Learning from the 20VC interviews, Round 1
Highlights from this post:
- initial investments will always come from current network
- falling costs naturally let me think about higher order problem-solving
- need a portfolio strategy for LPs as well
Breeze Clarkson from Sapphire Ventures
- they invest in US, Europe, & Israel
- act as LP in Series A funds
They’ve noticed a few interesting trends:
- drop in new funds
- 31 in 2016 from 90 in 2015 and 100+ in 2014
- more $500+ Million funds
- fewer $100 Million and lower funds
- a USV blog called The Hard Raise (http://avc.com/2016/10/the-hard-raise/)
Breeze just invested in Jason Lemkin’s SaaStr fund who built a community from a handful of folks to over 10,000 folks coming to his conference
- his community guarantees him deal flow
- this is a theme: how to secure proprietary deals over the long term?
Nav Athwal from RealtyShares
- Connecting investors to folks looking for capital for real estate projects
- Started with supply of deals based on his real estate experience
- That’s how you seed a marketplace
Some of his non-traditional investor thoughts
- ultimate value of solid personal relationships
- goal to create something of value for the investors
- balance compliance with scale
- move fast without breaking things!
- any employee can grow with the company, it’s their job to lose
- balance IQ & EQ In team
- importance of being an operator before being an investor
Origin story
- he has benefited from low yield environment
- need to have value for the early folks on the buy side
- that supports the better experience for the Critical early buyers
- deal acquisition grew organically afterward
Big Q: who are investors who are aligned with my mission and vision already?
Advisors are there to help with execution because they have scar tissue
- loves Fred Wilson’s blog but also Mark Suster (https://bothsidesofthetable.com/)
James Cham from Bloomberg Beta
- expert on Machine Learning
Why become a VC?
- want returns or…
- read too much science fiction
How orgs are thinking about Machine Learning
- how it ties into the future of work
- no one really knows how to apply ML
- falling costs = worrying about higher level problems
- immediate challenge is finding good opportunities to apply ML
- building ML is very different because it’s hard to know how to QA a model
- how do you share insights from a ML model without sharing the actual data?
Future of work
- everyone is a knowledge worker
- what tools do the best k-workers use
- what would it look like to have [dev tool] in a [analogous environment]
Random thoughts
- seed stage investing means that you get to see things 2–4 years before it’s interesting to the rest of the world
- entrepreneurship is the act of creation
- investing is putting your faith in someone
- people are constantly changing as a result of adopting transformative tech
- Rob May (http://coconutheadsets.com/) & Jack Clark (http://twitter.us13.list-manage.com/subscribe?u=67bd06787e84d73db24fb0aa5&id=6c9d98ff2c) write AI newsletters
- Tyler Cowan’s blog (http://marginalrevolution.com/)
Chad Byers from Susa Ventures
Stumbled into angel investing with his friends after having one good exit
- Now shifted to VC
- he needed more consistency
- but first to had to develop an investment thesis
Start with angel investing to build a track record and demonstrate value
- bring in some angel investments to the portfolio once the fund is established
Just finished raising fund 2
- Fund 1 was really hard
- treated as a startup
- the product is the team
- targeted high net worth individuals and family offices
- invested as they raised
- pitched institutional LPs even though they knew it was going to be a no
- stay in touch for fund 2 once they can prove “product-market fit”
- anchored with $10M
Big challenges: new fund and new (distributed) team
The portfolio strategy he uses for his LPs
1/3 late stage VCs
- insights into A&B raises
1/3 private equity managers
- can sell into or even be bought
1/3 well-known operators
- mentors to the founders
4 things for the fund
1) thesis-driven (build a moat)
2) bandwidth (need free time and 6–8 companies per partner)
3) stage (product is out and has customers)
4) helpful (word-of-mouth from founders)
$1 to invest and $1 for follow-on for fund 1
- shifting to $1:$2 for fund 2
End state is $125M w/ 5–7 GPs
Factors that will change as they scale:
- check size
- % leading deal
- % share of company
Creative decision-making with more GPs
Coding VC: http://codingvc.com/
Above the Crowd: http://abovethecrowd.com/
