PUBLISHED: Joshua Siegel Acronym Venture Capital: “We don’t do that.”
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Joshua Siegel’s expertise in VC include running successful funds as General Partner at Rubicon Venture Capital. But before venture capital, his background includes investment and electronic banking, real estate, angel investing and even time as a professional chef. The Buttonwood Tree sat down for an interview to learn more about the growing success of Acronym Venture Capital under his leadership.
Acronym Venture Capital may be a new contender to VC firms, but General Partner Joshua Siegel knows what to do. Maybe, more importantly, he knows what not to do.
Acronym Venture Capital Doesn’t Do Vertical Focuses
“We’re not vertically focused in the sense where all we do is Prop-Tech,” says Siegel. “We don’t do that.”
This is because, like his own diverse background, he likes to invest in areas he knows well and can garner connections for founders. “Therefore by investing in the earlier stage companies, we can not only help them with a check, but on their revenue generation capabilities.”
This came into play during his time at Rubicon when he first met the founders of food subscription brand Daily Harvest. Despite avoiding investments into meal kits and delivery companies, the company’s founders had Siegel sold at first bite.
“I’m a chef. I know taste,” Siegel says. “If you can make this taste great…and you have a unit of economics like they did, it’s gold.”
Acronym Doesn’t Invest in Trends
Unlike capital markets, Acronym – like most VC’s – doesn’t invest in trends.
“Everyone thinks we invest in trends. We don’t do that.” Siegel says. “We set the trends.”
When looking at startups, Siegel and his team search for answers years in advance to questions surrounding a the company’s technology, market, competition and demand.
“We spot this stuff years in advance. That’s our job. We see the future.”
Acronym Doesn’t (Typically) Invest in MUSH
Siegel has an acronym (no pun intended) for areas where he doesn’t invest in: MUSH. Which stands for Municipality, utility, school and hospitals.
“They take a lot of capital, a lot of time, the returns can be very high in healthcare, but in the other areas it tends to be a pretty poor return profile,” Siegel explains. “So we don’t invest in those areas.”
NexHealth, a medical platform, proved to be the exception.
Siegel credits his investment to the proven success of both the founders and their product. After evaluating the company’s growth and success over nine months, Siegel’s team wrote the check contributing to NexHealth’s $15 million Series A funding.
Despite his excitement to be a part of NexHealth’s trajectory, Acronym likely will not invest in a similar product. In order to provide companies the best network possible, Siegel is seeking to keep his portfolio unique.
“Everything’s really unique in its own category,” Siegel says. “We don’t want to bifurcate our introductions and capabilities.”
Acronym (And Joshua Siegel) Don’t Just Sit on Boards
Acronym’s approach to investing comes without the immediate need to sit on a company’s board. According to Siegel, many VC firms have a concentrated portfolio because members will sit on many company boards, which don’t always suit him.
“Otherwise, you’re just a professional board member and no longer a VC,” he says. “We don’t do that.”
However, since he doesn’t sit on as many boards, he provides more individualized attention to each company.
Typically, Siegel is already the first call a CEO makes if help or advice is needed.
“I’m very good at playing that role because it’s devil’s advocate and I’m one of the bluntest VC’s in the business.”
Acronym Doesn’t Pull Punches, Especially in Evaluations
Standing by his reputation as one of the bluntest in the business, Siegel takes pride in challenging his founders.
“I pull no punches, even if you’re a portfolio company,” he says. “If you’re doing something wrong, or I have to call you out on something I am going to do it.”
Although some founders may dislike the idea of being challenged, Siegel maintains that he also loves to be proven wrong. The final goal is not to break companies down; it’s to see how they hold up under pressure.
An evaluation will most likely include trick questions and traps in place of immediate compliments. While some VC’s worry about impressing founders, Acronym doesn’t, “Some VCs just blow sunshine and kittens at their founders,” says Siegel. “I don’t do that. If you’re coming into my office…my job is to fire torpedoes at you. If you successfully navigate that, you’ve got my check.”
By asking questions designed to create problems, founders demonstrate how they hold up under pressure. In every case, how founders respond determines whether or not Acronym writes them a check. According to Siegel, that’s because Venture Capital is a tough business. In his words, “I don’t criticize founders, I evaluate them.”
However, Acronym Does Have Its Companies’ Backs – Wherever They Are
Acronym’s mobility outside of company boards also enables individualized attention to its portfolio companies. “We protect our founders,” says Siegel. “Because I don’t view an investment as owning your company…I’m an investor in somebody else’s company. We will always try to help.”
Since its founding and the beginning of the COVID-19 Pandemic, Acronym has capitalized on investing in rising markets cross the country. Instead of solely investing locally in New York, the firm seeks to invest where it sees an exit. According to Siegel’s friend and former colleague Brian Cohen,
As a rule, Acronym will invest in founders that it can immediately help. If it involves sending companies to other VC’s or funds for a second look, Acronym does that too.
“Part of our job in the ecosystem is to be helpful,” he says. “If we like you and we think we can be helpful … we’ll tell you how to do it.
“We want to know we can pick up the phone and introduce you to your top 20 clients, cut through any red tape and get you meetings. That’s what we want to do, and we do it.”