Frequently Asked Questions

Joshua started his career as an investment banker with Citibank in the 90s and has over 15 years experience in early stage VC investing and deal structuring. Mat is also a former investment banker and worked with Joshua at their previous fund, Rubicon Venture Partners.

It's important to note that the Acronym VC team are continually refining and honing their approach based on what they are seeing in the market and where we are in the cycle. One of the most important characteristics of a successful VC investor is to accept that you never stop learning and you need to be able to adapt as the world around you changes.

Taking that as a given, the AVC team focuses on real businesses that have the potential to produce profitability at scale with founders that have deep domain knowledge and execution experience. AVC take this a step further by looking at investment not just through the lens of an investor, but as a customer; a company may have a great idea with an experienced team delivering an interesting product with a large potential market, but if the customer just isn't going to pay for it, none of that matters. AVC have learned that they need to understand the customer's perspective first, then make sure the team, product and market are the right fit.

Joshua hired Mat at Rubicon Partners where they worked together on both the Rubicon 1 and Rubicon 2 funds. When Joshua made the decision to start his own firm, Acronym Venture Capital, Mat left with Joshua to help build the business. Joshua and Mat have spent more than 7 years working together, have a very healthy working relationship and individual skillsets that are hugely complimentary.

AVC sees late seed as more of an opportunistic round and they are targeting 30-35% of the fund there. In some cases they may not quite meet the $1mm ARR requirement, but they can see a clear path for the company to grow to the next level and be ready for a Series A investment. This earlier stage investment gives AVC the opportunity to help address some of the issues smaller startups typically face e.g. hiring, legal, customers, helping them shorten the sales-cycle and accelerate their revenue process etc.

Series A will be 65-70% of the fund, where the companies are now more mature and looking to raise capital at a higher valuation. In most case AVC will be investing in Series A of companies it has already provided seed capital to, so they've worked with the companies a long time, know them really well and they are effectively doubling down. If it's a first time investment they will still have done a lot of due diligence so will know the company very well but they are more likely to participate in those rounds rather than lead it (AVC expect to lead 8-10 deals of the 20-24 investments they will make, the rest they will co-lead or simply co-invest).

Early Seed is a riskier stage and often it's hard to accurately quantify that risk, so it makes coming up with valuations very difficult. It also means your portfolio construction has to assume a high number of losing investments and you are relying on some of your investments being Unicorns. In contrast, by the later stages (Series B, C, D etc.) it's far easier to accurately assess a companies value, but because of that, there is also a lot of capital chasing those deals and valuations quickly become unattractive.

By focusing on Late Seed and Series A, Acronym believes it is investing with the appropriate level of risk, but also where valuations still offer upside, so they expect to deliver attractive risk adjusted returns.

​Within Late Seed and Series A, Acronym invests in Enterprise & SMB software companies focused on Fintech, Hospitalitytech, Proptech,Workflowtech, E-commerce Infrastructure & Omni-Channel Consumer Brands

AVC break their underwriting process town into a number of key areas; team, product, market, sales cycle and use of fund.

The first focus is on the team. They want to see a cohesive team in place with clear structure, that are technically capable, can sell the product or service and have a great customer success situation. A red flag for them is when the company is raising money just to hire for specific roles - they don't like to see a lot of c-suite roles at an early stage, the company should grow into that over time rather than hire for it up front.

Next Acronym want to make sure the company clearly knows who its customers are and how they will reach them. This goes beyond generic knowledge and they want to see the company be able to identify specific people within the organizations they want to sell to.

AVC spend a great deal of time understanding the sales cycle and helping their portfolio companies

Finally they want to see a rock solid 18 month operational plan for the use of funds, that shows a clear path to the next funding round, including the KPIs required to get there.

AVC target M&A exits in the range of $100 - $500 million but unicorns do happen like (Super Human/ Daily Harvest); AVC invest in real businesses that typically have revenues and customer/ market fit; they focus on categories in B2B or direct to consumer products which are typically overlooked at the early stages by large venture capital firms.

Acronym believes that its investment strategy results in less “failed” investments than a typical VC portfolio and a wider distribution of “winners” given the focus on M&A as an exit.

The companies that Acronym sources have to work hard to attract capital - it is still difficult for the vast majority of seed stage founders to raise capital despite the news headlines that you read about. Acronym is not typically in very competitive situations with other VC's for investment in their targeted companies due to the focus areas for investment.

AVC invest (where possible) in QSBS eligible investments.

FirstGeneration.vc is an incubator created by Mat Kaliski focused on first time founders. AVC have sourced 2 companies from FirstGeneration.vc with 1 of them being a unicorn.

AVC does not have ownership thresholds like most typical VC funds do (e.g. a common ownership requirement is minimum 10% post investment). AVC is not worried that they don't "own enough of a deal" - there threshold is whether the investment likely leads to their target return expectations and fits into the fund portfolio construction.

A lot of VC's typically have higher concentration within their funds (e.g. will only invest in say 10-12 companies). This means their individual checks have to be larger which usually means they will only invest if they can lead the funding round and it also means they simply can't fund some of the smaller deals. Because AVC is looking for a more diversified portfolio of 20-24 names, they can write smaller checks which gives them flexibility to participate in deals that some of the bigger funds simply can't.