Out of college, Kristin Gunther took a job in investment banking (IB) for a pretty regular reason – to pay off a load of student loans and maybe put her Economics degree to use (she didn’t). Now she’s a Principal at Revolution Growth, a VC firm that invests mostly in later-stage companies located outside of Silicon Valley, New York City, and Boston.

Her path to investing comes with extensive, multi-faceted experience that’s positioned her perfectly for a world where she could lead decisions on investing funds into promising growth companies.

During her stint in IB – where she pushed through tortured 110 hour work weeks in her roles in the M&A space and restructuring as part of her analyst program – she spent two years on the public markets side, using that knowledge to help analyze risky public equities and bonds. 

When the financial crisis hit, the instability around her encouraged a career analysis and refocus, and she realized that helping companies grow and navigate challenges was what she found most fulfilling. With that, she headed to a private equity firm (only after getting her MBA), where, among other things, she served a nine-month stint as CFO for of one of the firm’s portfolio companies.

She was introduced to Revolution through a friend and found the perfect fit, using her investing and operational skills to serve the team as it sought out the next crop of iconic companies.

We recently sat down with Gunther and chatted about her past and where she’s going.

You have experience in M&A and PE, which are similar to VC, but there are some differences. How has that shaped you as a VC?

Venture capital firms typically take non-controlling positions in high growth startups with a lot of potential, whereas private equity firms take over ownership (often using debt) of more mature companies, and work to make them more profitable and cash generating. Because in PE we took a controlling stake, we would have to have a clear plan for how to improve the business and how to execute on that plan.

In VC, we don’t have control and thus have to trust the management team a lot more. But the types of value creation roadmaps I’d developed in PE can still be helpful in VC as discussion points with founders and Boards and as a guiding compass for the investment team.

I also think that seeing the risks and challenges of more mature companies helps me to think through some longer term tradeoffs that growth stage companies might not know they’re making. Cost efficiency was also a huge part of value creation in PE, and those principles are helpful in VC as we steer companies towards being able to operate without raising additional capital.

What do you look for in an investment, either personally or as part of the overall Revolution team?

I tend to focus on companies that are consumer-facing, whether that be food, gaming, commerce, healthcare/wellness, or otherwise, and am particularly drawn to those that creatively improve consumer experiences.  For example, Scopely (one of Revolution’s investments) is a mobile gaming company that uses constant streams of data to understand how users engage with their games so they can in turn make them more enjoyable for each specific player in real-time.  Now you know why you can’t stop playing Wheel of Fortune on your phone!

The most important factors that I consider are the team and the business model. I find that the best founders to work with are self-aware and fully committed to building a big business, which in turn means they are able to recruit high-quality team members. As for business model, a company can have the best idea in the world, but if they can’t figure out how to sell it or scale it, that’s a problem. By the time they make it to us, they should have that figured out.

I work closely with a company, Revolution Foods, which provides healthy meals to schools and communities around the country. I love this company because, as a mom with an elementary-aged child, I know how much of a difference nutrition makes in a child’s behavior and his or her capacity to absorb information. It’s an example of a company where the cofounders, Kristin Richmond and Kirsten Tobey, have truly made the brand what it is today. They encountered a problem they experienced as moms, came up with a vision to solve it, and have executed on their vision to create a nationwide provider of clean label food.

What do you need to see in a team and/or leader you’re about to invest in? Revolution largely writes cheques in later-stage companies, what do teams or leaders at that stage need to show you?

Revolution’s initial investment in each company we invest in from our Revolution Growth fund is usually $10-$50M. They’re growing quickly and have overcome the primary hurdles that companies in their sector might face.

For a software company that usually means landing a number of large clients willing to pay an annual subscription fee. For a consumer products business it might mean crossing the $50M revenue mark where many companies struggle with capacity issues.  

Leaders of companies need to show us that they deeply understand the market they are in, they have a believable path to profitability, and that they have a plan for addressing the vulnerabilities in their business.

If you could tell founders who knock at your door a single thing, what would it be?

I think my advice applies to all stages of investment. I wish more companies better understood the downside of raising at too high a valuation, an estimation of the company’s worth. I understand the temptation – the startup world tends to encourage it by profiling companies that have raised the most or have the highest valuations – but seeking the highest valuation is a short-sighted strategy.

Doing so means that everything has to go right, otherwise you have unhappy investors and often a subsequent fund-raise that’s a lot harder than it should be.

You recently got a promotion (and hopefully a raise!). Congrats! What’s changed about your day?

Thank you! It’s great to be recognized for your contributions and hard work, but it doesn’t change much about my day.

During a typical week, I’ll be in the office for a few days doing a mix of diligence calls, which means researching companies we’re interested in investing in, and supporting our portfolio companies. Revolution is very focused on working closely with our investments to help them grow, and this can mean helping them raise money, develop partnership strategies, find executive job candidates, etc.

And the rest of the week, I’m usually out of the office for a day or two to attend board meetings and conferences or to network with other investors. Meeting people in person and developing a strong network in venture is critically important for developing a pipeline of new deals as well as forming theses on potential investment areas. 

At night I get to start my second and third jobs as a mom and household janitor.

Any thoughts on gender in your world?

Broadly, the finance industry lacks diversity, and in venture the statistics aren’t great either. Only 9% of US VCs are women and 74% of US firms don’t have a single female partner, so I feel very fortunate to work at a firm with several female investors and executives.

Generally I believe that diversity of thought will produce the best results regardless of the industry, but in venture, I think that the more diverse the group of people is that are sourcing investments will translate to a more diverse set of portfolio companies.