Transcript follows and video below. This is Part I of the interview. You can view Part II and Part III and Part IV here.
What is your sweet spot, in what kinds of businesses do you like to invest?
Define sweet spot?
Mark Suster
What sort of themes are you interested in investing?
Well when one talks about sweet spot sometimes one means what stage do you like to get involved? what industry sector? are there certain trends whatever? So I’ll just cover all those if its ok?
So as a firm we are what’s called stage agnostic. That means we’ll do seed investment for $500k, we’ll do an A round for $3m, we’ll do a B round for $8-10m. We don’t really go too higher than that because of our fund size. I prefer early stuff. I prefer getting involved before the concepts are too big because I like getting involved with strategy. I like getting involved with recruiting. I like the team dynamics.
In terms of sectors, again as a fund & then I’ll talk about myself. As a fund, about 30% of our investment historically has been in technology for the financial services sector. That suited us very well, we’re one of only 4 players in the country that invests at that level in financial services. That has allowed us to have super sized returns. Our last fund was the 5th best performing fund in the country.
Mark Suster
Wow congratulations!
Thankyou, thankyou I should take all the credit for it, I take none! But we had BillMeLater we sold for $1B, we had DealerTrack which IPOd, we had Investnet which IPOd. We had a company in Europe PrePay Technologies which was sold. So a lot of good performance there. We invest in technology in the media sector, less content & more content distribution & add technology. We invest in mobile, mobile infrastructure, mobile technologies & we invest in software as service companies. That’s all encompassing of what we do.
I personally don’t get involved as much in the financial services companies. Solely for the reason that my 3 partners have been doing that for 20 years. I don’t want to try & replicate what they already know.
Mark Suster
They outrank you in experience there?
But my number one theme & I say this everytime I’m asked, Pemo, is (& I don’t mean this in a flippant way, I mean it in a sincere way) I invest in great entrepreneurs. I don’t look for people who’re going to take ideas I have & run & implement those. I look for people who are passionate about a topic, an idea, a belief that there’s a market opportunity that they’ve researched. Or they have domain knowledge & they want to break down walls to make it happen & its a big market opportunity. And I’m about enabling that, not about trying to have a sector thesis around the types of opportunities that I think will be good.
Mark Suster
What percentage of women startups do you get pitches for? And what percentage have you funded?
Let me start by saying the good news. The good news is that our best performing company of our last fund returned $323m to shareholders & that was run by a woman. Good news there! I will also say that just today & Monday of this week I saw pitches from women entrepreneurs that I thought were fantastic. And I point that out, only because it’s not the norm. So this is the bad news! I would say on average, 1 out of every 30 or 40 inbound requests, either introductions or people write to me directly to pitch a business are for women. Those are pretty bad odds!
Mark Suster
Have you noted differences with women entrepreneurs in how they pitch & build businesses?
I can’t immediately say, necessarily that I have spotted a difference in how they pitch. In the past 3 years, I’ve been pitched by 20 – 25 women, again that’s not large numbers.
Mark Suster
Well that’s good news isn’t it, its just that there’s not enough of us?
Yes I think it’s a numbers game?
Mark Suster
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