Unlike most VCs, Sasha Trower — an early backer of Runna, the wildly popular app for runners which was acquired by Strava in April — does not think consumer is dead.
“Most of the big outcomes we’ve seen in VC have come from consumer. If you think about consumer tech in the sense of ecommerce and marketplaces and also consumerised SaaS, like Canva, Notion and Miro,” Trower, a former investor at London-based VC Venrex, tells Sifted.
Now she’s going solo to prove her thesis — and has just raised an £11.5m fund for her London-based firm, Circle & Co, to invest in consumer tech.
She’ll invest in pre-seed and seed-stage startups, in Europe and the US, in three main areas: marketplace businesses, consumer platforms (Spotify and Revolut being good examples of these) and consumerised SaaS.
Circle & Co has made five investments to date out of the new fund, including Ellipsus, a German collaborative writing platform for authors of fan fiction and British creative task management tool Workflow. LPs include exited founders and operators at consumer startups.
Runna-way success
While at Venrex, Trower invested in Runna — which, rather handily, announced its sale to fitness giant Strava just as she was closing the fund. “I had hit my fundraising target, then on the day the acquisition was announced I received £1m of inbound interest from investors,” she says.
Plenty of other VCs had passed on the business because it had quite high churn, a red flag to most SaaS investors. “But I realised churn didn’t matter because people were likely to come back, because they’re runners,” says Trower — and would likely use the app to train for another event in the near future. “And even for users who didn’t come back, the unit economics were strong enough that it didn’t matter too much because they were acquiring a lot of users for free via word of mouth.”
Making it as a consumer tech business is all about finding that magic thing: product market fit. “Making a product that really resonates with users” is the holy grail, says Trower.
She spends a lot of time with founders “trying to nail down product market fit”, she says. “Pushing them on: Have you got it? Have you actually got it? Now you know that you’ve got it.”
Founders can mistakenly think they’ve made it to product market fit if they’re spending a lot on user acquisition, Trower says. Instead, it’s important to look at fundamental data points like word-of-mouth and organic growth, the time users are spending on the product, how core it’s become to their day to day.
Once a startup does have product market fit, “any money they raise can start to pour fuel on the fire,” she adds. “That’s how you get such huge outcomes [in consumer] very quickly.”
