In the final pre-Christmas episode of "20 minutes VC," host Harry Stebbings interviews Sumit Shah from Brand Foundry Ventures, a firm known for investments in Warby Parker, Birchbox, and Contently. Sumit shares his unconventional journey into venture capital from a background in biomedical engineering and private equity, highlighting the importance of understanding different industries. He discusses the strategy of Brand Foundry Ventures, focusing on seed and pre-seed investments in product-based startups, and addresses the series A crunch, emphasizing the need for sustainable business models over the pursuit of unicorns. Sumit also touches on the value of diversity in startups, noting the success of female-led companies, and the unique strengths of the New York venture ecosystem compared to Silicon Valley. Lastly, he advises startups on leveraging investor relationships and teases a new investment in the eco-friendly women's sanitary product space with Lola.
This is the 20 minutes VC with your host Harry Stebbings and this will be the final episode before Christmas.
This quote introduces the episode and the host, Harry Stebbings, while also mentioning the upcoming holiday scheduling.
Sure. So I got into the industry by pure accident.
Sumeet Shah explains how his career in venture capital began unintentionally, setting the stage for his current role at Brand Foundry Ventures.
We focus on seed rounds every now and then, a pre-seed round.
This quote specifies the investment stages that Brand Foundry Ventures targets, highlighting their role in early-stage funding.
It definitely concerns me, and I definitely just want to say I do have the ultimate respect for Sarah Lacey, even though I don't always agree with her.
Sumeet Shah acknowledges the issue of the Series A crunch, showing respect for Sarah Lacey's analysis while also providing his perspective on the matter.
"Just as an FYI, we've invested in a crowdfunding platform. So Indiegogo and Kickstarter, the bigger thing for us actually is we want to work alongside them to help really facilitate great companies to come through."
This quote highlights the collaborative approach taken by Sumeet Shah and his firm towards rewards-based crowdfunding platforms, indicating a partnership rather than competition.
"On the rewards. Based on equity based crowdfunding, I would definitely say it's a little bit more of competition, but again, we would love to work alongside them."
Sumeet Shah acknowledges a competitive aspect with equity crowdfunding but still expresses a desire to collaborate, reflecting a nuanced view of the crowdfunding landscape.
"It's a case by case basis. I mean, the way that we do a lot of our due diligence is really focusing on people, product and pipeline."
This quote emphasizes the importance of a thorough due diligence process that focuses on key aspects of a startup before deciding on the timing of an investment.
"You have to make sure, above everything else, that your team is just so cohesive and solid."
This quote stresses the importance of a strong, cohesive team as a foundation for startup success.
"Never ever be afraid to ask for advice. VCs. We love doling out advice. We love doling out feedback, like quick fire feedback."
Sumeet Shah encourages startups to actively seek advice from VCs, highlighting their willingness to assist and the potential benefits of such engagement.
"I mean, our due diligence takes an average of two to four weeks, depending on our past relationship with the co-founders or with the entrepreneurs running the show."
This quote indicates the timeframe for due diligence and the importance of understanding the business and its leaders.
"Now, it's funny when you mentioned, know, again, ultimate respect to Eileen and cowboy ventures, but the bigger thing is we focus a lot on doubles and triples."
Sumeet Shah acknowledges the different investment strategies, emphasizing a balanced approach rather than chasing only high-valuation companies.
"Because the ultimate ugly reality about venture capital is no matter how good of a job a venture capital firm can do, in terms of helping startups, bringing advice, making introductions, growing the business and whatnot, we have a fiduciary duty to our investors."
This quote reflects the dual responsibilities of venture capitalists: supporting startups and fulfilling their fiduciary duty to their investors.
"The way that Andrew and I focused with brand foundry and the way Andrew worked with Zig Capital was to really work hard and build out strong, sustainable businesses."
This quote emphasizes the strategy of building strong, sustainable businesses as a focus for successful venture capital investment, as practiced by Andrew and Sumeet Shah at Brand Foundry and Zig Capital.
"I truly believe that by building those doubles and triples, and over time building your reputation of handling those doubles and triples, you're going to find the unicorn yourself."
Sumeet Shah conveys his belief that consistently successful, moderate-scale investments lead to a reputation that may eventually lead to discovering a highly valuable unicorn company.
"We are going to do everything we possibly can to help, to be as helpful, to be as approachable to our founders."
Sumeet Shah stresses the commitment of their venture capital firm to support and provide resources to their founders, highlighting the importance of an investor's role in a startup's success.
"We have a moral obligation to be as helpful and as approachable as we can to startups and to our startup founders, because they're putting their lives, they're putting their blood, their sweat, their tears, their livelihoods into these things."
This quote underlines the ethical responsibility of investors to be actively involved and supportive, recognizing the personal investment founders make in their startups.
"New York really focuses on building sustainable businesses."
Sumeet Shah contrasts New York's emphasis on sustainability in business with Silicon Valley's pursuit of big, ambitious ideas.
"Silicon Valley and New York need to exist. They absolutely need to exist because they feed each other."
The quote highlights the symbiotic relationship between the two coasts' startup ecosystems, each contributing to the other's success and growth.
"We invest a lot in women at brand Foundry too. Seven out of 13 companies are female founder led."
Sumeet Shah describes Brand Foundry's investment strategy, which includes a focus on female-led startups, implying their success and importance in the startup landscape.
"Women in tech is a black eye I think is an understatement in the world of startups and venture capital."
Sumeet Shah expresses frustration with the lack of women in tech and venture capital, indicating it as a significant issue within the industry.
"I just keep seeing a lot of great product startups that are female founder led that are doing very well."
This quote reflects Shah's observation of the success of female-led startups, suggesting a trend of strong performance by women in the startup sector.
"Oh man, it's probably close between Term Sheet by Dan Primack or Strictly VC by Connie Loizos."
This quote highlights Sumeet Shah's preference for industry staples Term Sheet and Strictly VC, indicating their importance and influence in the venture capital space.
"What really gets me excited about Sparrow is they took the ball that Bob Iger gave them, I mean, pun intended, I guess, and ran with it."
This quote explains Sumeet's excitement for Sphero, emphasizing their ability to capitalize on opportunities, particularly the one given by Bob Iger, which helped propel the company forward.
"Sparrow and Boulder as a whole is continuing to keep growing."
Sumeet's observation on the growth of Sphero and Boulder's startup ecosystem suggests a positive outlook for the region's future in business and innovation.
"I think Netaporte will still do okay because it's also, you got to think about all the lieutenants that people have come through now."
This quote expresses Sumeet's confidence in Net-a-Porter's future success due to the strong team and the strategic merger, even without the founder.
"Things a little birdie told me was very interesting because you also learn about the way that Biz Stone thinks about building businesses."
This quote conveys Sumeet's admiration for Biz Stone's thought process in business and the value found in his book, which goes beyond the story of Twitter to include business strategies.
"It is a subscription service for tampons and for women's sanitary products."
This quote summarizes the business model of Lola, highlighting its focus on a subscription service for women's sanitary products.
"The FDA does not require the women's sanitary product companies to list the ingredients and products inside of tampons."
Sumeet Shah points out a significant health and environmental concern addressed by Lola, which makes the company's mission and products stand out in the market.
"Easiest way to actually capture me is on Twitter. The handle is pe feeds, but p e underscore feeds."
This quote provides Sumeet Shah's preferred method of contact, indicating his openness to communication and engagement with the audience.
"Do not forget to sign up to our newsletter on www. Dot the twentyminutevc.com."
Harry Stebbings encourages listeners to engage with the podcast's content beyond the show, highlighting the importance of continued interaction and resource sharing.