GP @SusaVentures🦍 (seed VC in Robinhood, Flexport, Stord, Mux, Andela + more).
Prev: Caltech; 2nd eng @ LinkedIn; Google.
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Aug 12, 2022 • 6 tweets • 2 min read
1/ Want to see the deck @SusaVentures used to raise $375m from LPs? It's in the post below, along with a dozen other VC decks. Kudos to @rrhoover and @vedikaja_in for making VC more transparent.
Below are some LP fundraising lessons, learned the hard way, from our past raises:
2/ Most LPs want time to build trust & a relationship w/you. They rarely FOMO in. So build relationships early, even w/LPs that won't invest yet.
My gut is most LPs would prefer to back a GP they've known for 5 yrs that's had 3x funds over a GP they just met that's had 5x funds.
Mar 1, 2022 • 4 tweets • 1 min read
1/ Good VCs avoid competitive conflicts w/in their portfolios. They don't want to be in a position where helping one portfolio company actively hurts another. When there's doubt about a prospective investment, we ask the companies in question if they think they're too close.
2/ It's funny, because some founders are super paranoid ("We're both healthcare businesses. Competitive conflict!"), while others dgaf about conflicts ("The other company is building our exact tool for the same market, but it's a big market so whatever. No conflict on our side!")
May 20, 2021 • 6 tweets • 1 min read
1/ A few key levers for deciding how much venture capital to raise:
- can your current valuation support the amount you're raising?
- what set of milestones can you hit, and will hitting them 3x+ your valuation?
- is the money you're raising sufficient to hit those milestones?
2/ These three levers have to work in unison. I.e. you need to raise enough to hit meaningful milestones, while not asking for so much capital relative to existing progress that investors will walk away.
Below are a few common issues founders encounter when picking a round size.
Mar 18, 2021 • 8 tweets • 2 min read
1/ Founders who get multiple term sheets often struggle w/negotiation because they rarely come out and just say what they want. Here's a common scenario I see, and what I would do differently to get the best term sheet possible.
2/ Common scenario: you get a TS at, say, $15m post, and you have other interested VCs. You ping those VCs and say "I have a term sheet, please make an offer."
Now you get a few more offers, maybe at $13m or $15m or $17m. Most likely, your position doesn't impove by that much.
Feb 26, 2021 • 14 tweets • 3 min read
1/ Early stage founders regularly ask for advice on setting their own salaries. This is a somewhat touchy subject, but the main factors that I've seen people use to set their own salaries are: a) personal expenses, b) personal savings, c) how much cash the company has.
2/ The main tension for very young companies is that their cash runway is very limited, so the difference between two founders each taking $50k vs $150k per year is huge if the company only has $750k in the bank to start with.
Jan 23, 2021 • 4 tweets • 2 min read
1/ I strongly disagree w/this take. Frankly, suggesting that it's somehow bad to spend resources on AI models for curing cancer is offensive.
I know people that survived cancer & people that didn't, and none of them would prefer having cancer to having big co's investing in AI.
2/ The argument is that wealth shouldn't have so much influence over innovation. But that's backwards. Most big innovations wouldn't exist w/o $ incentives -- which lead to wealth. What fraction of stuff we use was created by companies vs. govts, non-profits, etc? I'd wager 95+%.
Nov 21, 2020 • 10 tweets • 2 min read
0/ I've recently been chatting with people about what it would take to start a new city. It's such an interesting idea to think about! Just like with products, I feel like a startup/charter city should be 10x better for target inhabitants. A few ideas for such cities:
1/ A city for parents -- less nightlife and fewer activities for single people; more options for school, daycare, and enrichment activities; lots of nearby lodging for long in-law visits.
Aug 11, 2020 • 6 tweets • 2 min read
1/ After reflecting for a while on @AngelList's rolling funds, I believe they will be very disruptive.
Previously the best way to start a VC fund was to build an investing track record. That takes many years. Rolling funds allow people to turn reputations into investing capital.
2/ The interesting development is that these reputations don't have to be investing-related. If you have a great network and you're well-known as an amazing founder or PM or ML expert, you can probably roll* that into a rolling fund.
* Sorry about the pun. I am who I am.
Aug 6, 2020 • 4 tweets • 1 min read
Surprising pattern in seed stage VC funds: if a fund is reasonably diversified, it'll need at least one $1b+ exit for a great total fund return. Regardless of fund size.
Doesn't matter if it's a $150m fund buying 15% stakes or a $10m fund buying 1% stakes.
Smaller isn't easier.
Assumptions:
- 50% of fund is for initial checks, 50% for follow-on checks.
- 30 investments.
- 50% dilution over time.
- In 90% of good funds, the top company returns the entire fund by itself. See comment below from a highly regarded fund-of-funds:
1/ The amount of great content coming out these days for founders, managers, and employees is incredible. Tons of 10+ and even 100+ page detailed tactical manuals, interactive guides, curated content databases, you name it. A few notable examples:
2/ How to Hire a Head of Sales by @jordanxwan on @AskAlmanac: askalmanac.com/articles/5949/…
Feb 25, 2020 • 13 tweets • 2 min read
1/ I started thinking about accredited investor requirements again after the tweet below. The requirements make SO LITTLE SENSE & needlessly block people from making investments they want to make. For fun, here's a list of 10 absurd consequences of our accredited investor system.
2/ As a reminder, in the US you're an accredited investor if you make $200k/year for two years (or $300k jointly with a spouse) OR if your net worth, excluding your primary residence, is $1m or more. You have to be accredited to invest in startups, hedge funds, etc.
Feb 14, 2020 • 6 tweets • 1 min read
1/ Earlier, I was chatting w/someone about the math of cold emails. TLDR if you write a large number of *good* emails then you will get good results.
There are three groups of people: 1) never reply to any cold email 2) rarely reply to cold emails 3) very open to cold emails
2/ Right off the bat, maybe 75% of cold emails are ignored because the person you're writing to is in the first two groups.
Dec 5, 2019 • 7 tweets • 3 min read
1/ There are a few interesting discussions today about whether it's a good idea for the government to run grocery stores. I think the best way to think about this is to look at other government initiatives and how they perform. Let's dig in.
axios.com/government-run…2/ Costs for government projects are typically very reasonable and exactly what you'd expect if private companies undertook the same projects.
1/ I see lots of financial projection spreadsheets (mostly for seed stage and Series A companies). The spreadsheets often have yellow (or red) flags that are easy to fix.
Below are some tips for making better financial projections:
2/ Extract all core assumptions into their own spreadsheet cells. Don't hard-code things like monthly revenue or churn #'s because then you can't play w/the model easily.
Modeling out "what if monthly churn is 1.5% instead of 2%?" should not require changing more than one cell.
Oct 23, 2019 • 6 tweets • 6 min read
1/ I work with lots of founders who from day one are thinking about building diverse, inclusive teams. I'd love to gather as many strategies, tips, advice, and resources as possible to help them out.
2/ Here are some starting points I've gathered from founders like Amal Aziz (@sellwithAMI), @HanadieYousef, @harryglaser, and @sbyrnes:
- if your pipeline isn't diverse, try different recruiting channels
- if some channels are better for diversity than others, double down on them
Oct 8, 2019 • 5 tweets • 1 min read
1/ Bottom-up market sizing is better than top-down sizing because bottom-up forces you to actually think about how much customers can spend & what fraction of them are reachable.
Top-down market estimates are quick-and-dirty calculations that are typically divorced from reality.
2/ For example, let's say you're building an accounting tool for authors. A top-down market size estimate might be "publishing is a $100b industry and a typical author spends 5% of their revenue on accounting, so our market size is $5b."
Sep 5, 2019 • 6 tweets • 2 min read
1/ I'm surprised (and somewhat disappointed) that Twitter doesn't do much to nudge conversations into better directions. They have a lot of power to do good, but they don't use it.
2/ AFAIK, the closest Twitter gets to encouraging specific types of content is offering free audience analytics (analytics.twitter.com). One of the pages is called "Audience Insights," but no real insights are offered.
Aug 19, 2019 • 7 tweets • 5 min read
1/ This weekend, there was a good discussion about founder/VC relationships. Several great investors discussed the value of getting to know founders while many founders wondered if building relationships was a waste of time.
To help, here's data from the @SusaVentures family..
@SusaVentures 2/ In the last ~7 years we've made 93 investments. Of those:
- 68 (73%) were founders we had just met
- 10 (11%) were founders we had known for 1-12 mo
- 6 (6%) were founders we had known for 2-4 years
- 9 (10%) were founders we had known for 5+ years
Jul 20, 2019 • 6 tweets • 2 min read
1/ Founders often ask me how to present a competitive landscape in their pitch deck. My framework is to use a four-quadrant matrix where each of the two axes are dimensions that are key to winning in your market.
2/ Examples of good axes to use are:
- types of scaling strategies (manual vs automated, geo by geo vs nationwide, etc)
- target customer segment (consumer vs SMB vs enterprise)
- customer needs (price, speed, customizability, privacy, etc).
Jul 1, 2019 • 9 tweets • 4 min read
1/ I couldn't be more excited to announce @SusaVentures Fund III. The customary thing to say is that fundraising isn't a true milestone and that we're going to get back to work. I'm going to momentarity ignore that custom. It's okay to celebrate things :).
2/ Some history: we started @SusaVentures in 2013. We were a team of friends that hadn't directly worked together and hadn't worked in venture capital. We began investing as an angel group, loved working w/each other and w/amazing founders, and decided to formally start a fund.
Jun 26, 2019 • 8 tweets • 2 min read
1/ There was a good thread this weekend started by @semil on how much feedback investors should give to founders when passing:
2/ FWIW I try to always offer detailed feedback when I pass, and I do it without asking for permission first. This is counter to most advice I got when starting my career as a VC.
