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Recap— 10/10 VC Series

BIOS: Nucleus of Life Science Innovation 🚀

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Alix Ventures: Supporting Early Stage Life Science Startups Engineering Biology to Drive Radical Advances in Human Health

Calling All Innovators Click to Reach Out 🚀

Throughout this series, we are honored to have featured investors at:

8VC, Obvious Ventures, Kleiner Perkins, Lux Capital, SV Angel, Artis Ventures, KdT Ventures, Bee Partners, Global Founders Capital, Cantos Ventures, Liquid 2 Ventures, RRE Ventures, 11.2 Capital, Healthy Ventures, Upfront Ventures, Maverick Ventures, Blue Bear Ventures, B Capital Group, 7Wire Ventures, Undeterred Capital, Craft Ventures, Prefix Capital, Civilization Ventures, Arkitekt Ventures, Inovia Capital, & Alix Ventures.

A huge thank you for sharing your experiences & wisdom with us 😊

In this final post, we recap the series, covering topics including investment criteria, portfolio support, industry trends, and general advice. There was a wealth of knowledge shared, not all of which fit in this summary.

1

“What are the top 3 common traits of founders in your portfolio?”

“Passion, compassion, and grit. Passion is the fuel to start the fire, compassion is the oxygen that keeps it burning, and grit finds more wood when the flame dies down.”

Cain McClary — General Partner @ KdT Ventures

“Stubbornness certainly comes to mind, but also vision. Many of our founders see the potential future so clearly that they become frustrated by anyone who doesn’t. But defensiveness scares me. It belies insecurity but it’s also inefficient. The most enlightened founders are able to reconcile with the present; they incept others toward their vision rather than fight them.”

Ian Rountree — General Partner @ Cantos Ventures

Wave-Generator — the courage to lead the first charge and set in motion the groundswell needed to start a movement.

Eye of the Storm — the ability to find stability and direction in an unstable and unpredictable world.

Always be Chasing — the rocket fuel that keeps on burning and the fire to weather on despite circumstance.”

Chas Pulido — General Partner @ Alix Ventures

2

“How does your investment criteria change in a recessionary environment?”

“In general, my investment criteria doesn’t change materially. That said, the current COVID-19 crisis has exposed glaring weaknesses across our healthcare system and has acted as a forcing function altering our perception of how care can be delivered and financed. Identifying the marriage between those acute vulnerabilities as well as new institutional behaviors within an evolving regulatory environment that is favorable to new business models and enduring innovation is where I am currently focused.”

Sean Doolan — Partner @ Global Founders Capital

“I think overall we’re looking for the same things on a criteria standpoint, but I think we can invest at similar valuations for companies that are slightly further along compared to before.”

Michael Ma — General Partner @ Liquid 2 Ventures

“I don’t think that early stage VCs are paid to time the market. We (ideally) are looking to invest in enduring companies that catalyze step-function change in an industry over a long period of time. Those companies should be valuable no matter what economic environment we are in. That said, I am putting extra effort on validating that the core utility of the company is a must-have to their customers and that there will be demand in a wide variety of economic conditions. I am also trying to be more conservative on valuation given that we don’t yet know what “normal” valuations across venture financing rounds will be in a post-COVID world.”

Nan Li — Managing Director @ Obvious Ventures

3

“How has your worldview evolved since you first started your VC career?”

“A difference in degree rather than kind, but I am more convinced of the inefficiency and inefficacy of our health system stemming from bad incentives and monopolistic behavior. And I am more convinced of the opportunity for engineers and medical professionals to team up and reinvent it, building new tech-enabled services and competing directly with incumbents.”

Sebastian Caliri — Principal @ 8VC

“I’ve certainly gotten a lot pickier. Early-on, nearly every startup seemed like a good idea to me. Eight years in I’ve been wrong enough that I now hit a lot of dead ends and think, “No, that’s unlikely to work.” I worry about my experience producing false negatives though, so I still try to keep an open mind. I’ve also gotten better at articulating what I used to attribute to intuition. Turns out there’s a lot of prior art around what traps to avoid and what makes a sustainably attractive business.”

Ian Rountree — General Partner @ Cantos Ventures

“I’ve learned to balance intuition with data — we look at frontier tech across the board, so my instinct alone as a generalist won’t always be sufficient to evaluate an opportunity. So — basically I’ve learned how to lean on the right people at the right moments to supercharge my efforts. Case in point, I didn’t know much about robotics when I set out to do a market sizing and landscape. That work has formed the foundation of our thesis, and I collaborated with a Bee founder to most impactfully perform primary and secondary research to then draw conclusions.”

Kira Noodleman — Principal @ Bee Partners

4

“Outside of operating experience & higher education, what is one seemingly random thing you look for in a founder’s background?”

“Sales and storytelling, as this is truly one of the biggest components of being a founder. If a founder cannot articulate the compelling story behind their startup and the value they bring to the current problem in their industry, it is going to be a long road from the seed stage, where we usually invest. We always look for founders that intimately know their industry and that can clearly convey their value proposition, which usually comes down to a combination of sales and storytelling.”

Jacob Smith — Principal @ 11.2 Capital

“I look for how intentional their background has been — is this a person who has taken agency over their career and made things happen, or instead benefited from rising tides and just hung on?

How well do they hire? What’s their hiring/firing process, how have they evolved over time, what are their philosophies on it, etc. Early stage founders basically have two jobs: raise money and hire well. We can tell how well they raise by how our interactions with them go. This helps us understand the latter skill.

How they work with their employees. What are the company dynamics like, how collaborative of an environment is it, and how freely and constructively are both ideas and feedback given and received?”

Anya Schiess — General Partner @ Healthy Ventures

5

“Outside of investing, what is one seemingly random activity that helps make you a better VC?”

“I constantly search out opportunities to learn new things in many different subject areas, whether it be through education, travel, reading, or mentoring. Intellectual curiosity is critical to being a good VC as it’s not a formulaic endeavor. Strategic agility and creativity are necessary to address the constantly changing nature of building companies and solving big problems. Any activity that can increase my ability to approach issues with new perspectives has served me well over the years.”

Robert Garber — Partner @ 7Wire Ventures

“Running is my version of meditation. It’s an opportunity for me to clear my head and return to a dilemma with fresh ideas. VC is fast-paced and decisions get made quickly; running helps me approach each day with an open mind.”

Elena Painter — Principal @ Craft Ventures

“Being a father. The world is full of irrational, unpredictable people and being a father provides plenty (perhaps too much) experience in dealing with those people and circumstances.”

Mack Healy — Partner @ KdT Ventures

6

“What has been the most helpful piece of advice you received throughout your career as a venture capitalist?”

“Do your own research and build your own conviction. Depending on conventional wisdom or trendy insights doesn’t set you apart, and especially when times are tough and wisdom of the crowd falters, you need deeper convictions to hold on and/or be decisive in shifting mental models.”

Kevin Zhang — Partner @ Upfront Ventures

“Someone I really respect once gave me the advice that one of the most important things you can do is be willing to have the really hard conversations with people and do it compassionately (it doesn’t just apply to working in VC). A lot of people shy away from those hard conversations, but if you can have those discussions with people you earn their respect and trust. They’ll know that they know exactly where they stand with you because you’ll tell them. When you do it compassionately you’re also showing them that you care enough to have the tough conversation.”

Adam Seabrook — Principal @ B Capital Group

7

“As an early stage investor, we often pick companies whose directions change. Can you talk about pivoting vs. staying the course?”

“This is the toughest part of early stage investing. False positives and false negatives are rampant; the former being the most deadly, especially in deep tech and enterprise. In general, always try to have an alternative, low overhead hedge for your current go-to-market strategy and build relationships with veterans not in the day-to-day (advisors, respected colleagues not employed at the company or on the board, etc.), who will objectively review “pivot data” alongside you and provide a trusted recommendation.”

Byron Alsberg — Co-Founder & Partner @ Prefix Capital

“I don’t call it “pivoting”, I call it “adapting”. It’s a company’s job to adapt as a response to market changes, consumer traction, macroeconomic conditions and a myriad other factors. There is merit to having a vision and executing on that vision, but adaptation along the way is key.”

Enke Bashllari — Managing Director @ Arkitekt Ventures

“At early stages, running a startup is a mandate for founders to run a series of experiments for 12–18 months to validate or invalidate a set of agreed-upon assumptions towards finding product-market fit. A pivot happens when one core assumption is invalidated leading to fundamentally rethinking what the business is all about. I don’t have a pre-defined opinion on the virtue of staying the course or pivoting out of context. All that matters to me is the velocity at which founders run those experiments and find those answers.”

Antoine Nivard — Principal @ Inovia Capital

8

“As a founder building something new in the world, you are often in need of knowledge you don’t possess. How would you recommend founders go about seeking mentorship?”

“Optimize for a mentor less on their potential area of expertise, but rather optimize for a mentor willing to give you unbridled time and who’s had demonstrative success. Good mentorship and business strategy translates across nearly all verticals.”

Phil Grayeski — Principal @ KdT Ventures

“A common theme amongst top founders is their ability to identify experts and repeatedly get their help/advice. Ryan Holiday wrote a fantastic piece about this trait which he called being a professional son. That article sums up the majority of my advice.”

Francisco Gimenez — Partner @ 8VC

“There’s an incredible but necessary balancing act between intense humility and self awareness to know where your weak spots are: “where do I need help”, and self assured confidence to seek assistance from the best people in the world “hey expert, here’s what I’m working on, pls help me”.”

Zavain Dar — Partner @ Lux Capital

9

“How does your evaluation process change when it comes to backing first-time vs. repeat founders?”

“A first time founder has the advantage of outsider perspective, insane energy, and naive optimism. A repeat founder has the advantage of domain knowledge, deep networks, and execution chops. In evaluating a startup, I weigh whether these pros (and unlisted cons) are necessary/sufficient to the success of that company.”

Francisco Gimenez — Partner @ 8VC

“There are definitely lessons learned with company building that are only learned through experience. That being said, at the root, no matter if you are a first time or second time founder, the essence of a good founder is the same.”

Beth Turner — General Partner @ SV Angel

“Quite frankly, it doesn’t. Repeat founders tend to be more self-aware and operationally savvy but sometimes lack the naivety required to truly rethink an industry with a beginner’s mind. The former can be learned, the latter not as easily so.”

Antoine Nivard — Principal @ Inovia Capital

10

“How do you advise founders in your portfolio to prepare ahead of time for future fundraises?”

“Generally, there are two trains of thought on a follow-on fundraise: 1) run a hypercompetitive bidding process under a tight deadline, trying to give as much term leverage as possible to the founders or 2) run a courting process so founders can get to know prospective follow-on investors and vice-versa, well in advance of a formal fundraise. Strategy #1 tends to be valuation/term optimal and can reduce the risk of founders spending time training a VC to train a future competitor. Strategy #2 tends to be a more organic process that can help ensure there is a fit between the founders and their next board member and can provide adequate enough time for a nontraditional startup to educate the capital market and successfully complete the raise. We often advise strategy #2, but sometimes strategy #1 is a better fit.”

Byron Alsberg — Co-Founder & Partner @ Prefix Capital

“Choose your investors wisely. Early investors are more than capital — they are your partners for engineering the next raise. Choose someone with credibility.”

Shahram Seyedin-Noor — Founder & General Partner @ Civilization Ventures

“My biggest piece of advice to founders prior to starting a fundraise is to be organized. It’s key for founders to do their research on which firms and partners are best suited to help build their vision, who are the right people in their networks to reach them, and what aspects of their process they can use to push investors to the next step of due diligence. Once founders formally kick off a raise, it’s a sprint to close while momentum is high, so the more prepared they are ahead of it, the smoother and quicker it will go for them.”

Ameena El-Bibany — Principal @ Artis Ventures

BIOS 10/10 VC series brings together perspectives across a variety of early-stage VC funds to help readers gain key insights into the eyes of investors. In our belief that perspectives should be well-rounded and not monopolistic, we chose to feature a variety of investors rather than to dive deep with just 1 or 2 individuals. We have a lot to learn from each other and hope that by sharing a multitude of unique viewpoints, we may all come to our own insights faster 🚀

📣 If you enjoyed this post please clap 👏 & comment 💬 to let us know

Alix Ventures, by way of BIOS Community, is providing this content for general information purposes only. Reference to any specific product or entity does not constitute an endorsement or recommendation by Alix Ventures, BIOS Community, or its affiliates. The views expressed by guests are their own and their appearance on the program does not imply an endorsement of them or any entity they represent. Views and opinions expressed by Alix Ventures employees are those of the employees and do not necessarily reflect the view of Alix Ventures, BIOS Community, affiliates, and content sponsors.

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