Office Hours: I’ve invested in companies like Doordash, Gusto, and Nova Credit. I’m the co-founder and managing partner at Pear VC.
Featured
Office Hours: I’ve invested in companies like Doordash, Gusto, and Nova Credit. I’m the co-founder and managing partner at Pear VC.Featured
Posted in:Office Hours
Hi everyone! I am Mar Hershenson, co-founder and managing partner of Pear VC, an early stage venture fund partnering with entrepreneurs from day zero to build category-defining companies. We have seeded companies like Doordash, Guardant Health (NSDQ: GH), Branch, Gusto, Nova Credit and many more. Prior to founding Pear, I was VP of product development at Revel Touch, entrepreneur in residence at Foundation Capital, VP of product development at Magma Design Automation, and co-founder and CEO of Sabio Labs. I have a PhD in electrical engineering from Stanford University where I am currently co-teaching Lean Launchpad, a very popular entrepreneurship course.Ask me anything about fundraising, the entrepreneurship journey, investing, product, and more!
ElphaStaff·Oct 04, 2020ElphaStaff·Oct 04, 2020Thanks so much for joining us @marhershenson620!Elphas – please ask @marhershenson620 your questions before Friday, October 9th. @marhershenson620 may not have time to answer every questions, so emoji upvote your favorites 🔥👍🏾➕
marhershenson620·Oct 09, 2020marhershenson620·Oct 09, 2020Thanks Elpha! I am looking forward to chatting with everyone.
Hi Mar, thanks for hosting office hours! I'd love to learn more about the investing process - there's this concept for entrepreneurs to have an official "pitch," but it sounds like in practice there are few moments of actual telling a full pitch with the deck, etc., and moreso pitching across a series of conversations, starting with a light intro call, and moving forward from there. How does that all work in your experience?
Hi Siran- Great question. In my experience both routes happen: 1) investing in someone who does an official pitch with us and then moves to diligence and 2) investing in someone that we know for some time and have had many touchpoints. Even in case 1, we are evaluating teams throughout the process (not just the first meeting but also the diligence process). This is a good blogpost that may be helpful https://bothsidesofthetable.com/invest-in-lines-not-dots-611f36491d73
Thank you! This was very helpful in clarifying things for me.
Hi Mar,Thanks for taking the time to do this! Can you elaborate on companies that you regret investing in? What were the lessons learnt or the yellow/red flags that you look for, since then as part of the diligence process?RegardsIsai
Hi Yezhisai , My regrets are not investing in companies not investing in some companies. In this business we know companies are tough and many won't make it. That's OK - even in some of the companies that did not work out, I learned a lot, built great relationships with the founders and grew as an investor. However, missing a large company, is VERY painful.My biggest learning has been getting better at reading people. We look for resilient, driven, ambitious, honest, kind yet firm, ... founders. Too many variables to count - It is really tough to evaluate a founder's character in a short meeting but I believe this is what good venture capitalist do.
Hello Mar! Thanks so much for being with us :)I would love to know what kind of sectors and/or company you like to invest in when the company is at the seed stage (product beta launched, no paying users yet)?
Hi Sophia. We invest in all sectors. We are what is called a "generalist fund". Our first check into companies is before Series A. Generally that can mean two types of rounds: pre-seed/seed (no product, no customers yet) and seed (initial product and a few customers, no growth yet). I love helping companies figure out product market fit and design their growth engine.
Thanks for sharing your time. How early do you recommend founders bring on an independent board member? Does it depend on sector/expertise of the founding team?
Hi Laura. What I see most often is companies forming an official board at seed or A where you have founders + investor. The independent tends to come later, series B or later. In some cases though, I see independent board members very early on, typically they are small angels. Reasons to bring them: founder may want more help (perhaps bring an operator that grew a similar business) or board realizes they need some expertise they don't have (for example, just before a company goes IPO, you want folks that have been CFOs before). It is all about building a team around you: it takes a village.
Hi Mar! Thanks for being here. Your background is extremely impressive. I am currently co-founding a retail tech company in which I plan on doing for the foreseeable future. However, my end goal is to get into VC later in my career. I am passionate about helping other founders and would love to take my experience and what I learn in my current venture to help and invest in others. What advice would you give a 23-year-old founder who wants to get into VC eventually? What should I be doing now to set myself up towards reaching that future goal? I don't have the traditional experience in investment banking or a degree from a top University.
Hi Trinity! Thanks for your question. The great thing about venture is that people from all sorts of backgrounds can get into venture. You are already in the path when you become a founder. Being a founder is a great way to learn how to operate a company and then use this to help founders when you eventually become a VC. I would say for now: focus on being a great operator - it is a hard endeavor to start a company and it will require your full energy. Once your company is growing, you can start advising founders and perhaps even doing some angel investing. This will connect you to the founder community and prepare you for VC. Don't be afraid to create a brand for yourself whatever feels authentic to you.
Hi Mar! I often hear that "the startup team/people" is one of the most important elements for VCs to consider whether it should invest in that startup. To me, "people" seems unpredictable and vague; subjectivity and bias can also play a role in the evaluation process. Is there any metric do you and your team at Pear VC use to evaluate "people"?
Hi Tran, You are so right. Investing in people is subjective. Same as recruiting. We try our best to not be subjective but it is very hard. I actually think we would be better investors if we let our subconscious bias go.Here is the situation: If you are pre-product and pre-revenue there is little to judge as an investor other than team and the market. I generally try to understand how well the founder can articulate the market opportunity a that stage. You can also evaluate how much they have done to date- even if there is no product yet, have they talked to customers? collected feedback? I also look for how they behave in the meetings I have with them, how they take feedback, how they run the diligence process etc.
Thank you so much for offering this Office Hour, Mar! I received my PhD in Mechanical Engineering in 2018 and am currently the co-founder and CEO of an advanced materials startup / university spinout commercializing anti-fouling coating technology developed in my graduate lab (we met briefly after I finished YC in Summer '19!). I'd love to learn more about your transition from academia to leadership in the startup/business world. A few questions I have in mind:- After your PhD, what key resources were most helpful in equipping you to lead/manage a team?- What were the top 2-3 skills necessary for leading a company that you didn't develop in your PhD program? How did you develop those skills (key mentors, books, experiences, etc.)?Re: investing:- Are there key differences in the ways you or other investors evaluate science-based hard-tech startups vs. software startups? What do you consider to be the strongest indicators that a startup will be successful?- Do investors have a strong opinions of SBIRs and other non-dilutive federal grants?- In your portfolio, what are the most common hurdles first-time founders (esp founders with a hard science background) have to overcome and how do they over come them?Your perspective on any of these questions would be much appreciated!
Hi Birgitt! I remember meeting you. Great to see you here! I have to say that I graduated in 1999 and it feels like A LONG time ago. I believe there are many more resources available today than ever before. I would say that my best resource was my independent board member. I built a strong relationship wit him and he was able to give me direct and honest advice. I felt that that really tough feedback was incredibly helpful. The most important skills for me were building resilience (even when things were tough, bouncing back quickly, making a plan for what's next), believing in myself as a business leader (as a PhD you think you don't know about business but this is not true) and being able to have hard conversations easily (this is tough!). Happy to chat more!
Hi Mar, I'm Chloe Chia, a 15 year old founder. I'm curious to learn how you first got into venture capital and if you have any tips for how to start in venture capital. I understand the basics of venture capital and try to read about it frequently, but I'm having trouble applying the knowledge. Also, my team and I are looking to raise in the future (definitely not now as we're not ready, but probably in a year from now). Do you have any advice on how high schoolers can reach investors?I watched the Pear Pitch events that occurred earlier this quarantine and really liked hearing the judges' feedback to the other startups. I also went to the Marketing with $0 event!Thank you so much :)
Hi Chloe - Great to connect. So happy you have been able to come to some of our events.At 15, you are already ahead of many founders! I would say that you starting a company will be a great step for getting into venture. Do a good job, learn a lot and you will know more than many venture folks. I see more angels backing high schoolers, angels mostly. I think it may be harder for an institutional fund because they are thinking that you are likely going to go college and it is hard to do both.
Thanks for taking time to answer our questions. What do you typically consider when choosing a company to invest in?
Hi Chess. I have the same question above and just responded. Pasting here for convenience.For me is team and market only. I invest early and have to believe the team can build a great product and generate traction. I really look for a founder that can explain to me why there is a big opportunity in the market they are in.
Hello Mar! Thank you for doing this!In your experience, is it possible to get VC funding as a nonprofit? If so, how might one go about finding such VCs?
Hi Wendy. Classic venture funds fund for-profit organizations. There are some impact venture funds that consider both profit and impact when investing. For non-profit financing you will need to go to other types of funders like foundations, family offices, etc.
Hello! I would like to know more about raising funds as a hardware startup! As it often is the case with hardware, it's difficult to have a refined product/ prototype without the appropriate funding, so I am wondering what advice do you have for successfully fundraising as a hardware startup?
Andrea - It is a bit harder to raise capital for hardware companies for sure. They require investment in the manufacturing process and then the actual inventory. The cycles between products are long (if you get your product wrong you may need to wait 6-12 months). Several things that help with investors:1- Make sure you build a team around you that has experience in shipping hardware - this reduces the investment risk2- Have a clear plan that shows to investors capital/risk on getting the first units shipped3- If you are super early, have some 3D models or if possible, show an early modelUltimately - IF you are targeting a really big market, you will find investors that are willing to take the extra risk due to hardware. So I would focus on making sure you are going after a BIG market.
thank you for the reply! it is definitely helpful! I currently have an early prototype, and building a community around it, as my business model is very similar to Prusa's. My plan is to raise small chunks of money, first at pre-seed in order to form said team and open-source our first prototype. The market is quite big, as we're building AR pocket projectors to enable wearable and screen free interactions, with the first target being the board games/ entertainment sector.
Hi Mar, I'd love to know more about how you successfully manage and organize all the companies you hear from. How do you choose who to invest in when it sounds like most of your companies are at a very early stage? Thank you:)
Hi Kayla. It is very difficult to keep track of everyone - this is the challenge of a sed investor so having software helps. We use Affinity (portfolio company) to manage companies, network and deal flow. This is a good way for all of us to know all companies we are looking at. We use Notion to gather diligence notes. A few folks have asked about how we choose - you can see the answers. Market & Founders first.
Hi Mar, thank you so much for offering this office hour! Hopefully I'm not too late to ask a question.* As a pre-seed startup, what is your opinion on the founders working part-time vs. full-time on the project at the time of going for pre-seed funding? What if some of the founders were full-time and some were part-time?* When discussing market size, is there any resource / metrics that investors prefer to see? (e.g. CAGR, market size reports) If there is no research done on the exact market that the product is targeting (and we have to resort to a much larger/tangent market), is there any way you recommend we estimate the market size?
I saw this question posted elsewhere and thought that I would like to hear Mar’s answer:Do co-founders get the same amount of equity refresh top on in a series A/B financing? Or does the CEO generally get more vs. COO or CTO? I am hearing the CEO gets a certain multiple more than say a COO, but what if the COO is the co-founder? Any advice would be super helpful. Assuming a big Series A/B raise etc.
Hi Divina, Refreshes tend to happen not at series A but later. While the initial grant may have more to do with the effort in starting the business, refreshes have more to do with current value/expected value to the company at that moment. Typically a CEO gets more than a COO and the C-level team. The refresh grants are generally much smaller than the initial grants for a founder. For example, a founder may initially have 20% of the company but a refresh could be 1%. ACEO may have a starting grant of 5% and the same refresh of 1% is more impactful.
Looking forward to the office hours.
Hi Mar - You have done a lot! Thank you for offering your time and advice. I'm the founder and CEO of Story2, a neuroscience-based writing platform that teaches people how to master high stakes communication (things like job interviews, pitching, sales) through the science of storytelling. COVID allowed us to really focus on product market fit, to build a freemium funnel, and to achieve a mass-market, live-online education product at a really reasonable cost. I'm trying to figure out who are the best investors to help us grow the next phase. We have bootstrapped, I've invested at each stage, and we've raised a solid $2.8M convertible debt seed round. We are a very different company with a very different story than we were even 6 months ago. I'd love your advice about how to navigate this next phase.
Hi Carol, Congratulations on your seed round. My advice for you is to get clarity on what are the series A metrics you need to hit (ask investors) and make a plan (with some buffer) that gets you there. Figure out what are the key metrics you should be tracking and be maniacal about that.
Hi Mar, thank you so much for taking the the time for these office hours. Super curious to read your answers to the great questions posted below. I work for Torre, a new AI driven automated recruitment platform. I'm curious as an early stage investor: what usually tips the balance for you to say yes to an investment: team, product, market opportunity or early traction? Thanks so much, Suzanne
Hi Suzanne, For me is team and market only. I invest early and have to believe the team can build a great product and generate traction. I really look for a founder that can explain to me why there is a big opportunity in the market they are in.
Thanks Mar! I will adjust my deck accordingly. I believe explaining the team (not only the leadership team) is key to not only show that a group of people have the vision but also the executional power to get the right things done. Thanks!
Hiya Mar! Thanks for taking the time for our q’s and I’m curious about the most influential/game-changing class or professor during your time at Stanford..Hope you are staying safe and healthy!
Hi Aury, I took mostly EE classes. I would like to say that my PhD advisor Stephen Boyd was very influential as he taught me how to write and how to speak in public. These are very important skills as a founder!
Hi Mar - Really appreciate you making yourself available and congrats on all your success! Any insight/advice you can share about Platform roles at funds? Do you need to have start-up/VC experience? Thanks so much!Miriam
Hi Miriam, Startup or venture experience helps but they are not necessary. Depending on what type of platform the firm wants to build you may need some expertise or other (eg, engineering for some data platform or social marketing for a community platform). The best skill is product management.
Hello Mar, you have accomplished a lot and it's very inspiring to see someone like you. I currently work as a Machine Learning Engineer and I'd eventually like to be in a position where I can lead teams and companies to leverage AI to place them in a strategically advantageous position. Do you have any advice for someone like me who is very early in their career but would eventually like to be in a lead/managerial position ?
Hi Deeksha. I would say tow things:1- Invest in yourself. This means learn what it takes to become a great leader/manager. Get some mentors to help you. Read a lot. Learn about market, how folks make product decisions. Ask in your company whether you can get involved in roles you may not be used to (eg, customer success, or even sales). 2- Be a leader in any job role you have. Even as an engineer, there are great opportunities to show and practice leadership: helping others in the team, can-do attitude, propose solutions, positive outlook ... Leadership is built up over time - one needs to practice
Thank you so much !
Hi Mar - thank you so much for doing this! I've spent about 10 years in tech, the last 6 in managing roles and am curious to dip my toe into the world of VC.But first - I am working on a self-published book for millennial managers as well as a podcast for the same demographic. Planning to launch both early Spring 2021.Any advice for someone mid-career but with an entrepreneurial zeal who wants to pivot into VC?
Hi Emily - Looks like you are doing the right thing by getting out there and publishing!Breaking into VC mid career requires "bringing something to the venture firm" (or you can start your own but then you need to raise LP funds). You need to figure out what is your superpower: do you know a lot about an industry? a type of tech? do you have a loyal social media following? do you have access to exclusive networks?.. any of these figure out what fits YOU and work on it. If you like say "supply chain", become an expert, create a community around it, write about it, become a thought leader... if you can do angel investing.
Hi Mar, thanks for taking the time to share your wisdom! I'm a VC Associate in Boston. I'm curious about you think about / allocate time for internal firm operations. Who within the firm determines how & when you grow your team? How (and at what point in each employee's tenure) is compensation & bonus structure considered? As Managing Partner, how much of your time do you spend on internal firm operations vs. closing deals, supporting portfolio companies, etc.? How important are these questions to consider for someone interested in the Partner career path?
Hi Paige. Typically the General Partners make final decisions on hiring and compensation. Good firms have plans for the next 6-10 years - who do we want to be in 10 years? How many partners? How big? etc. They hire to achieve those goals, knowing some people will not work out. The fastest way to partner or general partner is to add significant value to the firm. This is typically done by sourcing/winning deals that eventually return the fund. There are other ways - like becoming a must-go resource for portfolio companies that your firm is identified with (eg, we are taking Firm XYZ money because I want to work with Paige who is an expert on XYZ). In any case, you need to invest in building your brand. Find out what you are passionate about and become a thought leader. Could be some vertical like say "social networks" or could be some group of people "female founders", create content/voice/network around that.
Any advice to 50+ year old founders trying to raise capital given the news that VC capital for women has declined significantly. Thanks Suzanna Keith CEO and Founder Hello Career Guru. Thanks!
Hi Suzanna. Although there is significantly less money going to female led startups, I believe this has begun to change - small change but happening. There are more funds specifically targeting women and other URMs. Some LPs are looking to back VC funds that focus on backing women. I would say 50 is great- so much experience! Although folks think founders look like 20 year olds like Mike Zuckerberg this is not the case. Unicorn founders fall mostly in the 30-45 band. Advice - Focus on building a great business in a large market and know that it is harder for women, it is harder if you are older (lots of ageism) BUT older women do build great companies. Look at Julie Wainwrigh from The Real Real - 60 year old founder!
Mar, thanks so much for the inspiration. You made my day!
Hi Mar--There's obviously a lot of risk that goes into deciding to back a pre-revenue company in the seed stage, but it happens all the time. I'm curious what signals you look for in a company and/or founder to prove they're worth taking on that risk.Thanks!
I think some version of this question has come up. Early on is market and founders. I am looking to hear from the founder/CEO how they are building a great company in a big market. I like to understand how they think about it. This gives me great insight as to how they think about market, product, problem/opportunity.
Hi Mar, I am Prathima, co-founder of Kin Parenting (https://kinparenting.com) Thank you for all the great info. Your talk on fund raising at LAUNCH Scale program last year was one of the best sessions I've had the chance to attend. I can never forget your pre-seed slide with Team, Traction and Market :). We are currently fundraising for our pre-seed round and my question for you is - what's the best way for us to reach out to you for feedback and pitching? Do we need a warm intro or can we reach out to you directly via email or on elpha? PS: I don't have your email.
Hi Prathima. You can send me a blurb and a short deck to [email protected] and I will respond with next steps or any reason we may not be interested. Excited to learn more.
share this article
read these next
Office Hours: I'm the Chief People Person at Chime and was previously Chief People Officer at Zenefits. I'm Beth Steinberg.
On angel investing, boards, and fundraising with Joanne Chen, partner at Foundation Capital
Career Reboot: My Journey Back to the Workforce After an 8-Year Break for Caregiving
From $40K to $120K: My Journey Through the Salary Maze
Calling all Elphas interested in mindfulness + purpose-aligned career growth
Office Hours: I am the founder of Employee of Choice, a social benefit startup committed to using technology in advocating for the world's citizens in the workplace.