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README.md

Ramen Ventures Operating Manual

Ramen Ventures Logo

We angel invest in founders who are creating software that will improve the lives of millions of people.
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Table of Contents

  1. Who We Are
  2. Why We Exist
    1. Our Philosophy
    2. Our Mission
  3. How We Help Founders
  4. Our Investment Thesis
    1. Our Thesis
    2. Our Investment Criteria
  5. Our Investment Process
    1. Screening
    2. Meeting
    3. Learning
    4. Analysis
    5. Diligence
    6. Later: Making Follow-On Investments
  6. Working Together
    1. Getting Started Together
    2. Staying in Touch

Who We Are

Ramen Ventures is an angel fund in Toronto, Canada. We're run by:

Adam McNamara

Adam was the first VP Product at Shopify where he helped create the Product strategies it used to grow to a $17B company today.

Joshua Tessier

Josh was the first Head of Core Product Engineering at Shopify where he lead hundreds of engineers to build software that powers 700,000+ businesses and $10B/year in sales.

Ali Zahid

Ali founded Vanhawks, a Y Combinator-backed startup that made the world's first smart carbon fibre bike.

Why We Exist

Our Philosophy

“Technology not only moves the human race forward, it’s the only thing that ever has. Without technology, we’re just monkeys playing in the dirt.” - Naval Ravikant

We're rational optimists who believe that innovation makes the world a better place.

Our Mission

Our mission at Ramen Ventures is twofold:

To help founders create world-class companies like Shopify.

Shopify is the fastest SaaS company to 1-billion dollars in revenue. Anywhere. Ever.

When it acquired our startup, Shopify had about 60 employees, powered 20,000 businesses, and was worth about $100 million. Today, Shopify has more than 3,000 employees, powers 700,000 businesses, and is valued around $17 billion.

As Shopify's first VP Product and Head of Engineering respectively, Adam and Josh learned how to scale a small Canadian startup to a World-leading company. We want to share the important lessons we learned with as many founders as possible.

To help founders make the world a better place.

Our life's work is to improve the world. We don't angel invest to make money; we do it to help great founders solve problems that will improve the lives of billions of people.

How We Help Founders

We help founders in a few unique ways.

We're friends first and investors second.

Our number one priority is that you're healthy and happy. We know how hard being a founder is - we're founders, too. That's why we're friends first and investors second. You can always be honest with us because, no matter what happens, we believe you come first.

We're independent.

Unlike VCs, we invest our own money. We'll always act in your long term best interest because our interests are 100% aligned with yours, and no one else.

We help you grow into World-class founders.

We know first-hand what it takes to be the founder a World-leading startup. We can coach you on becoming one, too.

We help you create a World-class company.

We've hired and lead hundreds of developers, product managers, and UX researchers. We can coach you on how to create a great culture that attracts and grows great people.

We help you create World-class products.

We've built products that have scaled to billions of dollars in revenue. We can coach you on how to create massively successful products.


The best founders schedule regular coaching sessions with us. They also call, text, and email us all the time asking us for help.

We'll watch your investor updates for opportunities to help, but it's up to you to make the most of us.

Our Investment Thesis

Our Thesis

First, we look for a startup that's found a group of Users with a important, painful, and valuable Problem. We call this having an "Important Mission."

Next, we look for founders who are trying to create an ambitious solution that's first, best, or unique. We call this having a "Bold Vision."

Finally, we look for founders with the passion, guts, and ability to actually create it. We call this having the "Right Team".

Our Investment Criteria

  • Type: Combine three or more:
    • Market: Consumer, SMB
    • Problem: The future of Creation (audio, video, programming, etc), E-commerce, Education, Food, Financial Success/Empowerment, Health and Longevity, Transportation, Work.
    • Solution: Marketplace, Platform
    • Technologies: VR/AR, AI, Quantum Computing, and other Frontier Technologies
  • Location: Based in Canada, especially Toronto
  • Stage: "Pre-Seed"
    • Market: You've found a small niche of users in a market with the potential to be massive.
    • Problem: You've validated a problem that's important, painful, valuable, and underserved. (I.e you've found Problem/Market Fit)
    • Solution: You've validated a vision that's first, best, or unique. (I.e you've found Problem/Solution Fit)
    • Product: You're working with early adopters to create and validate your MVP. (I.e you haven't yet found Product/Market Fit)
  • Founding Team:
    • You're mission driven.
    • You have the ability to design, develop, and distribute your product (the 3 Ds).
  • Check Size: $100,000 CAD at Pre-Seed, and we exercise pro rata in later rounds.

Our Investment Process

Our investment process is designed to find companies that fit our thesis while being extremely founder-friendly - fast, honest, and transparent. It has five steps:


Screening

Step 1 is to quickly screen your startup.

Goal

To understand, at a high level, what your startup does and whether it fits our investment thesis.

Questions

We ask ourselves:

  1. Who are the founders?
  2. What user niche are they trying to solve a problem for?
  3. What problem are they solving for them?
  4. Are any of our portfolio companies solving a similar problem?
  5. Do they fit our investment thesis?
    • Type?
    • Location?
    • Stage?
    • Founding Team?

What We Need From You

  1. Your deck (if you have one)
  2. A link to your MVP

Next Steps

If your startup fits our thesis, continue to Meeting.

If not, we share our analysis and feedback.


Meeting

Step 2 is to meet your founding team, preferably face-to-face.

Goal

To deeply understand your target users, problem, existing solutions, unique value prop, mission, vision, and team.

Questions

We ask you:

User, Problem, and Mission
  • What users are you solving a problem for?
  • What problem are you solving for them?
  • How do you know it's important (to them)?
  • How do you know it's painful?
  • How do you know it's unsatisfied?
  • How do you know it's valuable to solve it?
  • What's your long-term mission? (eg: "To organize the world's information. - Google)
Unique Value Proposition, Solution, and Vision
  • How will you solve the user’s problem?
  • Why is this 10x better than the users' existing solutions?
  • How will you get in front of early adopters?
  • What is your unfair advantage? (ie: What makes you uniquely capable of doing this?)
  • What will your accumulating advantage be? (ie: What will make this stronger over time?)
  • What's your vision? What will the future look like in 10 years? (eg: "To provide access to the world’s information in one click." - Google)
Team
  • Who is on the team and what does each person do?
  • What is your history together?
  • Why work on this problem?
  • Is everyone full time?
  • How is equity split?
Progress
  • What is the timeline of the company until now?
  • What progress have you achieved in that time?
Your Fundraising
  • How much are you raising and on what terms?
  • How much have you raised before and on what terms?
  • What milestones do you need to achieve to successfully raise your next round?
  • How will you use these funds to get there?
  • Who’s committed?

What We Need From You

  1. To meet you :)

Next Steps

If we're excited, start our Learning.

If not, we share our feedback.


Learning

We've learned from you and now it's time for us to learn from others, too. We'll talk users in your target market to learn about them and their problems. We'll also talk to people who know you about the traits we look for in founders.

Goal

To develop a first-hand knowledge of your team, target market, and the problem you're solving.

Questions to Learn about Users

We'll chat with a few users in your target market and ask:

  1. What is the problem you're trying to solve?
  2. How important is this problem to you? Why?
  3. How have you solved this problem in the past?
  4. How painful was this? Why?
  5. In a perfect world, how would you want this problem solved?
  6. How would you feel if I told you that you could no longer use COMPANY?

Questions to Learn about Founders

We'll chat with a few people who've worked with you and ask:

  1. How do you know them?
  2. How would you describe them?
  3. How do they handle challenges and uncertainty?
  4. How determined and persistent are they compared others?
  5. What percentile are they in Getting Shit Done?
  6. How self-aware are they?
  7. How do they rank in terms of personal growth?
  8. Are they generally a positive or negative person?
  9. Would great people leave their job to work with them? Would you?

What We Need From You

  • Three (3) most recent monthly update emails
  • Intros to 2-3 early users
  • Evidence of a real user problem, like:
    • User interview transcripts
    • Retention metrics
    • LOIs

Next Steps

If users tell us that this problem is important, start Analysis.

If not, we share our learnings and feedback.


Analysis

Step 4 is where we decide whether your startup really fits our investment thesis.

Goal

To decide whether we should pursue an investment in your startup.

Questions

First we fill our our Investment Memo. It's full of questions we ask ourselves to understand if a startup fits our thesis.

We then turn our memo to an Investment Scorecard. Our scorecard helps us make data-driven decisions based on what we think are the most important elements of a startup.

What We Need From You

Nothing :)

Next Steps

If we want to invest, start Investment Diligence.

If not, we share our analysis.


Diligence

Step 5 is our investment due diligence. It's designed to be lightweight but rigorous enough to uncover any red flags.

Goal

To ensure that the company and funding are structured for success.

Questions

We ask ourselves:

Founders
  • Are the founders ethical?
  • Are the founders vesting?
Cap Table
  • Is the cap table lean and fair?
  • Is the cap table free of preferential terms? (liquidity preferences, ratchets, super-voting rights)
Fundraising
  • Are they using a standard fundraising agreement and terms?
  • Are all investors receiving equal treatment?
  • Do we have pro-rata rights?
  • Do we have information rights?
  • Are they raising enough to reach a logical next milestone?
  • If later than Pre-Seed, do they have a strong lead investor who will also lead their next round?
Working Together

What We Need From You

Access to a Data Room that includes your:

  1. Corporate Documents
    • Shareholder Agreement
    • Director Resolutions
    • Employee Stock Options Plan
    • Cap Table (on a fully diluted basis including all option, note, and warrant holders)
  2. Founder Documents
    • Founder Employment Agreements
    • Founder Vesting Agreements
  3. Past and Current Financing Documents
    • Subscription/Share Purchase Agreements
    • SAFEs, Kisses, and Convertible Notes
    • Right of First Refusal and Co-Sale Agreements
    • Side Letters
  4. Material Contracts
    • Major Supplier Agreements
    • Major Customer Agreements
    • Major Partnership Agreements

Next Steps

If there are no red flags, we invest and start helping.

If we can't, we tell you why.


Making Follow-On Investments

Goal

To decide whether or not to make additional investments in a portfolio company.

Questions

We ask ourselves:

Is this still the future?

  • Do we believe in their current mission?
  • Do we believe in their current vision?

Are these founders creating it?

  • What is their one metric that matters?
  • What is its month-over-month growth?
  • Is market pull creating exponential growth?
  • Are these founders executing in the top 5%?
  • Do they sead regular, clear, and concise monthly updates?
  • Are they raising an up-round led by one or more tier-1 VCs?

What We Need From You

Access to a Data Room that includes your:

  1. Past and Current Financing Documents
    • Subscription/Share Purchase Agreements
    • SAFEs, Kisses, and Convertible Notes
    • Right of First Refusal and Co-Sale Agreements
    • Side Letters
  2. Key Metrics
    • Your one metric that matters

Next Steps

If yes, we send you more money.

If no, we continue helping as we always have.


Working Together

Our mission is to help you be successful, and to do that, we only ask you for two things:

Getting Started Together

We ask founders to spend some time Getting Started Together with us after we invest.

Staying In Touch

We ask you to stay in touch by:

  1. Providing us with concise and regular monthly updates.
  2. Keeping an open and honest communication channel open. Some things shouldn't wait until a monthly update, so reach out whenever you want to talk.

Please don't only share good news; we'll be by your side on the best days and on the worst days.

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