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Meka Asonye, a Partner at First Round Capital, started angel investing in 2018 while working at Stripe and joined First Round in 2021. He has made dozens of Angel investments and 13 Venture investments, and he's just getting started! While he focuses on B2B SAAS, he has not shied away from investing in audacious founders, from modernizing 911 call centers to putting the biggest satellites in space. Meka shares his approach to finding true outliers, a practice he began while uncovering hidden talent for the Cleveland Guardians.
Meka writes checks of $2M to $5M as the lead at pre-seed and seed.
Highlights from the discussion:
- Meka's unconventional path to VC: from discovering high-potential baseball talent to leading sales at startups to VC
- Meka's first angel investment came from Craiglist!
- Exploring the frontiers: investing in Space and GovTech
- How Meka supports founder friends, honestly
- Leveling up in VC by learning from partners, retros, reviews, and reflection powered by process and data
This is for information purposes only. This is not investment advice.
Topics
Topics
- (00:00) - Kicking Off the First Funders Podcast with Meka Asonye
- (03:52) - First Round Capital's role in Meka and Shaherose's transition from Angel to VC
- (05:53) - Meka's Unconventional Path to Venture Capital: from baseball talent to management consulting to startups to VC
- (10:54) - Meka's purpose is rooted in being a part of the founder's village
- (13:55) - The Art of Angel Investing: Meka's First Investment Story came from a person he met on Craiglist!
- (18:37) - Thoughtful reflection: outliers can't be discovered via pattern matching
- (20:15) - How Meka assesses for money smells and hustle in a founder
- (23:16) - Missed deals like Anthropic keep Meka up at night.
- (28:10) - How Meka supports founder friends
- (33:42) - Outcomes and up rounds thus far: Rimeto, CODA, K2Space, Prepared
- (36:16) - Exploring the Frontiers: Investing in Space and GovTech
- (37:42) - Meka's betting on a pair of brother's putting big satellites in space
- (39:04) - Unexpected VC bet: Integrating tech into every 911 emergency call
- (43:31) - Meka is a generalist investor with a focus on B2B SAAS, Fintech and hard tech
- (44:54) - Investing in YC companies and maintaining an orientation towards prioritizing ownership over valuation
- (49:28) - First Round Capital's approach is rooted in consensus not conviction, they invest as team
- (52:17) - Leveling up in VC by learning from partners, retros, reviews, reflection powered by a process and data
- (01:07:47) - Outro
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Creators & Guests
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Host
What is First Funders?
Learn from angel and seed investors bold enough to write the first check.
How do they decide which startups to invest in?
How do they gain conviction in founders and ideas?
How do they add value to their companies?
Shaherose Charania and Aamir Virani are operators turned investors. They chat with their friends investing in early-stage technology startups and learn about their strategies to fund the best founders and startup companies.
If you are an angel investor or seed investor, you'll hear how others operate.
If you are a startup entrepreneur, you'll hear how investors filter and decide on writing that first check.
05: Meka Asonye - First Round
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Kicking Off the First Funders Podcast with Meka Asonye
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[00:00:00]
Aamir: Welcome to first funders. Hi, Shaherose. How are you doing this week?
Shaherose: So good.
Aamir: this week attended a board meeting. So this is my first board meeting for one of our portfolio companies as an observer. Which was incredible. A great experience for me. The founder did a great job sending the materials in advance and board members and board observers.
Shaherose: We were all chiming in the week before asking questions so that soon as we jumped into the meeting, we covered a lot of ground. And I've sat on the board of a nonprofit that actually behaved very much like a startup for many years and was, always impressed with exactly that process of sending materials in advance, everyone getting engaged prior to and using the time in person to really brainstorm and take things to the next level.
So yeah, that was a a highlight for me this week.
Aamir: Do you feel like there's a difference between how people who are actually board members versus observers operate in this [00:01:00] setting?
Shaherose: That's a great question. What I did notice because there were two official board members that they. They obviously knew a lot more about the company because they had been on the board for longer. So they were bringing a lot of historical context and were able to really dig in on more of the financials from previous years and compare them more quickly than we were able to.
So there was simply deeper knowledge coming in from them. But participation wise, we were all equally engaged.
Aamir: Yeah, it's funny. I feel like there's always a way founders are told to think about observers versus actual board members. But in, in my experience as well, it's been that whether you're an observer or not, you're fully participating in the discussion. You just don't really have a vote at the end for the formal counts.
Shaherose: Exactly.
Aamir: My end I've, I'm poking around for operating roles. I'd like to, join a company again. And so I went to the YC work at a startup page and I will suggest to the angels and [00:02:00] even the pre seed investors out there that it's a really interesting signal to go to that location. Maybe other job boards are this way too, but since, YC is such a hotbed of startups that come out with momentum checking out The job postings there helps you understand whether anyone's got momentum or not.
There were a lot of companies that we've seen from the prior demo day, just a few months ago who have no additions who are still trying to add one more person. And then there's some that already have five or six people and are like clearly showing that they've figured something out even just in this short amount of time.
If you are interested in YC demo day companies. I suggest you just go look at work at a startup.
Shaherose: It's brilliant. Do you want to share more about the kinds of roles you're looking for?
Aamir: Yeah, I think the way I'm putting it is I definitely am staying in the Bay area. I am really interested in coding again. It's been a while since I've coded for production. I like the product roles. I like doing that. But I want to be a little bit closer to the engineering side than just senior level, where all I do is work on PowerPoints or documents.
Getting closer [00:03:00] with a small team would be good. If it's a team of 10 or less, I feel like that's the sweet spot for me.
Shaherose: You heard it here first, everybody, Aamir is out on the market.
so with that, let's jump into the interview for this week. We have Meka Asonye from First Round Capital,They invest pre seed and seed on average between two to five million they often lead those rounds
Meka particularly focuses on B2B SaaS. He does a little bit of FinTech and a little bit of deep tech, but ultimately he is a generalist as is the fund. So with that, let's get into the interview.
.
Shaherose: Welcome to the first funders podcast today We have Meka Asonye from First Round Capital. And what I'd love to do is get started with a story of how we know each other.
First Round Capital's role in Meka and Shaherose's transition from Angel to VC
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Shaherose: Meka and I met through Zoom. So exciting. We met through Zoom during COVID. Meka was leading the First Round Capital's Angel [00:04:00] Track, which I was a part of, which As you know, Meka had a huge impact on my journey from angel to VC. And so for listeners, the program is an inside peek into how investors decide.
It just helped us angels get better at being angels. And for some, it played a role in them transitioning from angel to VC, which was not just in my case, but in many others. The thing about the program, that most stood out to me was the signal I got. That things are changing in the venture ecosystem.
folks like Meka, who are founder operator profiles are increasingly becoming a part of the ecosystem. And so seeing you Meka go from former operator to angel to a top tier fund to like First Round was true proof of this change And so it's so exciting to have you on the show to have you talk about your journey.
Meka: No, I really I so appreciate, I was just going to say, I so appreciate you having me on And as you talk about AngelTrack for me, it's funny being on the other side and teaching some of the curriculum, but I was also one of the students [00:05:00] in AngelTrack and AngelTrack was foundational for me in moving from operating To investing as an angel and feeling comfortable to investing as an angel, to moving to an institutional VC.
And so I'm always thankful when I can be put in communities of people who are trying to learn a similar trade or craft and feel really lucky to be doing it.
Shaherose: Yeah. Yeah. Thank you. I know you as this official bio that you presented during First Round Angels, which was high performing operator from Stripe and Mixpanel turned VC. And then we met for coffee about a month ago and I started to learn a little bit more about your background, read a little bit more about you online.
first generation American from the Midwest. Can Your first job out of college was with the Cleveland Cavaliers living the life scene in Moneyball. Were you Brad Pitt? Were you Jonah Hill? So many questions. And so with that, I'd love for you to introduce yourself.
Tell us that full story from the early days and eventually how you got into venture.
Meka's Unconventional Path to Venture Capital: from baseball talent to management consulting to startups to VC
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Meka: Yeah, I didn't know what venture capital was honestly until 2013 when I moved out to the Bay Area Silicon [00:06:00] Valley is like the furthest thing from my roots you My family are Nigerian immigrants. We grew up in the suburb of Chicago. And I feel really lucky to be in this seat, but I think it's a pretty strange story.
And so for me, it starts in undergrad I was lucky enough to go to Princeton. I was an econ and finance major there. And so many people went from there to Wall Street or consulting. And I spent my sophomore summer at Merrill Lynch, which is no longer an investment bank, rest in peace. But at the end of the summer, I was like, how do people do this as their full time job?
This cannot be what I'm destined to do. So I went back to campus in the fall and I was like, I got to figure out what career is going to be right for me because While there were a lot of smart people there, I just wasn't enjoying the day to day of the work. And so I just started browsing through the alumni directory, looking for people with really interesting jobs and turns out the general manager of the Cleveland Indians and guardians was a Princeton grad.
So I shot up a DM. I said, Hey, I'm Meka. I really love [00:07:00] sports. I wrote all my independent work at Princeton about sports stuff, would love to learn from you. And he got on the phone, he offered me a summer internship, and that summer internship turned into a full time job. So I spent four years there.
After four years at the Cleveland Indians, I went to business school at HBS. Out of HBS, I was a consultant at Bain and Company doing a lot of Fortune 50 work, but I was doing it here in San Francisco. And when you're here in San Francisco, You can't avoid bumping into founders, VCs, early stage operators, and you just hear about how they think about doing something one day and then they do it the next day.
It's not Oh, we did a study for three months and then we presented it to a steer co and then they thought about it. And then they put it on the shelf. It was just like, move fast and break things. And I just, I wanted to be a part of that. So I started looking at early stage companies was fortunate enough to land at Stripe on the early days and helping build out the sales organization.
My team was the team that was actually trying to onboard early stage companies that were high growth. So one of Stripe's secrets to success was companies like Uber [00:08:00] and Lyft and Postmates all started on Stripe at the earliest days. And so my team's responsibility was like, don't find all these high growth startups.
And as I was spending time coaching my reps to spend time, not on SMBs, but VC backed startups, I just got, I got enthralled in this ecosystem of early stage founders. And that's when I started angel investing. That's when I. I started doing Angel Track when I started really thinking that venture could be a path for me.
And many years later, fast forward and now I'm on the dark side at First Round Capital, investing in early stage founders.
Aamir: Can I ask you two questions
Meka: Sure thing.
Aamir: you said Midwest. where did you grow up?
Meka: I grew up in Homewood, Flossmoor. So I grew up in Chicago. And the funny thing about the whole Indians thing is I grew up the biggest Chicago Cubs fan growing up. And I don't know if much about sports, but the Cubs were a tortured franchise. And then I want to say in 2018, after I, or 2017, after I'd left the team but when I was, a lot of the guys on the team were still, people would come up through my minor league system.
The Indians were in the world series. So I flew back to Cleveland. I'm there at the [00:09:00] world series. The world, Cleveland has also been a little bit of a tortured franchise for a long time. And I finally think we're going to win the world series. But we're playing the Chicago Cubs. So my entire family is rooting against the team that I helped put together.
We end up losing in game seven. I've never, I don't think I've ever been more sad in my entire life for something professionally. But my whole family was happy because the Cubs finally won the World Series that they hadn't had in a hundred years.
Aamir: So I guess we already have the answer to what your worst investment is. You decided to go, you decided to go all in on the Indians, the year that the Cubs won it.
Meka: Oh, man. Yeah. It's like Venture. It takes a long time to see the returns. And there's still some guys on the team who were there when I was there. So I'm hopeful that in the next few years, you'll see the Guardians return to the World Series.
Aamir: I empathize with you. I'm from Houston originally. And so the Astros were a tortured franchise and then they weren't, and then they were cheaters. And then maybe they're not really cheaters anymore and we're champions. Baseball is a rough sport [00:10:00] to cheer on.
Meka: What a rollercoaster ride.
Shaherose: And such a hard conversation for me to have being from Canada where all we do is watch hockey. And I love how I said Cleveland Indians. What did I didn't even get it right. Cause I really know nothing about baseball.
Meka: You said the Cavaliers, which is a Cleveland sports team. So you get partial credit.
Aamir: Yeah. Was it, was baseball your sport growing up? I, that was the other question I had is or were you into other sports?
Meka: No, I grew up playing basketball and football. And honestly, the only reason I worked in baseball is because as a econ and finance major, baseball has the cleanest data set. There's tons of statistics, for back from when Babe Ruth was playing. And so it made it easy to do a lot of the money ball analysis.
And so that's how it fell into the baseball.
Aamir: Okay. We'll have to have a separate podcast later to talk about analytics in soccer and in basketball.
Meka: For sure, it's taken over everywhere!
Meka's purpose is rooted in being a part of the founder's village
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Shaherose: here you are now at First Round Capital. [00:11:00] If you think about your purpose or your why, what is it now? Do you have a sense of your why?
Meka: Yeah. I always talk about how things take a village. And I think about what we do at First Round and every single person on this team is so important to delivering amazing experiences to our founders. And so when I think about that concept of it takes a village, I think about myself as being a small part of that village for these founders and a small accelerant to some of the most ambitious people trying to take on the world's hardest problems.
And so for me, I just, I get so much enjoyment in helping others. And I think And in helping others do something really meaningful. So that's my why every morning it's getting out of bed and thinking about the founders that I'm lucky enough to partner with now. And the founders that I'm going to be partnering with in the future.
Aamir: And it's how can I be a better advisor and partner to them to help them achieve their missions? part of what happens in venture capital is that in theory, you make a lot of money. So it'd be interesting to hear let's say it's down the road and you've got a lot of money. Do you have any other secondary goals in mind besides [00:12:00] helping founders is amazing. Helping to build the economy and the companies is awesome.
Is there another goal you have as you go out and live your life?
Meka: Honestly, not really. Like when I think about. How I grew up our parents gave us as much as they could. And I feel very lucky to have had opportunities to go to the right schools they exposed us to a lot. And so for me, I feel like I've achieved financially, what I've wanted to achieve in this world.
Like I just want to be able to provide for my family. And so I feel like I have the ability to do that and make sure that my kids can grow up, slightly more resources than I did. But I also think that It's sometimes helpful to have resource constraints. Like I think I'm a product of feeling like at times I had my back up against the wall and that there was no safety net.
And if there was a safety net, I don't know how that would have changed things. And I'm like a pretty simple dude. Like I like watching sports, I like playing golf, I like hanging out with my friends. And financial success isn't really going to change any of those things. Maybe you play golf in slightly fancier [00:13:00] places.
But for me, I'm pretty happy on any 18 old muni because I'm just, I'm competing with others. I'm competing with myself and I'm having a great time with people I enjoy. Oh,
Aamir: what's your handicap?
Meka: I knew you were going to ask me that. It's not good. It's higher than I want it to be, but I'm playing on like a 15 right now. But I will defend that and say I started playing golf in the pandemic because there was nothing else to do. And so I feel like for only playing golf for a handful of years I feel pretty good and I keep every single time out there.
I think I'm on the precipice of greatness. And who knows? Maybe this weekend is the weekend where I break 80.
to make you feel better? I'll tell you that my handicap is higher than the maximum handicap calculation, right? 42, I think. So I'm still working on it.
But the fact that you know this system means that, you're on the, you're on the journey and it's going to slowly come down.
Aamir: I hope you're right. Why don't we go to the first, like real question, right?
The Art of Angel Investing: Meka's First Investment Story came from a person he met on Craiglist!
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Aamir: It'd be great to hear about your first investment. This is a path that many folks want to go [00:14:00] down and they're just afraid to pull the trigger on their first angel investment. They're not even sure how to go about doing it, how they would meet the right people, where they would get the capital.
We'd love to hear how you went from, someone who was working early at companies and had all this experience to where you were able to write your first real check.
Meka: Yeah, it's it's a really odd story. And so the person I wrote the check in I actually met on Craigslist. So I was I was looking for a new roommate. I was moving out of one place in San Francisco and moving to another and someone had a Craigslist posting for a bedroom in a Marina apartment.
I ended up living in that place and meeting this guy, Maxwell, who worked at Facebook. And during my time as roommates, He was just one of those people who over delivered on everything, whether it was like the grocery order or like washing the dishes or like when he'd talk about proposing to his fiance the way he was going to do it.
Everything was always like top 0. 01%. I'm just like, does this guy have any chill? Does he like ever let his guard down? And mind you I'm a random Craigslist roommate. This is not someone who's trying [00:15:00] to like flex and show out He doesn't think that there's anything that I can do for him at this point.
But he was leaving Facebook to go start a company with two other of his colleagues at Facebook. And I didn't know the other two co founders. I also knew that they weren't really at Facebook, but that was about it. And so I knew that Max was one of the smartest, hardest working people in the world.
And when I asked him what he was working on, he was like, What do you do when you're at Stripe and you're about to go into a meeting with someone you haven't met before? I'm like, Oh, I go and I pull up LinkedIn. He's isn't that weird that like you research your colleagues on another platform? And I was like, that is strange.
He's we want to fix that. We want to take all the information inside of an organization and we want to make it so that you are really prepared when you're going to different meetings so that you really understand who your colleagues are, what projects they've been a part of. I thought it was a great idea.
So I had never written a check before, but again, this was at the stage of my career where I am at Stripe and we're investing. We're trying to onboard all of the high growth startups. And I was just like, Hey, Max, I know this sounds weird, but can I [00:16:00] put some money into your company? Not a lot. I don't have that much to give, but I would love to be a small piece of this.
And he said, yes. So that was, I went from the day before that, never having written an angel check all of a sudden, like I'm an angel investor. And the funny thing about that, you see it on some people's LinkedIn profiles. It's like angel investors, it's a mindset. And so you don't really need, anything to start and I think some people think Oh, they hear about these giant angel checks, but an angel check can be $1,000 And obviously $1,000 is still a lot of money, but they don't have to be these massive checks. And so that was my first angel investment. And it's funny looking back that company Rimeto ended up getting bought by Slack which is now part of Salesforce, but I think it's pretty rare for someone's first investment to actually turn out into an exit. And so the multiple on money is pretty good. The IRR is really good because the acquisitions would have happened three or four years after, after I invested. But it's a story that ends really well.
And what I love about it is just that, was luck. It was happenstance, in the [00:17:00] moment when he was telling me he was starting that company, he's thinking about it and saying that I wanted to invest like, one of the key learnings I always have is you just have to put yourself out there.
You just have to make the ask. Because there's so many opportunities that are around you and if you don't seize those opportunities, those are the kinds of things that you end up regretting down the line.
Aamir: so you described your roommate Max as he didn't display chill. And that was one of the things that you saw as a signal that this person would do something that, how do you measure chill? That must be a signal in a weird way today, right? You're assessing founders on something like that, I would guess.
So how do you assess chill today or lack of chill in a positive way?
Meka: Yeah, honestly, I think a lot of it is how they show up in the first interactions. You just want somebody who's never going to take no for an answer. You want somebody who does things the right way because they have pride and craftsmanship in their own work, not because they think that someone is watching.
You want these people with a chip on their shoulders and feel like they have something [00:18:00] to prove, or like the problem is so burning that they're like, this thing has to have been solved yesterday. And I do love someone who doesn't get too high with the highs or too low with the lows, but they just have to have that underlying boiling intensity that For some people shows that you see it on their face and you're like, Oh whoa, slow down.
But for other people, like they can look cool and calm on the outside of the inside. You just see that, that inner desire. You hear it a lot when you're talking to people who spent a lot of time with the people, like we spent a lot of time trying to do high quality reference checks and you start to hear it over and over again, where people are just like, this person is maniacal.
They won't stop until they figure it out. And Max is one of those humans.
Thoughtful reflection: outliers can't be discovered via pattern matching
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Is there anything from your early days sourcing players that you apply to this assessment of founders? Cause I was reading a bit about how you said, Hey, like spotting hidden talent in the minor leagues is a similar idea to, uncovering high potential founders.
Meka: Yeah, I think one of the things that I'll say is that reps [00:19:00] matter and pattern recognition matters. But oftentimes there's no pattern. Like the outliers all look different. And you can think about that, whether or not you're looking at a sports analogy. We're like some of the best players are like small and quick.
Other are like really big and fast. And strong. And so I think founders, different founders leverage different superpowers.
For one person, it might be their product design sense.
For somebody else, it might be their commercial instincts.
For somebody else, it might be the sort of like their customer centricity.
For somebody else, it might just be like their raw intellectual horsepower.
Everyone has different things that helped them spike as a founder. And I think that if you take your first investment, you're just like, okay, I'm looking for more Maxs I think one, you're gonna, you're gonna realize that you're looking for the outlier and you probably end up just finding 99 other people who don't, return real outcomes.
But I think the other thing I think about is when we're thinking about like inclusive inclusivity and what the world of Founders look like pattern recognition can be something that just keeps reinforcing [00:20:00] stereotypes. And so there's traits that you're looking for, but I think it really depends on the opportunity.
And so I try to never just say Oh, this founder, it looks like this founder has all the same characteristics as this founders. It's how does this founder work in this specific opportunity,
How Meka assesses for money smells and hustle in a founder
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Aamir: So on another podcast, you mentioned that you love hearing about founders who are like this and they have a commercial orientation. I think that was the phrase you used. You like seeing that they want to know how to build a business. So when I heard that, I was thinking to myself, a lot of founders are really young though.
They may have never been part of a business. They may not have that experience that someone like you did, right? You had worked at Bain, you had worked at startups that had gone through high growth to where that you actually had to build out sales and marketing. And. Understand what the business needed to be.
Not just, Oh, I have a hypothesis that we'll sell against eyeballs. How do you look for that whenever you're talking to the founders you deal with today?
Meka: Yeah, I think sometimes commercial instincts can be something that sounds more traditional that you might learn in an MBA program, but I often think it's not. I don't know if you've had this experience where I [00:21:00] got hustled at a Girl Scout cookie stand the other day. I was going to buy two boxes of Tagalongs.
And somehow I ended up walking away with six boxes of Tagalongs. And not only that, but I also tipped the Girl Scout. So that was something that I'd never seen before. And I was like, this girl has commercial instincts. Some people call it money smells and people call it commercial instincts, there's lots of different things.
But I walked away being like, 20 years from now, I want to back that Girl Scout because she knows how to hustle. She knows how to extract value from her customer. And it was just you know it. When you feel it, I think there's certain things like there's certain questions that you can ask oftentimes just to understand whether or not people are commercial.
Oftentimes I'm trying to understand like how well do they understand the customer's option set and how they compare to that option set? How well do they can understand like the value that their product is delivering and how much you can, of that value you can extract for yourself. There's different Frameworks that we'll sometimes use.
There's different questions that we'll use, but you just want to see that [00:22:00] someone's really thoughtful about all of this, because I think there's a lot of founders who really want to build something cool. But I think the best founders, not only do they want to build something cool, they want to build something cool that solves a real burning business problem and that you can monetize.
Aamir: Yeah, I feel like I am often ranting to founders where if they come to me and say, I have a great project, I'll be like, projects are for grad school. Businesses are for real life. So we need to figure out how you would make money on this to determine if it's actually viable.
Meka: I like that. I like that a lot.
Shaherose: I was totally that Girl Scout, by the way always top performer in selling cookies and a really good nonprofit fundraiser. So these things do start early, my friend.
Meka: See?
Aamir: I think the Girl Scouts must be sharing information. Cause we bought some over the weekend too. And my wife was like, we'll buy one of those or, and then one of our kids like, no, I want this instead. And so they just charge us for both.
Meka: Oh, man.
Shaherose: the slick checkout.
Aamir: Yeah,
Meka: I [00:23:00] was waiting for the iPad screen where the tips were like 25, 30, 50 percent. You're like, what? What just happened here?
Aamir: yeah,
Shaherose: So good.
Aamir: there's probably a badge somewhere for someone who implements that in their sales process.
Missed deals like Anthropic keep Meka up at night.
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Meka:
Shaherose: Thank you for that Meka, Investor life sounds great, clearly, because you nailed it out of the park the first time around, and you must be continuing to nail it. But in reality, we all know that it takes a lot of hits before you get a true home run. Oh wow, I just did a baseball analogy and I wasn't trying!
Meka: at you.
Shaherose: blew myself away. So let's talk about Your worst investment. It could be worst in whatever vector you think means worst. Tell us what happened and what did you learn?
Meka: Yeah I'm promise I'm doing the best to answer this question. However, I will say, so I've written 13 checks at First Round and all of them still have a chance at glory. So [00:24:00] no one has shut down yet. And so there's not a, and I also don't have a shutdown in my angel portfolio yet either. So I was going through the list and I was like, I'm going to answer the spirit of this question.
I'm going to give them a failure, but I think every company still has a shot. There's companies that are doing better than others, everyone is still chugging along when I actually think about like the biggest regrets and the things that haven't worked out.
It's actually missed opportunities. And the thing that you realize in venture is that missed upside, like it's actually way worse to miss the chance of buying a small percentage of the next stripe than it is to, burn 5 million of the firm's capital on a company that didn't work. And so I've got so many examples of this.
I think, one of the founders in my HBS section, so you, at HBS, you get cut up into cohorts you take three classes a day with the same people for an entire year. I sat next to this person all year round and he ended up leaving for the second [00:25:00] year and starting a company called Handy and I didn't invest at Stripe, I worked with Daniela who went on to work at OpenAI and then be one of the co founders of Anthropic.
I didn't invest. I think about that every single night. Like, how do you have these people who you've spent years with? In an organization, know that they're one of the best people. They go off to start a company and you don't ask. And so for me, there's all these opportunities where I'm like, there are people in and around my orbit, my network that I really should have gone to, And made the uncomfortable ask.
It's the same story of Rimeto, the first angel check that I wrote. And Max didn't come to me and say, Hey, do you want to write a check to my company? I had to go to him and say, I would love to be a small part of this.
And that's one of the areas where I'm trying to be better about is we've all accumulated lots of amazing people through our, undergraduate studies and business school and companies we've worked in and dinner parties and people you've met at the gym. And [00:26:00] so many of these people especially when you're in the Bay area, there's just so many people.
Who have massive aspirations who will go on to do things of real consequence. And for me, I think the key to being a really good investor is just leveraging the people who are one degree of separation around you. And so that for me is like the thing that didn't work out. And the funniest thing about Anthropic is there's so many of my friends who work at this company now.
And every single time I see them posting on LinkedIn, I'm like, Oh, can I just rewind to four years ago and send the LinkedIn message or send the text of Hey, I would love to write a small check into the company that you're building.
Shaherose: That is so funny because Aamir and I were lamenting this yesterday as we were prepping to chat with you. We have a similar story. I was there ground zero when CloudFlare was getting launched, Eventbrite, Stitch Fix. Indiegogo. And I knew the founders
at the time I was in my twenties. I [00:27:00] didn't know, I didn't even think. To AngelInvest. I didn't even think to ask. And then as these companies went on to raise their ABCs and go public, it's Oh, just a tiny check really would have mattered. we certainly, we feel that regret too.
Aamir: Yeah. After we moved out of our first offices for drop cam, the next Resident was Stitch Fix. It's three people that had just come out of, I think it was also Harvard Business School, right?
Meka: Yeah. Katrina Lake.
Aamir: Yeah. Katrina. Yeah, it was Katrina and two other people working at our old tiny office, shipping clothing off of racks and putting them in boxes themselves and shipping them out the door.
And I wish I had thought to myself, Oh, Maybe I should write a check and see if I can find some way to support this company. And that actually leads me to ask a question. You're at First Round now, Meka, and you were, doing some angel investing prior to that. Is there a mindset difference?
Like in a way I feel like. As a partner at a firm, you must think about returns and trying to hit, top quartile, what, your multi X returns that you're promising to your [00:28:00] LPs. How are you looking at it when you were an angel? Because I don't, you're not giving me the vibe that you were saying to yourself, I need to put money into my friend because I need to make money.
It feels like it was something else for you. What was it?
How Meka supports founder friends
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Meka: Yeah. I think there's two things. I think one, when you think about supporting the most important people in your life, there's lots of different ways that you can do that. And I think one of the ways in Silicon Valley, a lot of people support their friends is by putting money in their ventures. And I think the funny thing is, I remember when Max saying I hadn't really thought about taking money from friends and family because then, I feel this sort of pressure and I was explaining like no.
I understand the math of angel investing. I understand when I write this check, I probably will never see it again. Despite the fact that I think you're a rock star, like odds are it won't be there. And so for me, Like I just like to be a part of people's lives and to be a part of things that are really important to them.
And with the check, oftentimes comes information rights of hearing about the investor updates and some of the raw, the stuff that you [00:29:00] won't hear at, at a dinner party or through friends or online, like you'll get the real deal. And in, in those monthly or quarterly updates. And so I think also when you write a check, People don't feel bad asking you for help for things.
So Max would pick up the phone and talk to me about, closing pilots, structuring pilots and closing enterprise sales deals, because that was my functional expertise. And yeah.
Aamir: I'll chime in with a personal story on this front. I feel like I've done it backwards. I am trying to do it more angel investing now, but coming out of an exit I had friends who would go on and start companies and I'd always said to them, I will support you. And I treated it as I'll support you with my time and now my connections, but I didn't give it as my money.
And one of my friends it's actually a mutual acquaintance of Shaherose and mine yelled at me at one point. And I was like, you promised to support me. And yet you are like, you did not attempt to participate in the round. And I felt so bad and I feel that way even today. There's multiple people who have gone off and started companies post drop cam and at the time I never thought of it as, Oh, I should this is a signal of like [00:30:00] support as much as it is like an attempt at a financial return.
Meka: Yeah, and ideally in the best case situation, both things happen, you're supporting them and then the financial reward comes. But I do think when you're early on investing, you should only be investing capital that you're comfortable losing because you're most likely to lose it. And so you had asked, a little bit about the difference between being an angel investor in an institution.
And so for me, the bar at investing at First Round is just higher than the angel bar. And so I would say as an angel, I would feel comfortable writing a check into somebody who I knew was a top performer, but I knew less about the space. It's tougher for us to do that here at First Round. And for angel investing, I could write as many checks in a year as I wanted to, as much capital as I wanted to implode.
But here at First Round, because of the fact that we're working deeply with our founders, my goal is to partner with For four to six founders a year. And it's just, it's a little bit different. I think the other thing too for First Round, [00:31:00] our goal is to return, capital for our limited partners who tend to be nonprofit universities and hospitals.
We're doing really important research. And so I can't invest in a company that I don't see having the possibility to, return the size of the fund. I've got a lot of friends who are starting businesses, but. My question to them is is this a venture backed business?
Does this have the possibility to get to, SaaS company, a hundred million in ARR and so as an angel, I think there's sometimes where you can see, you can say, Oh, I can easily see, 10 X or 50 X upside and those kinds of opportunities just don't make sense as an institutional investor I
Aamir: how do you deal with that pain of having to tell a friend founder? No, that First Round can't do the investment. Do you feel that conflict often?
Meka: I don't. So one of the things, I do talk to a lot of friends who do want First Round to invest, but on the first call, what I always tell them is I'm going to take off my First Round hat and the primary hat with which you're talking to me [00:32:00] is the friend hat. And I'm going to be a friend first and I'm going to be an investor second.
And so I think one, like a lot of people, like I've now seen, I don't know, probably in the order of 5, 000, Pitch decks I've taken thousands of first meetings. And so I've been around the block a few times. I've seen this story. And so I think one of the things that I can really offer is true feedback on like how this pitch is resonating.
As they're collecting term sheets, I can give them real feedback on like the pros and cons of a seed stage fund versus a multi stage fund. And so my promise to them is I will be your Sherpa behind, behind the scenes, and I will help you navigate this process. And I always preface this with at First Round, we invest in less than 0.
3 percent of all of the opportunities. So it is very unlikely That this partnership is going to work, but what I can do and promise you is a hundred percent honesty about the process, real feedback that will help you improve your pitch as you're moving forward. And just a thought partner as you're making, what are really important [00:33:00] decisions.
So something that's really important to you.
Shaherose: we're obviously giving capital to the founder, but I think honestly, you're getting yourself in a situation where you're going to be dealing with this person for the next, 10 years, potentially. They're going to be on your board. They're going to be there through the ups and the downs.
Meka: And I think that you really want to partner with people who you know what you're going to get. You know how they're going to behave in some of the worst circumstances. Cause it's really, it's easy to be a great partner to companies when things are going well. Of course. I think people's true colors show up when things go a little bit sideways.
And in everyone's career in almost every company, there's going to be some moments of, stepping backwards or things going sideways. And you just want the people around the table to make sure they always have your back.
Outcomes and up rounds thus far: Rimeto, CODA, K2Space, Prepared
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Shaherose: Why don't we talk about your best investment so far? I know there's probably a lot that have not been realized, but if there is one, it'd be great to hear about that. I think a lot of our listeners are trying to understand what happens when it does get realized, whether it goes public, gets acquired, you got to check back.
Aamir: Like it, it'd be great to hear some of the details around that type [00:34:00] of story.
Meka: Yeah. so Rimeto was actually realized. I got to check back and I earmarked in the bucket of continue to plow into more investing. As far as other angels investments I've made, Alchemy, they're a web through development platform. They're valued at north of 10 billion.
CODA, they're a collaborative workspace product. They're valued at, closer to one and a half billion. And at First Round thus far, again, no realizations, but I feel like I've partnered with a bunch of companies that have started to inflect and later stage investors that, Continue to invest.
So K2 Space is a company that's building the biggest satellites that you've ever seen and are opening up new use cases in space. And Altimeter recently led a 50 million Series A into that company. Prepared is a company that they're doing something really cool. They're actually trying to modernize 911 centers.
So I don't know if you've ever called 911, but there's no rich media. And so they're like, this is crazy. Everyone is calling from their cell phones. And instead you're just like talking to this operator, just typing some stuff in. And then they're sending it basically via text to like the patrol officers.
[00:35:00] Imagine if you called 9 1 1 and your camera showed up. And so the 9 1 1 dispatcher could see what was happening and they could send that video to the paramedic, to the police officer, to the fire department person as they're coming. That's what they're trying to do. They're basically trying to modernize 9 1 1.
Andreessen Horowitz recently led a 16 million A into that company. Pocus is another company that I think actually Pocus was one of my first investments at First Round, Coutue led a 20 million Series A into them, and they're a new age CRM platform that's giving reps far better data.
Initially starting with product led growth companies and just allowing them to figure out like which which prospects they should be spending more time with. there are a bunch of companies where if we were to do this podcast again, and in five to seven years, I think they could be, large IPOs or large M& A processes, but.
What you learn when you're investing at day one of these startups is that the best startups take at least seven to 10 years to get to the end zone. And I'm really looking forward to fast forwarding another five [00:36:00] years from now and seeing some of these companies either ringing the bell or creating great outcomes for themselves and their whole teams.
so you mentioned a couple of different companies that are not realized, but you think are very promising going forward. There's themes around a couple of them that I'd like to dig into.
Exploring the Frontiers: Investing in Space and GovTech
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Aamir: One is, one is you mentioned K2 Space, right? That's a. Satellite company, like you said, so we've gotten a few listeners asking us already to try to have someone on who can talk more about hardware and like this deep tech type stuff.
So how do you assess that type of company at the beginning? It seems like you have seven year timeframe to return money to your LPs. These things, may not go up if they go up. They're so dependent on government contracts and, windows to the place you're trying to go to in space.
How do you. Assess that and say, okay, this is something that I think could have a financial outcome and I'm willing to spend the time to even get to the first checkpoint.
Meka: Yeah I'd say with every pitch, there's first this baseline, is the founder great? Because even if the idea is really [00:37:00] unique, like you need to make sure the founder's great. And so I knew one of the founders actually, Max. Introduced me to this founder. I ended up connecting him to another friend who was an early stage startup, and he ran go to market for his startup.
And after that company exited, he was like, I'm going to go do this space thing with my brother. So I was like, Hey, we don't invest in space, but I'm happy to listen to your pitch and give you candid feedback. If you do pitch to generalsts. And after the first pitch, I walked out and I was like, Whoa, there actually might be something really interesting here.
But I don't know what I don't know. So let me go and try to get smart.
Aamir: Wait, so can you actually can I poke on that? So what did they tell you? What did they tell you? And what did you say? I don't know that, but I need to figure it out to make a
Meka's betting on a pair of brother's putting big satellites in space
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Meka: Yeah. Okay. So they basically said the whole world is building smaller satellites. We want to build really big satellites. And the reason we want to build really big satellites is you can put more power on them so you can do crazier things in space. And oh, by the [00:38:00] way, because of what's happening at SpaceX, reusable rockets, the cost to launch mass to space is coming down.
So there'll be new use cases, and you can put heavier things in space than you ever thought for a fraction of the cost. And no one is building for this world yet because Starship is not yet online, but it will be online in a few years. But the large primes, the Lockheed Martins of the world, Raytheons, don't do things until it's actually online.
So there's a unique time and point that we can build this today and basically win the market. So I was like, that kind of roughly checks out, but let me go figure out like this Starship thing, how realistic is it to happen? Let me go figure out, let me go talk to some scientists. Let me go talk to some DOD contacts and ask them if you could put things that were 10x heavier in space, are there actual use cases?
And so when you start to do these things and you start to hear Oh yeah, it's crazy. But it makes sense. And there's all kinds of things we would [00:39:00] do if this existed. That's when you start to see the excitement. That's when you start to lean in more and more,
Unexpected VC bet: Integrating tech into every 911 emergency call
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Aamir: Okay. I'll ask another question. Along the same lines, then you mentioned what was the name of the 9 1 1 company?
Meka: Prepared.
Aamir: So yeah, I've actually seen some stuff around this, given the small town I live in here in the Bay area. What about that stuck out to you? Because I feel during my time as a investing partner at a firm and through other avenues, I've seen that GovTech is terrifying to folks because the sales cycles are so long and you're a sales go to market expert.
What how did you resolve that question in your head? Because there's, I think OpenGov is a company that just got acquired by a PE firm and they were like the standout example of a startup that was trying to go attack government spending and contracts and that I don't think that outcome was considered amazing in the end.
So for something like this, where you're going to be selling into not just Government, but local governments where they're completely fractured and fragmented. How would you assess that at the beginning to determine any chance of [00:40:00] success and even like market domination?
Meka: Oh,
Yeah, you said something really interesting
which was like, people get scared away from GovTech because of the long sales cycles. And so when we're backing founders, we're oftentimes looking for this unique insight. And so the first thing that Mike said to me was we're building something that is sold over the top.
So it's a little plugin. That goes on top of their systems and does not require a rip and replace. And by not requiring this rip and replace, we don't get stuck in these long RFP cycles. We can basically deploy something that looks more like product led growth, where you go to our center, you tell them why that this would be fantastic for them and their first responders, and they can try it the next day and then they can get value out of it.
They can start using it. And then all of a sudden they're like, Oh, wow, we really need this thing. And so that was the first piece of it, which was just like, Oh, the distribution strategy is unique. They're not trying to rip out the guts of Salesforce. They're basically just trying to build in a plugin to Salesforce to start.
The second thing is this founder, he so he's a tail [00:41:00] fellow. He actually grew up in a small town in Ohio that had an active shooter situation. And so he had this super compelling, like real personal story. Of why this like Yale football player dropout was building. 9 1 1 tech. And I just think like you don't often find these amazing founder market fit stories.
Also they're super scrappy. They just built it pretty quickly and hacked it together. And so on the pitch we like, he played responder. I played person in my darkest times, needing to talk to somebody and just being able to see how this works. It was really fascinating.
The other thing that we get obsessed with is are you creating real value for, customers and when you hear this story about someone dealing with a domestic abuse situation and them turning on the camera and the person running away and the 911 responder talking them through it, then them sending that video to the police officer [00:42:00] who's going to go on site, who can then go find that person.
We always talk about these magical moments. And of course, this is like a horrible situation, but to hear how horrible situation was transformed to be that much better, like those are the kinds of products that we, and I love investing in is when you're really like, you can go home to the Midwest and tell your family about this business.
That's actually making people's lives better.
Shaherose: How does something like that. Get all the way through the venture filter. Cause you just, debunked the government cycles. Okay, fine. But now you just told me it's a, it's an add on. It's a feature. It's not a platform. how will this. Become a venture scale business.
Meka: Yeah. We always talk about wedges and so As a startup, you have limited resources and you're competing against incumbents with, a hundred X, a thousand extra resources. So picking your wedge is incredibly important. And so again, the like plugin was a wedge and what they're doing now is significantly different.
They are the [00:43:00] brains and the operations for these PSAPs or these 911 centers. And he told that story early on and it's starting to come true. And you're seeing them be the transcription, like audio transcription layer for these 911 centers, helping with training, helping improve the outcomes for, first responders and dispatchers.
Shaherose: And again every early stage startup has a ton of risk and it's just For me, it's not about all the things that can go wrong. It's if the things all line up and it goes right, what happens? And so I think prepared, we're seeing some of the early signs of things are lining up and everything is going right. That's amazing.
Meka is a generalist investor with a focus on B2B SAAS, Fintech and hard tech
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Shaherose:
so
it's been a, it's been a couple of years, both Angel and VC for you. You've got some incredible lessons that you've just shared. Let's talk about today. What are you investing in? Tell the audience a bit about, the areas you're excited about, your check sizes and maybe how many deals you do each year.
Meka: Yeah, so I would say the goal for me is to do somewhere between, four and seven investments a year. We try to be very deliberate and [00:44:00] not speed up too much in the go times and not slow down in, in sort of times where people are afraid. We think that like great companies are created.
in every era and every vintage And so I'd say today our average check size is usually somewhere between a $2 and a $5 million round, but occasionally that round can be as small as a million dollars. And sometimes they're as large as 10 million. But oftentimes we're writing, we're leading. Pre seed and seed rounds in the most ambitious founders.
And we're a generalist fund. So there's some common themes, SaaS, dev tools, infrastructure, security, healthcare, AI. I spend a lion's share of my time in B2B SaaS. And I'd say, I've got some minors in fintech and in hard tech. I'm a pilot I've invested in a satellite company. I'm just like a naturally curious person.
When someone is trying to do something wacky in the real world, I'm always incredibly interested to learn more.
Investing in YC companies and maintaining an orientation towards prioritizing ownership over valuation
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Shaherose: I noticed is that you have invested in a good number of YC companies. Is that right?
Meka: Yeah, a [00:45:00] handful.
Shaherose: Help us understand this as they come out of YC, pre seed.valuation for traction for us sometimes, the both of us, we go, what, how does this work?
So what's your mindset? Is it different? Do you approach YC companies differently? Do you have different expectations or, are the valuations that come out of YC, your standard, what you actually invest in more commonly?
Meka: Yeah. I would say even in YC, if I think about the last batch that finished, I think we met some companies that were raising it at valuation caps as low as 10 million and we met some others who were raising as high as $40 million dollars. And despite the fact that they're all coming into a batch at the same time, I think the quality of companies can vary widely.
I think one of the things that we know is that YC has been so good at creating value. There are outliers in every single YC batch. And so we we take that very seriously as we're meeting with founders. And so price to progress is something that we talk about in our partner meeting. But I price matters in one [00:46:00] sense.
But in another sense, it doesn't matter. And in the sense it doesn't matter is if you're investing on a 20 post versus a 25 post, like if it's a zero or a one it's not really going to make a difference. And we normally at First Round, like we're normally not the highest price. We try to be very fair.
But we're also not the sort of like value investor. I'm not a value investor. At the end of the day, if I meet someone, And they are magnetic and they want to build something big. And I believe in that vision. Like I don't want price to get in the way of our partnership.
Shaherose: So we've had a number of different investors come on to the show with all differing perspectives on this, right? We've got people who invest smaller checks for whom this matters, right? They're a smaller fund. We have another one going live from a larger fund who said
look, I look at all the things that matter, the team, the market opportunity. And one thing he said, I've learned is that deal structure matters.
That we come [00:47:00] in at a price that works for us. And so it sounds like we have yet another perspective here where price, you're not going to come in at the highest, but you're also not going to say no, if you truly believe in the founder and what they're getting after.
And when you think of that and you say, okay, this might be on the higher end. what have you seen play out when you have invested at the higher end valuation, let's say at a pre seed has that had an impact? Do you have any data points that show, Oh, you know what? It actually didn't matter.
Price didn't matter. They, they hit it out of the park. They were able to, raise their next round at a valuation. That makes sense.
Meka: Yeah. So for us, I would say that the thing that we have trouble compromising on is ownership. And that's because we spend a lot of time with all of our portfolio companies. And so for us to spend tens of hours every week on each company, we need to have meaningful ownership in those companies.
And so that, that is one area where we're less flexible. And on the price side, when I think about the nature of leading seed rounds, Like when I think about our iconic [00:48:00] companies, whether it's Notion, whether it's Uber, whether it's Square, whether it's Roblox, whether it's Flexport, the entry price doesn't matter.
Like we're owning, a real percentage of a business that's worth billions. And so I think we invested in Uber on a four or five. Pre money valuation. Different era different time. But honestly, even if you took that 5 million devaluation and you made it 50 million.
It wouldn't make a difference. And so in our fund model, the way it makes a difference is like the higher, the entry prices, the fewer companies that we can put in that portfolio, which means that we just need to be slightly better pickers. But again, it's an outliers business. And so to pass on something because the price was 10 percent off of what you needed it to be is not great.
We will sometimes pass on companies who just have unrealistic Expectations were like, okay, what does that say about a founder? If they're raising an evaluation where it's putting them in a position where [00:49:00] raising that next round is going to be really tough, where they've got to recruit employees to come in and the valuation seems divorced from reality.
And so price does matter. But again, for me, I think there are some firms who are very strict. They're like, this is the number. If it goes above this number, we're not going to touch it. And for us, our more strict criteria is ownership just because we want to be very large shareholders and be in the trenches with those founders.
And the only way to do that is for each founder to be very meaningful to the fund.
First Round Capital's approach is rooted in consensus not conviction, they invest as team
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Aamir: First Round is one of those pinnacle first funder firms out there, right? People know that this is a good place to go if you're looking for a pre seed or a seed round. I don't think many founders or even other investors may understand how it works in that team dynamic.
It is different at each firm. If you're an angel and when a founder comes to you, it's okay, they're just talking to me. I might make a decision after an hour and just write a check. But firms operate differently and you emphasize in some of your other media that, venture is a team sport.
At First Round venture is, a team sport and that the partners work together. So could you share a little bit about how that is for [00:50:00] you? Like you may be the point person on this. What's going on in the background? Is someone else helping you? Are there actually multiple people thinking about a yes? How does it work?
Meka: Yeah different firms have different models and you have to buy into the system and I've bought into the system that when you put six different people with lots of different operating experiences and backgrounds, they make better decisions than just sending me off into the world to go do my own work.
And so we discuss every opportunity as a team and we vote on it as a team. And when we make a seed investment, it is because the majority of the partnership felt that this company, this founder had a chance of building an outsized outcome. And the really nice thing about this team oriented aspect is when I need help, when one of my companies needs help, every single partner is financially motivated.
To help that company. And so you, you get a point partner who owns the relationship, but you get the power of the full team. So whether or not you want to talk, fundraising strategy with Josh, who's been, basically invented [00:51:00] the class of institutional seed. He's excited to spend time with every one of the founders, not just his founders.
If you're thinking building an e commerce company and you want to talk with Haley, who spent a Years as an e commerce, founder and spends a lot of time looking at technology in this space, like she's willing to do it, Todd led product at Dropbox and worked in the original Gmail product.
And so when Mike wanted perspective on a VP of product candidate, like who better to go talk to than Todd Jackson about that. And so to me. It just makes so much sense. And I can't imagine any other world in this world of we win and lose as a team and, obviously there's some, IC aspects of venture, like I own the relationship with that founder.
They're calling me at 11 o'clock at night when something's going wrong. But I love the fact that not only do I have my partners, but at First Round, we've got a really large founder success team who, all they think about every day when they come to work is. How can I help all of the portfolio companies at First Round get to that million in revenue faster, hire [00:52:00] better, create better BD relationships, have better marketing copy on the website.
to me it makes natural sense. And it shocks me that every firm isn't structured this way.
Shaherose: You said earlier that it takes reps to get better at investing, but how do you get better at investing?
Leveling up in VC by learning from partners, retros, reviews, reflection powered by a process and data
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Meka: To me it's a focus on the process. And there's something to learn from every single pitch that you take. And so for instance, after we do our partner meeting, we all vote, we all write a bunch of like pros and cons across the product, the market, the team and terms. And so for every single company that comes to the partner meeting, I like to go back.
And after we've had the discussion, I go through and I read. Every single comment to really understand, all of these partners who are really respected, are great investors. What did they see that I didn't see? What did I miss? We've got a pretty great system of alerting us about companies that came through our funnel that we didn't invest in that have gone on and raised large rounds.
And so when we get one of those dreaded alerts, I always go back and look at the pitch deck, [00:53:00] look at my notes, understand what I liked, what I didn't like. And you're just trying to learn From every single thing. But I think it's all about creating a process by which you learn. Another way to do this is like we write investment memos before we invest.
And six months after we invest, I love looking at that memo and being like, what did I accurately predict? And what did I get wrong? And how do I make sure that I learn from that process? So like reps definitely matter, but for me, it's about like practicing with intentionality and figuring out what systems and processes you're using to make sure that you're growing every single day as an investor.
Aamir: The intentionality sounds amazing. I heard three parts, to this, right? One is it sounds like everyone around the table writes out product market team and terms and has thoughts on that. So that's something every partner is committed to doing as you assess a company together.
Meka: Correct.
Aamir: so it sounds like you've got like this data store or some database, but then you can go back and look at it.
Meka: Yeah I can't wait to one day, put a bunch of AI on all of our data and see what it does because we've been in [00:54:00] business for 20 years, we've met a lot of founders, we've made a lot of investments and we're learning a lot. In real time in, in how to continue and improve our decision making.
We we treat our decision making like it's a product. We even have like a, I think Annie Dukes, she used to be a professional poker player, she wrote the book, Thinking in Bets. She's advised us a bunch. We have a whole insights and analytics team here at First Round that helps us think about this.
it is, probably one of the most important things that we do. And so I love that we're committed to this process of also improving that our decision making process.
Aamir: And then second, you have the investment memo. That's what I heard from you. And then third could you just describe a little bit more? Like, how do you have a period of self reflection that's customary that you go back or is it just, Oh, an alert came in that a B round came from a company we had skipped and we should go back and look at it now.
Is there something more formal than that?
Meka: There, there is, so at all of our off sites, we'll do portfolio reviews and at those portfolio reveals you'll zoom out look at the last quarter. Also just think about the portfolio as a [00:55:00] whole. And as all partners, we'll talk about all of our companies. And we'll figure out what ways we can be best supporting them to reach their goals.
But I think those portfolio reviews are a good time to rewind and again, look back to your initial investment memo and understand what has transpired since we last invested. And how does that compare to what we thought would transpire? And so those are where I'm trying to pull out learnings and insights and getting the one off alerts for the companies you passed on, but then also doing these formal portfolios that we do on a pretty regular cadence is also a helpful time to go do it.
Shaherose: Thank you for sharing that so openly because you did talk about that during the First Round angel track and it influenced my process. I included things that you all were doing, the questionnaires that you guys. Send her on the table and I'm sending it to myself, but good enough for now.
So yeah, I know it's amazing to hear the true system behind the fund, right? The true process and system that you guys have created.
Aamir:
Okay. Speed round. Who is a first funder you admire?[00:56:00]
Meka: it's going to sound cheesy, but I'm going to go with my partner, Josh Koppelman. He started the firm nearly 20 years ago, and he's had the ability to partner with some of the most incredible founders over the last two decades. But the reason I say him is like, the dude isn't slowing down. Like he still has the same hunger and drive.
And I think also, sometimes what is when people have been around for a long time, they're like, I've been really good. And I'm just going to continue to do the things that got me here. But he's. Always pushing us and our team to think differently, to be paranoid, to reinvent ourselves, to launch new initiatives.
And yeah, just really lucky to work alongside Josh every day.
Shaherose: Wait, to be paranoid? Tell me more.
Meka: The reason I say paranoid is it's easy to have some early success and then think you have it figured out. And I think that just like in tech, all these startups trying to eat incumbents lunch. There are emerging managers. There are multi stage fund. There are a bunch of [00:57:00] people, really smart people who have really amazing careers, who are trying to eat our lunch.
And if we don't realize that. If you get stagnant, if you get complacent, you will be a nobody. So we need to continue to be paranoid about who we are, who we're backing, how we're supporting those people. Otherwise, you just see very few venture institutions who are strong over, four or five decades.
And I think that we all want to build First Round to be a lasting institution that continues to be a tier one funder of the most ambitious founders.
Shaherose: Thank you. Yeah, that reminds me of what we would say at Nike, right? Always be on the offense.
Meka: Love that.
Aamir: a piece of media that has had a major impact on how you invest?
Meka: I got to go back to my roots, Moneyball just the concept of finding overlooked talent really, resonating with me and is so foundational. And again, I didn't know what VC was when I was working at the Cleveland Indians, but now when I rewind and I think about the parallels, [00:58:00] so many parallels about, finding hidden talent, helping them develop and get the most out of their potentials and getting them to IPO or to the major leagues.
Also just Patience, tolerance for long feedback loops, commitment to process. There's just, there's so many things that like, I didn't realize it at the time, it prepared me for this phase of my career.
Aamir: Zoom, phone, or in person meetings.
Meka: In person, I think. SF is back. We've got a new office space where our founders are here. Angels are here. The rest of the team is here. I've just really loved connecting with people in person. I think you also as an investor, I think you get such a better read of someone in person than you do on zoom or on the phone.
Aamir: Each, every medium has its place, but if I can, I always opt in for in person. What is your social media platform of choice?
Meka: Probably LinkedIn. Yeah, as a former sales guy and as somebody who's just looking to partner with the most ambitious people, I think almost all of them are on LinkedIn.
Shaherose: Thank [00:59:00] you, Meka, so much for joining us today. Where can people find you online?
Meka: They can find me on LinkedIn. They can find me on X or Twitter big Meka style. And then they can just email me on Meka, M E K A at firstround. com.
Shaherose: That was amazing. Thank you.
Aamir: Thanks to Meka for joining us. That was a great episode, Shaherose, what were your main takeaways?
Shaherose: yeah, one of the first takeaways is really simple, but I felt like it hit me. as something to remember is that within the network that I have and the networks that you have, there's always people building something that's important to them. and Meka's reminder to. Just make the ask, right? Don't wait for the founder to come to you or your founder friend in particular to come to you and say, I'm starting a company. be in touch with the people around you. And I love that.
Put yourself out there and it's so obvious. but. Sometimes you think that people are going to come to you because you're investing, but really you need to be proactive, and that's how he made his first investment. He put the ask [01:00:00] out there. So that one I'm going to keep top of mind, because I have a deep network of operators and founders that are most likely doing something.
And it's my job to reach out to them.
Aamir: Yeah, I agree. That was one of the ones I wrote down as well. He said, leverage the people who are one degree away from you at the start. I feel like that's a great thought. And once you start doing that though, everyone will come at you. I, I don't know if this is really true, but I feel like I experienced some of that and then you have to start saying no to the people who are one degree away from you, and that's the part that feels a little bit painful, right?
That there are some people you're like, Oh, I will You know, invest in anything that they do. And there's somewhere there's no way I would invest in them after having worked with them or been around them after, for a couple of years. And I don't know how you balance that out.
Shaherose: another takeaway that that really pattern matching. Isn't the way to find outliers, right? An outlier is an outlier by definition because they're different, right?
So that mindset of, what is the opportunity this person is trying to solve? And do they spike in the areas [01:01:00] that make them the best person for this? Problem, right? Like the analogy, of the baseball player, some people are, shorter and faster and some people throw better. this VC world that always talks about pattern matching, but that's actually not the way to find outliers.
Aamir: Yeah. This reminds me of when Amit was talking about how the headway Investment that he made, right? It was around the right definition of the problem, right? space of mental health is one that everyone's going after, but the formulation of the problem was what was unique and that was the outlier to him.
And so I saw that reflection whenever thinking about what Meka was saying, that, there might be a lot of people and a lot of friends playing in a certain space just because it's hot right now, but that insight, that thing that makes it like, Oh, I've not heard that version of it before is the outlier, and to really dig in on that.
Shaherose: The third takeaway was hearing a different approach to decision making. So this is the first, person we've had on the show. Talk about making decisions to invest in a [01:02:00] consensus fashion, venture as a team sport and how, first round capital is really Designed as a system where everyone's involved. Sure. There's one person who sources and manages the deal, but everyone's incentivized to participate in supporting the company, in the journey as one of their portfolio companies. it was a reminder that there's so many different ways. To create value and realize value when you're investing, whether you're on your own or in a fund, right? There's people who have different approaches, different systems, different cultures, and
there's still realizing value nonetheless as a top tier fund. This is one of the first we've heard that doesn't invest through conviction.
Aamir: I found that fascinating too. I feel like most of the folks I talked to end up being conviction, not consensus. One thing I appreciated. From what Meka was describing is it seems like the knowledge sharing and the growth for [01:03:00] everybody accelerates as a result. I don't know if that's really true, but I feel like that's a setting where, he's absorbing how others would think about things while he develops his own theses and builds from there.
And when I've been part of a, groups where it's, oh, what do you bring to the table? What do you think? And we'll say, this is good or bad. It's more of a superficial view. So I thought, I wonder if he gets a deeper set of insights from the people around him by going through the philosophy that First Round is espousing.
And along the same lines, that's why I thought the collateral that they use is amazing. It sounds like that's really helpful to hear how are people thinking about things at a deeper level again, than just the 20 minute discussion in a Monday morning meeting.
Shaherose: Yeah. Yeah. That was my last takeaway was how committed he and first round are to process as a means to stay ahead and. Be in the top tier position is that they're all learning from each other constantly. The partners all come from different backgrounds and they're [01:04:00] constantly documenting, analyzing, revisiting, reflecting, on both investments that they have evaluated and said no to, and the investments that are in their portfolio.
And I think that systematic approach that data driven approach, it's a, it's working for them, right? And that learning from others, it's working for them. So it's, that's something I really walked away with. I'd walked away with the lesson of the practice of documenting throughout your journey, what you're seeing and what decisions you made and why when I did first round angels.
And I would say that was like one of the best gifts was that guidance to do that.
Aamir: I'll mention one of my takeaways. I thought Meka gave a a few insights that are very tactical for people to take. What if you're a beginning angel and experienced angel or a seed investor
I thought he was doing a good job of describing specifically how to think about what unique insight means, for him, he's talked about, Do the founders have commercial instincts [01:05:00] and that means they don't just say Oh, I know I'm supposed to go do SAAS and here's some economics, but that they have intriguing propositions around how to do it.
And I think that helps me think about. When I've spoken to founders, they often come with a standard answer. And, maybe one of the things you're looking for to see is someone as an outlier is that they have done the standard stuff already, and they've come up with something even deeper than that.
So like digging into commercial instincts, I thought was really helpful. And the other part was the way he described the the satellite company. And prepared, the 911 company, same thing there, right? It's Oh, this is, there's so many problems in GovTech. There's so many problems in hard tech.
They come forward with this key thing that makes you think a lot. It makes you want to go do the research, right? First Round said he was going to go and look at, he had to go and look up. What does Starship really doing, right? What does SpaceX really doing? Is this true? And that set of insights is really deep, right?
Pete, lots of people were saying, Oh, I should go do satellites. Satellites can capture lots of things, but to go that one level deeper is where the unique insight truly comes in. And I think that's the level of knowledge you want to see [01:06:00] before you invest in a founder, if it's someone you really don't know,
Shaherose: Absolutely. I started to think after that conversation was, am I, did I meet a founder who actually taught me something about the problem or the customer that I didn't know? I think that's where I get, really excited when I meet a founder where they're like they're deep passion and they're deep, focus on understanding what what value they want to create for their customer.
I want to walk away having learned something. I had a call. This week with a founder who is a veteran operator, right? He's mostly had finance and operating roles early in growth stage startups, right? Has a great track record, really knows FinTech and presented this wonderful idea, problem solutions, a marketplace, all this stuff telling me the story, et cetera, et cetera, raising a pre seed round.
Once raised 4 million. I know I was like 4 million pre seed. Don't even doesn't have a product built, [01:07:00] but the part that really got me, it just shocked me. I said, so how many customers have you interviewed? By the way, it's marketplace three sided marketplace. And he's once I built, I will get feedback.
And I, I just couldn't believe that was the answer. So I didn't learn anything first of all, but secondly, how have you come to this pitch with this really clear deck? Yes. Based on all your operating experience, but you haven't spoken to a single customer, like what's the unique insight here.
And it was absolutely missing. So hard pass.
Aamir: hopefully that's some tactical advice that people can take as they go on and do their investing
Shaherose: Thank you again, Meka Asonye from First Round Capital from First Round Capital for joining us. We'll see you next time.
Outro
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Shaherose: Thanks for listening. We'd love your feedback and suggestions on topics and guests. You can find us on Twitter/ X, @shaherose and [01:08:00] @avirani.
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