cashflow operations — much like a startup. We also run pilots on each one of our builds out of our own pocket, mostly for speed of operations as it is difficult at times to approve additional money with our corporate partners in a timely manner.

As a VC, it was easy to remain oblivious to the pressing immediacy cash flow concerns can pose to an entrepreneur. It’s a different ball game when there’s a very real worry of, “I have employees to pay in two days” or “I need to order ice packs for my pilot which is launching in 3 weeks and it will take 2 weeks and 4 days to get here from China.”

Having these discussions makes me realize that if a founder says “I need the money in the bank for X, Y, or Z,” they’re not desperate because they want to be, they’re desperate because they have to be. They’re dealing with the stress of not being able to move forward on time or even worse, facing the risk of losing credibility with their customers and team.

Emotional Toll: The Silent Challenge

Here’s a sample list of questions that I ask myself at least three times a week, at any and all times of day:

• Will this venture work or not? Do customers really love what we’re building? Will the product even work?

• Are my suppliers in X going to follow through on their shipping commitment? What if they don’t? How should I hedge that risk? Should I find suppliers in Y instead?

• I only hired one recruit because I only had the money for one. Will they fit in? Can they do the work? How can I best set them up for success?

• Will the investors we’ve brought to the table really follow through? Should I follow up with my friend at the fund to see if her team is actually interested?

• There are a few competitors in the space who are approaching this problem from a different angle. What if they’re right and I’m wrong?

And many more…

In what I do now, I feel a deep sense of ownership and pride in the ventures I build — I’ve built as many ventures in the last 14 months as I invested in within a frothy 2-month span in 2021 — which is a testament to the depth of our approach. As a VC, I often spoke to my peers about empathizing with our founders — this experience has both made me realize how wrong I was but has also given me an opportunity to better appreciate that the entrepreneurial journey isn’t just a business challenge; it’s a deeply emotional one with oscillating highs and lows, from the exhilaration of a new client deal to the apprehension of a potential setback.

Customer Challenges: Beyond the Startup Glamour

The startup world isn’t just about innovative products, groundbreaking ideas, and sitting on panels telling the world how amazing you are. It’s also about addressing genuine customer issues — handling complaints, managing returns, and addressing service glitches can be operationally burdensome and emotionally taxing.

Taking that role initially during what we call the Design phase and then the Build phase (before the venture is ready to tackle its challenges on its own) is eye-opening. There are clearly so many more things that can go wrong than right. The key thing is to understand what pain point you are solving, and for who. This is often misexplained or misinterpreted as what friction are you solving for the customer but it is much more about what value you are providing to the customer and how much can be extracted for the venture. As mentioned earlier, the customer (not the VC) is the most important stakeholder, something I think many VCs sometimes forget.

Sometimes customer focus groups look like this

The Ripple Effect of Early Hiring Choices (and really any other early choices)

The path a startup takes can be considerably swayed by its initial team members — I kind of knew this coming in but in the last 14 months I have hired and have had to let go of early employees in a venture, once within a week, and even had to make a call to let go of a venture where the founders were not the right ones.

As a VC I often interacted with founders and it was the best part of my job. However, I rarely interacted with other team members beyond that, particularly because I was managing a portfolio of 20+ companies while executing 3–4 deals at a time. I couldn’t properly appreciate the impact of how a hire could so significantly change things.

My journey from investor to builder has been challenging, fun, tiring, energizing, and fantastic. As I transitioned from the panoramic view of a Venture Capitalist to the trenches of Venture Building, I’ve come to appreciate grappling with operational complexities, understanding the essence of cash flows, navigating the emotional rollercoaster, and addressing genuine customer concerns. While the world of VC offered insights from a distance, being a Venture Builder has given me a front-row seat to the highs and lows of building a venture from the ground up.

We are pleased to be an appointed venture studio of EDB’s Corporate Venture Launchpad 2.0. CVL 2.0 is an expanded S$20m programme by EDB New Ventures, designed to enable companies to incubate and launch a new venture from Singapore, supported by venture studios experienced in corporate venture building. You can also find out more on our website.

Interested to learn more about investable ventures? Drop us a line: contact@wright.partners

Author:

Ajay Taunk, Venture Lead at Wright Partners