Underscore | Frequently Asked Questions

Roughly half of our investments emerge from the Boston ecosystem, but just as many come from elsewhere in the US and around the world. We have portfolio companies in San Francisco, Chicago, Austin, Paris, New York City, and across New England. This is all to say that, while we may be bullish on the Boston ecosystem, the best ideas can come from anywhere, which is why we’re geography-agnostic.

Underscore VC is primarily a B2B software investor with about 50% of our investments in B2B vertical SaaS and 50% in Fintech and Emerging Technology companies.

While we steer clear of biotech and anything requiring FDA approval, we’re interested in healthcare and life sciences and have backed companies such as H1 and TetraScience that sit at the intersection of SaaS and healthtech.

You’ll note that the Underscore portfolio is fairly diversified across B2B software. This is because, as early-stage investors, we don’t see our role as predictors of the future. We leave it to bold founders to envision the next generation of iconic software companies.

That said, we don’t back companies or even ideas. We back people. People who are uniquely qualified and purposeful about solving impactful problems. That’s why it will always be about you. Just ask our founders.

As a venture fund, we focus on B2B Pre-Seed and Seed-stage companies. That said, we welcome the opportunity to get to know you at the earliest stages of your company-building journey. Several of our portfolio companies were simply an idea on the back of a napkin at the time of our investment in the founder.

Our diligence process, from the first meeting to the final decision, typically takes two to three weeks at the Pre-Seed and Seed stage. In priced rounds, the funding process will take 30 days after the term sheets are signed.

Every investment decision is different, so it is hard to precisely describe every possible scenario. Timelines can be highly variable. Different company stages can require more or less diligence. That said, almost all investment processes roughly follow the same shape.

1. First meeting with the founding team and someone from our investing team. Typical 30-45 minutes.
2. Second meeting with more of our team, and often experts from our community. Typically 60 minutes. Background diligence begins. 
3. Meeting with our full partnership. 60 minutes or more. Diligence continues. 
4. Yes/no decision on investment. Final diligence as needed.

We meet founders in many ways. It could be through our personal network, through an introduction by a mutual colleague, an event on a university campus, or even an unsolicited email or LinkedIn outreach. While the nature of our job doesn’t make it possible to respond to every single connection or message, if something about a founder’s background or materials that were shared along the way spark interest, we schedule an initial meeting with one of our investing team members.

In the first meeting, we are working to answer a handful of key questions, but first and foremost, we want to get to know the founding team.

• What is your origin story?
• What compelled you to start this business?
• Why are you the right people at the right time to build this company?

We also want to understand the market opportunities founders are solving for.

• Who is your target customer and how many of them are there?
• What problem do you plan to solve today and down the road?
• How are you planning on making money?
• If the founders are right, how big could this company become?
• What could go wrong? (Tech, competition, macro trends, etc.)

In subsequent meetings, we typically introduce a founder to more of our team, while digging deeper into the business itself. In the background, we are doing our own research, getting smarter about the market and opportunity, and developing questions for follow-up conversations. This is also where we begin to leverage our Community in the diligence process. 

Much in the way that we do not expect a founder to be experts in every aspect of running a business, we are not experts in every possible domain either! In almost every case, we pull in experts from our Core Community to help in our investing process. This does three things:

1. It helps us validate the problem, the opportunity, and to ask the right questions.
2. It gives founders an opportunity to speak to someone that really understands their space, and in some cases is also a potential customer!

Somewhere after the first or second meeting, we will also generally ask founders for references. This includes both personal and professional references and where applicable, customers as well. This part of the diligence process often continues right up to the decision point. Finally, we may also conduct some level of financial and legal due diligence at our discretion. For early-stage startups with little revenue, this tends to be pretty light weight, but we generally like to understand a basic financial model and milestones and projections between the current and next financing.

This entire investing process usually takes 2-3 weeks, but after the final meeting with our entire partnership, we are generally ready to make a decision within the next 2-3 business days.

We generally don’t take board seats. However, we will if that is the desire of the founder we’re backing. In any case, we act as a trusted advisors just as a board member would. Our aim is to be your most valuable partner in building from Pre-Seed or Seed to Series A.

We like to lead or co-lead rounds.

Our typical pre-Seed check size is between $500K and $1M, while Seed stage check sizes fall between $1M and $3M.

Diversity, equity, and inclusion is a top priority for Underscore VC. But our words don’t matter here, our actions do. So we would like to share specifically how we’ve actively woven diversity and inclusion into the fabric of our firm. We started with our firm’s vision statement:

Underscore VC aims to create a better world where technology entrepreneurs and investors are aligned in a diverse community that creates outsized value and impact beyond the reach of any individual, company, or portfolio.

Our firm-wide goals trickle down from our vision statement and have diversity, equity, and inclusion (DEI) intentionally threaded into them. These goals are reviewed and adjusted bi-annually and monitored for progress.

Additionally, Underscore has implemented an ESG policy and formed a cross-functional ESG Working Group that meets regularly. Within the ESG policy, DEI is a particular area of focus for Underscore VC. We strive to be an industry leader moving the needle to create a more diverse, equitable, and inclusive tech ecosystem. In turn, the ESG working group is measuring DEI goal progress across six buckets: team, portfolio, community, content, partnerships, and limited partners.

To solidify our commitment, Underscore became a Principles for Responsible Investment signatory, firmly committed to developing an inclusive global financial system. This is a commitment that we as a firm are excited to make, as it will hold us accountable, reinforce our values, and improve our world for generations to come. We report to the PRI annually.

What does success look like for us?

Success isn’t a statement on our website. It isn’t a badge, an award, or a press piece on our successful DEI efforts. And success definitely isn’t a quick win. Success is a long, hard grind resulting in a team, community, portfolio, and LP base that reflect the diversity of the geographies in which we invest.

We won’t always get it right, and when we don’t, we encourage your feedback. We are committed to actively evolving and continuing to work toward a world that is equitable and fair.

Where will you see our DEI efforts appear in our investment process?

Before your first investor meeting, you’ll receive a diversity survey that we ask you to opt into taking. This is to track the diversity of our investment opportunity pipeline.

When you advance to a partner meeting, you should expect to be asked how you’re thinking about ESG, as ESG factors are an element of our investment scorecard.

When you’re given a term sheet, you’ll note that it has a diversity, equity, and inclusion clause that asks that you adopt policies to ensure acceptable workplace behavior, encourage the creation of diverse teams, foster the growth of under-represented groups, and support workplace efforts to improve diversity, equity and inclusion.

If we’re lucky enough to partner with you, your onboarding will ask you to voluntarily self-report your demographic information. This is to track founder diversity in our investment portfolio. And, as a portfolio company, as a part of standard financial reporting, you’ll be asked for your company’s ESG metrics, including those related to diversity, equity, and inclusion.

The best companies are thinking about DEI from day one, but we recognize that it’s not always easy to navigate. That’s why we’re committed to serving as a support system and safe space for you as you implement and evolve your DEI best practices. We encourage you to ask us about these services when we’re pitching you.

We know that talent is your most valuable asset; that’s why we take a community-oriented approach to venture capital. Our Core Community gives our portfolio companies a distinct, unique advantage when it comes to hiring.

Organized by domain, company stage, and job function, the Core Community is packed with leaders who can connect you to the strongest candidates for your key roles. And, while organic, self-facilitated talent flow does occur, we don’t leave your hiring process up to chance. We’ll partner with you on developing a key-hire roadmap and we’ll partner with the Core Community to make sure your job descriptions and talent vetting process are designed to deliver success. It’s our hope that you’ll also ask us to interview finalists, and help you close top talent.

There have also been several instances in which a Core Partner for a portfolio company later chose to join the company full-time. In turn, we’ve seen some founders use the Core Partner program as a way to attract, trial, and entice top executive talent over time to officially join their team.

In addition, we host a public portfolio company job board on our high-traffic website, send monthly Core Community Bulletin emails featuring your most critical open roles, and have a bench of vetted recruiters and HR specialists who are available to you.

Underscore has a unique community-driven model.

In founding the firm, we started with a listening tour, asking hundreds of entrepreneurs what they really need to make a business successful. What we learned is that connecting with the right people, at the right time, can make the biggest impact on a company’s trajectory.

For that reason, we created the Underscore Core, a community of top entrepreneurs, seasoned executives, rising stars, and domain experts who are uniquely incentivized to help Underscore source, select, and support portfolio companies.

We know what you’re thinking: Every VC firm has an expert network—how is yours different? Well, one of our portfolio company founders, Rob Gonzalez of Salsify, put it best: “Most VCs simply make intros into their networks. Underscore goes a step further by financially investing in their Core Community advisors so they take helping you seriously. It makes all the difference.”

We do this through our Core Partner program. A Core Partner is a Core Community Member who agrees to partner with Underscore on sourcing, or advising an Underscore portfolio company. We set aside 10% of our profits to be allocated to Core Partners in return for their support. This ensures Core Partners are aligned to a portfolio company’s success in a way that is 100% non-dilutive to the founders.

We like to put it this way: Through the Core Community, you as a founder get connected to the right people, at the right time, all on Underscore’s dime.

It Takes a Community
It’s not just our tagline; it’s our number one value. We take a community-first approach to everything we do, and we have since day one of Underscore’s founding.

Trust
Trust is the foundation of every good relationship. We’re firm believers in “say it here, say it now” and walking our talk. In turn, we ask for and deeply respect your candor.

Actively Evolve
We’re playing the long game. That means we’re committed to actively evolving based on your feedback and the needs of our ecosystem. We have an “outcome over ego” approach and are willing to change our minds.

Extreme Clarity
We prioritize “cutting the noise” and have a bias for progress against goals with clear measures.

You’ve likely heard it said before: “Your investor relationships will be longer than the average marriage.” A statement that truly only hints at the importance of choosing your investors wisely.

We take our role in your business and your life seriously. And as a multi-generational mix of seasoned investors, operators, and entrepreneurs, we’ve been in your shoes. That’s why we set out to build a venture firm that we ourselves would want to be in business with.

So, how has that manifested in our relationships with our founders? We’ll encourage you to ask them when the time is right, but here are a handful of words our founders have used to describe us: approachable, authentic, transparent, “clutch,” and even fun. We like to think that we emphasize the “fun” in “funding.”

We take our work seriously, but not ourselves. We operate with trust and respect. We bring our whole selves (and sometimes our children and fur-babies) to work, and we expect the same from you.

You’ll have access to the full Underscore VC team, not just the Partner that championed our investment in you. We’re a package deal. And as former founders and operators ourselves, we each have our individual talents and expertise that we encourage you to tap into.

Building a company is a roller-coaster of an experience. We commit to supporting you through the twists and turns, celebrating with you during the peaks, and answering (encouraging, even) your late-night phone calls when you’re in the valleys. Entrepreneurs humble us, and we’ll do everything in our power to remove the barriers that stand between you and your success.

Above all else, the Underscore team is made up of listeners and learners who are united in our belief that it’s all about you and your mission.

While we have investments across the US, and several over seas, we are champions of the Boston ecosystem, and with good reason. With its strong talent pool, tech companies that spawn future entrepreneurs, and its culture of giving back, a strong case can be made that Boston, Massachusetts is the best city for startups.

If you’re a native Boston startup, or a growth-stage company with a Boston hub, you benefit from the city’s unparalleled innovation ecosystem. What makes it unparalleled? Well, it has all the foundational building blocks that must be in place for a startup community to succeed:

1. Risk capital infrastructure: No matter what stage venture you have, Boston has an investment firm for you. The city’s capital management firms can truly take you from idea to IPO. From private equity to growth equity to early-stage venture capital, if you name it, we got it.

2. Labor fluidity: The greatest minds in nearly every industry—of all backgrounds and demographics—have coalesced right here in Boston, making it a great city for entrepreneurs to recruit top talent.

3. Iconic platform companies: An iconic platform company doesn’t consume startups, it spawns them. It does this by creating a culture of innovation that celebrates spin-out businesses. These are companies like Hubspot, Wayfair, Acquia, Drift, and Toast—to name just a few that call Boston home.

4. Research and development: Boston’s top-tier universities are investing heavily in R&D in areas that are certain to play a larger role in society decades from now. And institutions throughout the city are in place to ensure innovations become commercialized products, from diagnostics to cleantech and robotics.

5. A density of innovators that allows for serendipity: As much as it is a metropolitan city, Boston still boasts a small-town feel compared to other similarly known and sized municipalities. The big cluster of players in a small geographic area creates an influx of opportunities for discovery and cross-disciplinary thinking.

6. And a culture of giving back to the next generation: Boston has a deep sense of civic duty, and a culture of propping people up. With the success of local technology companies, there has been an influx of angel investors who mentor and invest in the next generation of entrepreneurs.

Underscore VC calls Boston home for a reason. Boston has unparalleled talent, world-class research institutions, and homegrown leading tech companies that fuel the next generation of founders. Our deep roots in the academic ecosystem and local community have meaningfully plugged our team into one of the best places to launch a company in the world.

Underscore is embedded in the Boston academic community, serving as a limited partner in Dorm Room Fund, the Harvard Innovation Labs’ Allston Venture Fund, and MIT’s The Engine and Sandbox funds. These commitments, along with regularly giving lectures and holding office hours for students, give Underscore early access to some of the most gifted entrepreneurs that emerge from these programs. As a result, around a third of Underscore’s investments are sourced through this talented academic community.