In this episode of the 20 minutes VC, host Harry Stebbings interviews Leon Wong, the founding general partner at Spectrum 28, a $170 million Silicon Valley fund. Wong's background includes experience at Lightspeed Venture Partners and SV Angel, and he brings a wealth of knowledge about the intersection of data, computation, and industry transformation. The conversation delves into the nuances of venture capital, with Wong challenging the notion that all great VCs need operational experience, emphasizing instead the importance of investment expertise and a strong operational network. He also outlines Spectrum 28's unique investment approach, which involves a hybrid model focusing on multiple verticals to remain flexible and efficient amidst changing market conditions. Wong and Stebbings discuss the evolving VC landscape, the significance of VC value add, and the strategies for building a cohesive and lasting venture team. Additionally, Wong shares insights on Spectrum 28's recent investment in a company addressing the challenges of accessing medical records.
"So joining me in the hot seat today, I'm thrilled to welcome Leon Wong. Now, Leon is the founding general partner at Spectrum 28, $170,000,000 Silicon Valley Fund..."
The quote introduces Leon Wong, emphasizing his role as a founding general partner at Spectrum 28 and his previous experience in the venture capital industry.
"And Angel Loop is free for all investors and only costs $59 per month for companies."
This quote highlights the pricing model of Angel Loop, a platform designed to enhance investor-founder communication, emphasizing its affordability and accessibility for users.
"Wonder Capital, the award-winning online investment platform that allows individuals to invest in solar energy projects across the US, earning up to 8.5% annually..."
The quote explains the core offering of Wonder Capital, highlighting the dual benefits of financial returns and environmental impact for investors in solar energy projects.
"I went to the University of Waterloo, started in a fairly technical part of the space at Microsoft and Microsoft research, designing search engines and search and storage."
The quote provides insight into Leon's technical background and early career, setting the stage for his eventual move into venture capital.
"I actually believe the opposite, which is that not all great operators are naturally going to be good investors."
This quote challenges the conventional wisdom that operational experience is a prerequisite for successful investing, suggesting that investment acumen is a distinct skill set.
"The more real time your operational relevance is, the more powerful it's going to be."
The quote emphasizes the importance of having a network with current operational expertise, rather than relying solely on one's past experiences, in the context of venture capital.
"I want to congratulate you on the incredible fundraise with Spectrum 28."
The quote is a congratulatory remark on the successful fundraising efforts for Spectrum 28, recognizing Leon Wong's achievement in securing capital for the venture fund.## Venture Environment Shift
"Yeah, so definitely there's been a shift. I mean, we went from things were exceptionally good towards the beginning of 2015 to things are incredibly rocky in terms of the start of 2016." "Do your investments have exit potential and will they survive the longer period in the market?"
The quotes highlight the change in the venture capital environment and LPs' increased emphasis on sustainable investments with clear exit strategies.
"So our target raise was closer to 125, and I think we continually increased it because of thinking for the long term, there were LPs that we wanted to include in this fund to start building a relationship in order to raise a larger fund later." "So ended up bringing it to 170 because we also brought on some team members we felt were exceptional and we could be confident deploying that extra amount."
The quotes explain the rationale behind the fund's target increase, emphasizing strategic relationship building with LPs and confidence in the team's capabilities.
"So I think anywhere in the efficiency curve you're going to see superior returns." "Where you see capital gaps are in phases after that, where you have the larger seeds that require larger amounts of capital because they're tackling something harder."
The first quote suggests that returns can be superior at any investment stage if it's on the efficiency curve. The second quote identifies where there are capital gaps in the market, indicating potential investment opportunities.
"We're a hybrid of the two. We invest across stage, but we don't limit ourselves to single vertical." "So that's the experiment we're running and that's why LP supported us, because we have a different playbook."
These quotes describe Spectrum 28's unique approach to investing across different stages and industries, which deviates from traditional fund structures and appeals to LPs seeking a diverse investment strategy.
"So for each vertical, when we focus on it, we do get to that equal level of depth." "However, for first fund, we're providing way more value and going much deeper than we otherwise would, because we're trying to build the reputation of delivering on that value."
The quotes explain that while Spectrum 28's investment strategy is broad, they still achieve a deep understanding of each vertical they invest in. The focus is on delivering value and building a reputation, despite the challenges of scalability.## Impact on Company Growth and Value Addition
"They care about how impactful were you to them as a company, growing them and adding actual concrete value."
This quote emphasizes the importance of venture capital (VC) firms providing tangible benefits to portfolio companies, which in turn builds the VC's reputation and justifies long-term investment from limited partners (LPs).
"So I don't think introductions and advice is outdated... However... which are the ones that we're uniquely going to be able to move the needle on, and how can we really add value that's in a measurable way?"
Leon Wong argues that while introductions and advice are not obsolete, the focus for VCs should be on unique contributions that measurably advance a company's key metrics.
"I think the only way you establish a reputation is actually by doing what you're saying."
Leon Wong stresses that a VC's reputation is established by fulfilling promises and delivering results before making public announcements.
"Could you build a team that is actually team oriented versus stars?"
Leon Wong discusses the concept of building a VC team that is collaborative and institution-focused, contrasting it with the traditional model of individual star investors.
"So who gets credit? Who gets credit for the work?"
This quote highlights the challenge of ensuring that in a team-oriented VC firm, credit for success is shared among team members rather than attributed to individuals, fostering a collaborative culture.## Recognition in Team Dynamics
recognition is dispersed has been something we've had to explicitly architect in.
This quote emphasizes the importance of intentionally structuring a team to distribute recognition evenly, which can contribute to the team's overall success.
No. I had Andy Ratcliffe from Benchmark on the show and he said that kind of inherent integration of the team and kind of lack of vc Persona, it was inherent to their success at benchmark.
The speaker references a conversation with Andy Ratcliffe, highlighting the role of team integration and the absence of strong individual egos in the success of Benchmark.
I think seven years.
This quote is a prediction for when self-driving cars will become widespread, at least in certain applications like warehouses.
Meditations by Marcus Aurelius because that book is about anti hype.
The speaker expresses admiration for "Meditations" due to its lessons on staying grounded and not getting caught up in power or hype.
So jobs is about humans. Humans are always going to find something to do.
This quote reflects the speaker's optimistic view that humans will always find ways to stay employed, even as AI changes the job landscape.
Humans wants and needs are infinite and I think we just adjust to them with time.
The speaker agrees with the notion that human desires are limitless, and this drives continuous adjustment and progress.
I actually like medium and quora in a more organic way that's less structured.
The speaker prefers platforms that allow for a variety of perspectives and the natural progression of ideas.
So our most recent investment is one that solves or attempts to solve the problem of medical records.
The quote explains the reason behind the speaker's latest investment, highlighting the need to overcome the traditional hassles of accessing medical records.
But Leon, thank you so much for coming on the show today.
The host expresses gratitude to the guest for sharing insights and contributing to the discussion on the podcast.
You'Re a founder or an investor, Angel Loop is a must.
This quote introduces Angel Loop as a valuable tool for founders and investors to manage post-funding activities and keep track of performance data.