Feb 3, 2016 · 24m · 20vc
20VC: The Evolution Of Mobile & The Importance Of Follow On Funding with Hadley Harris @ Eniac Ventures
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
On this episode of The 20 VC, host Harry Stebbings interviews Hadley Harris, founding general partner at ENIAC Ventures, discussing early-stage seed investing, startup valuations, follow-on funding strategies, and the evolution of the mobile ecosystem.
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 22.5% of the talking time here. How this is scored →
Harry as informed peer 2.8 Guest teaching 3.3 Guest disagreement 1.1 Harry pushing back 1.5
speaking balance: gold is Harry, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 10:29 Hadley Rejects Founder Collective's Follow-On Stance
Hadley directly pushes back against Founder Collective's philosophy against follow-on capital, arguing that backing existing portfolio stars shows critical alignment with new investors.
Hardest push from Harry ▶ 10:14 Harry Pressures Hadley on Follow-On Capital MisalignmentHarry confronts Hadley with Founder Collective's perspective that reserve funding creates misaligned incentives between VCs and founders.
Biggest teaching moment ▶ 8:18 Hadley Corrects Host on Airbnb InvestmentWhen Harry attributes backing giant rocket ships like Airbnb to ENIAC, Hadley explicitly clarifies that ENIAC merely sold an early startup to Airbnb and takes no credit for Airbnb's core success.
Harry holds his own ▶ 10:14 Harry Demonstrates Venture Nuance on Follow-On SignalingHarry demonstrates deep knowledge of venture capital dynamics by introducing Founder Collective's specific thesis regarding follow-on signaling risk.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Harry as informed peer | Guest teaching | Guest disagreement | Harry pushing back | Why |
|---|---|---|---|---|---|---|
| Hadley Harris's Journey from Engineering to Venture Capital | 2 | 3 | 0 | 0 | Harry asks standard background questions regarding Hadley's path from engineering to VC. Hadley explains how technical training aids problem-solving and founder empathy. | |
| The Strategic Vision Behind ENIAC's Mobile-First Focus | 3 | 4 | 1 | 1 | Harry asks about why ENIAC chose mobile-first in 2009 and the growth of New York's tech ecosystem. Hadley explains the historical pushback from traditional VCs back then. | |
| Supporting Portfolio Companies and Value-Add in Follow-On Funding | 2 | 5 | 2 | 1 | Harry mentions high-profile portfolio names like Airbnb. Hadley gently corrects him, clarifying that ENIAC sold an early company to Airbnb rather than directly backing their main venture rounds. | |
| Strategic Perspectives on Follow-On Capital and Signaling Risks | 5 | 4 | 3 | 5 | Harry challenges Hadley by bringing up Founder Collective's anti-follow-on thesis and citing Sheryl Sandberg on valuations. Hadley defends ENIAC's pro-rata strategy and warns about late-stage valuation bubble risks. | |
| The Art and Negotiation of Seed-Stage Startup Valuation | 3 | 4 | 1 | 2 | Harry asks about seed valuation mechanics and founder assessment. Hadley articulates why seed valuation is more art than science due to lack of early revenue metrics. | |
| Navigating the Series A Crunch, Pre-Seed Rise, and Capital Runways | 4 | 4 | 2 | 3 | Harry brings up the funding barbell and London's second-seed trends. Hadley clarifies that the real drop-off bottleneck occurs between Seed and Series A rather than later rounds. | |
| Rapid-Fire Insights: Books, Productivity, and Industry Hyped Sectors | 2 | 1 | 0 | 0 | Quick-fire section covering favorite books, productivity software, industry mentors, and sector hype levels. | |
| Investment Thesis Spotlight: ENIAC's Backing of Photo | 1 | 1 | 0 | 0 | Hadley highlights ENIAC's recent deal in Photo and Harry wraps up the episode with standard podcast housekeeping. |
Statements from this episode (18)
Stebbings: ENIAC Ventures was world's first mobile-focused VC fund
“ENIAC Ventures, who are the world's first venture fund exclusively focused on mobile”
Prominent VCs warned Eniac founders in 2010 that mobile was too niche
“A lot of the VCs that we had worked with as entrepreneurs who are Very well-respected VCs and continue to be very well-respected and nothing against them, but a lot of them told us that, you know, it was too niche, that we needed to be broader.”
Harris: New York is clearly the second-largest US tech market
“I think it's gotten to the point where it's clearly the second biggest market.”
Eniac Ventures allocated half of its 2015 investments to San Francisco
“If you look at kind of our investments last year, about half were in San Francisco, about a quarter were in New York and about a quarter were We're elsewhere.”
Eniac Ventures acquired its Airbnb equity by selling an early portfolio company
“Airbnb is a situation where we sold a company to them early on.”
Eniac Ventures takes pro-rata but never leads Series A or B rounds
“Our model is to take our pro rata in the follow on rounds, but we would never lead a series A or B or something like that given our size and our focus.”
Harris disagrees with seed funds that refrain from follow-on investing
“I don't agree with the idea of not following on in your good companies.”
Seed funds eliminate signaling risk by only following outside-led rounds
“If you always follow when they raise a new round from a new investor, you also get around any signaling issues.”
Overvalued late-stage startups face severe down-round risks in 2016
“I think there's a lot of companies now, especially at the later stages, that are going to have a lot of issues in the next year because they raised rounds at too high of a valuation. The market has corrected, and now they need to raise rounds at down rounds or…”
Eniac Ventures has never experienced a portfolio down round as of 2016
“I, we've been fortunate that we haven't had one yet.”
Eniac Ventures agrees on valuation in 19 out of 20 startup deals
“I would say, you know, 19 out of 20, we were able to agree on a valuation and, It's more about wanting to work together and coming to something that we're, that we we're comfortable with rather than kind of a pure negotiation.”
Eniac Ventures dislikes founders who actively search for problems to fix
“Probably the type of team we like least, kind of in this area is teams that kind of stumble upon a problem, or they're just trying to find a problem to fix. The best teams are ones that kind of in their everyday life as an employee or as a consumer notice some…”
The steepest venture funding drop-off occurs between Seed and Series A
“You could argue that probably the biggest drop off happens between the seed and the a rather than the a and the b. And I think that's just because there is so much seed money and there are so many seed funds compared to a funds where, you know, you really, tha…”
Eniac Ventures avoids participating as a new investor in second Seed rounds
“We generally don't participate kind of as a new investor in those when we have companies that need to do that, you know, we try and be as supportive as possible.”
Seed startups must raise enough capital for 18 to 24 months runway
“Raising enough money in the seed to that we have kind of 18 to 24 months to do what we need to do to get to the A. The biggest mistake I see is companies not raising a large enough seed where, and you look at it, it's like, well, there's really no room for you…”
Startups raising a second Seed round have lower chances of success
“Now, companies have, certainly there's a bunch of companies that have raised second seeds and have gone on to be successful, but once you get to that point, I think your chances of success are lower.”
Mobile enterprise will produce a Salesforce-scale breakout within 5 to 10 years
“Under hyped for us, I think is mobile enterprise. I think you're going to see a lot of amazing companies come out in, in grow in the next five, 10 years both for desk and non-desk workers. You know, I think there's going to be A Salesforce Oracle type company …”