Dec 23, 2015 · 27m · 20vc
20 VC: Are Unicorns Necessary To Make Big Returns and The Series A Crunch with Sumeet Shah @ Brand Foundry Ventures
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In this episode of The 20 Minute VC, host Harry Stebbings interviews Sumeet Shah of Brand Foundry Ventures about early-stage consumer investing, navigating the Series A crunch, and building sustainable revenue-generating businesses. Shah shares insights on startup team dynamics, venture capital responsibilities, and why focusing on consistent 'doubles and triples' often yields superior returns compared to chasing unicorns.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Harry holds 19.2% of the talking time here. How this is scored →
Harry as informed peer 3.0 Guest teaching 2.4 Guest disagreement 1.3 Harry pushing back 1.3
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 6:52 Emphatic rejection of deal flow disruption
Sumeet flatly rejects the host's suggestion that VCs are losing deal flow to crowdfunding platforms with an immediate 'Absolutely not,' reframing them as operational partners.
Hardest push from Harry ▶ 12:27 Challenging seed fund math with Eileen Lee's thesisHarry directly challenges Sumeet's investment philosophy by invoking Eileen Lee's argument that seed funds must hit unicorn valuations to deliver adequate returns.
Biggest teaching moment ▶ 25:15 Educating on FDA ingredient disclosure gapsSumeet educates the host on regulatory oversights in women's health, explaining that the FDA does not require tampon manufacturers to disclose chemical ingredients.
Harry holds his own ▶ 4:53 Citing Sarah Lacey's Series A crunch thesisHarry showcases informed preparation by citing tech journalist Sarah Lacey's specific thesis regarding the widening gap between seed rounds and Series A follow-ons.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Sumeet Shah's Background and Path to Venture Capital | 1 | 1 | 0 | 0 | Harry asks a standard conversational opening question about Sumeet's background. Sumeet delivers an uninterrupted monologue detailing his path from Columbia to private equity and into venture capital. | |
| Early-Stage Investing and Perspectives on the Series A Crunch | 4 | 3 | 2 | 2 | Harry references tech journalist Sarah Lacey's analysis on the Series A crunch to test Sumeet's market outlook. Sumeet politely disagrees with Lacey's broad premise, clarifying that the crunch impacts tech/software much more than consumer product startups. | |
| Crowdfunding Platforms and Due Diligence Process | 3 | 3 | 3 | 1 | Sumeet immediately rejects Harry's premise that deal flow is being lost to crowdfunding platforms with an emphatic 'Absolutely not.' He educates Harry on how Brand Foundry partners with platforms like Indiegogo and Kickstarter rather than competing with them. | |
| Essential Startup Team Dynamics and Advice for Early Days | 2 | 2 | 0 | 0 | Harry asks straightforward advisory questions regarding early team formation and due diligence timelines. Sumeet collaboratively outlines the three key early startup roles and diligence mechanics. | |
| Rethinking Unicorn Expectations: Focus on Sustainable Doubles and Triples | 5 | 4 | 3 | 3 | Harry presses Sumeet by bringing up Cowboy Ventures founder Eileen Lee's landmark argument that seed returns require unicorns. Sumeet counters by arguing that consumer product investing generates excellent returns through sustainable doubles and triples rather than unicorn chasing. | |
| Maximizing Investor Value and VC Duty to Founders | 3 | 2 | 2 | 2 | Harry asks about investor value add and East Coast versus West Coast ecosystem dynamics. Sumeet passionately criticizes Silicon Valley's gender disparity while Harry clarifies the driver behind backing female founders. | |
| Quickfire Round: Industry Reads, Sphero, Boulder Tech, and Biz Stone's Book | 4 | 1 | 0 | 1 | Harry demonstrates good industry context during a rapid-fire sequence, referencing Brad Feld and Net-A-Porter founder Natalie Massenet. Sumeet provides quick, harmonious answers without friction. | |
| Recent Investment Spotlight: Lola's Sustainable Personal Care Brand | 2 | 3 | 0 | 1 | Sumeet introduces investment Lola, enlightening Harry about the lack of FDA mandatory ingredient disclosure in feminine hygiene products. Harry keeps the mood light with banter about celebrity co-investors. |
Statements from this episode (13)
Shah: The Series A crunch primarily impacts software and tech startups
“The Series A crunch definitely exists a lot when it comes to technology and app-focused and software-focused startups.”
Shah: $1M is the average seed round for consumer product startups
“Really the million dollar seed is kind of an average these days on product, because you need the right amount of money to handle the entire production Sourcing and distribution processes.”
Shah: Equity crowdfunding platforms ease the VC due diligence burden
“Platforms out there like the Seed Invest and Angelists of the world they're getting better and better in terms of the validation and really strict interview process of startups coming in through them, and it's really helping us a lot because it kind of allevia…”
Shah: Technical co-founders are almost negligible for e-commerce startups
“If you're working in a more high-tech consumer, or if you're working on things that really require that extra software to back everything through, you're gonna need a technical co-founder, but with, like, something of e-commerce, you know, it's almost negligen…”
Shah: Brand Foundry Ventures' due diligence averages two to four weeks
“I mean, our due diligence takes an average of Two to four weeks, depending, depending on our past relationship with the co-founders or with the entrepreneurs running the show.”
Shah: Focus on doubles and triples eventually leads to unicorn investments
“I truly believe that by building those doubles and triples, and Over time, building your reputation of handling those doubles and triples, you're going to find a unicorn yourself.”
Shah: Andrew Mitchell's Zig Capital backed six $100M+ valuations
“I mean, with Andrew's old term, six out of them are over a hundred million dollar valuation. Two of them are over half a billion of those six, and then one of those six is 1.2 billion dollar valuation, and that's Warby. And those half billion are both Harry's …”
Shah: NY builds sustainable businesses; Silicon Valley has a dream mentality
“New York really focuses on building sustainable businesses. Silicon Valley and San Francisco is a dollar in a dream mentality.”
Shah: Seven of Brand Foundry's 13 portfolio startups are female-led
“Seven out of 13 companies are female founder led. Three out of the seven are two women co-founder teams.”
Shah: Female founders understand product startups better than men
“And they get product startups most of the time better than men.”
Shah: Boulder, Colorado is a top emerging startup ecosystem
“Bigger thing also, I would say even, but just being about bullish on Sparrow, is that would be bullish on Boulder, Colorado. I mean, I was there a few weeks ago working with Techstars, working with Galvanize, working with Boomtown three accelerator programs ou…”
Shah: Net-A-Porter will succeed post-YOOX merger despite founder's departure
“I think it'll be ok, because Net-A-Porter and Ukes, the merger, made a lot of sense for both sides. I mean, having the back end of Ukes with the front end of Net-A-Porter and what they've done has been absolutely fantastic. It is worrisome that Natalie is no l…”