Crane Venture Partners Investor Megan Reynolds: On Being an Investor vs. a Builder

Written by Tom Fairey

8 March, 2022

So it’s safe to say Megan Reynolds did not follow the normal MBA path into business. No — instead, she studied ancient language. And it was not one ancient language, but three: Latin, Sanskrit, and Ancient Greek.

“First off,” she told me during an interview on my podcast, Back Yourself, “total nerd.”

From there, it was not exactly straight into VC. While studying ancient languages, she also taught herself finance and economics, almost treating it as another language.

“There is so much exclusivity in how finance works,” she said. “It was almost like learning a language.”

Her first job was a radical departure from linguistics: she was an analyst in Hong Kong, focusing on Chinese large-cap tech stocks founded in the last decade or so. After a short stint there, she returned to London.

Back in the U.K., Reynolds worked for Crowdcube as a fundraising manager, and then Entrepreneur First as a programme associate. Then it was her real launchpad: In September 2019 she became an investor at Crane Venture Partners, an early-state, enterprise, and European go-to-market venture capital company. That led to roles as a seed investor for CoMind, and then added identical roles for, Silverflow, and Gitpod.

What Makes a Good Fit for Crowd Investing?

Crowd investing is an attractive solution for many entrepreneurs as well as investors. For investors, it can be anonymous, relatively painless, and allow somewhat easy entry into the world of investing.

But what types of companies are a good fit for crowd investing? Reynolds particularly likes fintech. She thinks the best funding scenarios are when there is a direct alignment between the customers of a company and the crowd. Good outcomes often come when a company has a large, loyal following who likes their products so much that they are willing to be invested, and then when there is a value to accessing that crowd. Customers who become investors are incredible advocates.

“Those are the most successful raises,” she said. “If you use crowdfunding right, you can really build an incredible community. And that is what we were looking for.”

Three types of companies fall into this category:

  • Relatively large and relatively well-known companies who use crowd funding almost as a marketing tool
  • Early-stage companies whose founders don’t have access to capital but see crowd funding as a viable channel
  • Startups that have some capital and some investors and who are basically just looking for a funding top-up and marketing by way of generating interest and creating an early-stage marketing tool

Why Invest in a Company and Not Build Your Own?

Clearly, investors like Reynolds are well versed in what it takes to create a company from the ground up. Why does she continue to invest in companies when she could be creating her own?

For Reynolds, the thread through her career has been how one creates value at the early stages of a company. Building your own and figuring it out is one way to do that, but she has worked with some incredible talent and finds enjoyment from identifying those brilliant people and backing their ideas and skills.

“If I can get a share in what they are trying to create, that is going to be incredible for me intellectually and personally,” she said.

What Is an Enterprise Investor?

Crane Venture Partners bills itself as an “enterprise investor.” The company has a narrow focus. It invests in B2B enterprise software only at the seed stage, across Europe, while also working with companies on their go-to-market strategy.

“Seed,” in this case, can range from pre-seed to post-seed. Crane typically invests $1 million to $2 million in technical product founders who may have a couple of engineers on staff. The product is built and there is some level of pull from the market, which has been identified. In other words, the sweet spot: high risk, high reward. Crane currently has a portfolio of about three dozen companies.

“Because we only invest in those companies, we have basically learned the root-specific challenges that all of those companies face scaling from seed to Series A,” she said. “We have actually built our team around those specialties.”

What Is Your Best Advice to Someone Who Wants to Get Into VC?

Reynolds says that someone looking to get into VC should understand really why they think they want to spend large amounts of time solving problems for a specific customer, and who that person is.

“That has guided me, and I love working for those people,” she said. “If I make them successful, I am going to be happy. So if you can find that and communicate that to a VC fund, I think that holds a lot of weight.”

The Takeaway

Reynolds forged a singular path on her way to working in VC. She has figured out a successful journey by understanding what customers want, what she wants, and how to deliver on both.

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