Marc Cyr, partner at 20x Capital
Q: You’re a lawyer by training, but you transitioned into software engineering at a couple of startups that exited and are now stepping into investment more formally. How has that journey prepared you for this newer role?
A: That is a great question. All the components of my journey have been intentionally put together with the goal of getting into angel investing–and eventually venture capital–from the age of 20. Knowing the law has helped me every step of the way while navigating my career, founding startups, and now participating in funding rounds. Since I took courses focused on marketing and entrepreneurship in my MBA program in London, that degree has come in handy not only through generally managing employees but also in my role as Chief of Marketing at a startup. Now, stepping into an investor role, all of these experiences come together and allow me to make informed but efficient decisions when it comes to either deciding to fund a company or pass on the opportunity.
Q: Can you talk a bit about your new firm, 20x Capital, and how the name reflects your investment strategy?
A: The name for 20x Cap comes from the notion of multiples in the venture world. Depending on the industry vertical, the desired multiple varies. Still, one common multiple you’ll hear often is “20 times top-line revenue.” Any tech startup’s goal should be to secure a 20x or greater multiple from generating growth efficiently. Of course, there are verticals (like SaaS) where you’ll often see 50x or even 100x top-line revenue! It depends on many factors, but based on the common expression, we named 20x Capital.
Q: When considering a potential portfolio company, what are the top 2 or 3 things you look at when deciding whether to ultimately make an investment?
A: Early signs of product/market fit. This usually shows up as consistent growth (up and to the right) of whatever a company considers its “North Star Metric” to be. For some companies, this is revenue, but it could be user or engagement growth for others. Whatever that North Star Metric is, I expect to see at least triple/triple/double growth (year-over-year). I love seeing a company growing 40% month-over-month. Drive that CAGR (compound annual growth rate) up and to the right!
Founder/product fit is another piece of the early puzzle. It’s admittedly hard to see that early on because the company doesn’t have a track record yet. If the founders are trying to solve a problem they’ve experienced themselves, though, they are much more likely to push through brick walls because they’re passionate about finding the solution. If it’s not personal for the founder, they might give up at the first resistance or not pivot when necessary to keep driving the business forward.
Q: Are there any common mistakes you’ve seen companies make after they’ve gotten financing?
A: I have been very fortunate so far to not have seen many dire mistakes being made by portfolio companies. The biggest advice I can offer, no matter the startup or the founders, is to update your investors regularly and in a timely manner. It’s easy to do when times are good: who doesn’t love firing off an email letting investors know you’re efficiently applying their capital and growing the business? It becomes a lot harder, though, when things are hitting a rough spot and you have to navigate troubled waters. Those times are also when that communication is most important, though, because you have investors who believe in you and have untold, varied experiences. Often, what you’re running into is not the first time it has ever happened, and chances are someone in your investor network will have ways to help get things back on track.
Q: Is there anything else you want early-stage companies to know?
A: I’m happy to talk about these concepts more, so feel free to reach out!