We discovered the “VC Rank” database, and became intrigued, hoping it can also increase access to capital for cleantech companies and founders. So we reached out to Nate Pierotti (CEO of New Stack Ventures, the organization mainly responsible for “VC Rank”) for a quick interview.
Maybe you can quickly tell our readers how you’d describe what you’ve built up with Newstack?
One of the biggest challenges that our founders face is raising capital. It’s become increasingly difficult to know who has capital to deploy, if they lead, the desired check size, and thesis areas of interest… VC investment behavior is a perpetual moving target. Because of this, we’ve spent the past 4 years building a targeted fundraise approach for our founders that we call the ‘Next Round Plan.’ It’s an 1800+ firm database with detailed investment preferences on every firm. We work with each startup to create a custom list of the best-fit firms for their stage and sector. It’s been a huge hit and our founders cite the NRP as the primary reason why they refer other founders to New Stack. When the pandemic broke, we decided to “open source” our database and provide founders with a miniaturized version of the NRP. Ultimately, we built VC Rank. By answering a few questions, VC Rank allows any startup, anywhere to generate a customized list of the best-fit VCs for their Stage, Sector, Geography and Technology.
Being an investor, what were you biggest misconceptions you had a few years ago?
My biggest misconception was that in order to make a great investment I really had to intimately understand an industry or the market. I no longer believe that to be true. Investors can’t predict the future, and investing at the pre-seed / seed stages, what the market will look like in 8 – 10 years is anyone’s guess. Rather than seeking founders who are building something similar to my own investment hypothesis, I think the best approach is to seek out founders who are deeply invested in the evolution and innovation of their respective markets. Those are the founders that are continually on the cusp of knowledge and teach me more about their respective market than I could ever learn myself. I learned to lean in to conversations with these incredibly knowledgeable founders and rely less on what I believe the trends may be and rely more on what these individuals have to teach me about what the trends are and could be.
In terms of cleantech, what are the topics you’re most excited about, both generally and specifically in terms of your investments?
We’re always open to any opportunities in the cleantech space, but because of recency bias, food waste and waste reduction are exciting areas. Companies’ attention and budgets towards sustainability are increasing, and startups that are both preventing waste while providing ROI for their customers are exciting opportunities as an investor.
What was an investment you missed out on, which you really regret now?
N/A I haven’t invested long enough to know which investments we really missed out on.
What advice would you give to our readers in terms of cleantech (or tech) private investments?
Find amazing founding teams whose solutions are positively impacting the environment but also providing ROI to the customers purchasing those solutions. A win – win makes for an easy decision to purchase.
What car do you drive, and what’s your next car?
A Toyota Rav. I don’t plan on getting another car after this one!
On your database which helps founders to find VCs, what feedback would you like to hear on how to improve it giving better results for cleantech founders?
Any feedback is appreciated! We’re always looking for how we can continue to help and provide more transparency in the fundraising process. Any suggestions can be sent to email@example.com.
What are your favorite cleantech public companies, from a personal point of view ?
This is a cliche answer, but Tesla is such a standout company for me. I think it’s very difficult to create a product that: A. Has a positive impact on the environment B. Is well designed and is perceived as luxury, and C. Is affordable to the masses. Tesla is one of the few companies that has gotten each one of these right and the public market has clearly rewarded them for it.
Which trends are a little over- and under-hyped (thinking how they would materialize in 5 years) in your investor’s opinion?
Unfortunately, I don’t have a good answer for you here. I think, in general, areas that are receiving a lot of attention are often overhyped and we tend to steer clear of those. Examples being Crypto, VR, Scooters, etc.. Regarding areas that we’re excited about, it always goes back to the entrepreneur independent of the industry that they’re operating in. They’re the ones creating the next trend and pulling the future into the present. But to not entirely give you a cop out answer, digital transformation is still in its infancy and that’s incredibly exciting as an investor. Having the privilege of being exposed to so many different industries often has me saying to myself: “Wow, I can’t believe that industry still operates so inefficiently.” Legacy industries have so much opportunity left to be mined, and it’s exciting encountering amazing people that have spotted one of those opportunities.
Do you have VC or companies which are a particular inspiration?
There’s too many to name… As far as other VCs, I enjoy reading Paul Graham, Sarah Tavel, Bill Gurley, Eric Paley (among many others) for their first principles thinking and approach to the art of venture.