Early vs Growth Investing

After 3 years in venture I’ve come to appreciate the differences between operating and investing better, and the nuances between the different stages of investing in private, high growth, technology companies. There are many observations and lessons learned for sure that I might share in future posts, though here’re some points very well articulated by Ilya Fushman, who recently joined famed VC firm KPCB.

IF: Certainly, there were some great logos in the growth-stage fund. But I think returns from [earlier-stage] venture were pretty great as well.

I think where we came down as we were thinking about strategy was this notion of how do you compete. There’s a lot more capital at the seed stage; there’s a lot more capital in growth stage. When we think about ecosystem and landscape of venture, when you look where we’re focused predominately today — which is Series A — the type of work we do and the kind of skills required is mentally quite different from late-stage investing. There’s basically no data. We’re helping founders hire their first sales leader and figure out their product strategy and helping them navigate partnerships. And when you look at the late-stage growth side, a lot of it is financial engineering, and you have to be really good at it, because you have to price things really well. For us, if we’re off 20 to 30 percent on price, it’s probably okay as long as we pick the right company.

I believe this pretty aptly describes the work that we do at SeedPlus. We were there when founders are looking at the go-to-market strategy for the first commercial launch of their products; we were there to help navigate complex partnership conversations and financing strategies; we were also there when founders needed the nitty gritty & the mundane – helping hire the right corporate secretary firm, modelling cap tables in Excel, recommending co-working spaces etc. Of course all the above doesn’t preclude a successful outcome (both in the investment sense and in building a successful company), but in general we feel pretty good about our ability to roll up our sleeves and help and being part of the company building process.

In other words our aspiration is to be Company Builders rather than Company Financiers. Hopefully the perceived value is mutual between the SeedPlus team and our portfolio founders. :)

Read the rest of the interview here: https://techcrunch.com/2019/02/14/kleiners-mamoon-hamid-thinks-we-could-be-in-a-15-year-long-bull-market-and-other-insights-from-the-firm/

tianglim

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