Strategy Session is a feature for Crunchbase News where we ask venture capital firms five questions about their investment strategies.
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Megan Bent founded Boulder, Colorado-based Harbinger Ventures in 2016, inspired by her experience and observations from running a family office for 10 years and leading direct investments through the lens of entrepreneurs.
Harbinger closed its second fund in 2019 with $21.7 million and now has approximately $40 million in assets under management. The firm is actively deploying funds from this fund and has made four investments so far and will make eight total, Bent said. Companies in Harbinger’s portfolio include Cora, Once Upon a Farm and Nona Lim.
Bent spoke to me about her investment strategy and how she is redefining the traditional business model — particularly how the firm likes to meet female founders before they start raising money so it has the opportunity to prove its value-add for early-stage investments.
The following was lightly edited for length and clarity.
What is Harbinger’s investment philosophy?
Bent: From a fundamentals perspective, we are an early-stage growth firm investing in Series A companies in the consumer products space. We have a strong bias for brands that identify a real and practical need, but were in sectors that were under-innovated in over a decade. We look for brands that have a go-to-market advantage and have a disproportionate share of voice, authenticity and engagement. We also look for the DNA required for future success for general partners. Forty percent of our limited partners are women and 100 percent of the teams have a female as a co-founder. Most boards have women that make up 60 percent, and we like that accountability built in from Day One, ensuring the consumer is reflected in the key stakeholders.
Did this strategy bode well for the firm during pandemic?
Bent: It did. I hate to say we did well, but our portfolio companies serviced consumers well during the pandemic. We were in areas such as baby food, tampons, wine and home fragrance, and those sustained or increased demand. Because of the channel mix, they had fluidity to be both retailers and e-commerce.
How do you like to work with founders?
Bent: I have very strong reverence for founders because I spent so many years working with one. We like to add value and work with them at a regular clip. We are often setting up weekly meetings and creating roundtable sessions, so when they go through quarterly board meetings, we can set up working sessions staffed with experts. Our goal is to derive the greatest source of value as quickly as possible. We also incentivize portfolio companies by giving them their own piece of carried interest of the fund. They are literally co-owners of their success, and that is an upside.
How is Harbinger redefining the traditional business model of financing startups?
Bent: We realize that it is seductive to be a big fund, but when you have to deploy more capital you aren’t able to provide the same service to everyone. Series A is a critical stage for a company — it is often when it is making its first hires or closing on a national contract. I have been here my whole career and it requires discipline to not scale out the specific whitespace. We only take the lead position and that allows us to act differently. If we had to make 50 investments versus five, it would transform how we spend our resources. We prefer to spend more time with them in the weeds, and we know how to staff for that.
Why do you expect more innovation from women entrepreneurs after the pandemic?
Bent: Following the pandemic or accelerating during, women took on additional responsibilities, as educator and caretaker, along with a part-time or full-time job. When a crisis hits, it unlocks innovation. There are new ideas or better ways to address existing ideas. Many are revamping go-to-market, as well as rethinking marketing plans and messaging based on “aha” moments. Secondly, dislocation and disruption create opportunities. During this time, women also had trouble getting heard and there was a dramatic shift in behaviors, and we are actively looking for those pops.
Photo of Megan Bent courtesy of Harbinger Ventures.
Illustration: Dom Guzman
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