Justin Jackson: 5 Things I Need To See Before Making A VC Investment

An Interview With Orlando Zayas

A clear understanding of what other funding sources the startup must tap into to make sure they can keep growing and raising more funds.

As part of our series about “5 Things I Need To See Before Making A VC Investment” I had the pleasure of interviewing Justin Jackson.

Justin Jackson serves as a Partner at Pegasus Tech Ventures, focusing on growth stage investments in the U.S. and Asia (excluding Japan). In addition, he works with corporate limited partners and supports the business development team with international expansion. Justin also serves as a Board Member at the University of San Diego Knauss School of Business.

Justin started his career as an associate at a global manufacturing company, and built expertise in the medical, automotive, and consumer industries. Beyond this, he held positions at Torrey Pines Bank, the Los Angeles Angels, and Monster Energy.

Justin earned a B.B.A. degree in Finance from the University of San Diego, with additional studies at Fudan University and Peking University in China.

Thank you so much for joining us in this interview series! Before we dig in, our readers would like to get to know you a bit. Can you please share with us the “backstory” behind what brought you to this specific career path?

During college, I was passionate about learning Mandarin and thus decided to study abroad in China. I worked hard to prepare and then immersed myself for a year at two of the country’s top schools. After school, I joined a family-owned business with operations in both China and the U.S. After a few phenomenal years, I decided to find a finance-focused role. This is what lead me to Pegasus Tech Ventures, a leading venture capital firm in Silicon Valley. Since I enjoy learning about cutting-edge technology trends, the venture capital industry is a great fit.

Is there a particular book that made a significant impact on you? Can you share a story or explain why it resonated with you so much?

One book that recently impacted me is Ray Dalio’s Principles for Dealing with the Changing World Order: Why Nations Succeed and Fail. The well-regarded author is founder and co-chairman of Bridgewater Associates, which, over the last forty years, has become the largest and best performing hedge fund in the world. I’ve always appreciated the fields of history and macroeconomics. This book gives a data-driven perspective on where the world is today and where it is going.

Do you have a favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life or your work?

Never say never because limits, like fears, are often just an illusion — Michael Jordan.

We’re all faced by obstacles and find ourselves in challenging situations. The lesson is that the best thing we can do is to avoid fear. We’re only limited by the boundaries that we set for ourselves. This is critical for entrepreneurs and anyone who wants to succeed in business. We can accomplish much more than we think we can — so don’t hold yourself back.

How do you define “Leadership”? Can you explain what you mean or give an example?

When I think of leadership, I remember to lead from the front and from the back, depending on what is needed. Elon Musk — founder of SpaceX and Tesla — will work on the front lines and sleep on the factory floor if he needs to. Great leaders must demonstrate an inspiring vision, and they need to remember that they are not too good for any task that needs to be done for the business to succeed.

How have you used your success to bring goodness to the world?

While in college at the University of San Diego, I started thinking about how we can connect the university with the community and local businesses. Our mission was to help high school students learn entrepreneurial skills and learn how to package an idea into a business presentation. We successfully grew the program to over 33 high schools throughout San Diego County. Even today, I’m keen to help educate people and provide access to opportunities.

Ok, thank you for that. Let’s now jump to the main part of our discussion. The United States is currently facing a very important self-reckoning about race, diversity, equality and inclusion. This is of course a huge topic. But briefly, can you share a few things that need to be done on a broader societal level to expand VC opportunities for women, minorities, and people of color?

One key factor is access to education and tools. We need to offer more programs that educate and enable potential entrepreneurs. There often are not enough low-barrier-to-entry ways for people to learn how to turn their passions into robust business ideas. I believe there is ample room for more types of incubators and accelerators.

Can you share a story with us about your most successful Angel or VC investment? What was its lesson?

Yes, Mobile Premier League, our first Pegasus Tech Ventures investment in India. We invested early in the pandemic and the company has continued to innovate and grow, multiplying our investment. The lesson we learned is to be open-minded about new sectors in emerging markets.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

We invested in a Fintech company in an emerging market, but unfortunately the startup didn’t do well in part due to the COVID-19 pandemic. This was also a new sector for us and we misjudged the quality of the leadership team. The lesson here is to talk to more references and customers.

Can you share a story with us about a problem that one of your portfolio companies encountered and how you helped to correct the problem? We’d love to hear the details and what its lesson was.

Yes, the Indonesian startup HijUp — an e-commerce platform providing high fashion to Muslim women all over the world — comes to mind. The company struggled to understand where their business model was going and how to get there. Pegasus stepped in with another VC to give them the runway and strategic advice. This helped HijUp streamline its operations and reduce its burn rate, ultimately surviving the COVID-19 pandemic. At times, reducing a startup’s burn rate is the right strategy if they need more time to understand their go-to-market strategy.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn from that story?

We explored investing into a U.S.-based semiconductor company, a potential competitor to Nvidia. It was a relatively new industry for us and we decided not to invest, but the startup has continued to perform very well.

Super. Here is the main question of this interview. What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.

• A detailed go-to-market plan and business strategy are critical. Even if they are not perfect, these demonstrate an understanding of the customer and the marketplace.
• A solid plan of how to use cash and how long a startup’s cash balance will last. Spending cash too quickly is a common reason for failure.
• A strong product roadmap: How the company will develop its products and iterate on them. What is the company’s long-term vision and how will the product evolve?
• The founders’ deep understanding of their market and their competition is critical for success. Who is the customer? How does the product fit into their day? It’s key to understand these from a micro and macro standpoint.
• A clear understanding of what other funding sources the startup must tap into to make sure they can keep growing and raising more funds.

You are a person of enormous influence. If you could inspire a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. :-)

I believe that access to education is critical. I’d like to inspire a movement that enables everyday people to learn what they are passionate about. And to offer accessible platforms so they can explore those ideas in a systematic method that can enable monetization.

We are very blessed that some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. :-)

Elon Musk of SpaceX and Tesla would be fascinating to meet. I’d love to learn his perspective on how we can better solve industry and societal problems, how he attracts and retains talent, and how he inspires teams to work together successfully.

This was really meaningful! Thank you so much for your time.