Our Investment Process
This post has been up on the Fly VC Medium page for years but I’m increasingly finding that founders are coming to me via this site or my newsletter, so I’m reposting here for good measure.
There’s a lot for founders to hate about the fundraising process and the opaque decision process that funds can have. At Fly we are strong believers in radical transparency. In that light, we’d like to summarize exactly how we make investments. We hope this sheds light on what we value as a team and provides founders a sense of where they stand if we’re lucky enough to be speaking with them.
Like most funds we always prefer to meet founders long before they raise. Regular check-ins over time allow relationships to form more naturally and provides a better sense of how a team performs as operators. However once it’s clear that founder is actively raising we immediately transition into a three stage process of evaluating potential.
Stage 1: Evaluating
Timeline: 1–3 days
This is a mostly solo activity with a single Partner of the Fly team building understanding and conviction in an opportunity. A typical journey in this stage is:
Intro call (30 minutes)
Follow up questions to the founder (email)
Secondary call (60 minutes)
Deep materials reading if applicable (white papers, case studies, etc.).
Stage 2: Evaluating High Priority (EHP)
Timeline: 2–3 days
This stage transitions from a solo activity to a team-wide effort. The sponsoring Partner will typically team up with a second team member and they will run the majority of the founder-facing effort, though discussion and debate takes place on our end with everyone. There is usually a follow up call and/or email Q&A if needed, but the primary focus is the Onsite.
An Onsite is a ~two hour working session between the founders and sponsoring Partners of a deal. The goal of this session is two fold:
Work through the 2–3 key areas and reach true investment conviction
Test the chemistry between the founders and Fly in a natural working environment.
This is the final step for sponsoring Partners to build conviction. Progressing beyond this means those Partners want to formally endorse a company for investment.
(Historically the “Onsite” was always performed at the startup’s office but now we’re more fluid)
In parallel we will try to validate our understanding through our network.
Stage 3: Building Investment Proposal (BIP)
Timeline: 1–3 days
The deal sponsors are now properly excited and clear out their schedule to run the final steps of our due diligence. Sponsoring Partners also pull in the rest of the Fly team for our final step, the AllPartners Meeting.
An All Partners Meeting is a 60 minute meeting (pitch + Q&A) where founders present the company to the full Fly team. Our whole teamwill have been prepped and armed with their key questions. Pitches can take any format but usually this is an uninterrupted 15 minutes as we think it’s important to hear the authentic and complete founder narrative. Questions from our end can come from any Partner and we encourage all founders to speak to their specific areas of expertise. We think it’s important for our full team to meet the founders in order to properly vote on a deal. More importantly, we feel it’s critical that a founding team knows all of Fly. As a Fly portfolio company we are all in your corner and serve as your evangelists.
After the All Partner Meeting we debate internally, vote and provide a final decision within 24 hours (or less). If we want to invest we will issue our standard term sheet and commit to as fast a closing as possible. Then it’s off to the races of realizing your ambition!
If you’re a (pre)seed stage founder building a deeply technical, enterprise focused startup we would love to meet you. Please reach out to anyone from the Fly Ventures team.