VCs Larry Bohn and Izhar Armony want to play matchmaker for their startups together. (Credit: General Catalyst)
Signing a big business as a customer is a key moment for any startup. And at two established venture capital firms, partners are teaming up across portfolios for the first time to help.
The program is called The Velocity Network, and its founders come from two firms with a combined 60-plus years of investing, General Catalyst Partners and Charles River Ventures. Their premise: with so many startups pitching big customers these days, the startup/corporate courtship process would work a lot better with a little speed dating.
“Companies today bombard IT executives with a lot of noise, and enterprises are shutting down,” says Izhar Armony, a partner at CRV and the co-leader of the new program alongside General Catalyst managing director Larry Bohn. “We wanted to find a less noisy and more friendly environment.”
The network was inspired, at least in part, by the work done by Andreessen Horowitz, the relatively young but high profile VC firm founded by Marc Andreessen and Ben Horowitz. That firm set up its own executive briefing center for its companies, where visiting businesses could get pitched by relevant startups in Andreessen Horowitz’s roster. But such a center requires a significant commitment in resources. So for firms like Armony’s and Bohn’s, it could make more sense to shoulder that burden together.
Based in New York, Velocity’s sessions consist of a more informal lunch, quick elevator pitches by each startup attendee, followed by one-on-one sessions between enterprises and startups from areas of focus such as cyber security. Each session has a common theme, says Bohn, meaning that a potential customer can save a lot of time by sending relevant executives to meet with half a dozen pre-screened startups, rather than evaluate sales pitches on their own from whomever sends a cold email.
For one attendee of two of the firms’ trial sessions in recent months, the meetups have already led to a significant sales boost. Cyber startup Contrast Security focuses on protecting apps from attacks. Contrast has attended two of the firms’ sessions in recent months and has 10 sales processes underway with some of the country’s largest businesses from introductions at the meetups. Part of the value, says CEO Alan Naumann, is that the executive sent from a corporation is usually one with decision-making authority, reporting directly to a CIO or CTO. “It would usually take two or three meeting just to get to that person,” says Naumann. “This shortcuts two or three months of effort.”
It’s a similar story at security startup Cybereason, which has already raised nearly $90 million in funding and has four offices, but got a jump start from conversations at a Velocity Network event, according to CEO Lior Div. Cybereason has already onboarded one enterprise it met as a customer, with four more in the process, says Div. “If I can get to the chief security officer of a bank, I don’t need a lot of time to convince them,” he says. “In 10 minutes, I can explain the value of what I’m doing. But in the regular sales process, you have to work hard to get that meeting. Here you work from the top down.”
As Velocity Network works its way through General Catalyst and CRV’s portfolios, it remains more of a question whether startups outside of a hot area like cyber security will find such success in closing deals. The program works naturally today given the overlap of the two firms in categories without many direct competitors, but if its founders expand on Velocity’s success, politics between invited startups could become more of an issue.
Over time, Velocity Network may add more VC firms to its mix, its founders say. Bohn at General Catalyst says that the program would still work well with several more venture firms joining in, up to a limit of about half a dozen.
Among the CEOs participating, Naumann says that he’d welcome the program growing over time, but that if it scaled to the point of direct competitors, the dynamic would change. “Having some intimacy works well,” he says. Div says he wouldn’t care. “We see our competition everywhere, with this or without this,” he says. “These enterprise customers have the ability to access any company that’s out there anyway.”
“What we have in mind is a broader, more open network,” says Armony at CRV. “We think this is good for sales, and it’s good for the industry.”