Welcome to The SMB Syndicate!

In our inaugural newsletter, we describe the goals and vision behind launching this community.

The Promise of SMB

The number of new small business starts has steadily declined over the last decade. This year COVID accelerated that trend, causing thousands of small businesses to close their doors. This impacts everyone across the country, but has especially negative consequences in communities of color.

Entrepreneurship has been a key pillar of the American Dream and a key part of the promise of social mobility. As profits become more concentrated in fewer players, it has become increasingly difficult to create and sustain a new business. Venture capital can play a pivotal role in backing the tech that is reversing these trends and enabling small businesses to thrive.

Many SaaS investors still view selling to small businesses as either a stepping stone to larger enterprise sales, but more commonly it is viewed as an inefficient strategy that doesn’t scale or make economic sense. The assumption was that it still has an enterprise sales cycle, but the contract value of a consumer product. We believe that this line of thinking will force some investors to miss out on the largest opportunities of the next decade.

Targeting small businesses as a primary customer requires adopting an entirely new playbook.

This newsletter aims to aggregate pieces of that playbook by highlighting the most innovative new business strategies and best practices in venture capital that are advancing SMB tech. We’ll curate the best articles written by investors and operators in the space and share our own perspectives. We welcome submissions from readers of SMB Syndicate as well!

Our hope is this newsletter will be informative to VCs investing in the category, founders building in the category, and executives seeking strategies to implement.

Who are the folks behind this newsletter?

After that introduction, you might be wondering, ok this sounds cool, but who are you?

We are a collective of Partners and Principals at different venture capital firms who have come together over a common interest - SMB tech. We see a massive opportunity in empowering more small business owners.

• Austin Clements is Managing Partner at Slauson & Co., an LA-based pre-seed and seed stage firm driven by economic inclusion. His focus at the firm is backing tools, technologies and platforms that support small businesses.

• Jen Richard is a Principal at Bonfire Ventures, an LA-based B2B software firm investing at the seed stage. She's particularly excited about vertical market software and e-commerce tech, as they have both become catalysts for large-scale growth of SMBs.

• Sydney Thomas is a Principal at Precursor Ventures, a Silicon Valley-based pre-seed firm. Her focus at the fund is to back companies that are creating a stronger middle class by building products and services for the millions who are often left behind.

Why is SMB so exciting right now?

The month of November has brought numerous big announcements for companies that support SMBs. Klaviyo solidified the case for e-commerce tech with a $200MM Series C fundraise on a $4.15B valuation led by Accel. This will likely be the last round of private capital the email and SMS marketing platform raises before filing for IPO. And, as if we needed more of a case for e-commerce, Forter entered the unicorn club with a $125MM Series E raise led by Bessemer Venture Partners. Boulevard, an LA-based business management platform for salons and spas, recently closed a $27MM Series B with investors including Index Ventures, Bonfire Ventures and others. Austin-based ZenBusiness closed a $55MM Series B to continue providing micropreneurs with the tools they need to start their get their businesses up and running.

With Black Friday just behind us, it would be remiss to not mention the results from the big day. This year, Shopify reported record global Black Friday sales of $2.4B. Despite the economic impact of COVID, Shopify's sales on Black Friday accounted for 80% of the sales done in the entire holiday weekend last year. This year's cognizance on supporting small businesses as well as the growth of e-commerce gave Etsy a 10.66% lift in share price at market close on Black Friday. Though numbers are still coming in from the big weekend, it's clear the SMB's that moved online saw some major traffic.

Why should you join this community?

I hope you enjoyed our discussion and introduction on why we think small businesses are a fundamental part of our society, and why we think they are such an important vertical to invest in going forward. In the coming newsletters, we are really excited to bring you some hot takes about how we're thinking about this landscape as it grows and shifts and matures. Since COVID hit, we have seen an outpouring of interest from investors in this space. We're looking forward to following the growing development of this space, as it matures, and as we become even more active participants in it.

We expect to send these newsletters every quarter. You can expect to find articles about SMB we found interesting, updates on how we're thinking about the market more generally and deep-dives into how we're thinking about specific companies within this space. We look forward to being really transparent about how we're thinking about our own investment theses as they grow and mature over this journey. We also plan to build community by hosting small events with industry leaders. 

Our hope is to build a collaborative community of people who are committed to building small businesses in our country. Please do e-mail us if you'd like to include anything in the next newsletter or if you would like to partner on an upcoming event. We hope that this is a space for both investors and operators because we think that there is so much we can learn from each other. We're looking forward to engaging and developing rapport with each one of you.

Onwards,

Sydney, Jen + Austin