Explore how Adam Struck, a founder-first VC, transforms early-stage B2B startups into industry leaders in this insightful conversation.
Venture capital has evolved over the years, with different firms developing unique strategies to add value to their portfolio companies. Among these, Struck Capital stands out with its “founder-first” approach, emphasizing close partnerships and proactive involvement with startups from the earliest stages. Adam Struck, the founder and managing partner of Struck Capital, recently shared insights on this approach during a podcast with Mark Allen of Gaper.io, shedding light on how his firm turns early-stage B2B startups into industry leaders.
At the core of Struck Capital’s investment philosophy is the belief that the relationship between a venture capital firm and a startup should be akin to a partnership. According to Struck, many seed-stage investors fail to grasp the long-term impact of the precedents they set, both in terms of cap table structure and their engagement with founders. For Struck Capital, every interaction with a startup is carefully considered, knowing that the effects will ripple throughout the company’s life.
Struck emphasizes the importance of setting positive precedents early on, particularly when it comes to cap table optics and term sheet negotiations. By maintaining a balance where both the investor and the founder have sufficient stakes in the company’s success, Struck Capital ensures that the startup is set up for future funding rounds and growth.
“We put ourselves in a position that we have enough of the company to justify the equity we put in, but we also set up the founder and downstream rounds for success.“
This approach not only aligns the interests of the investors and founders but also sets the stage for a healthy long-term relationship.
Unlike many venture capital firms that maintain a hands-off approach, Struck Capital meets with its portfolio companies on a weekly basis. This frequent engagement allows the firm to actively contribute to various aspects of the business, from product development and engineering to talent acquisition and business development. Struck describes this involvement as “battling in the trenches” with the founders, where the firm takes on marching orders and returns with tangible value-added contributions.
“Our definition of adding value is not calling a founder once a quarter and asking what their KPIs are. It’s about meeting with them on a weekly basis and trying to really move the needle.“
This deep involvement not only helps startups accelerate their growth but also fosters a relationship of trust and mutual respect between the firm and the founders.
Struck Capital’s portfolio is carefully curated, with a strong focus on early-stage B2B startups. The firm specializes in seed and pre-seed investments, with the goal of entering at a point where they can have the most significant impact on the company’s trajectory.
Struck explains that the firm prefers B2B businesses due to their clear path to achieving high Annual Contract Values (ACVs) and the ability to execute on unit economic positive sales motions. The firm is particularly interested in startups targeting large, often untapped markets with slow-moving legacy incumbents. This focus allows them to identify opportunities where they can help companies disrupt industries and gain significant market share.
“We love anything with a B2B motion, We care a lot about executing on a unit economic positive sales motion.“
By focusing on B2B startups, Struck Capital can ensure that the companies they invest in are positioned for long-term success, with sustainable business models that do not rely solely on performance marketing for customer acquisition.
When evaluating potential investments, Struck Capital looks for specific characteristics that indicate a startup’s potential for success. First and foremost, it starts with the founder. Struck emphasizes the importance of founders who possess robust information asymmetries—unique insights or experiences that give them an edge in their industry. These founders have often faced adversity and demonstrated resilience, key traits that Struck believes are crucial for navigating the challenges of building a company.
As Struck explains:
“We’re really looking for founders with robust information asymmetries that can really answer to us not only why should this company exist but why they are the right persona to take this company from 0 to 1.”
In addition to strong founders, Struck Capital also values companies with some level of traction, typically between $250k to $500k in Annual Recurring Revenue (ARR). This allows the firm to conduct in-depth financial analysis, including cohort analysis, net dollar retention, and expansion revenue opportunities, providing a clearer picture of the startup’s growth potential.
The venture capital landscape has shifted significantly in recent years, with changing expectations around what constitutes a seed-stage company. Struck notes that today’s seed-stage startups often resemble what would have been considered Series A companies in the past, with more mature products, real customers, and material ARR.
Struck attributes these changes to macroeconomic factors, including interest rates and general market sentiment, which have pushed the goalposts further out for later-stage funding rounds. As a result, seed-stage startups now need to demonstrate more substantial traction to attract investment.
“In the later rounds, the goalposts have sort of gone further out, and I think that trickles down to the seed stage. If founders want to raise that $3 million round at a 12 to 15 post, they need to have a real company with real customers.“
This shift has also led to the emergence of pre-seed funds, which cater to startups that are still in the idea or proof-of-concept stage, allowing Struck Capital to maintain its focus on more developed seed-stage companies.
Investing in early-stage startups inherently involves a high level of risk, but Struck Capital’s disciplined approach to portfolio construction and its hands-on engagement with founders help mitigate these risks. The firm saves a significant portion of its fund for follow-on investments, ensuring that it can continue to support its portfolio companies as they grow and scale.
“We save anywhere from 50 to 60% of the fund for follow-on investing,” Struck explains. This strategy not only provides additional capital for startups as they progress through their funding rounds but also allows Struck Capital to maintain its influence and continue adding value throughout the company’s lifecycle.
Over the years, Struck Capital has seen several of its portfolio companies achieve remarkable success, raising substantial follow-on funding and becoming market leaders in their respective industries. These successes are not only a testament to the firm’s investment strategy but also to the deep relationships it builds with founders.
Struck emphasizes that the emotional aspect of early-stage investing is one of the most rewarding parts of the job. By partnering with founders at the very beginning of their journey, Struck Capital can build lasting relationships that extend beyond the typical investor-investee dynamic.
“When founders go and raise that Series C or Series D from some tier-one multi-billion dollar fund, they might have a relationship with the investor, but it’s different. It’s optimizing for the right terms, not necessarily for partnership. For us, because we’re partnering with founders at such an early stage, there really is almost an emotional element to it as well.“
These relationships often continue long after the initial investment, with founders reaching out for advice or even mentoring new startups within Struck Capital’s portfolio. This ongoing engagement creates a unique ecosystem where experienced entrepreneurs contribute to the growth of the next generation of startups.
Among Struck Capital’s success stories are companies like Apollo.io and Mythical Games, which have raised multi-billion dollar valuations from top-tier venture firms. These companies started at the seed stage with Struck Capital and grew into industry leaders, thanks in part to the firm’s early belief in their potential and its active support throughout their journey.
However, Struck is quick to point out that these successes require more than just financial investment—they also require a bit of luck. “We’ve been lucky enough to start with companies at the inception, genesis phases, and watch them go all the way and turn into true market leaders,” Struck acknowledges.
As the venture capital industry continues to evolve, Struck Capital remains committed to its founder-first approach. The firm’s focus on early-stage B2B startups, disciplined investment strategy, and deep engagement with founders have proven to be a winning combination.
Looking ahead, Struck Capital is prepared to adapt to the changing dynamics of the venture capital market. By staying true to its principles and continuing to prioritize the needs of founders, the firm aims to help more startups navigate the challenges of scaling and achieving market leadership.
“The reason why I really love early-stage investing and why I think it’s differentiated from late-stage investing is you truly have the ability to create an incredible relationship with a founder. That can become a lifelong relationship.“
For Struck Capital, the mission is clear: to support founders in turning their vision into reality, helping them overcome obstacles and achieve success in their industries. By maintaining its founder-first ethos and focusing on adding tangible value, the firm is well-positioned to continue its track record of turning early-stage B2B startups into winners.
Struck Capital’s founder-first approach offers a unique and highly effective model for early-stage venture investing. By focusing on building deep, meaningful relationships with founders and actively engaging in the growth of their startups, the firm has demonstrated its ability to turn promising ideas into market-leading companies. As the venture capital landscape continues to evolve, Struck Capital’s commitment to its principles ensures that it will remain a key player in the industry, helping to shape the future of B2B innovation.
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