A founder who runs a $20 million VC firm that specializes in PR shares the 4-step plan she uses to scale her business and attract investors
- Masha Drokova is the founder and general partner of Day One Ventures.
- Since its inception, Drokova's early-stage venture capital firm has invested in companies in 18 countries, including 17 women-founded startups, and has secured $20 million in capital.
- While angel investing, Drokova tested an original model she had conceived: leading communications and PR for her portfolio companies. This lead to a unique business venture and Day One Venture's mission and structure.
- She has brought in significant press and investment to her porfolio companies by following a fool-proof, four-step strategy.
- As the company grew, she began to expand her investor pool to include owners of banks, heads of private equity firms, and family offices. "When these investors saw our portfolio growth, deal flow, and LPs experienced in tech, it became obvious that our model is unique," Drokova said.
- Click here for more BI Prime stories.
Masha Drokova keeps her elevator pitch simple: "I fund startups and tell their stories," the founder and general partner of Day One Ventures states on her LinkedIn page.
Judging from the results, she's darn good at it, too. Since the inception of Drokova's early-stage venture capital firm in 2017, Day One has invested in companies in 18 countries, including 17 women-founded startups, and has secured $20 million in capital. (Earlier this year, Drokova shared a copy of Day One's pitch deck with Business Insider.)
The firm has already had three exits - including data aggregation platform Acquired.io and software company Ntechlab - and invested in an A-list of portfolio companies that includes email client Superhuman, sustainable product merchandiser Public Goods, and customer service automation platform DigitalGenius.
From all of this success, you wouldn't know that the founder had almost no connections when she immigrated to the US from Russia six years ago. She shared her story and strategies with Business Insider of how she made it all happen.
Mentorship propels Drokova from venture capital PR to opening her own firmDrokova first started working in the US in 2011 when she joined Runa Capital, a tech-focused VC firm based in Palo Alto, as a PR director. While at Runa, Drokova worked with Serguei Beloussov, the founder of over 20 companies including backup provider Acronis, software company Parallels, and consumer electronics company Rolsen.
Over the next five years, Beloussov became a mentor to Drokova, and she joined his team at Acronis in 2013 as the VP of communications, where she led communications and marketing in over 30 countries.
Beloussov encouraged Drokova to pursue her next vision: launching her own PR firm, M&A PR Studio. Drokova reached a million dollars in revenue in the shop's first year in business, and multiple startups grew to $100 million and $1 billion in valuation while working with her and her team.
Dipping her toes into angel investingAfter seeing that PR played an integral role in the growth of her client's businesses, such as Gett ($1.5 billion in valuation), Houzz ($4 billion in valuation), and HotelTonight ($463 million in valuation), she began setting her sights on becoming an angel investor.
"I wanted to help the best companies with communications and was in search of a structure that would allow me to spearhead communications and achieve stronger alignment and higher returns than agency-client relations allowed for," she explained.
So while Drokova kept M&A going until 2018, she simultaneously began exploring angel investing opportunities in February 2016. Finance management solutions company Truebill was among her picks. Her vision was on track: Truebill grew eight times last year and recently closed a series B round.
While angel investing, Drokova tested an original model she had conceived: leading communications and PR for her portfolio companies.
Her concept resulted in more and more people asking her to coinvest with them and/or invest money on their behalf. Founding her own fund, Day One Ventures, became a natural response to demand on both sides. (Day One's name, as it states on the firm's website, was inspired by Amazon's Jeff Bezos, who once explained that as soon as a business reaches 'Day Two,' it's all over.)
According to TechCrunch, Day One is currently the only fund in the US that leads communications and PR for its portfolio companies. As a result, she described her time angel investing as a "great test for the business model."
Ensuring that her entire in-house team gained a clear understanding of how her VC firm would provide added value, and developing a process around the way they would do this, were key to her company's success. She shared four steps that made this happen, and how other businesses can do the same.
1. Show your team clear examples of what success looks like
Day One gives their in-house team past examples of strategic communications plans at each stage.
"We start with business goals and craft goals for communications based on the clearly outlined business goals for each portfolio company," Drokova explained. "As we spent time doing due diligence before working with a company and understanding their business, it makes it easier for us to get clear on business goals and on what kind of publicity will help to achieve them."
With this process in mind, success for Day One is not just about media coverage gained, but about benchmarks hit with the help of the firm's PR work. "We have multiple case studies of our work that give benchmarks of what we see as good work, though we are always trying to deliver more than [in] previous phases," she said.
2. Meet with and research clients before making a decision to partner up
Drokova noted that most of the time, her team has met with founders before investing in their company. As part of the investment process at any VC firm, Day One's internal team is also involved in different parts of due diligence in evaluation of investment opportunities - especially when it comes down to evaluating consumer products targeting Day One's demographics. Drokova's team researches the market size and dynamic, tests the quality of the product, and looks at the founding team's experience, including reference checks.
"This structure allows everyone [on the internal team] to gain a great understanding of [our portfolio company's] business, giving them a leg up on delivering 110% - because by the time they're expected to execute on communications goals, they [have] already learned about the business, market, team, and market opportunity," Drokova said.
3. Pen a "jump-off document"
Upon investment, the firm creates a "jump-off document" that outlines business goals for the next year, announcements, company story, founder story, and expected milestones.
4. Go out and create opportunities based on your data
Next comes messaging. Using the information from the document, the team paints a fuller picture of the portfolio company and crafts facts into a compelling story that's meant to evoke emotion and be relatable to any reader.
"We build out messaging with numbers, data, and market trends, leveraging peer-reviewed studies and credible database information," Drokova said.
Drokova pointed to Day One's portfolio company TrueBill as a great example of her four-step plan in action, noting that Day One invested in the seed stage and led communications all the way through TrueBill's series B. Her team's history with TrueBill enabled them to garner unique feature stories for the company, which led to new opportunities and influenced the growth of users, fundraising, recruitment, and market positioning.
"We started by clearly defining what the company does and why it's important," she said. "This has evolved over the years and each time a new feature, function, or problem they were solving was added, we reshaped the messaging to reflect this."
With TrueBill, her team was able to see that the personal finance ecosystem is fragmented, with many apps focusing on a single aspect like investing or savings. After identifying the problem/market opportunity, Day One next moved into showing how their portfolio company is the solution.
"Our explanation of the solution was that Truebill has grown from an app that helps people track and cancel subscriptions to being recognized as one of the most effective platforms for personal financial management," Drokova said. "It saves its users an average of $500 per year with total savings surpassing more than $50 million, and the company has analyzed nearly $290 billion in financial transactions."
Next, Day One dives deeper and defines key features: the most useful and unique aspects of the app. For example, Day One highlighted that TrueBill was slated to release three new features: Bill Pay (the ability to view bill PDFs and easily pay bills within Truebill from one central place), Credit Scores (to view, track, and monitor a credit score and credit report from the Truebill app), and the Truebill Rewards Program (a rewards program that increases savings bonuses based on behavior).
Based on all of the above components, Day One next crafts press announcements to generate media interest. In the TrueBill example, Day One generated TrueBill's launch, series A, and series B announcements, which resulted in top tier media coverage in outlets such as TIME Money, Forbes, TechCrunch, Business Insider, Crunchbase, and The Next Web, to name a few. Day One also introduced TrueBill to some of the firm's marketing partners, who helped TrueBill with growth and introduced them to some of the firm's new investors.
Day One had initially taken investment mostly from successful tech founders, who, Drokova said, "intimately understood, from their own experience building a company, that our value add would get us access to the best founders and help grow business we invested in."
But as the company grew, she began expanding to wider circles including owners of banks, heads of private equity firms, and family offices.
"When these investors saw our portfolio growth, deal flow, and LPs experienced in tech, it became obvious that our model is unique," Drokova said. "Some of the LPs I met on closed curated events, dinners, [or] educational programs for executives. [A] few people came through my personal friends."
Drokova explained that it was critical to her to make sure that the firm worked only with people with "the right values, transparent reliable sources of income, and perfect business reputation." She also prioritized investors who could add value. For example, she pointed out that some of Day One's LPs buy software and products produced by Day One companies.
"We couldn't take capital from every person interested in investing in Day One and are very happy with the investors that we work with," she said, noting that they are primarily based between San Francisco, New York, Zurich, and London. Drokova intentionally limited her activities between those four cities to create a community in each city.
"I try to be in every one of these cities a few times a year, throw a dinner whenever I'm there, and introduce our partners to each [other] so they can have networking benefits from the Day One community besides the financial returns," she said.
She added that while spearheading communications served as a "great door opener" to the best founders, investors, and deal flow, the most important "north star" for Day One has been an "obsession with founders," which she explained means that every decision the Day One team makes is guided by the best interests of their founders.
"Our dedication to our founders has resulted in Day One becoming their No. 1 point of contact and trusted adviser for the most complex business decisions," Drokova concluded. "We're constantly working to serve our founders better. It's a never-ending process."