After spending time at a growth equity firm screening hundreds of companies through research and talking to CEOs, Jeff Flynn learned how to spot those companies that have a little something extra. Learning to have a point of view on how they stand out, shares Flynn, was a skill he learned through practice and mentorship.
Now as Managing Director of Assurant Growth Investing, Flynn harnesses both that strategy and his eye for innovation as a corporate investor. The venture capital arm of the global insurance leader has large, market-leading clients and diversified offerings in the Mortgage, Multifamily Housing, Mobile Device and Vehicle Protection markets.
While insurtech, fintech, and real estate tech often may fly under the radar in typically-traditional industries, Flynn says that when new technology is applied, it creates a unique situation for investment in an uncrowded market.
His advice to founders trying to reach out? Skip the cold LinkedIn connection and find a colleague that can provide a one-on-one intro. If that’s not possible, research the investor’s interests and send a solid pitch via email. “I think it’s best to be targeted: if you know what an investor is looking for and send them something relevant and interesting, they’re reasonably likely to respond,” he says.
Hypepotamus caught up with Flynn following an investor panel at Comcast’s The Farm, and he shared more about his priorities as a corporate investor, why he’s often attracted to ‘non-sexy’ technology, and the number one red flag he looks for when meeting with founders.
How did your career journey lead you to corporate investing? What kind of skills have you learned along the way?
My first exposure to technology investing was with a growth equity firm where a big part of my role was screening hundreds of potentially interesting companies through research and conversations with CEOs. You start to recognize patterns and learn how to develop a point of view on what may or may not be differentiated and interesting. I don’t think this skill can really be taught, but rather learned by iteration and discussions with more experienced investment professionals, and I was lucky to be around some really smart people.
Then I spent a couple of years in corporate strategy helping a major retailer grow its online business. You learn about the way big companies operate and some of the challenges they face when it comes to innovation and disruption, and how the best companies still find a way to prioritize these things even if they don’t fit in traditional corporate decision-making frameworks. I was lucky to work for one of these great companies.
The corporate investing role is in many ways a marriage of the two: we want to invest in great companies that will provide great financial returns, but we do it with an eye toward strategic value — both what we bring to the table and what we can learn by investing in and potentially partnering with our portfolio companies.
How are the priorities of a corporate investor different from other VCs?
We always want our interests aligned with the management teams and financial VCs that we partner with on investments. Our priority is the same: we want to invest in great companies that produce great financial outcomes. The only difference is that we do need to have a hypothesis as to how the investment is or could be strategically relevant to Assurant.
We focus on investments where we can add strategic value beyond dollars invested, whether through our deep expertise and relationships in specific verticals, by being a distribution partner or partner for pilots/experimentation, by being a customer, etc. We believe these produce the best outcomes for all parties involved.
What are some of the missteps you’ve seen before or during meetings with founders?
One question that I often have to ask is, “Who is going to pay you and why?” This question should be answered before any VC has the chance to ask it, and even the most interesting products become uninteresting if there’s no clear and well-articulated answer to this question.
But stepping back, I don’t feel super-qualified to be coaching founders on their pitches: every founder we’ve invested in has done a much better job pitching than I could have ever done, and that’s the way it should be. So the biggest piece of advice I’d offer is to get lots of feedback on your specific pitch from lots of people around you.
Many investors look to a strong leadership team or founder. Are there certain characteristics you look for in a founder or team?
The founders we’re most interested in tend to be highly transparent and authentic — lack of transparency is always either obvious in the first meeting or comes out later. If we find something in diligence that we should have heard about in the first conversation, it’s a red flag. If you don’t tell us about the three other startups doing the same thing as you because you think we may not have heard of them, that’s a red flag (instead, tell us why you’re different).
We love the confidence and leadership skills required to build a company that disrupts an industry, but these need to be balanced with humility and willingness to learn from experts around you. And there’s no substitute for brain power and the ability to articulate exactly what you’re doing and why you’re doing it. Finally, we like fun founders — a sense of humor and a good attitude go a long way toward a successful partnership.
You mentioned that you are attracted to ‘non-sexy’ products and/or markets. Do you have any advice for a founder that may be in one of those markets and has trouble getting traction?
Assurant does lots of non-sexy things, including (but not limited to) insurance. Few people would call insurance sexy, and as a result, we’re seeing lots of technologies that have been applied successfully to other industries finally making their way to insurance. When technology that has proven successful in sexy markets hits less sexy markets later in the cycle, it can create compelling investment opportunities. We’ve invested in debt collection, title insurance, tenant screening — the list goes on.
Sexy is not a requirement for us, and I don’t think we’re unique in that regard. If you think you’re not getting attention from investors because your product isn’t sexy enough, you either need to talk to different investors, or re-evaluate your product and/or pitch.