20VC What Are The Big Questions Entrepreneurs & VCs Must Ask Corporate VCs, Why Corporate VCs Are Not Your Best Lead For Series A & Why The You Have To Network Your Way To Us' Is Wrong with Allison Goldberg, Managing Director @ Time Warner Investments

In an episode of "20 minutes VC," host Harry Stebbings interviews Alison Goldberg, Managing Director and Senior Vice President at Time Warner Investments. Goldberg shares insights into the rise of corporate venture capital and Time Warner's strategic investment approach, which balances financial returns with strategic goals, focusing on enhancing Time Warner's digital media capabilities. She emphasizes the importance of being open to diverse investment opportunities and maintaining a hands-off approach to potential acquisitions. Goldberg also discusses the evolving media landscape, particularly in gaming and content consumption patterns among millennials, and the potential of emerging technologies like VR and AR. Additionally, she advises entrepreneurs on engaging with strategic investors, stressing the need for understanding the investor's structure, approach to follow-on investments, and potential strategic synergies.

• Harry Stebbings introduces the episode of the 20 minutes VC podcast.
• Harry can be found on Snapchat for questions and suggestions.
• He mentions the rise of corporate VC and introduces Alison Goldberg from Time Warner Investments.

Hello and welcome back to another episode of the 20 minutes VC with me, your host, Harry Stebbings, and you can find me on Snapchat at hstebbings with two B's where you can ask me questions and suggest future guests for the show.

This quote is Harry Stebbings' introduction to the podcast episode, highlighting his availability on Snapchat for interaction with listeners.

• Alison Goldberg is the managing director and senior vice president at Time Warner Investments.
• Time Warner Investments focuses on strategic investment opportunities.
• The portfolio includes companies like Mashable, Discord, Admeld (acquired by Google), and Mike.
• Alison Goldberg sits on the boards of Outpost Games, Yieldmo, Bustle, and Mike.
• She started her career in finance at Morgan Stanley.
• Hunter Walk from Homebrew facilitated the introduction to Alison Goldberg for the podcast.

Alison also directly sits on the boards of Outpost games, Yieldmo, Bustle and Mike. Prior to Time Warner, Allison cut her teeth in the finance industry with a stint at Morgan Stanley.

This quote provides context on Alison Goldberg's professional roles and her experience before joining Time Warner Investments.

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• Alison's interest in tech investing began with a venture capital internship during college.
• She pursued investment banking in the media sector, working closely with Time Warner.
• After banking, she transitioned to venture capital and then joined Time Warner Investments in 2001.

Well, I think I got my first taste of tech investing in college. I actually did a summer internship one summer at a venture capital firm in New York, which was a super unique kind of summer internship opportunity.

This quote explains how Alison Goldberg's initial exposure to tech investing during her college internship influenced her career path.

• Corporate VC was less common when Alison joined Time Warner Investments in 2001.
• Some firms have been consistent in their VC efforts, while others have fluctuated.
• The perception of corporate VC varies by firm and is influenced by the track record of the people involved.

I'd say when I joined, there certainly weren't as many people doing corporate vc, although when I joined in 2001, it was sort of the first bubble of VC investing, and there were a lot of funds or corporate groups who had done it for a couple of years, sort of like late nineties, early two thousand, and then stopped.

The quote provides insight into the corporate VC landscape at the time Alison Goldberg joined Time Warner Investments, noting the inconsistency of corporate VC presence over the years.

• Time Warner Investments maintains an open policy for receiving investment pitches.
• They review around 600 deals a year from various sources.
• Alison Goldberg believes in the importance of openness to see a diversity of ideas.
• The first deal she worked on came through an unsolicited contact.

So for us, we've always been really open. So we have on our website an email address to send. Anyone who wants to send us a deck or just a pitch email can send it to us.

This quote emphasizes Time Warner Investments' commitment to openness in sourcing investment opportunities, highlighting their willingness to consider unsolicited pitches.

• Openness to deal flow can be more manageable with a strategic investment thesis.
• Having a clear focus allows for quicker filtering of opportunities that do not align with the firm's goals.

I think it's easier when you have a thesis. So because we're strategic investors and we have a theme, we're trying to find companies that fit into certain categories in the digital media ecosystem, it's a little easier because then you can sort of filter out stuff pretty quickly.

This quote discusses the practicality of being open to unsolicited deal flow, particularly when a firm has a strategic investment focus that allows for efficient filtering.## Perceptions of Corporate Investing

• Corporate investing is often seen as requiring a specific networking approach to get hired or present business plans.
• Openness and accessibility to venture capitalists (VCs) should be improved, especially when approached via social media or direct messages.

"There are VCs who say you have to network to us in a certain way to either be hired or to show them your plan." "And if people dm you or try to dm you or at you on Twitter and want to send you a business plan, say, yes, it's not that hard."

These quotes highlight the current perception that VCs have rigid networking requirements for engagement and suggest a more open and accessible approach to interactions, especially through social media channels.

• A good investor must first be a helpful venture capital investor.
• Being a strategic investor involves enhancing the value provided to companies through connections and business development within the investor's larger company.
• It's important to know how to be a supportive VC before adding the strategic component.

"And so how helpful you can be to your companies with everything from hiring to fundraising to M&A to biz dev and strategy." "And then how can you be even more helpful?"

These quotes explain the foundational responsibilities of a venture capital investor and the additional benefits a strategic investor brings by leveraging their own company's resources to support the invested companies.

• Strategic and financial goals are both crucial for corporate VCs, with a balance between generating competitive returns and creating strategic value.
• Strategic investments are made with two goals in mind: near-term business partnerships and learning about disruptive technologies that could impact the industry.

"So we need to make money. We want to be competitive with VC returns and make money for our shareholders and our company." "And then we also want to make sure we're creating some strategic value for our divisions."

These quotes emphasize the dual focus of corporate VCs on financial returns and strategic insights, highlighting the importance of balancing these two objectives to benefit the company and its shareholders.

• Strategic investors need to be transparent about their intentions to avoid the perception that investments are for early acquisition opportunities.
• Entrepreneurs should be cautious if a strategic group's modus operandi appears to be scouting for acquisitions through investments.

"So we're very upfront to say that's not why we're doing this."

The quote clarifies the importance of being upfront about investment intentions to maintain trust with entrepreneurs and avoid concerns about premature acquisition motives.

• Having a strategic thesis makes investing more interesting beyond financial outcomes.
• A strategic investor enjoys evaluating how technology can disrupt or enhance their industry.

"I just think it's more interesting to have a thesis and you're looking." "So having sort of that piece and being able to think about that and thinking about how a new technology can disrupt one of our businesses or help one of our businesses, to me, just makes it a lot more fun."

These quotes reveal the personal satisfaction and intellectual stimulation that comes from strategic investing, where financial considerations are paired with strategic alignment and potential industry impact.

• New content brands are emerging for younger audiences, and technology is changing how content is consumed and navigated.
• Investments are driven by the creation of new brands and technologies that cater to the changing behaviors of millennials.

"So that's been a sector that we've spent a lot of time looking at." "So understanding that and how consumers discover and enjoy and watch things has just changing so rapidly."

These quotes discuss the focus on new digital content brands and the evolving landscape of content consumption, emphasizing the importance of understanding these developments for strategic investments.

• The gaming sector remains an exciting investment area despite fluctuating hype cycles.
• Warner Bros. has a significant presence in the gaming industry, with a diverse portfolio of games across various platforms.

"Warner Bros. Now has around a one and a half billion dollar top line games business, which is amazing."

This quote shows the speaker's bullish stance on the gaming sector, backed by Warner Bros.' substantial investment and success in the industry.## Investment in Gaming Sector

• Harry Stebbings discusses the importance of innovation in the gaming sector and how it aligns with their company's IP.
• They are looking for companies that push the industry forward with new formats and platforms that can utilize their IP effectively.
• Outpost Games is highlighted as an example of creating innovative games and tech platforms.

"So we as a company have a lot of ip that makes a lot of sense in that environment, in the video game environment." "We're looking at who's innovating in the sector, who's creating the next thing."

The quotes emphasize the company's focus on leveraging their intellectual property within the gaming environment and seeking out innovative developments in the industry to invest in.

• Alison Goldberg discusses the company's approach to investing in AR and VR technologies.
• They have made successful VR investments and are exploring content that makes sense in VR.
• The company has invested in NextVR and AdAE for their potential in enhancing experiences like basketball games and bringing characters like Wonder Woman to life in AR.

"I think it's super early still, just obviously from a usage standpoint, I think it's only going to get better, but it's early." "We've done a select few investments in the space, and we're going to learn and see how the market develops."

These quotes highlight the company's cautious yet optimistic approach to investing in early-stage VR and AR technologies, with a focus on learning and adapting as the market matures.

• The company does not operate as a traditional fund but rather through a capital allocation process.
• Each deal is approved individually, and they have a projected annual budget for investments.
• They focus on follow-on investments and model out the company's financial needs and market readiness during the diligence process.

"We're not set up as a fund, so it's more of like a capital allocation process." "We definitely think about the timeline."

These quotes explain the company's investment structure and their strategic approach to considering the timeline of investments, emphasizing the importance of thorough due diligence.

• The company does not have traditional ten-year fund lifecycle constraints, allowing for more flexibility in investment timelines.
• They typically avoid very early-stage seed deals and focus on strategic fits with more near-term potential.

"We don't have those limitations or restrictions, and we don't have the need to show certain exits because we're raising another fund."

This quote clarifies the company's freedom from the constraints of a traditional fund structure, which allows them to focus on strategic investments without the pressure of demonstrating exits for fund-raising purposes.

• Entrepreneurs should thoroughly research the structure and history of the strategic investor.
• Understanding the strategic's business and potential fits is crucial.
• Entrepreneurs should learn about the investor's approach by talking to CEOs who have worked with them.

"First, I would try to just learn as much as you can about that specific investor." "Understand what that strategic represents, what their businesses are, and really try to figure out, are there any natural fits."

These quotes suggest that entrepreneurs should conduct in-depth research on potential strategic investors to assess compatibility and strategic alignment.

• Entrepreneurs should ask strategic investors about their overall view of venture capital and their investment motivations.
• It's important to inquire about the possibility of the strategic investor seeking special rights or control.
• Questions regarding follow-on investments and the longevity of the company's venture capital activities are essential.

"Definitely ask, how do they view venture capital just overall?" "Ask them if they're going to ask for special rights."

These quotes advise entrepreneurs to ask critical questions to understand the strategic investor's intentions and whether they align with the entrepreneur's goals for their company.## Working with Other VCs

• Evaluating a VC's track record with financial and strategic partnerships is crucial.
• Ensuring that the startup does not become exclusively tied to one VC partner is important.

Do they have a good track record of working with other financial vcs? And also, how about working with other strategic vcs? You don't want to lock yourself up where you're sort of exclusive to one partner.

This quote emphasizes the importance of a startup's need to assess a venture capitalist's history of collaboration and the potential risks of exclusivity with a single VC.

• Entrepreneurs worry about negative signals if a corporate invests over a top-tier VC.
• Stage mitigation is a strategy to avoid negative signaling; corporates should not lead Series A.

So one way to mitigate it is really stage mitigation.

The quote suggests that the timing of when corporates become lead investors can be critical in preventing negative perceptions in future funding rounds.

• Strategic investors typically lead from Series B onwards.
• Co-leading Series A with another financial investor can be beneficial.

We've also cold a's. Like we could split an a with another financial investor.

Alison Goldberg discusses the approach of splitting a Series A with financial investors to balance strategic and financial support.

• A rapid response segment where Alison Goldberg shares her immediate thoughts on various topics.

So let's see your favorite book and why.

This introduces the quick fire round segment, prompting Alison to share personal preferences and professional insights.

• Alison's favorite book is "The Windup Bird Chronicle" by Murakami.
• She appreciates fiction and finds the book beautifully written and relatable despite its weirdness.

My favorite book, I'd say now, is the Windup Bird Chronicle by Murakami.

Alison expresses her admiration for Murakami's work, highlighting her interest in fiction.

• Esports and VR are considered overhyped in the media space.
• Blockchain and crypto are well-hyped generally but not as much in media.

Overhyped, I think, has been esports and VR, too, but definitely esports and then underhyped.

Alison shares her perspective on the current hype trends in media, singling out esports and VR as receiving more attention than warranted.

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• It has potential applications in tracking rights and talent associated with media productions.

I mean, it could be interesting from an understanding rights perspective.

Alison believes blockchain has the potential to significantly improve the management of media rights and related data.

• Alison believes in "trusting the process," a reference to the Philadelphia 76ers.
• This belief may not be widely held by others around her.

I believe in trusting the process.

The quote reveals Alison's personal philosophy, which is influenced by a sports reference that others may not commonly share.

• Alison reads tech blogs and newsletters daily.
• She has been reading Dave Pell's newsletter, now called Next Draft, for around 20 years.

The longest I've read, I think I've been reading Dave Pell's newsletter, which is now called next draft, for like 20 years.

This quote indicates Alison's long-term commitment to a particular source of information, highlighting its value to her.

• Alison's company remains bullish on video games and sees opportunities in esports.
• The company is exploring ways to make esports more accessible and appealing to a broader audience.

I think there's a lot of opportunities specific to us there and esports as well.

Alison explains the company's continued interest in video games and esports, suggesting they see untapped potential in these areas.

• Alison anticipates the continued integration of esports into mainstream media.
• Future efforts in mainstreaming esports may differ from past attempts.

I do think we will. And I think it might look a little bit different.

The quote predicts the evolution of esports' presence in mainstream media, hinting at adaptations to broaden its appeal.

• The most recent publicly announced investment was in Mike due to its content and understanding of the millennial mindset.
• The team at Mike was also a significant factor in the investment decision.

Our most recent publicly announced was Mike, and we said yes because we love the content.

Alison shares the rationale behind her company's investment in Mike, emphasizing the quality of content and alignment with millennial interests.

• Expressing gratitude to Alison Goldberg for her insights on the show.
• Encouragement to follow Alison on social media for more updates.

Such a pleasure to have Alison on the show there and fantastic to hear such a different perspective to investing.

Harry Stebbings concludes the show by thanking Alison for her participation and offering a unique perspective on investing.

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