Andrew Gluck, the 1st check into Lunchbox, on the future of eCommerce
this week’s exclusive is with Andrew Gluck, founder, advisor and early stage DTC, AdTech and NextGen Commerce investor
Each week on The Cap Table (TCT) we highlight investors, operators, founders, and industry leaders in the private markets to share their tribal knowledge of how to get onto “the cap table.” Know someone we should feature? Let us know here!
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We’re thrilled to announce this week’s exclusive with Andrew Gluck, founder, advisor and early stage DTC, AdTech and NextGen Commerce investor! After founding the largest independent digital marketing agency in the US that oversaw $5B for high profile brands, Andrew then went on to launch irrvrntVC,a personal investment fund which includes portfolio companies such as Lunchbox, Invisit and Cheeky! Having worked with hundreds of founders at his agency and now two years into investing via irrvrntVC, we sat down to talk all things cap tabled related, including:
The unlikely path that lead him into investing 🔎
The biggest gaps in venture capital and ways to solve them 🌏
His first 100x return 📈
Cap table advice (and hard lessons he’s learned) ⼏
The state of NextGen Commerce in 2030 🔮
TCT: You were the founder & COO of Agency Within, a digital marketing agency working with brands such as Shake Shack, Nike, and Etsy before transitioning to investing, founding irrvrntVC. How did your experience founding an agency propel you into the venture capital scene?
It wasn’t intentional at all but it surprisingly helped in a few ways that I didn’t even fully internalize at the time. I was fortunate to work with close to a hundred brands over my time running the agency. I got to see many VC-backed companies, some at the earliest stages (Billie, Helix Sleep, Bandier) and many as they were scaling 30%+ MoM (Zola, Goop, Rothy’s).
This is my thesis on DTC investing that I’ve honed over the past few years investing but there are a ton of lessons here that I learned from my time at the agency, spending tens of millions per month on customer acquisition for consumer brands.
This trained me towards understanding what were the characteristics of solid business foundations that allowed for that scale, what were the teams like that were able to take advantage of that scale, and how to identify the difference between good and great founders.
It also set me up with a network as I transitioned into venture as many of the founders I worked with were very willing to introduce me to the investors on their cap tables.
What exactly is irrvrntVC?
irrvrntVC is my personal investment fund. We write $10k-$50k checks into early stage startups. Although I’m an angel investor, I track it like a fund (including look at Net TVPI, Net IRR metrics) as I’m still not 100% sure where I want irrvrnt to go. I just celebrated the two-year anniversary of launching irrvrnt - and unleashed a brand refresh. Fortunately it’s been a great two years investing (4x+ MOIC over twenty companies, 170% IRR) and I’m excited to see what the next twenty bring.
irrvrntVC invests at the earliest stage possible (inception, angel and seed rounds) across the DTC, AdTech and NextGen Commerce, with a strong focus on tight thesis’ and founder-market fit. Can you tell us more about your due diligence process and how you assess founder-market fit at such early stages?
I love investing early and have been the first check a few times and in the first round of financing (often committing before a lead and/or helping secure a lead). At the earliest stages there aren’t often business metrics to point to so you really are investing in the team and the market. But I’d add a third component here that is founder/market fit. There’s no scorecard here but I love when founders can share with me an earned/learned secret that they have from being in the trenches in the industry and how they plan to capitalize on that. Sometimes you need an outsider who brings a ‘crazy’ idea and upends an industry but I think there are a lot of Eric Yuan’s out there waiting to be funded. And it doesn’t need to be directly related: Jason Cohen, founder of MyBundleTV, covered the TV industry as a PM at Buckingham Capital; Helena and Woody Hambrecht, founders of Haus, worked in communications / creative and in the wine industry respectively - they didn’t come from the latest hot DTC startup. It’s not enough to be right, you also need to be contrarian. Having that experience in / around an industry allows founders to be creative and approach problems from a different angle that others wouldn’t.
“We believe the (investing) process is broken and we want to play a part in fixing it” is a quote off irrvrntVC’s website. In your eyes, what gaps are there in the investing ecosystem and how do you plan on solving this?
The underfunding of female founders and black founders (and of course black female founders). These are all tied together in some way or another.
If you are a networked, pedigreed founder it has never been easier to raise capital than in 2021. Low interest rates, FOMO, $10B as the new $1B, and Zoom have made it easier than ever here. Some of those same things, especially the lack of serendipitous meetings at events and conferences has made it harder than ever for black and female founders as investors have retreated to their networks and are less able to build rapport with new founders in person.
Let me be clear here: I still have a ton of work to do here. I have invested in 20 startups directly and in 0 black founders. I invested in several female founders and several minority / immigrant founders. I am putting in the work to build my pipeline via direct outreach, running events on Upstream, working with accelerators, being open to cold inbound, and more. But there’s still more work to do here.
I don’t think I know where any founders I’ve backed have gone to college; I have funded two startups from outreach I did to them; I funded a startup that reached out via cold inbound.
Another gap in here is lack of speed and conviction. Many investors want to know who else is in the round / who is leading, etc. They ‘outsource’ their DD to this and want to rely on other investors as a signal. Unless you are Correlation Ventures and that is all you do; it seems kind of silly. Venture is at its most exciting and (most profitable) when you are the one sifting and finding the diamonds. There’s nothing I love more than being the first commitment into a round and helping a founder with introductions and their narrative to find the lead investor. It’s challenging, rewarding, and lucrative.
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You were the first investor and advisor for Lunchbox Technologies in 2019, a next-gen enterprise online ordering system that has since gone on to raise $22M+. Take us back to when you first met the founders. What signaled to you that this was going to be big and what was your conviction level behind this investment?
Ironically, while starting the agency, my Co-founder and I also were also working on TastyTab, a business that was going to put tablets on tables in restaurants, bars, and nightclubs (we sunsetted that business once the agency took off). When I came into the venture scene I was surprised that no one had really solved this yet. There were a few big guys like Presto and Ziosk, but no one was doing the full ordering suite solution with marketing automation. I evaluated a few startups in this space but many were just digital menus on iPads or had low quality customer experiences.
Right away, I was blown away by Nabeel and Andrew, the founders of Lunchbox. I met them in late February, almost right as they were incorporating, and got involved immediately. I ended up ‘leading’ their Pre-Seed round and advising them, working out of their office for most of the year (until the pandemic). I knew they were building the right products: best-in-class digital ordering with phenomenal marketing support. They were bringing the ecommerce digital experience to restaurants which is 10x harder > orders need to be sent to the POS and to all the prep stations, there’s a lot more customization in food than in ecomm, and food has a much higher service component - it needs to be delivered quickly and while still hot. It’s a system that really could only be built by insiders who had spent significant time in the industry and knew what was broken, why, and how to fix it. They had the right focus on serving the consumer and their clients, the restaurants, but they also solicited feedback from the front-line workers > the busboys, cooks, waiters, and managers. They’ve leveraged that product and marketing expertise to ‘arm the rebels’ and help brands recapture their customer data, LTV, and margin from third-party marketplaces, while also expanding and acquiring net new customers.
It’s been only two years but they work with some of the hottest up and coming brands and a lot of iconic and legendary brands. They’ve done all this while giving back to the community via HelpMainStreet, building one of the most diverse teams for a Series A tech company, and remaining on the cutting edge of the space partnering with Reef Kitchen, sbe, and more.
What are you passionate about outside of work?
My family and playing sports, specifically tennis and golf. I’m also an avid reader and usually am reading two books at a time, one business book and one non-fiction book.
I realized earlier this year that, riffing on Drucker here, what gets calendared gets prioritized. I now have scheduled times for playing tennis; I also work out with my wife via Peloton classes (Jess Sims shoutout) a few times per week; I don’t schedule meetings from 5:30-7 so I can put my kids to bed and have dinner with my wife. Right now I’m reading The Business of Venture Capital and the latest Harlan Coben book.
The pandemic and quarantine have taken so much from us but not having to commute has given me so much time back (6-8 hours / week) that I’ve invested into these priorities. I’m a bit concerned about what it will be like if / when I go back to working in an office but will rely on my calendar to keep me honest.
What was your first 100x/10x and how did you get into that deal?
In addition to Lunchbox, I have two others that fall into the 10x category but financings aren’t yet public so I’ll talk more generally. Both of these were founders that weren’t raising competitive rounds and securing the rounds were pretty easy. This goes back to one of my core mantras: be the best version of yourself. I am not an investor with well-networked friends who have several exits under their belt and I’ll get first crack at their funding rounds. I over-index on first-time founders without ‘pedigree’. I am very willing to commit to a round before there is a lead and to help galvanize the round and find a lead.
What’s your secret for getting on the cap table?
Speed, conviction, and being helpful.
Capital is cheap but being responsive and helpful even before you make a decision is something that founders notice. I come to meetings prepared having read the deck. Usually, our first meeting is a conversation framed around the deck but with many pointed questions. I don’t need a partners meeting (obviously) so I try to get back to founders with a quick no in 24-72 hours (I’ve even given no’s live on the first call, explaining in detail why it’s not a fit for me).
Although some might think this is awkward, every time I’ve done it the founder has thanked me for being direct and quick. If it requires further diligence or additional questions, I will let the founder know what questions I am still thinking about.
Even during this time I try to be helpful by giving feedback on the deck, sharing the deck with other investors, and making suggestions on things like pricing or CaC estimates. I try to not give founders ‘homework’ but am a fan of value-add diligence (so much so that I have the domain).
What’s your biggest cap table “mistake” or a deal you passed on that you wish you invested in?
I’ll give you one of each.
On the misses, unfortunately, this is an easy one: Main Street. This one hurts a lot since I knew the space was about to blow up but I let people talk me out of it. I was using the incumbent in this space at my agency and started recommending them to portfolio companies pretty quickly to take advantage of tax credits. In late 2019 I even reached out to the CEO of the incumbent to learn more about the business and see if he was thinking of raising capital. Although they had raised capital in 2016/2017, they weren’t growing that quickly and had matured into a stable, profitable business. He didn’t think the business was really fit for venture. I was introduced to Doug, the founder of MainStreet while he was wrapping up his round and I never pursued it due to the perspective the founder had ‘Inception’-ed in me that this space wasn’t venture-scalable.
On the mistakes, Benja was an expensive lesson. I loved the idea of Shoppable Ads and it was an idea I had myself. But I ignored some of the red flags (valuation low relative to company performance, need to raise capital even though company profitable, inability to leverage line of credit if use case was just really float on pass-through ad spend) and paid the price. I don’t know that I’d do much differently as many deals have some hair on them, and Andrew, the founder, was able to dupe a lot of investors by going really deep into the fraud (faking bank statements and invoices, having an employee pretend to be a customer, etc).
What’s the state of NextGenCommerce in 2030?
NextGen Commerce is definitely the most exciting space for me.
It represents all the innovations in business models, the unlocks of tech enablement, the cooperative elements of community models, and more. I think we are going to see a lot of continued innovation here. In 2030, everything is going to be shoppable and connected. While that may sound like an exaggeration, look at what’s happened in just the past few weeks due to NFT’s. We are also going to see a tightening of connection between the provider of the good or service and the marketer/influencer who ‘made’ the sale. One-click shopping is coming to everything, including to text and email. I think we are going to see so many new marketplaces created that bring liquidity to industries that are lacking it and unlocking a ton of opportunity. I’m also really excited for marketplaces that combine local services with a national product or brand. I think we’ll also see some startups that do a strong job of combining best-in-class content, community, and commerce - and by tying all those in together they can gain authority within the community and service them across their entire commerce stack. I’m excited to see what people build here and please hit me up if you’re building in this space.
How do you think about investments outside of your core DTC, AdTech, NextGen Commerce thesis?
Fortunately, the NextGen Commerce thesis is pretty broad so a lot of things fit in there. But for things that don’t (healthtech, F+B, hr tech, and later-stage investments) I leverage investing via AngelList and syndicates. It’s a way to get exposure to these industries and expand my circle of competence while having skin in the game while having others run a lot of the heavy lifting on sourcing and DD.
Follow Andrew on Twitter (@irrvrntVC) for more insights into NextGen commerce, D2C, and all things early stage investing!
Deal News 3/20-3/26
Lev: $10,000,000 led by NFX. Lev is a commercial mortgage marketplace.
Trace: $8,300,000 led by Greylock, Uncork Capital. Trace, the first service desk for finance, provides collaborative workflows and analytics for companies to better manage financial services like budgeting, spending, and hiring.
Grovara: $5,500,000 led by David Pottruck. Grovara is the 1st B2B Global Marketplace for US Wellness Brands, connecting natural and organic brands with international retailers.
Lolli: $5,000,000 led by . Lolli is a rewards app that allows users to earn bitcoin when shopping online.
Frost Giant Studios: $5,000,000. Frost Giant Studios is a production studio focused on real-time strategy (RTS) games for competitive gaming on PCs.
Blippar: $5,000,000 led by Chroma Ventures, West Coast Capital. Blippar is a technology company specializing in augmented reality, artificial intelligence and computer vision.
Firework: $55,000,000 led by GSR Ventures, IDG Capital, Lightspeed Venture Partners. Firework is one of the fastest growing interactive video platforms on mobile.
Greenwood Bank: $40,000,000 led by Truist Ventures. Greenwood Bank is a digital banking platform for Black and Latinx people and business owners.
AppliedVR: $29,000,000 led by F-Prime Capital. AppliedVR offers virtual reality-based therapeutic treatments that address the complexity of chronic pain.
Incode Technologies: $25,000,000 led by 3L Capital, DN Capital. Powering the future of omnichannel biometric identity
Ketch: $23,000,000 led by Acrew Capital, CRV. Ketch is a platform to manage compliance with privacy regulations
Gorillas: $290,000,000 led by Coatue, DST Global, Tencent Holdings. Groceries at retail prices. Delivered in only 10 minutes.
Pacaso: $75,000,000 led by Global Founders Capital, Greycroft. Pacaso is a proptech company that modernizes the generations-old practice of co-owning a second home.
AKASA: $60,000,000 led by Bond. AKASA is an AI-powered automation company for revenue cycle management in healthcare.
Neighbor: $53,000,000 led by Fifth Wall. Neighbor specializes in the fields of public storage, economic empowerment, sharing economy, and peer-to-peer marketplace.
Holberton School: $20,000,000 led by Redpoint eventures. Holberton School is a project-based alternative to college for the next generation of software engineers.
Blockchain.com: $300,000,000 led by DST Global, Lightspeed Venture Partners, Vy Capital. Blockchain.com is a platform that offers ways to buy, hold, and use cryptocurrency.
Orca Security: $210,000,000 led by CapitalG, Redpoint. Orca Security provides instant-on, workload-level security for AWS, Microsoft Azure, and Google Cloud Platform.
.Pie Insurance: $118,000,000 led by Acrew Capital, Allianz X. Pie is transforming small business insurance—starting with workers’ compensation.
Aiven: $100,000,000 led by Atomico. Aiven develops and manages cloud service hosting for software infrastructure services.
ID.me: $100,000,000 led by Viking Global Investors. ID.me is a digital identity network that aims to simplify the user's indication verification experience.
Scipher Medicine: $82,000,000 led by aMoon Fund, Northpond Ventures. Scipher Medicine develops a healthcare platform designed to determine which drug will work best for each patient.
ActionIQ: $68,000,000. ActionIQ is a purpose-built enterprise Customer Data Platform solving complex data problems: flow and scale, analytics, and orchestration.
Axis Security: $50,500,000 led by Spark Capital. Axis Security manages and secures business applications through modern architecture, technology, and a zero-trust business-centric approach.
Ease: $41,000,000 led by Spectrum Equity. Ease provides a cloud-based platform that helps SMB onboard new employees, manage payroll, and elect benefits.
Bevy: $40,000,000 led by Accel. Bevy is an enterprise-grade virtual conference and community events platform designed to build, grow, and scale global communities.
Ro: $500,000,000 led by FirstMark Capital, General Catalyst, TQ Ventures. Ro is a telehealth startup that operates digital health clinics for men’s and women’s health, along with smoking cessation.
Feedzai: $200,000,000 led by Kohlberg Kravis Roberts. Feedzai develops risk management tools to prevent fraud and money laundering in transactions.
Notarize: $130,000,000 led by Canapi Ventures. Notarize documents online! Digitizing industries. For the 1st time, buy or sell your home, execute a mortgage or loan, sell a car… online.
Flex Logix Technologies: $55,000,000 led by Mithril Capital Management. Flex Logix Technologies is a semiconductor startup designing reconfigurable AI accelerator chips.
Attentive: $470,000,000 led by Coatue. Attentive is a personalized mobile messaging platform for innovative brands and organizations.
Komodo Health: $220,000,000 led by Tiger Global Management. Komodo Health develops computer software that brings transparency and market intelligence to healthcare and life sciences.
Evidation Health: $153,000,000 led by Kaiser Permanente Ventures, OMERS Private Equity. Evidation Health is a health data analytics platform that collects and analyzes continuous behavior data and healthcare information.
Ginger: $100,000,000 led by Blackstone Group. Ginger is an on-demand mental health company providing around-the-clock access to emotional support via coaching, therapy, and psychiatry.
Lattice: $60,000,000 led by Tiger Global Management. Lattice is a people management platform that empowers people leaders to build engaged, high-performing teams.
Dataminr: $475,000,000 led by . Dataminr develops an artificial intelligence platform designed for real-time event and risk detection.
Hopper: $170,000,000 led by Capital One. Hopper is a travel app that uses predictive analytics to make travel recommendations.
goPuff: $1,150,000,000 led by D1 Capital Partners. goPuff is a digital delivery service that brings daily essentials and groceries in minutes.
Sources: Crunchbase, LinkedIn, Twitter.
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