Sep 2, 2019 · 43m · 20vc
20VC: How Founders Can Gain Leverage in Fundraising Negotiations, The Metrics You Need To Raise Your Series A in Consumer & What We Have To Change About Cap Table Construction with Jana Messerschmidt, Partner @ Lightspeed Venture Partners
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Lightspeed Venture Partners partner Jana Messerschmidt to explore consumer startup fundraising metrics, operational lessons from Netflix and Twitter, and methods for optimizing cap table construction. Messerschmidt provides actionable advice for founders on building negotiation leverage, selecting strategic angel investors, and addressing gender equity disparities in startup equity.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 32.9% of the talking time here. How this is scored →
Harry as informed peer 3.1 Guest teaching 4.6 Guest disagreement 0.9 Harry pushing back 1.9
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 25:00 Standing firm on making VCs work
When Harry notes that making VCs work is an unpopular statement on a VC podcast, Jana firmly doubles down, explaining it serves as a critical test of whether an investor will actually be in the trenches with a founder.
Hardest push from Harry ▶ 26:09 Challenging the assumption of strong metricsHarry refuses to accept the ideal scenario where metrics are stellar, directly pressing Jana on what options founders have to gain negotiation leverage when their numbers are not where they need to be.
Biggest teaching moment ▶ 33:30 Dissecting gender disparity in tech equityJana educates Harry with data from 180,000 tech employees, revealing that while women represent 33% of the tech workforce, they hold only 9% of total equity value compared to 91% held by men.
Harry holds his own ▶ 16:50 Proposing explicit milestone pitching frameworksHarry demonstrates his venture insight by proposing that founders outline specific downstream metrics for subsequent rounds directly in their pitch decks, probing whether investors find it strategic or overly formulaic.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Welcome and Guest Opening Remarks | 1 | 2 | 0 | 0 | Harry welcomes Jana with warm introductory questions about her path from engineering into venture capital. Jana explains her background and introduces the Midwest market phrase 'will it play in Peoria'. | |
| Operational Lessons and Leadership Culture from Netflix and Twitter | 1 | 6 | 0 | 0 | Jana delivers a comprehensive masterclass on company culture lessons from Netflix, covering high performance, freedom and responsibility, and context over control. Harry mostly listens and expresses admiration for her leadership insights. | |
| Strategic Fundraising Mindset and Alignment on Series A Metrics | 4 | 4 | 1 | 2 | Harry asks if founders should always be raising and proposes a specific hypothesis on pitch deck milestone transparency. Jana reframes raising as a continuous requirement until profitability and confirms that explicit milestone planning impresses investors. | |
| Specific Performance Benchmarks for DTC, Subscription, and Social Consumer Companies | 3 | 6 | 1 | 1 | Harry asks for explicit benchmark metrics across DTC, subscription, and social startups. Jana provides precise numbers including revenue run-rates and retention figures, while Harry contributes pop culture references to Fortnite and Love Island. | |
| Differentiated Distribution Channels and Demand for VC Transparency | 4 | 5 | 2 | 3 | Harry raises the issue of rising customer acquisition costs and pushes back humorously when Jana asserts founders should make VCs work to define clear metrics. Jana stands her ground, framing VC labor as a key test of investor commitment. | |
| Gaining Negotiation Leverage and Constructing Strategic Cap Tables | 5 | 5 | 1 | 4 | Harry pushes back on the premise of ideal fundraising conditions by asking how founders can gain leverage if their metrics are lacking. Jana outlines storytelling strategies for sub-optimal metrics and details strategic cap table construction. | |
| Maximizing Angel Utility and Addressing Equity Disparities via 'The Gap Table' | 4 | 6 | 1 | 3 | Harry asks probing operational questions regarding angel investor utility and update frequency. Jana shares a concrete case study on angel network activation and reveals striking research on gender equity gaps in startup cap tables. | |
| Quickfire Round: Reading Recommendations, VC Realities, and Industry Wishes | 3 | 3 | 1 | 2 | Harry conducts a quickfire round covering books, transition surprises, and industry wishes. Jana highlights the intimidating pace of modern venture deals, which she humorously likens to a hasty Las Vegas wedding. |
Statements from this episode (16)
Messerschmidt: #Angels syndicate has invested in over 100 startups
“And now, nearly five years later, we've invested in more than a hundred companies as a group, and those companies include Bird, Cameo, Gusto, Carta, Airtable, Lambda School, Carrot Fertility, Modern Fertility, Vector Space, and countless more.”
Messerschmidt: Netflix culture deck values were actively lived by employees
“These weren't just values that were thrown up on a wall or mentioned it in all hands once or twice. They really embodied what it was like to work there.”
Messerschmidt: Employee underperformance is always the sole responsibility of their manager
“My general, like, managing philosophy around why people don't perform is it's really the sole responsibility of their manager. You've either failed to give them the context of what you're trying to achieve, or you've hired a person with the wrong skills in the…”
Messerschmidt: Unprofitable startups must perpetually raise capital until profitable
“Unless you're running a profitable business, you're going to run out of money, typically one to two years after you raise. And so you're absolutely always going to have to raise more capital. So you're actually always raising until you're profitable.”
Messerschmidt: Early founders must focus exclusively on metrics for next round
“So at the early stages of company building, like when you're pre-seed, seed, series A, you really shouldn't be focused on anything else other than do I have the right tactics in place to hit those metrics that are going to give you more money.”
Messerschmidt: Growth velocity beats overall revenue when raising a Series A
“So we'd much rather back a company who's gone from like zero to 500 K in a few months with strong organic traffic than a company who hit a million dollars a month rate, but the growth has slowed significantly.”
Messerschmidt: 70% of Fortnite users have made in-app purchases
“There's some crazy statistics of Fortnite, like, I think, 70% of their users have spent money in the app.”
Messerschmidt: Netflix cited Fortnite as a potential competitor on earnings call
“Netflix mentioned Fortnite in a recent earnings call as, you know, being a potential competitor, right?”
Messerschmidt: Startups cannot sustainably grow long-term on paid ad spend
“So I think in general, like you can't plan to grow your business on ad spin perpetuity and the channels just get too saturated and too expensive. So you've really got to find that distribution advantage.”
Messerschmidt: Asking VCs to define target metrics tests their partner quality
“Well, I think you can learn a lot about who you might want to work with by seeing if they actually do the work. And so it's a good first test of, you know, is this person going to be in the trenches with me? And are they going to help me?”
Messerschmidt: Founder negotiation leverage depends entirely on having strong alternatives
“Your power in the negotiation, it's driven by the alternatives that you have. So you want to go into your next fundraising with metrics that are so compelling that you're in control over who you work with and at what terms.”
Messerschmidt: Founders should avoid party rounds and secure institutional leads
“You're going to either want to have a lead or a co-lead of institutional investors. You want to avoid party rounds, but there's usually some allocation that you can leave over to bring strategic angels or individuals onto the cap table.”
Messerschmidt: Put top two or three requests atop regular investor updates
“The best scalable way I've seen to leverage your cap table is sending out, whether it's monthly or quarterly updates, and putting your explicit top two or three asks at the beginning of that email.”
Messerschmidt: Women hold just 9% of equity value in tech companies
“Women make up roughly 33% of the workforce of tech companies, yet they hold just nine percent of the equity value. Men hold the other 91%.”