Meet Rebecca Kaden, General Partner at Maveron

Steven Loeb · December 2, 2016 · Short URL:

Kaden was a journalist for the Economist in London and a special projects editor at Narrative

There has been a big debate over the last few years over whether the Series A crunch is real or not. What everyone can agree on, though, is that there are definitely more seed and early stage funds now than ever before, and more people willing to give money to young companies looking to make it big.

But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?

We're highlighting key members of the community to find out.

Rebecca Kaden is General Partner at Maveron .

Before joining Maveron, Kaden was a journalist for the Economist in London and as special projects editor at Narrative, an online literary platform devoted to bringing great literature into the digital age.

At Narrative, in addition to her editorial responsibilities, she was in charge of driving revenue and scaling the user base. Now she brings her skills and passion for understanding how stories come together to looking at the potential of breakout consumer brands.

Kaden earned her undergraduate degree from Harvard and graduated from Stanford’s Graduate School of Business.

VatorNews: What is your investment philosophy or methodology?

Rebecca KadenWe invest exclusively in direct to consumer businesses in the early stages—series A and seed. We think about how technology can provide leverage in building the next generation of breakout consumer brands and strive to partner with the best big thinking entrepreneurs attacking major consumer categories. 

VN: What do you like to invest in? What are your categories of interest?

RK: We invest across the consumer landscape. Our primary goal is to partner with the best entrepreneurs. But within consumer, I think a lot about two buckets. The first is comprised  of areas marked by big, legacy businesses with low customer satisfaction and appeal. Think financial services, healthcare, real estate. We think those categories provide huge opportunities to take a customer experience currently marked by fear, confusion, or friction and build a brand that creates delight, value, or clarity.

The second bucket includes transactional consumer brands where technology can create scale and momentum by expediting awareness, personalization, and access. Great commerce brands like Everlane and Allbirds fall into this category. 

VN: What would you say are the top investments you have been a part of? What stood out about those investments in particular?

RK:  There are many investments in our portfolio I’m incredibly excited about! But I’ll call out two that meet that thesis above.

Earnest is a brand, business, and team I love. They’re building a new consumer bank, starting with consumer lending. Without question, the first thing that stood out about Earnest was the founding team. Louis and Ben have deep category knowledge, the ability to simultaneously think big picture and maintain a detail orientation, unique talent at recruiting and building a world class team, and unbridled passion at conquering a giant, old school, and clunky industry  known for poor customer satisfaction. They think about how to leverage both technology and brand to build a superior customer experience and better business model.

Another business I’m particularly excited about is Allbirds, a vertically integrated footwear brand. Again, the first thing we loved was the team, a combination of brand and design talent and operating experience. They are manically focused on what their brand stands for and how to deliver a superior product to their customers, in this case, the world’s most comfortable shoe. 

VN: What do you look for in companies that you put money in? What are the most important qualities?

RK: First and foremost, we look for founders and teams that we have high conviction and belief in and who are tackling big consumer categories. We look for entrepreneurs who not only have big visions but can evangelize around them, to potential hires, customers, partners. We look for founders who can master the daily balance of focusing on the giant goal and acting in the weeds, living both in the sky and the dirt.

We look for people who can build the kind of teams that you look at and are think the caliber of talent outpaces the stage of company. We look for deep understanding and empathy for the customer and that sense of relentless perseverance on the part of the team around building products and a business that serves consumers well and owns a category. We look for a product mindset. We focus on whether the team has the talent, ability, and inherent capability to move fast, to aggressively push the boundaries and try to beat the normal curve of a business. 

VN: What kind of traction do you look for in your startups? And can you be specific? Are you looking for a number of customers or order volume?

RK: There are no magic numbers in terms of what kind of traction we look for. We’ve done Series A investments with millions of dollars in revenue and Series A investments that are prelaunch. For those prelaunch, often we’ve worked with the team before or seen that they are standout operators. The less experienced the team, the more we look for other proof points in the business.

When we dig into a business, we look for evidence of consumer obsession. At that stage, growth matters to us less than evidence that a) your current customers absolutely love your product, they integrate it into their daily lives and talk about it with their friends and b) that you know  how to find more of them. 

VN: How long does it take before you meet a startup and make an investment and how do you conduct your due diligence

RK: The process varies depending on the stage and type of company as well as how well we already know the founding team. We operate under the belief that the biggest factor in a company’s success is the caliber of the founder and the team he or she is able to build. As a result, we have a strong preference for knowing the team extremely well before writing a multi-million dollar check or leading the Series A. So on seeds, we go quickly; it can be a couple days or a couple weeks but we are nimble. But on Series As, we do value how well we know that team a lot. The average time we’ve known Series A teams in our portfolio before leading the round is about a year and a half, so its often the result of a relationship that’s been in progress for a while.

Our goal is not to have to see a deck and go through a process, but have that understanding and relationship already. Sometimes that’s not the case and then a lot of our diligence process is focused on how we can get up the curve on our understanding of the team: who they are, what makes them tick, and what our working relationship will be like.

VN: Given that these days a Seed round is yesterday's Series A, meaning today a company raises a $3M Seed and no one blinks. But 10 years ago, $3M was a Series A. So what are the attributes to get that Seed round? Since it's a "Seed" does it imply that a company doesn't have to be that far along?

RK: Fundamentally, raising rounds is a function of supply and demand and not external, objective benchmarks, which  makes answering these kinds of questions really difficult. The unfortunate answer is that it highly varies. It depends on who the entrepreneur is, including his or her track record (it’s far easier for a proven entrepreneur to raise $3 million on a deck than someone whose never done it before); the category they are focused on; and primarily, how good they are at creating early momentum around their idea and the need to be a part of it.

Seeds are raised on decks or less than decks as well as on millions of dollars in revenue. Early stage raising across rounds is a process of de-risking; the more you’ve shown progress, whether that’s in traction, team, partners, product, etc., the more you move to a position of strength. In a seed, for us, we want to have deep conviction that this is a founding team we want to be in battle with, that they are working in a market that’s incredibly big and ripe, and that there’s reason to believe that they can create category leadership inside it. That last part is sometimes answered by what they’ve already begun to do and sometimes answered by what they can convincingly show is going to come. 

VN: What are the attributes of a company getting a Series A?

RK: Similarly, the criteria of a series A vary wildly. We’ve done series A investments pre product or launch, particularly with entrepreneurs we know well or EIRs, as well as Series A investments with millions of dollars of revenue. Across the board, at a Series A, we like to see that there’s evidence of this being a true all star team.

A big thing for us here is how they’ve been able to hire: can they evangelize their product and business to remarkable early employees who are willing to get on their bus before its obvious? And we like to understand that current or future customers love what they are doing, that they tell their friends, come back and buy again, want more, etc. We want to see an early indication of that cauldron of consumer passion that is the fuel behind breakout brands and that the team knows how to harness and utilize this early passion to grow something special.   

VN: Given all the money moving into the private sector, I believe there's more money going into late-stage deals in 2015 than there was during the heyday, back in 2000, do you think we're in a bubble?

RK: I think we’re in a frothy time. There’s buzz and attention on the venture world and a huge influx of capital into it that’s looking to be deployed. There’s an abundance of funds and capital across stages as well as untraditional sources entering the game who, in other moments in a cycle, are uninterested in the venture landscape.

A bubble to me implies that there will be a single moment that it will pop or end, an explosion of the current state. Late stage capital is keeping companies private that otherwise would be public or sold. Capital has been fueling interest in top line growth sometimes over fundamental underpinnings of businesses. But I don’t know that a pop is what will happen here versus a slower movement towards another place in the cycle. We’re already seeing that in the last nine to 12 months in the early stage ecosystem, the shift to a focus on unit economics and slower fundraising cycles, and I imagine that will trickle up to late stage as well.

That being said, we believe each generation sees a handful of breakout, long lasting consumer brands, regardless of where we are in a cycle. Our goal is to block out the noise and focus on being a part of a segment of these.

VN: Tell me a bit about your background. Where did you go to school? What led you to the venture capital world?

RK: I grew up in New York City and then went to Harvard for undergrad and Stanford for Business School. Before business school I’d been a journalist and worked in publishing, writing for publications like The Economist as well as Narrative, an online publication, where I  became deeply interested in the intersection between content and technology.

While I was in business school, a mentor of mine, Bill Campbell, a wonderful, inspiring tech leader and coach to many and an advisor to Maveron, who recently passed away, introduced me to the Maveron team. I got to know them while I was in school and joined full time when I graduated to help grow out our San Francisco presence and focus on finding and working with the entrepreneurs building the next great consumer brands. 

VN: What do you like best about being a VC? What makes you excited?

RK:  The role of venture is to think, constantly, about transforming figments of the imagination into fixtures of life. It’s an industry built on belief, in extraordinary people who can build big businesses out of kernels of ideas, in the ability of new thoughts and technologies to change how we live, and in the momentum of consistent human progress. It is an amazing combination of imagination, people, and ideas.

I spend all day talking to founders who have crazy passion and knowledge, and want to use those ingredients to concoct wild new things that, if they succeed, will become so integrated into the fabric of how we act that they will seem obvious. And I think, constantly, about how I can help, with capital, network, patterns, hustle. It’s incredibly hard and requires this wild mix of inherent unrest to find and help push along the new side by side with the patience to let businesses evolve, get to outcomes, and learn from cycles that can make you better. But it's absolutely awesome. 

VN: What is the size of your current fund?

RK: ~$150M

VN: What is the investment range?

RK: We write seed checks of $100,000 and Series A checks of $2 million to $8 million

VN: Is there a typical percent that you want of a round? For instance, do you need to get 20% or 30% of a round?

RK:  In Series A rounds we have a target ownership of 15 percent to 30 percent. Our average is about 20 percent to 25 percent. In seeds, we are less ownership sensitive and more focused on putting a smaller check in to develop the relationship with the team and help from the earliest stages.

VN: Where is the firm currently in the investing cycle of its current fund?

RK:  We’re at the start of our 6th fund, and excited to build a portfolio of standout consumer brands inside of it! 

VN: What percentage of your fund is set aside for follow-on capital?

RK: About half 

VN: What series do you typically invest in? Are they typically Seed or Post Seed or Series A?

RK:  Primarily Series A and we have a seed program as well which helps us build relationships with entrepreneurs over time and for them to get to know us and how we’re different. About 50 percent of our Series A investments come out of that seed portfolio. 

VN: In a typical year how many startups do you invest in?

RK: Four to seven Series As and about 18 to 20 seeds.

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