From Entrepreneurship to Venture Capital Investment

Before he started Flint Capital, Andrew founded a couple of other startups. These businesses ultimately didn’t go as planned, and he decided to spend more time learning about the VC market. “I was fascinated in how venture capital could dramatically accelerate the growth of the business compared to other forms of capital or other forms of growing companies like bootstrapping,” he says. “It was curiosity that drove me there, and the desire to build actually never left me. So the investment firm Flint Capital is our own startup.”

Andrew’s previous startup efforts informed his overall approach to founding Flint Capital. Among other things, he knew the importance of listening to others. “That both helps the entrepreneur to navigate the most effective path through all the challenges that they face, and it also benefits the investor's ability to make good decisions and to help their portfolio companies,” he says. 

He and his co-founders also understood the challenges that entrepreneurs face from first-hand experience. “Investors are very different than entrepreneurs,” he says. “We are not at the steering wheel. There are so many who have never been there and done that. They don't understand what it means to lead the company.” Andrew thus believes that his previous startup experience helps him “to speak the same language, to have the right kind of empathy for our portfolio founders, and to be there for them.”

Andrew notes that there is less money in the capital markets than there used to be. He has some advice for entrepreneurs as they adjust to this new reality. “I would suggest that focus is the most important thing,” he says. “The first thing we did in our portfolio was reach out to our CEOs and ask them to accept that there's a downturn in the capital markets. They must prepare now because speed matters. Historically, the companies that prepare in advance tend to survive better.”

Companies that aren’t well prepared for the current downturn should still try to secure as much funding as possible. “Accepting a flat, or sometimes a down round, like lower valuation, is still at the table,” he says. “It's better to survive now than die. The small percentage of something valuable that survives is much more valuable than 100% of zero.”

Over the next two years or so, when funding continues to be limited, founders should “prioritize their burn control,” Andrew says. “You should have the runway for at least 24 months – a burn multiple, that is, how much you burn to create $1 in a new era,” he says. “This burn multiple should be as low as possible. Cash flow during a downturn can be more important than revenue growth. If your company survives and the economy starts to grow, you'll be able to win the markets and a piece of the competitors that didn't survive.”

Flint Capital has taken several steps to help prepare founders it has invested in for future economic hardships, including making a larger-than-usual allocation towards following investments. “The goal is to give our best portfolio companies as much runway as they need to pass it over to the next level of metrics and to actually survive this period of turbulence,” he says. We still continue to invest.” 

Above all, Andrew strives to always look on the bright side. “In venture capital, you have to be optimistic,” he says. “Otherwise, you cannot write a check to something that actually exists only in the mind of a few people. So I think that a downturn is an excellent time to start something. We have seen it through many previous downturns. 2008 was a great example of new companies that are currently the tech leaders of the world that emerged in that period.”