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Venture Capital vs Bootstrapping: Valentina Zakirova Of SDVentures On How To Determine If Fundraising Or Bootstrapping Is The Right Choice For Your Startup

Once you’ve seen successful founders at the beginning of their growth path, you’ll know the look, you’ll remember it, and you won’t mistake it for anything else.

Founders are often faced with the nagging question of whether Fundraising or Bootstrapping is the best choice for them. What is better, having access to capital or maintaining full control over your vision and profits? What is preferred, to have the seasoned oversight of an experienced investor, or to plow forward with a disruptive and pioneering ‘can do’ attitude? Of course, every situation is different, but what standards can be used to help a founder decide?

As a part of this series called “Venture Capital vs. Bootstrapping: How To Determine If Fundraising Or Bootstrapping Is The Right Choice For Your Startup”, I had the pleasure of interviewing Valentina Zakirova, Investment Director at SDVentures, Forbes 30 under 30 nominee.

Valentina holds a Diploma of French University Studies from Jean-Moulin Lyon University, a Master’s in Economics and Finance from the Higher School of Economics, a Master’s in Economics and Finance from the London School of Economics and Political Science, and a VC Unlocked Diploma from UC Berkeley. After completing her studies, Valentina worked as a Senior Investment Analyst at Waarde Capital, where she analyzed 100+ VC deals and 10+ LBO deals in Eastern Europe and executed the deal with Gauzy, the world leader in smart glass technologies. Since 2018, Valentina has worked as an Investment Director at SDVentures. Among her responsibilities is the direct supervision and management of 10+ direct VC investments, a venture fund-of-funds, and an internal incubator for online dating products. At SDVentures, Valentina has initialized, analyzed, delivered to IC, and executed deals with Flo, Patreon, Woebot, Grabr, AFG, NEA, Khosla Ventures, DCM, Bling VC, Bain, and Target Global. She also managed 25 venture investments including top-tier VC Funds in the US, EU, and Israel. Valentina is a Mentor at Seedstars, the world’s first seed stage venture capital fund dedicated to global emerging and frontier markets. She has authored an academic article in the Russian Journal of Economics dedicated to the calendar anomalies in the Russian stock market. She was a speaker at Woman Who Matters Conference and has been an investment expert twice at the Russian Business Channel TV Show. Valentina’s main ambition is to create her own business or venture fund. Her favorite podcast is Bloomberg Technology.

Thank you so much for doing this with us! Before we dive in, our readers would love to learn a bit more about you. Can you tell us a story about what brought you to this specific career path?

Thank you for having me. A career like this was something that I wanted from the time I was at the university. Even at that time, I was communicating with startup founders and felt their energy. Having once faced a founder with an enormous desire to change the world, I couldn’t imagine any other career path. I always wanted to have a job where I would be able to build various relationships and communicate with smart people. I think I was also set on this career path by my education: I had been living in many countries and studied several languages even in high school, and communicated a lot with people of many different nationalities. This, I believe, was the secret key to unlocking a VC career.

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or takeaway did you learn from that?

Actually that is very funny, but I had done my first angel investments during my first year of work. I was so convinced of the company’s success that I did my very first personal VC investment along with the fund. And although it wasn’t such a big mistake, I would now take a different approach. I would invest in a portfolio, not in a specific product/project. I realize now that VC business is a portfolio game, so you should be very accurate in building the strategy with diversification elements in your VC track. Do not do emotional one-time investments.

You are a successful business leader. Which three character traits do you think were most instrumental to your success? Can you please share a story or example for each?

1. First — I like deep analysis. I’m usually the one poking around and asking unusual questions of every founder in our pipeline. I’m curious what would be if.

For example, I can ask: “What would you do if you had $1bn? How would you spend it?” I can evaluate the breadth of people’s thinking by answers to those questions and see how far they can go.

2. Second — I love communications, I love in-person communications, because I always learn from other people. And, for example, during the COVID pandemic, I was the person who couldn’t stand the online format of the new world, since I think we are losing a lot of human magic when we are just having Zoom calls. I insist on person-to-person meetings and relationships and that is how I build VC business.

3. Third one would be personal, but I think it is relevant. I do love extreme sports. They teach me to take high risks of venture business and develop the passion for what I’m doing. And, of course, I meet a lot of like-minded people when I surf, skydive, kite, dive, etc.

Are you able to identify a “tipping point” in your career when you started to see success? Did you start doing anything different? Are there takeaways or lessons that others can learn from that?

Sure, I was very proud when one of my investments became a unicorn. That was Patreon. We had originally invested at a very early stage, and at the moment when they raised another round at $1bn+ valuation I felt that this was a success. It was amazing, to tell you the truth. Every VC investor dreams about unicorns, but I managed to have one in my portfolio at the age of 27. I think others may learn that everything is possible regardless of your age, gender, or nationality.

None of us are able to achieve success without some help along the way. Is there a particular person or mentor to whom you are grateful who helped get you to where you are? Can you share a story about that?

Sure, my mentor is Dmitry Volkov. I’m super excited to work with him as I can learn from any of his actions or words. Dmitry’s contribution to my success is not only that he has supported every deal we have in the portfolio right now, but also that he supported my study at the UC at Berkeley, as well as the networking parties and brainstorming sessions. For me, Dmitry is very inspirational as he is a successful and established entrepreneur with an enormous background.

You have been blessed with great success in a career path that many have attempted, but eventually gave up on. Do you have any words of advice for others who may want to embark on this career path but are afraid of the prospect of failure?

VC is a relationship business, so I would advise anyone who wants to join this career path to start building those relations as early as possible. If you have connections in the VC or entrepreneurial world, you don’t have to fear that something might go wrong as this community is very helpful and open for new ideas and people.

Ok, thank you for that. Let’s now jump to the main part of our discussion. Can you share a story with us about your most successful Angel or VC investment? Or an investment that you are most proud of? What was its lesson?

Apart from Patreon which I have mentioned earlier, I am proud to have invested in Flo. This is a mobile application for women’s health. I remember a very funny investment committee regarding this investment, when at the committee there were 10 men and only one woman, me. And we were discussing women’s health’s issues, problems, and market opportunities. And apart from the professional interest, I’m using Flo as a user and I was having an emotional link to this app. And when they became a business with an $800M valuation, I knew that this success was partially due to my work. And this was also an amazing feeling. The main lesson here is not only to analyze metrics and numbers of the app, but to feel the energy of the founders. Once you’ve seen successful founders at the beginning of their growth path, you’ll know the look, you’ll remember it, and you won’t mistake it for anything else.

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

Yes, unfortunately I have such an experience as well. One of our portfolio companies had a downround and this was very painful. The company was connected to travel and after the pandemic had very low chances of fundraising. However, they managed to pivot in a very short period of time and now they are doing great. I consider this a failure because the value of our share had dropped dramatically, but it was also a lesson for me, seeing the founders be so insistent and hopeful of their product even when its success was rather improbable.

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

Yes, unfortunately there are a lot of them. I have a company that we had a possibility to invest in at a valuation of $100M, and then at a valuation of $500M, and now they are worth more than $2bn. I regret not doing it a lot. We decided against investing because we saw negative media coverage of this product, but it was actually very beneficial for the company as they got a lot of attention from users. After this experience, I realized that even negative PR can be good for business.

Super. Here is the main question of this interview. Let’s imagine that a young founder comes to you and asks your advice about whether Venture Capital or Bootstrapping is best for them? What would you advise them? Can you kindly share “5 things a founder should look at to determine if fundraising or bootstrapping is the right choice”? If you can, please share a story or example for each.

Well, before making this choice, we should quickly discuss the benefits and drawbacks of each option. Any founder should always remember that VC capital is the most expensive capital that they can get. By going to VCs, a founder might dilute their stake in the business significantly and this may cause difficulties for future fundraising. For example, I had one company in our portfolio that raised capital too early and they were so diluted, that at Series A, the founder’s stake in the company was less than 1%. This is a true story. An alternative for them could be bootstrapping for as long as possible and close to series A to be in a privileged position to the investors. In analyzing traction, investors usually choose the startups with bootstrapped tractions. However we shouldn’t ignore the fact that seed round and VC investments have a very positive PR effect that attracts attention of employees and partners.

So my general advice would be to bootstrap as long as you can.

But coming back to your question:

  1. The founder should analyze their traction.
  2. The founder should analyze their stake in the business and potential stake that would come after a possible round.
  3. The founder should figure out if they need new employees and partners
  4. The founder should analyze the current market situation: what are the multiples right now? Are macroeconomic conditions favorable for current fundraising?
  5. The founder should calculate how long they can bootstrap without external investments. What is the runway and how much capital can they invest themselves?

and the final decision would be the compromise between those answers.

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. :-)

Honestly, I would love to start a movement of women speaking openly and publicly about their problems. Flo is one of my fem tech investments, however I’m convinced that there should be many more investment opportunities in Fem Tech Space. I think there is a very large potential if we openly and honestly discuss all our fears and concerns about giving birth to a child: pregnancy planning, gestation, lactation, etc. I think the market is enormous here and I expect more successful businesses to appear in this space.

We are very blessed that a lot of amazing founders and social impact organizations read this column. Is there a person in the world with whom you’d like to have a private breakfast or lunch, and why? He or she might just see this. :-)

I would love to have a private lunch with Whitney Wolfe (founder of Bumble). I’m very inspired by her story of becoming the world’s youngest self-made woman. For me, the strongest moment was when I saw her around the age of 30, holding her baby and launching an IPO.

For me this is a mind-changing picture, showing that a woman in her 30s can achieve this success without giving up her personal life. Huge admiration for her! I would love to know her secret!

How can our readers further follow your work online?

Yes, sure my twitter is @valentinka779

Thank you so much for this. This was very inspirational, and we wish you only continued success and good health!

Thank you for the interesting conversation!

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