Q&A with Les Craig at Next Frontier Capital
We recently sat down with Les Craig, partner at Next Frontier Capital, a regional early-stage venture capital firm with offices in Bozeman, Montana, and Boulder, Colorado. The firm invests primarily in B2B SaaS in the Northern Rockies: Montana, Utah, Colorado, Wyoming, and Idaho. We discussed what made Next Frontier Capital turn to Aumni, audit season, using data from Aumni to grow the firm, and much more:
Q: What challenges was your team facing that led you to Aumni?
LC: In Next Frontier Capital, we're a very small, very lean firm. We have three partners and over 30 portfolio companies across three different funds. Managing all of those deal documents with continuity across multiple financing rounds can be a pretty significant challenge. As we continue to grow the team and add new partners, we need visibility on the historical document libraries and the investments we've made, especially as it relates to follow on rounds. This made Aumni a natural choice for our firm in terms of relieving some of the pressure on where those documents exist and what the capitalization structure looks like with each of those companies. Aumni is a phenomenally elegant solution for maintaining visibility on our portfolio, managing our portfolio, and managing, at a very granular legal level, the document libraries for all of the historical deals that we've done.
Q: Tell us about your audit preparation -- i.e., tracking down deal documents and the hectic nature of making sure that your auditors have all the information that they need. Is that something you deal with?
LC: When it comes to audit season, generally all partners are responsible for tracking down the documents that are necessary for our annual audit – it's a group task. We all have to fulfill our individual responsibilities as board members and on the deals that we lead. Having a one-stop-shop for where those deal docs are and knowing what's missing is invaluable. There’s always a doc that just seems to be missing for whatever reason. Historically, it's been a complex task to manage with our small and lean team, receiving minimal support below the partner level. Aumni has been a very meaningful solution for us during audit season, helping ease our workload as we prepare.
Q: Tell us more about the span of your audit process.
LC: For a small firm like NFC, typically the audit process takes a substantial amount of our time away from sourcing new investments and putting together new deals. It’s generally a stretch every year when we need to get those documents together. Although it is a critical part of our business and what we do on an annual basis, simplifying it allows us to put that time back into what's really important at our firm, which is making investments and managing our portfolio companies. Historically, we've been very diligent with our deal docs and central repository, electronic documents store, etc., but it’s always possible to miss archiving a document here or there. Aumni has been a phenomenal way for us to make sure that we've got everything we need – it has really created a new level of diligence and discipline for our firm.
Q: Could you speak to how you use data from Aumni to grow your firm towards institutional ready capital?
LC: While we haven't finished getting all of our investments on the Aumni platform (that is our goal!), what I'm really excited about is starting to use some of the managed views to identify a lot of opportunities, such as summarizing the co-investors who are most frequently on the cap tables that we're on. We generally have a good sense of this type of information; however, as the portfolio grows, it becomes more challenging to manage and fully realize who we are actually in the most deals with. There are significant benefits to having all this data and rolled up dashboard view, aside from the more granular stuff related to voting rights and protective provisions.
We went through an exercise recently in which we categorized each portfolio based on follow on investors – i.e., who are those investors in the VC 100? How many months since the last equity financing on average, across our portfolio? etc. It was a daunting task calculating those statistics, even as summaries for our LPs for our annual update, in terms of identifying where to get that data. We needed to answer questions, such as How many months since the last equity financing across the board? When was it announced? When did they close? With Aumni, you don’t need to dig deep – it’s all there. There's a column in one of the managed views that I remember seeing, months after that last equity financing across the entire portfolio, and was just right there, served up for you.
All these different managed views that are now available in the reporting feature are like a treasure trove with the data at your fingertips -- any pivots and questions you want to ask! That's what excites me about getting our full portfolio uploaded across all three funds. I can only imagine the value that this has to firms that have done hundreds of deals.
Q: We’re thrilled to see that Aumni is a useful resource to NFC. Do you recommend Aumni to venture firms that you come into contact with through your network or through co-investing?
LC: I recommend Aumni to pretty much every venture firm that I come in contact with, especially if they express challenges or concerns related to portfolio management, cap table management, or document management. It is the gold standard solution, from my perspective, for alleviating so many of these problems that firms have. And by the way, I wouldn't even say there's an optimal type or a size of venture firm. I think this tool is so widely applicable for first-time funds all the way through to household names. For all the debt that you've accrued in your documents as a venture capital firm and in managing all your data, it helps you catch up if you're hundreds of portfolio companies deep. If you're just getting started, it's great to get Aumni into the process early on because that will allow you to keep pace. I'm glad we got onboarded prior to our current stage with 30+ portfolio companies because it's proving to be easier and making our lives better in every day.
Q: Any final thoughts?
LC: Last year, I remember we were getting ready for our annual update, we asked one of our associates to compile a logo slide of everybody that's co-invested with us. They literally had to go out and scour PitchBook to look up every deal individually, make a list of all the logos, and go find the logos. Now we could just tell them to go into Aumni and look at that view.
As the list of co-investors that we've participated with grows, the co-investment count in Aumni is really an intriguing asset bank for me because we're always looking to build strong syndicates with great syndicate partners. Typically, when referring to deals that we're active in, my mind goes to some of the relationships that I've been keeping up with; however, there are amazing people in our portfolio already, and it reminds me of some of the great people that we should reach out to when we're looking to fill out a round of a new deal. We've already got that trust built up as co-investor with them on other deals and that historical record provides a source of data that you normally would overlook since there's so much going on from a relationship perspective in the day-to-day. I'm really excited about thinking through that for future deals and syndicates that we're putting together.