20VC 'The Best Seed Investors Hunt' with Paige Craig @ Arena VC



Harry Stebings introduces Paige Craig, founder and general partner of Arena Ventures, on the "20 minutes VC" podcast. Craig, a former Marine and defense contractor, has transitioned from military to angel investing, backing over 110 startups including Lyft and Twitter. He emphasizes the importance of founder qualities over business models in early-stage investing. Stebings also discusses the value of product recommendations like Blinkist and the SaaStr podcast for industry insights. Craig's unique VC approach combines traditional funds with AngelList syndicates, democratizing early-stage investments. He advocates for experience before starting a syndicate and stresses the importance of swift, decisive action in investing. Craig's sourcing strategy involves hunting for deals and leveraging founder networks, underscoring the evolving landscape of crowdfunding and its impact on traditional VC.

Summary Notes

Introduction to the Podcast and Personal Product Recommendations

  • Harry Stebings introduces the podcast "20 minutes VC" and shares personal, non-sponsored product recommendations.
  • Blinkist, a service that condenses business books into 15-minute summaries, is highlighted.
  • Harry's own podcast with Jason Lempkin at SaaStr is mentioned, focusing on the world of SaaS (Software as a Service).

"The first is Blinkist, which you might have heard from our episode with Ellie Wheeler at Greycroft."

This quote introduces Blinkist as a useful tool for consuming condensed business knowledge, as mentioned by a previous guest, Ellie Wheeler.

"And then number two, I have to plug my own. And I would love to hear what you think of my latest podcast with Jason Lempkin at Sasta, taking you inside the world of SAS."

Harry promotes his own podcast, which delves into the SaaS industry, and invites listeners to share their thoughts on it.

Introduction of Guest Paige Craig

  • Paige Craig is introduced as the founder and general partner of Arena Ventures.
  • Paige is an experienced angel investor with over 110 startups in his portfolio.
  • Notable investments include Lyft, AngelList, Postmates, Twitter, and Wish.
  • Paige's background is non-traditional for VC, with experience in the Marine Corps, US intelligence, and as a defense contractor.
  • Mattermark is acknowledged for providing data and analysis for the episode.

"Now, Paige is the founder and general partner of Arena Ventures. He's also an experienced angel investor who's invested in over 110 startups in the last seven years, including some pretty incredible companies."

Harry introduces Paige Craig, emphasizing his role at Arena Ventures and his extensive experience in angel investing.

"Instead, he spent the first half of his career in the Marine Corps and us intelligence community, and later launched a defense contractor, driving a loan into Iraq in 2003 with just $10,000 and expanding operations across the Middle East, Afghanistan, Pakistan, Africa and Southeast Asia."

This quote outlines Paige's unique background, highlighting his military and entrepreneurial experiences before entering the VC world.

Paige Craig's Career and Transition to VC

  • Paige Craig details his career journey from the military to becoming an angel investor and founding Arena Ventures.
  • He admits to starting with little knowledge but learned through trial and error.
  • Paige emphasizes his active investment approach, often being the first money in for startups.

"I spent most of my life, the first half of my life, in the military and national security community, very different from tech. I built up a private military, sold that business, and about eight years ago decided to go start working with entrepreneurs."

Paige describes his transition from a military and security background to working with entrepreneurs and starting his journey in investing.

"And I just started writing checks. And honestly, I didn't know a damn thing when I started. I just tried like founders would try. I tried and failed and tried and failed as an angel investor."

Paige candidly shares his initial lack of knowledge in investing and his approach of learning through action and perseverance, akin to the founders he invests in.

Paige Craig's Investment Philosophy

  • Paige's military background led him to focus on the people behind startups rather than preconceived investing norms.
  • He prioritizes founder characteristics such as attitude, drive, and behavior.
  • Paige believes the qualities of founders are the most enduring aspect of a company and crucial for early-stage investment understanding.

"And so having no preconceptions about what was right or what was wrong. And because I didn't know anything, that ignorance led me to doing what I thought was right, which was to focus on the people."

This quote explains how Paige's lack of preconceptions allowed him to develop an investment philosophy centered on the personal qualities of founders.

Arena VC's Unique Approach

  • Arena VC combines a traditional VC fund with an AngelList syndicate.
  • Paige Craig and his partner Jeff Lowe created Arena VC to democratize early-stage investing for accredited investors beyond the already wealthy.
  • The fund allows participation from various professionals, including businesspeople, professors, and engineers.

"But we could also extend investment to other savvy investors who may be businessmen or business women in their own industries. These could be professors, they could be engineers. We could bring early stage investing to the masses of accredited investors by doing syndicates through Angelist."

Paige explains the rationale behind Arena VC's dual approach, which aims to make early-stage investing accessible to a broader range of accredited investors through AngelList syndicates.

AngelList Syndicate and Arena Ventures Collaboration

  • Arena Ventures collaborates with AngelList, allowing 80 to 90 early-stage investors to participate in deals.
  • Investors in the AngelList community receive the same deal terms as Arena Ventures.
  • This model of investment is unprecedented and aligns with the mission of AngelList.
  • The motivation behind this approach is both support for AngelList and self-interest in the success of Arena Ventures.

And that excited me. The opportunity to bring in, in each deal, 80 to 90 other early stage investors who could all benefit from how we run our fund. And the way we work is that we, arena Ventures, invest, and every time we invest, we share a part of that deal with the angelist community, and they get to invest in that deal at the very same terms that we do.

This quote explains the innovative investment strategy of Arena Ventures, which involves sharing investment opportunities with a large group of early-stage investors from the AngelList community, ensuring they receive the same terms as Arena Ventures.

Drivers of Syndicate Success

  • Open communication about the syndicate's activities is a key driver of success.
  • Top syndicates tend to actively promote their work and achievements.
  • Performance and reputation are important; people often talk to founders backed by the syndicate to gauge its effectiveness.
  • The combination of promotion and proven performance contributes to the syndicate's success.

Probably because we tell people about, we, we tell people on email and we tell people on conferences and we tell people, hey, this is what we're doing. We're not ashamed of it, so we talk about it.

This quote highlights the importance of communication and transparency in promoting the syndicate's activities, which is one of the reasons for its success.

Qualities of a Great Investor

  • A great investor has a natural desire to help founders.
  • Responsibilities include looking after LPs, selecting the right deals, and actively supporting founders.
  • The team at Arena Ventures values the ability to help and serve founders as a defining characteristic.

I'd say so my biggest quality, when I looked around and built our team, so we're a team of seven people here at arena. The biggest thing I look for in an investor is someone who innately wants to help.

This quote emphasizes the importance of a supportive attitude in investors, suggesting that the desire to help is a key quality sought in the Arena Ventures team.

Personal Development as an Investor

  • Recognizes personal tendencies such as irritation and aggression, which can be beneficial in certain scenarios.
  • Acknowledges the need to balance these traits with negotiation and diplomacy.
  • Constant self-awareness and improvement are necessary for personal development as an investor.

I can also get extremely irritated and aggressive, which is good in some situations where we need to fight with regulators or we need to fight with competitors, I can be very aggressive and I have to think of that consciously all the time.

This quote reveals a personal trait of the speaker, acknowledging that while aggression can be useful in some business scenarios, there is a need for conscious management of this trait to ensure it is applied appropriately.

Diversity of VC Personalities

  • VCs, like all people, have a range of personalities, from intellectual to aggressive.
  • The VC industry features a spectrum of unique individuals, not just average archetypes.
  • Top investors tend to have distinctive and interesting personalities.

It's an entire range of unique personality. It's definitely unique personalities. If you look at the tops, you're not going to find so much averages, but you will find very unique and interesting people.

This quote describes the diverse personalities within the venture capital industry, emphasizing that top investors often have unique and noteworthy characteristics.

Crowdfunding's Role in Early-Stage Investing

  • Crowdfunding is another entity in the investment ecosystem, alongside late-stage and early-stage funds.
  • It may threaten weaker early-stage funds but does not displace key categories.
  • AngelList has increased transparency in angel and early-stage investing.
  • Having an AngelList profile is becoming as essential as having a LinkedIn profile for professionals.
  • AngelList's transparency benefits founders, LPs, and syndicate backers.

I think it's one more animal in the kingdom. There's going to be late stage funds and there's going to be early stage funds and there's going to be crowdfunding.

This quote places crowdfunding as an additional player in the investment landscape, coexisting with other types of funds and contributing to the ecosystem.

Future of AngelList and Series Funding

  • AngelList's progression into Series A and B funding is viewed as a natural evolution.
  • The distinction is not whether AngelList will move into these stages, but rather how the investment community will adapt to include larger funding rounds.

I think it's not necessarily that angel list moves into it. It's that the ticket lead

This incomplete quote suggests that the speaker believes the evolution of AngelList into handling larger funding rounds is not a matter of if, but how it will integrate with the existing investment practices.

Joining or Starting a Syndicate

  • Syndicate leads are generally responsive to potential members.
  • For small investors, observing deals and reading blogs is recommended before investing.
  • Investing in syndicates is a portfolio strategy; it's better to back multiple deals rather than a single one.
  • Experience is crucial before starting a syndicate; inexperienced individuals should avoid starting one.
  • Syndicates should not be treated as training wheels but as a serious investment step.
  • Personal experience and capital are important when starting a syndicate.

"If you want to join a syndicate? I'd say go out there and just look around the list and people. I think most syndicate leads actually respond to the people, so you can reach out to them."

This quote emphasizes the approachability of syndicate leads and the importance of reaching out and engaging with them for those interested in joining a syndicate.

"So go find a syndicate lead or two that you like and try to back as many deals as possible."

This quote suggests a strategy for potential syndicate members to diversify their investments by backing multiple deals under syndicate leads they trust.

"Please don't treat AngelList syndicates as training wheels for becoming an investor is a very real step into being an investor."

Paige Craig warns against treating syndicates lightly and underscores the significance of having proper investment experience before starting a syndicate.

Transition from Angel Investor to VC

  • Being a VC brings greater responsibility but the process is similar to angel investing for those with experience.
  • Having a good team and the ability to write bigger checks are the main differences when moving from angel investing to VC.
  • The core processes of finding and closing deals remain the same.

"The biggest thing is that I have a great team of people around me that can help me close deals and find deals and we write bigger checks."

Paige Craig highlights the benefits of having a supportive team and more financial power as a VC compared to an angel investor.

Sourcing Deals

  • Paige Craig prefers direct engagement in sourcing deals, such as attending hackathons and house parties.
  • Early-stage investors, especially the successful ones, tend to actively hunt for deals.
  • There is a contrast in deal sourcing strategies between early-stage investors and those at later stages.

"Now I'm naturally a hunter. I love going out to the hackathons and the house parties on the street and to the accelerators."

This quote reveals Paige Craig's proactive approach to finding investment opportunities.

"But as an early stage, a pre-seed seed investor, all the good ones go out there and hunt."

Paige Craig asserts that the most effective early-stage investors actively seek out potential investments.

Learning from Experience

  • VCs, like founders, need to execute decisions quickly.
  • Translating decisions into actions is crucial and sometimes overlooked.
  • The Airbnb experience taught Paige Craig to move faster and be decisive.
  • Confidence in one's skills can allow for quicker and still effective evaluation of founding teams.

"That Airbnb experience led me to making decisions and then following that up with an offer or a check or just getting shit done versus letting that decision sit around in my head and get permutated and changed over time."

Paige Craig explains that the lesson from missing out on Airbnb was the importance of swift decision-making and execution.

"Spending a week with a new team is a lot of time."

This quote indicates Paige Craig's belief that a week is sufficient to evaluate a founding team, suggesting confidence in his ability to assess teams quickly.

Importance of Founder Networks

  • Paige Craig values staying in touch with founders he has backed due to their ability to attract other great founders.
  • He emphasizes the importance of the networks and opinions of these founders.
  • A recent deal in New York was facilitated by a founder he backed five years ago, demonstrating the long-term value of these relationships.

"I really believe in staying in touch with all my founders, not just helping them, but great founders attract other great founders." "I really value the founders I work with, not just in the transactional mode of the companies they're building today or the companies they may build five years from now." "But my founders have great opinions and great networks of their own, and I really value the introductions they make for me."

The quotes highlight Paige Craig's investment philosophy of maintaining strong relationships with founders and leveraging their networks for future opportunities. He appreciates the non-transactional aspects of these relationships, such as their insights and connections.

Personal Favorites and Productivity Tools

  • Paige Craig's favorite book is "Ender's Game," which inspired him to shape his own path in the world.
  • His productivity tools include Lyft for transportation, Pipedrive for customer relationship management, Gmail, and the Notes app for task management.
  • He prefers the simplicity of the Notes app over more complex tools like Evernote.

"Ender's game. I read that when I was a little kid and it just made me feel like I was so right. I need to go out there and do my own shit and shape the world." "Lyft. So I don't have to waste time driving." "I use Pipedrive for CRM and to stay in touch with all the deals that we're running, Gmail and the notes app."

The quotes provide insight into Paige Craig's influences and the tools he uses to stay organized and efficient. "Ender's Game" was a formative book for him, and he relies on practical tools like Lyft and Pipedrive to manage his time and business dealings.

Reading Habits and Industry Respect

  • Paige Craig regularly reads Mattermark Daily, a curated newsletter featuring articles and blog posts from the venture capital industry.
  • He expresses great respect for venture capitalist Brad Feld, noting his advice on portfolio theory and his "pay it forward" approach to life.

"I read Mattermark. Actually, Mattermark daily. I read it probably two to three times a week." "One of the guys earliest I met who took time to give me some advice was Brad Feld."

The quotes reveal Paige Craig's sources for industry knowledge and his admiration for Brad Feld, who has influenced his approach to investing and professional conduct.

Future Industry Disruption and Investment Criteria

  • Paige Craig is interested in disrupting the government and nonprofit sectors, citing inefficiencies and potential for for-profit models.
  • He mentions Andela as an example of a for-profit company positively impacting education in Africa.
  • Craig's most recent investment was in a company led by a woman he found brilliant, passionate, and intense, reflecting his focus on personal qualities when investing.

"I think government is absolutely horrible and screwed up... I'm very open to founders who are disrupting government." "An example of that is we invested in a company called Andela, which is changing education in Africa right now." "And after 2 hours of meeting with her, I called my partner Jeff and said, this is the kind of lady that we invest in."

These quotes underscore Paige Craig's belief in the potential to innovate within traditionally non-profit or inefficient sectors and his investment philosophy, which places a high value on the personal attributes of the founders he chooses to back.

Show Promotion and Appreciation

  • Host Harry Stebings promotes Blinkist and the official SaaS podcast, which he co-hosts with Jason Lemkin.
  • He encourages listeners to sign up for the 20 Minute VC newsletter and follow their Twitter account.
  • Stebings expresses gratitude to Paige Craig and the listeners for their time and support.

"Blinkist, that's B-L-I-N-K-I-S-T where you can read business books in 15 minutes all through incredible summarized content." "And then we also have the official SAS to podcast brought to you by myself and Jason Lemkin." "I'm so grateful for you tuning in today."

The quotes are part of Harry Stebings's efforts to promote other resources available to the show's audience, including a book summary service and a podcast on SaaS, as well as a reminder to engage with the show's online content and community.

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