William Leonard
Welcome back to another episode of the Atlanta Startup Podcast. I’m your host, William Leonard, and today I’m joined by Charles Robinson, who is the Managing Partner at 1888 Ventures. Based in Atlanta, the firm is focused on deploying capital outside of the major hubs, with $250,000 to $500,000 checks. And today we had a great conversation with Charles about the 1888 investment strategy. We talked to Charles about his views of the world of VC from both his time as a founder to now his time as an investor. We talking about the power of relationships and serendipity, and also why running a venture firm is actually like running multiple businesses in one. This was an amazing wide-ranging conversation, and I hope you all enjoy it. So let’s jump right in. Charles, I am excited about the conversation today because we’re going to talk about multiple things, including your experiences as an entrepreneur, building a startup, scaling that startup, and now your experience as a fund manager. But I want to sort of level set the conversation here and have you maybe kick it off with a brief introduction about 1888. What the fund is, the origins of the fund, the types of companies you’re investing in, and then I’m sure we’ll dive into more about 1888 a little bit later in the conversation, too.
Charles Robinson
We are an early-stage, venture capital firm that focuses on investing in emerging technology that is outside of the major hubs, so outside of California and New York, but that’s what we focus on. Our check sizes are between 250 and 500. We don’t lead rounds. But definitely looking forward to meeting a lot of those great entrepreneurs who have amazing emerging technology ideas.
William Leonard
And any particular areas that you all are focused on as a firm? Are you pretty agnostic?
Charles Robinson
We have areas that we focus on. Generative AI, Proptech, FinTech, and Sports Tech. Cybersecurity has come across my desk a lot, it’s one of those things where sometimes it goes over your head if you don’t have the technical expertise. We haven’t gotten any of those deals but that’s probably the biggest theme that you’ll see. But within emerging tech, things pop up all the time. I would consider myself very curious about things that come up more, but those are our key themes.
William Leonard
That makes sense. I want to take the conversation back a bit now to dive into your background, all the way from your Duke days, to getting the idea for building a startup and then actually executing on that and scaling the company, as well. I’ll let you talk more about your prior experiences as a builder of a startup.
Charles Robinson
One of the key things that you brought up, most of the folks who listen to this, they’re going to see that everything at its core is based on relationships. So for me, graduated from Duke and worked in banking for almost two years, left and bounced around a little bit. My first startup experience was with a company called Vstrator. I absolutely had no clue what I was doing. Like, I was running around like a chicken with my head cut off. And long story short, I was fired from that job, because I was losing so much money here regards to the technology piece, but there was a silver lining. This guy, Jesse Lipson, was a friend and mentor of mine. He pushed me to start my own thing. And at first, I really didn’t want to do it because growing up, I was always an entrepreneur. I sold cookies and candy apples, hustlin, things like that. But one of my close friends and brother, we went to school and played football together, hit me up about Teamworks and came on board to build that up and start that out. Since then, Teamworks has grown to close the Series E probably about six weeks ago, at close to a half-a-billion dollar valuation. The second company I started was Forward Cities. We built startup ecosystems throughout the country and really just trying to figure out ways that we can help a lot of these startup ecosystems. So that’s essentially like the quick rundown of my background and my story on how I got to my startup ecosystem days, tech days, and all that jazz.
William Leonard
I like how you started out and really talked about the essence of relationships sort of being foundational to everything. I would be curious to hear some of the parallels that you draw from building multiple startups to now. Translating that almost to building a venture fund and supporting startups through that fund with capital, what are some of the parallels that you’re seeing as the leader here?
Charles Robinson
I will say, it’s one of those things where I couldn’t have drawn it up any better. We definitely set it up in a way where I couldn’t plan it any better way. But I will say, as an investor, I have not just empathy, I know exactly what’s going on. I know when the times that early stages like seed or pre-seed, there’s a lot of smoke screen and mirrors, and I just cut through it and say, hey, 9 times out of 10, most people are not going to care about this but if you can actually focus on the engine of the business, and show me if dollars go through this way, it’s going to come out this way, and all of the intricacies that happen within the business, I could speak to that with a lot of the founders. Also, a lot of the bottlenecks and hurdles that entrepreneurs run into when they are trying to scale their businesses, I can be able to speak to that and kind of help them. What I’ve noticed as well just being in the business as a founder and now an investor, most startups fail because of indigestion, not starvation. A lot of times these founders are looking for capital, like, oh, man, we gotta survive but there’s a bottleneck there, that’s not allowing them to pass through. Either they’re getting the sales of the customers or being able to cross over the finish line and converting at the top line of a funnel with the cells, customer success, not being able to keep people happy, like those things are really what kills the company. Having that mindset, I can be able to see those triggers as an investor early on, which helps me mitigate some risk for my LPs.
William Leonard
Charles, you touch on some of the bottlenecks that you probably faced as a founder and that you’ve seen some of the founders that you’re assessing and working with as well. What are some of the most common hurdles and bottlenecks that you’re seeing today founders are facing as you’re evaluating and supporting their startups?
Charles Robinson
Great question, bro. I will put this as number one for what I’ve seen most with early-stage companies, especially the ones you know, series A and less is not having a good grasp on them. The big thing that I’ve noticed is I understand the smoke screen mirror piece that you got to try and figure out to kind of give a little bit of sizzle to sell the deal and things like that. That always happens, but the numbers will never lie. The difficult part is when you start to get too ahead and you don’t realize that it doesn’t match up when it comes to an investor coming to your business looking to ask those detailed questions. Those are the pieces where I can navigate with the entrepreneur and in the pieces where I think most entrepreneurs if they can get a grasp on the numbers, even if they don’t make a lot of money, they can clearly define what is the average deal size. What is their burn rate? What is their lifetime value? What is the customer acquisition cost? All of these different things, at their basic level, are very easy to keep track of. Once you start getting into shooting for the stars and all those things and you’re not keeping track of it at each step, that’s where you lose. So that’s one piece that founders run into. And then the other one is, when it comes to sales, specifically go to market, if you’re really early, I think there’s a misconception for what the market is actually looking forward versus what you think the idea is actually causing traction. I think there’s a gap sometimes between the traction that you’ve had in the vacuum of your business, then the traction that the market is actually providing, and being able to test it out for trials, testing it out through early alpha customers, or beta customers, if you’re selling like products. Those are the two predominant things that I see with founders early.
William Leonard
You really touch on customer discovery and go to market. I think that’s the most important thing because you want to move forward and you want to move in the right direction. It doesn’t matter how fast you go. I think we see a lot of that at the pre-seed stage and even the seed stage sometimes. Founders have customers, they’ve got revenue, but they’ve got seven or eight different ideal customer profiles that they’re monetizing through. I think it’s a factor of where you want to focus to scale. Pick a vertical and nail it. I think that’s really good advice. It’s easy once you start saying, hey, I’ve got five customers, there are verticals. You’ve got revenue, you’ve got traction, but most VCs are wanting to see pattern recognition, and in particular, that’s going to give you real insight into the repeatable, scalable sales process that can take place as a result of monetizing within one vertical there. That’s great advice.
Charles Robinson
I think you hit it on the head. The thing that most entrepreneurs have to understand, if you’re looking for investor capital, we’re talking about different forms of capital and there are more than enough resources out there where you can find different sources of capital. The idea of having these multiple streams, and not a very clear understanding of what you’re nailing, I consider that more hustle than a business. And a lot of times again, at the early stage, there’s confusion of trying to build an enterprise versus having a business that’s just a lifestyle business, or a business that spins off a certain amount of revenue each year. Sometimes they got this streaming income, like direct-to-consumer, some enterprise, SaaS, and it’s all over the place, and it’s very difficult for an investor to feel comfortable if you can’t nail that. I appreciate the emphasis you put.
William Leonard
100%. As a VC is evaluating an investment in a particular startup, they’re looking to underwrite a deal. They’re typically underwriting the existing traction that you have and some of the future traction that they anticipate you will have based on your financial model. If you’ve got inconsistent customer streams and revenue streams, it’s very difficult to underwrite that opportunity to have a venture-scale outcome because you don’t know what direction this company is to go in. I think we could talk about that all day. Charles, as you think about it now, in 2023, building 1888, we talked about this before we got on the podcast. How running a venture firm is basically like running multiple businesses in one, unpack that a bit, and how you are running 1888 today?
Charles Robinson
It is a grind. I was talking to Amari, I think there are similar friends of ours. They’re part of ATV group. But the thing is, VCs and entrepreneurs are very simple. We still have to have a data room, we still have to be able to show our traction, we still have to be able to show the team, and what our skill sets bring to it, we still have to have a thesis around the reason why we’re going for. So a lot of the similarities between entrepreneurs and VCs are very close. The part where I think you mentioned multiple businesses is spot on because the very thing that you’re thinking of as an entrepreneur, that’s like one track, right? But as a VC, you have to be able to have multiple tracks. Currently, what I’m going through right now with 1888 and setting up the data room is you have institutional investors, you have pension funds, you have high net worth individuals, you have a plethora of options that you have to speak to that’s separate in each category when you’re going to raise funds. That’s one part of the business. The other part of the business is being able to find deal flow. So now you’re on sales, you got to put that on, be able to get in the rooms, get access to the quality deals, and be able to make sure that you get allocation versus the set of other folks. That’s one part of that, then you have the team head, who is able to manage the operations of the business. Make sure that as these deals are coming through, you’re notifying your investors, quarterly reports, and annual reports. All of the different things that you have in these different categories. You’re doing it all in one in one fund, so multiple businesses are definitely the type of things that we’re going through right now.
William Leonard
As an emerging manager, we hear a lot about it online, and shout out to Samir Kaji, he has a really great podcast tailored towards emerging managers. But really outside of him, we don’t get a lot of the inner workings of what it’s like being an emerging fund manager, the hurdles in the winds, and the successes and the losses that you all experience when trying to fundraise. What insights can you share for maybe other emerging managers that are not financial advice, but more so just general advice around grinding, takeaways, and things that can short-circuit and augment their processes?
Charles Robinson
One, it takes a community. That’s hands down the ultimate thing you could do as an emerging manager. I mean, my friends are top-notch like yourself, Will, De’Havia, Rashaan, Martin, Henri from Harlem Capital, and Charles Hudson, when I say if you really want to circumvent a lot of the things that you want to do, don’t do it alone. You got to hit up those friends. Don’t be afraid to ask questions, even if you think it makes you sound dumb. Ask those questions and get ahead of it now, because if you don’t, I always use sports analogies, if you strike out in front of certain LPs, you go on the dugout for a long time and you may not be able to get an opportunity in time for you to get that LP back on the docket for you in regards to raise capital. Also, when it comes to getting access to relationships and networks, as an emerging manager, you may not have the same amount of nepotism or access to a network or room that others may have access to. You got to be able to leverage those relationships as well to be able to say, hey, man, is it possible to get me in this room? Or hey, is it possible that I can help you be as good as possible and whatever that can serve you? For example, in our relationship, hey, bro, whatever you need or I need you to be a judge. You got me. Whenever I have to come into this pocket, you got me. All of those things that we have together as an emerging manager, are the things I think that you could definitely leverage. Leveraging that community. We have a text group where we share different resources and things like that, as we ask them questions. Leverage the fact that you get at certain rooms and networks and dinners and things like that. And then ask questions about conferences, going to those places, and being able to exchange cards. You’re gonna have to hustle and grind outside of your job. So that’s one of the things as an emerging manager, you got to go hard.
William Leonard
That’s so true man. I think the bit about community is so important. I think that’s important for everyone in the venture, but especially in the emerging manager community as well. Charles, as we wrap up this conversation here, you are a North Carolina guy. I think you touched on this earlier, but it sounds like relationships really brought you to Atlanta. How have you seen the city and the startup and VC ecosystem evolve since you moved here? Are there any similarities or parallels or even differences that are highly distinct between the Raleigh Durham scene and the Atlanta scene? Because Raleigh Durham is really bubbling up. Shout out to Cofounders Capital out there and other funds as well. Two different cities, what do you see in terms of parallels or distinct differences?
Charles Robinson
I didn’t know you knew Cofounders Capital. I love it. First Atlanta ecosystem in comparison to Raleigh Durham, that’s one, and then two does Atlanta in its own right and just kind of speak into that. I think there are a lot of similarities in that. Durham is really starting to bubble up. A lot of really dope startups and it’s not their first rodeo, mostly because being there in Durham and a lot of folks coming out of Duke to come back to either give through building commercial real estate deals and Durham Google for startups is there now. There are a lot of corporate folks coming into the city which is bringing more talent, and creating more opportunities, obviously, the price is going up, as well. I think there are similarities in Atlanta where a lot of corporations are coming in and more talent is coming in. You’re gonna see that. I will say specifically to the Atlanta ecosystem, one thing I love about Atlanta, which is also what I would consider a gift and a curse, Atlanta is very collaborative. The opportunity we have right now is that we’re collaborative within our own silence. One of the things that I tried to do is to disrupt as much as I possibly can and cross as many barriers as possible. I can do that just like you can do that. We have the skill sets, we have the pedigree, we have the relationship to the kind of blend the lines from the spectrum of who we are, and a lot of people don’t even know the spectrum of who we really are. But the thing in Atlanta is that if you haven’t been afforded that opportunity to make those jumps and bridges between those different ecosystems, you will never know. I literally was talking to somebody yesterday, they didn’t even know what Engage was or in-depth but they’re in the startup ecosystem. I will consider them extremely talented, extremely smart entrepreneurs, but they don’t have access to those rooms. They don’t have access to even know what that’s about. A couple of things happen. One, they can’t compete at the highest level, because they don’t know all the competitors that are in the room. Two, there are investors that may miss out on opportunities to invest in these founders who are just flying under the radar. But three, the beauty of Atlanta kind of circling it back to the positive side is we’re working towards it. Conversations like these podcasts like yours are where I believe Atlanta really is a space where anybody could come and thrive. I’ve only been here for almost two years. I haven’t even been here two years yet and I feel like I’ve been pulled in and championed by all my friends and people that have my back and give me the resources necessary to thrive and be successful. I’m here in Atlanta. I think that’s what Atlanta has going for it to be top five in the capital markets, in my opinion.
William Leonard
I think you hit the nail on the head with all sentiments there because Atlanta is, I would say, one of the most, if not the most diverse city in the nation. The opportunities that are here within the startup ecosystem, the corporate ecosystem, you’ve got the university system that is here. The private company ecosystem is here as well. I mean, there’s so much opportunity for innovation and collaboration. You’ve got the programs like Engage, Endeavor, Startup Runway, and Google for Startups, to really be here and serve as a resource and a true foundational layer for the earliest stage of founders. I think that that’s what differentiates Atlanta from a lot of the other ecosystems out there. I think that’s why Atlanta is going to win. I’m bullish Atlanta, or a shirt or something that says Long Atlanta because I am. I know you are. A ton of dollars are going to be flowing here over the next decade from LPS, from institutions, from corporates, and the more venture funds that we can get here, the better the ecosystem is going to be.
Charles Robinson
I think you nailed it on the head, too. The other part is, if we’re not tight as a community when the capital does come in, it’s just going to bifurcate. So that’s the opportunity that and I think the folks that are here now are up for the challenge, and they’re making stuff happen. And as I said, we have so much talent here. It’s just crazy. Excited for what that’s going to be.
William Leonard
Charles, I appreciate your time, man. How can founders, who are listening to the podcast today, get in touch with you or someone at 1888 for potential investment?
Charles Robinson
Right now, how I’m able to connect with folks through these mediums through Twitter, @1888ventures on Twitter. I’ve just been producing a lot of videos to talk a lot about this for founders through Tik Tok, and then splicing that up, and sending it out so I can help more people who are navigating either from the founder stage to the early stage investor. Those are the two areas. Obviously, you can hit me up on LinkedIn, just Charles Robertson, Managing Partner at 1888. Those are the main areas they can get in contact with.
William Leonard
I love it. Charles, I appreciate you a lot for coming on this podcast and sharing the knowledge. You are a builder and innovator, and I think you’re going to have an amazing impact on the city of Atlanta. Let’s do it together.
Charles Robinson
I’m excited. Appreciate you, man.
William Leonard
All right. Charles, take care.
Lisa Calhoun
We’re thrilled to have you as an Atlanta Startup Podcast listener to help you get the most out of the experience. Let me invite you to three insider opportunities from our host Valor Ventures. First, want to be a guest on this amazing show. Reach out to our booking team at atlantastartuppodcast.com. Click on booking, It’s a no-brainer from there. Are you raising a seed round? Valor definitely wants to hear from you. Share your startup story at valor.vc/pitch. Are you a woman or minority-led startup valor sister program? The Startup Runway Foundation gives away grants to promising startups led by underrepresented founders. The mission of the Startup Runway Foundation is connecting underrepresented founders to their first investors. Startup runway finalists have raised over $40 million. See if you qualify for one of these amazing grants at startuprunway.org. You can also sign up for our next showcase for free there. Let me let you go today with a shout-out to Startup Runway presenting sponsor Cox Enterprises and to our founding partners, American Family Institute, Truist, Georgia Power, Avanta Ventures, and Innovators Legal. These great organizations make Startup Runway possible. Thanks for listening today and see you back next week.
