During the last 10+ years as an investor/operator and learning from some very successful investors I have honed my thesis which I will be applying to this syndicate going forward.
- Invest in mission driven entrepreneurs. I ask about their life stories and how their experiences have led them to want to solve this problem. The difference at the earliest stages between those who succeed and those who fail can often be attributed to tenacity and scrappiness.
- Along the same lines, invest in entrepreneurs with conviction and domain expertise but with humility and high integrity. My belief is that understanding the market and customer is more important than having better technology today.
- Invest in entrepreneurs with chips on their shoulders. I initially started investing outside of the Bay Area as I believed that other ecosystems (such as LA, Chicago and NY at first) would develop and would not be as competitive from a capital perspective and I could do real diligence. I was correct on these points (in fact the Bay Area has more capital invested in it than the next 7 markets combined) but an unintentional added benefit I saw was that these entrepreneurs also had a chip on their shoulder. They perceived that this was their only shot to build a company and wouldn’t accept failure as an outcome. As an aside I have also found this thinking in non pedigreed founders and those with non traditional backgrounds (2/3 of my founding teams have a minority, immigrant or woman founder).
- Invest with conviction. When you look at historical returns of venture as an asset class, the overall numbers are not good. Returns tend to be skewed to a few firms and partners. Given I have been fortunate to have worked with both great and not so great investors, I have found the great ones tend to not care about social proof.
- Invest early and at reasonable valuations. Given I don’t look for social proof (and as mentioned above I am often the first investor), I invest in early stage rounds (angel, pre seed, seed) where valuations are much more attractive. While every investment I make I believe has an opportunity to be a unicorn, the data shows that the vast majority of venture backed exits are less than $100 million (95%+). Thus entry price matters (and frankly matters even more in a syndicate since you are backing individual investments I am making and not investing in a fund where one outlier can make up for all the losses). I have only made two investments where the pre money valuation was north of $10 million and expect most (if not all) of my investments here to fit that same pattern (so it behooves you as an LP to invest when I am writing the first check to capture that upside as opposed to waiting for subsequent rounds where there may be more social proof). In general my biggest check will be the first check I write into the company since this is when economics are most attractive (eg $10K in pre seed round and then $1-5K checks in each subsequent round).
- Invest in capital efficient businesses at the early stage. This means no hardware companies, drug discovery, med devices, etc. that need millions at formation to prove out initial milestones and require rigid go to market plans. I will invest in software enabled businesses that touch hardware, drug discovery, med devices, etc.
- Invest in companies that can generate revenue early. Historically 75%+ of my companies have been b2b or b2b2c. In general, I tend not to invest in audience or eyeball plays (eg catching lightning in a bottle). Revenue solves a lot of problems.
- Invest outside the Bay Area in sectors that leverage the respective strengths of those geographies (eg energy startups in Texas, ag tech in farmland, enterprise in Chicago, healthcare in Boston, etc.). Data has shown the majority of tech IPOs and acquisitions are in companies based outside of the Bay Area.
- Invest in legacy industries with big dollars where mission driven entrepreneurs with domain expertise and tenacity can have a significant impact (eg healthcare tech, ag tech, future of work, ed tech, climate tech, etc.).
- Leverage resources, experience and network for deal flow, diligence and portfolio company support. In addition to the below mentioned people, I launched a startup studio (https://hypothesis.studio) earlier this year with Peter Brack from Mucker and John Ryu from Scout Ventures (who have a combined $500 billion in exits). I have 11 other partners there who are functional or domain experts (experience at Facebook, United Healthcare, Google, WPP, Groupon, Apple, etc.) spread across the country (LA, NY, Philadelphia, Chicago, DC, Nashville, Minneapolis and Charleston) who I can leverage as well. Finally I am a venture advisor to RTP Ventures (DataDog, RingCentral, etc.) new seed fund and collaborate with them as well.
I started my venture career at Advanced Technology Ventures in the Bay Area. ATV (https://en.wikipedia.org/wiki/Advanced_Technology_Ventures) was one of the earliest VC firms founded in 1979, had $1.5 billion AUM and was a bi coastal, multi stage firm that invested in both tech and life sciences and was investing its 7th fund totaling $720 million during my tenure. I also was with Prism and launched the tech practice in California for them (firm had $1.2 billion AUM and was investing its 5th fund totaling $250 million when I was there). While I did not lead deals (I was a Senior Associate and Principal), I was fortunate enough to support companies including LogMeIn, X+1 and Conduit Labs which ultimately had exits totaling over $4 billion. I also was an early investor in Mucker in Santa Monica and seen how they have built a top tier accelerator and seed fund.
In addition to my venture experiences, I started and helped start companies in Santa Monica, Chicago and New York and was lucky enough to have 4 of them acquired (total transaction value less than $100 million). During this time I worked with and learned from fantastic investors including Paul Martino at Bullpen, Paul Lee at Lightbank, Erik Rannala and Will Hsu at Mucker who have had collectively over $18 billion of exits (Zynga, Udemy, Honey, Sprout Social and Emailage).
After my roles as an operator and entrepreneur, I started angel investing with support from my brother (Bong Koh, one of the managing partners at Venrock with over $20 billion in exits) as well executives at Google, Uber, Snap, Amazon and Goldman. I have now made over 30 angel and seed investments with an aggregate equity value of over $1 billion (with closed and announced exits totaling over $600M so far) and was the initial investor or in the first round of funding for over 90% of the companies. 100% of my companies have raised outside funding which totals over $300 million and co investors include Spark, Upfront, Drive, Redpoint, Lightspeed, Felicis, Google, Forerunner, Bullpen, Mucker, etc.
I began my tech career at Organic where I was one of the first hires in the NY strategy group. While at Organic the company went public and the company was ultimately acquired by Omnicom. Finally I worked as a management consultant at McKinsey in Palo Alto and Los Angeles and in the M&A group at Salomon Smith Barney in New York. I have a BA from Yale University and an MBA from the Sloan School of Management at MIT.
I will syndicate every deal where I can get allocation (going forward from Q3 2020). My core focus is on early stage companies and as a result, I often will be investing in rounds where I am the first check. I will make every effort to get pro rata in later stage rounds. My deal flow sources include my other funds, scouts, advisors, fund LPs, team members, accelerators, service providers, entrepreneurs, other investors, etc. I receive hundreds of referrals every year and log over a thousand companies every year. I have historically made only a handful of investments every year.