Helloooo Grove!
Elisabeth Iszauk's POV is from building companies backwards. Her team at Montauk Capital has a good habit of choosing the market first and hiring the team to build from there.
In two years, they’ve built up 12 companies across space, grid, cryptography, ERP and geothermal.
Let's dive in.
In this week's issue
- Let the competition do your homework
- Funding starts 12 months before you raise
- Ego is the enemy
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Let the competition do your homework
Elisabeth spent years investing across climate at Extantia in Berlin before moving back to New York and joining Montauk.
Before placing their bet on geothermal, the team first went out and talked to nearly every company in the industry.
They were upfront about evaluating the market with an interest in building. Next came her usual trio of questions.
- what's changed for you lately?
- how could we work together if we build in this space?
- Then, the juice: where's the white space that would actually push the industry forward?
That gap eventually became Birch Geothermal, a tech-enabled developer using the same enhanced geothermal approach Fervo has been proving. They drill for heat much like oil and gas companies drill for oil.
Montauk deliberately left the thesis of the company unfinished.
Enough of a tech and business-model outline to be real, but open enough that the incoming CEO, Mike Matson, could put his own stamp on it and call it his company.
Would your company be different or the same if you built in this direction?
Funding starts 12 months before you raise
Fundraising is famously a few months of panic, a colorful pitch deck, and a scary little countdown on the wall. At the early stages, Elisabeth treats it as a relationship she started a year before raising is ever discussed.
Her goal was always to meet a founder six months to a year before investing. Catch them at spinout, talk every quarter or so, be useful where she can, and watch.
If a pitch meeting was her first time hearing a great founder's name, as far as she was concerned, she was way late.
The seed you raise next spring is already being decided by the conversations you are (or are not) having right now.
She calls it a 10+ year relationship, and you don't sign up for a ten-year marriage after one rushed pitch under a countdown timer. (or maybe you do? this is a judgement-free zone).
Ego is the enemy
Think in your head of a team that spins out of university dead certain about its beachhead market.
They spend some time finding out it's wrong because the customer doesn't need it yet or there's no contract structure that would ever let them scale.
Mistakes aren't the dealbreaker. Elisabeth doesn't expect a pre-seed startup to have the answers, and she knows the plan will shift before the seed stage anyway.
What she is watching, however, is their rate of evolution.
Her biggest red flag is a team too headstrong to drop a market that stopped working.
Are you defensive when the feedback is hard or do you actually take it in?
If the relationship is going to last a decade, she'd much rather learn that in month three than year three.
Responding to the market and pivoting could be seen as failure. In this case, see this instead as an opportunity to open funding doors.
Feedback
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With love, Blake
See you next week!
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