The Exchanges

Q How much time does it take to raise the first fund?

A Yeah, I mean, it took us probably nine months from start to finish. Um, you know, part of it is because educating LPs on this new category was hard, because we would talk to LPs about how we think pre-seed will be the new seed, and they would turn around and call their seed managers that they were already invested in, and the seed funds would be like, You know, pre-seed is a fad. It's gonna go away. We do pre-seed, whatever. It's, it's not real. So it was really hard to, to like convince investors that this new category will come together until they talk to founders. When they talk to founders, the founders will tell them, yeah, like seed funds told me I'm too early for them because I don't have a product in market because I don't have traction. So yeah, if somebody was willing to lead my round before that, I would work with them, right? So that, that took us some time to, to educate first the investors to be able to raise the fund. And then the founders as well, right? On, hey, look, if your first run of funding, you should call it pre-seed. You should talk to pre-seed funds, not seed funds, because you're going to be too early for these seed funds. And that took some time, and we started this pre-seed summit where we had founders of Pinterest, Instacart, DoorDash, you know, Cloudflare, Stitch Fix, Affirm, I can go on and on and on, where we had them talk about their pre-seed …

AI assessment note: “it took us probably nine months from start to finish.”

Q And how did you meet the founders of Gamma?

A The founders of Gamma we met through, um, another angel investor who used to work with the founders of Gamma at Optimizely. So the founders of Gamma came out of Optimize that this was a company that was in the A-B testing space, um, that was, you know, really did well, uh, at one point in time. And, uh, my friend, my business school classmate, uh, used to be, uh, colleagues with him at, at Optimizely. And these guys were, the Gamma founders were spinning out, starting, starting Gamma. And my, my friend said, Hey, look, you had, you had invested in Airtable, uh, which is a sort of an analogous company in the sense that Airtable built a prosumer horizontal tool, in their case, focusing on Excel and, like, sort of making a better version of Excel, if you may. And Gamma's initial thesis was, we can do the same thing for PowerPoint, right? PowerPoint is obviously used by millions of people, but hasn't changed much in decades. Um, but the world has changed a lot in terms of how we do work, right? We don't, like, sit on our PCs anymore. It's a lot over the cloud. It's on our phones. It's very collaborative, and we think there's a new, kind of, uh, version that, that should exist. Um, so I think that, that was probably why I got pulled into that, that, that opportunity, and, and we were very lucky to invest in the first round of Gamma. And the company, again, has changed a lot over, ov…

AI assessment note: “The founders of Gamma we met through, um, another angel investor”

Q And how many times you have to do convincing the reverse pitch to get in a company?

A Every single time. Every single time. I think, uh, you know, we're, we're in the business where founders pick us more than we pick them. I think, uh, I think if you look at venture capital, it seems like a business where, you know, we sit around like shark tank style and we're like, yes, no, yes, no. That's not how it works in reality. Uh, in reality, it's really a sales job, right? You're selling people to take a meeting with you. You're selling people to take your money, which by the way, Is, is a little crazy to think about. Um, you know, as somebody who grew up in India, I didn't know anything about venture capital, and I remember when I was, um, when I was going to become a VC, my, my uncle, who's a lawyer in India, he, I was trying to explain to him what venture capital works, and he was, he kind of listens to me, and he goes, wait, so you give people a million dollars, like, what collateral do you get? And I was like, nothing. We just give them a million dollars and, like, hope for the best, you know? And, and it sounds crazy, frankly, to most people on this planet. And it should, it should sound crazy, because it is a little crazy that it works. Um, and, and not only that, not only do we not get any collateral, but we have to sell them to take our money. And it's, and the reason for that is because, um, there's, the constraint actually is not capital, as I've realized o…

AI assessment note: “Every single time. Every single time.”

Q And how do you coach your set of founders for leading the next round?

A Yeah, look, um, I, I think raising money, um, especially the round right after us, um, you know, if, if our round is hundred percent storytelling, zero percent data, the next round is still 90% storytelling and 10% data. There's some early data, but it's not like it's obvious that it's like, you know, breaking out. It's not like millions of revenue, right? It's still early. So I think a lot of the time work we do, and this is where we can be very helpful to founders, is really crafting the story. Right. But crafting the story for investors, not customers. It's a different story, right? The founders are so focused on selling the product every day, and they're so in the weeds as they should be. Sometimes it's hard for them to, like, you know, take a step back and figure out what the story is for investors, right? Or they feel like, why, like, I just look at the data, or like, like, let me just walk into the product, like, that should be enough. But the challenge is, like, when you're an investor, you see so many companies, and you're human at the end of the day, And you're trying to predict the future. You have to prioritize where to spend time, right? And I think where the companies where you, after the pitch, you walk away and go like, you know, I felt something there. Those are the companies you end up taking more serious. And I think it's our, our job to help our founders get…

AI assessment note: “a lot of the time work we do... is really crafting the story”

Q And what's your process to make sure good companies don't slip through?

A Yeah. You know, we meet, uh, as a team, believe it or not, three times a week, right? So most venture funds have a partner meeting once a week, usually on Mondays. We've extended that to three times a week, um, because we want to make sure if one of us on the team, we were team of seven investors now see something they like, there's a team meeting right around the corner where we can discuss and debate it and figure out like key diligence points and move fast and decision-making. What we don't want is you meet something on Monday afternoon and you got to wait for Monday to like discuss this with the team. Right. But we are, our whole thing is like, if we like it, we should have signed the deal before Monday. All the other venture funds are going to discuss the deal on Monday. By Sunday night, if you like this deal, do whatever it takes to get it signed. If you have to show up at the founder's house, you do that, right? If all of us have to show up at the founder's house, we do that. If all of us have to meet at Sunday at the office and discuss the deal, we will do that, right? They're like, things move fast. Um, you know, and then the founders were investing in, I think also appreciate that because they want to move fast, right? And they like that we move fast. Um, and they, they like that everybody else moves slow and we move fast. I think that kind of also went back to like s…

AI assessment note: “we meet, uh, as a team, believe it or not, three times a week”

Q And can you share your journey in fundraising? Because like, You know, that's the undiscussed part of venture capital on when VCs like us have to do this, what have been some of the learning, what have been some of the toughest times, and how did you, you know, uh, eventually build your ICP for your LPs?

A Yeah, you know, um, I think where it really helps is to have empathy and, uh, an understanding of what it's like to be on the other side. I think the challenge for LPs is they're getting inundated by new funds and emerging managers and micro funds and so on and so forth. So I see that one of the biggest things they're all looking for, understandably, is differentiation. Right. What is your right to win? Right. Why will you see this deal in the first place? And why will they pick you versus somebody else? Right. And then of course, can you form the right portfolio to be able to have, you know, generate alpha, right? And alpha is like, not just a net three extra turn because they can get that from other places, but like a five, 10 X, right? So all of those things have to, so I think storytelling becomes really, really important because if you think about it as a VC selling to LPs, what I'm basically saying is, hey, Give me money to invest in companies I haven't met yet. I don't know what they'll be building. But just trust me, there are gonna be good companies, you know, and like, especially as a generalist investor, I don't even know what sectors are gonna be in, right? And like, I don't know who the follow-on investors will be, but like, just, just give me money. It's, it's like, it's absurd, like, the ask you're making, right? Especially as a first-time fund with no track reco…

AI assessment note: “I think the challenge for LPs is they're getting inundated by new funds”