First Funders

Amit Kumar, former founder and angel investor, is a generalist venture capitalist at Accel focused on dev tools, healthcare, and fintech startups. Twitter acquired Amit’s third company, and it was then that he realized his true purpose was supporting startup founders, and he shifted to venture capital. Amit shares insightful stories and lessons learned from 8 years of early-stage investing out of a large, top-tier VC fund.

Amit writes checks of $2M to $4M as the lead and first institutional seed investor. 

Highlights from our discussion:
  • How Amit frames venture capital as a long game
  • Why Amit considers himself a “co-founder as a service,” and how that serves his startup community
  • The right way to think about deal setup for successful early-stage investing
  • Why the problem slide in your pitch deck is most important
This is for information purposes only. This is not investment advice.


  • (00:00) - 04: Amit Kumar - Accel
  • (00:16) - A startup idea seed investors will definitely say NO to (but maybe Shark Tank will take it)
  • (03:35) - Amit Kumar - seed investor and First Funder at Accel
  • (05:17) - Amit's Transition to Accel and the Power of Networking
  • (07:38) - How Amit learned about angel investing - friends, conferences, and meetups
  • (08:47) - What does it look like when a VC firm recruits you as a potential founder? Potential partner?
  • (12:14) - Angel investing as risk diversification and knowledge sharing, especially for existing startup founders
  • (13:56) - Venture capitalists can provide "co-founders as a service"
  • (17:21) - How Amit chose between being a founder again and investing full-time
  • (20:06) - Amit's first investment, and how past founder relationships build trust
  • (22:23) - Startups that don't go public in 7 years - does that hurt your model and LP relationships?
  • (24:11) - Conviction, not consensus - but what builds trust among GPs when startup investing?
  • (26:30) - Startup valuations: Amit's venture capital POV and moving targets in 2024
  • (28:37) - How does a large early-stage VC think about follow-on investments and the number of startups to fund?
  • (31:57) - Taking bigger risks earlier
  • (34:49) - How startup investors consider incumbents in a space when assessing competition and exits
  • (36:24) - Headway, and what Amit has learned about identifying good startup investments in new markets
  • (42:05) - How to think about thesis investing, conflicts of interest, and competing startups
  • (45:14) - How Amit thinks about return profiles and seed investing today
  • (48:08) - What founder and market signals does a venture capitalist look for?
  • (50:39) - How to get on the Midas List - it's the fundamentals
  • (51:47) - A movie you must see to understand venture capital and startup investing matters
  • (54:15) - Takeaways from Amit Kumar's First Funder approach
  • (01:01:18) - Outro

Connect with Us

Follow the First Funders Podcast
Newsletter with behind-the-scenes access and key takeaways
Twitter/X @shaherose
Twitter/X @avirani
Email us with feedback and suggestions on topics and guests

Creators & Guests

Aamir Virani
Helped 50+ orgs grow product and scale teams.Software Engineer ➡️ Product Manager ➡️ Founder (Nest Cam fka Dropcam) 🔀 Investor, CRE, Founder@pifgov 2021
Shaherose Charania
Venture Investing at @CakeVentures and @joindvc | Always helping founders | Raised on Atari, MS-DOS, Bollywood & Hip Hop. 🇨🇦in 🇺🇸
Amit Kumar
Investing in the future @accel and @ucberkeley; Sometimes magic is just spending more time on something than anyone else might reasonably expect

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.


[00:00:06] Aamir: Hi, Shaherose. How are you?

[00:00:07] Shaherose: Good. How are you?

[00:00:10] Aamir: It's been a very hectic week, but I've gotten a chance to get some stuff done both at home and at work. What about for you?

[00:00:16] A startup idea seed investors will definitely say NO to (but maybe Shark Tank will take it)

[00:00:16] Shaherose: Yep. Also been busy, but mostly I've just been sitting here in huge curiosity about this app that you were talking about last week. Ha ha ha,

[00:00:26] Aamir: So I'll just give you the overview for it. It came about while I was helping to handle the kids during spring break. I'm sure this must exist, but then I went looking and I don't know, maybe this is just a feature in some other big product.

[00:00:37] I was thinking of calling it Kidsonar and it's an app where you set up the groups of friends you hang out with. Like my kid likes to go to one of the parks around us. So if we end up going there, then the phone would just send out a ping to all the people in that circle of friends saying Aamir has arrived at this park. If you want a playdate, it's on spontaneously right now.

[00:00:58] And so that was the thought. It's [00:01:00] very extendable to other things whether it's kid play dates or adults hanging out somewhere, or even phone calls or something and say, you put your sonar on. And it will notify the people you're calling cool with talking to saying I'm available. I have 45 minutes or an hour. I'm sitting at the airport. If you want to give me a holler, go ahead. That's the idea.

[00:01:19] Shaherose: I actually like it because when I think about the first use case you talked about, the weekend rolls around and we're heading somewhere with our little one, we're always sending out what we call a bird call to our friends who live within a five mile radius of us.

[00:01:35] And we're curious if they're heading to the same place or if they want to meet us there.

[00:01:40] Aamir: This is just automating that step. I don't remember to tell people, Oh yeah, we're thinking about going to the park at two 30. Do you want to meet there? Instead of sending nothing, what if just as we were getting to the park, it just sent out the notification and said so and so has entered this area of fun. If you'd like to join, feel free.

[00:01:55] Shaherose: As a parent, you also are juggling so much. So the idea of [00:02:00] automating that request is so good. And the fact that it might sound different than a regular text message, the receiver might pay more attention to it. Often we have pinged our friends and they're like, Oh, I was just there. I didn't check my phone.

[00:02:15] Aamir: I would, definitely not say this is a venture backable idea. It's meant to just be more of a fun little app that I'm coding on the side.

[00:02:21] I'll probably send it to you and to a couple of other friends. The one nice component to this, if it actually did work out is it does seem inherently viral. If you're allowed to make multiple circles, then suddenly it's going from, me and you to you and some of your friends that you have that are not mutual and same for me on my side right now and just keep going from there.

[00:02:39] Shaherose: At least with the use case of parents, I think it's worth you building a prototype because I'm going to use it.

[00:02:44] Aamir: So I guess if you're listening and you want in on the prototype, go ahead and send me an email. You can email Aamir at firstfunderspod. com and I'll make sure you're on the list and maybe we're nearby and we can meet up.

[00:02:55] Shaherose: Love it.

[00:02:56] So let's get into this week's interview. This week we have Amit [00:03:00] Kumar and he's at Accel, which is a large fund. The current fund, for example, has 650 million under management, which is great because our first interview was with Jenny Fielding of Everywhere Ventures, which represents a small fund.

[00:03:13] And more recently we interviewed Rachel Sheinbein who represents an individual investor.

[00:03:19] And so we're really excited to interview the spectrum of First Funders from angel to small fund and now to large fund so that we can understand how these investors invest. Is it similar? Is it different?


[00:03:35] Amit Kumar - seed investor and First Funder at Accel

[00:03:35] Shaherose: All right, everybody, welcome to the First Funders podcast. Today, we have a wonderful friend Amit Kumar, who is a partner at Accel.

[00:03:44] And how Amit and I know each other is through the social scene in San Francisco. You were coming off Twitter, and you were making your way into VC.

[00:03:54] I think we met through mutual friends, we've hung out many times, and we talked about work a bit, [00:04:00] but I would say mostly we hung out. So this is really fun because I get to hear more about your journey because it's been one that I've admired from afar and I've told you that.

[00:04:08] And as I moved into VC, you're on the top five list of people I go to and ask questions as someone who's been in the game now for a while.


[00:04:16] Shaherose: When I was thinking about going into investing back in 2016/17, Shaherose put us in touch and we spoke. And I still remember the biggest piece of advice you had for me was you need to think about this as a long game, 15 years plus, and what you want to do over that time period.

[00:04:30] Aamir: And I went into venture and I left a year and a half later. And part of the reason was because I realized I can't think in that long a timeframe. So your advice was very cogent.

[00:04:40] Amit: I've been here almost for eight years now, which is crazy. It's the longest place I've ever worked anywhere. Before this, I think I maxed out at three or four years. And when you start a company, of course you think in terms of 10 year cycles.

[00:04:50] I think as a founder, you usually think you're going to know if you're onto something within a couple of years and in venture,I know it's like a truism, but the feedback cycles are [00:05:00] so long.

[00:05:01] And the companies I invested in, the ones that are still going, they just haven't exited. And it's mind boggling how long the cycles are. Literally I just had an exit from one of my very first angel investments when I was doing that.

[00:05:13] And it took nine years. It's such a game of patience.

[00:05:17] Amit's Transition to Accel and the Power of Networking

[00:05:17] Aamir: Why don't we talk about your journey into investing? I think we referenced that you were a founder before. If you could share that story as well as how you ended up angel investing and then ending up at Accel.

[00:05:27] Amit: I certainly am not God's gift to investing. I don't think it was a certainty that I would ever end up in investing.

[00:05:32] My background is in engineering and you just don't find a lot of ex engineers in venture capital. I had this mistaken point of view that Reid Hoffman IPO'd LinkedIn and then he went over to Greylock and, I almost viewed it as the hall of fame. Like you, you graduate from being an entrepreneur to being a venture capitalist.

[00:05:48] And honestly, the reality couldn't be further from the truth. It's a young person's game. It's a, different career path. And the path of supporting entrepreneurs. It is, you are constantly on the road, you're constantly working, [00:06:00] you're trying to find that next company. And it's not this sort of, halfway house between being a founder and being retired.

[00:06:05] And so I remember as a founder, I was very fortunate to go raise venture capital. And, one of the coolest parts about that was I got to pitch all the VCs in the Valley. We pitched Accel, we pitched kleiner Perkins, Benchmark, like Matt Kohler over there, Chi-wa was still at Kleiner, and it was Andrew Braccia at Accel.

[00:06:22] I think it was around 2007 or 2008 when I first met Andrew and I just left that meeting just being completely impressed by him.

[00:06:29] And, sometimes you just know that someone is really special. The way he engaged with us, the way he understood our business instantly, the way that he kept in touch with me. I just left that meeting thinking this guy was the greatest thing since sliced bread.

[00:06:40] And for me, ever since that meeting, that one moment, I left just thinking Accel was the best place and success for me would be getting a chance to work with Accel.

[00:06:49] And from that experience, It's never been lost on me that, when you as an entrepreneur going into a place like Sequoia or Benchmark or Accel, that's a really important day in your [00:07:00] career. And even though Andrew turned me down for that investment, which he was of course really smart to do so because it was a crazy company he made such an impression on me. And I think it's important as investors, we treat entrepreneurs with respect when they're coming in because it's just such an important moment.

[00:07:14] So that company ended up not working out and I actually came back to Accel and got paired up with an EIR here. And so we started this company, it was called CardSpring. We worked on it for four years. I wasn't the CEO of the business. I've never been CEO of a company. I was always the tech co founder. We worked on that company for four years. We ended up selling it to Twitter.

[00:07:32] It was okay from a financial point of view, but it was like a really cathartic moment for us and the company and the folks who'd worked on it.

[00:07:38] How Amit learned about angel investing - friends, conferences, and meetups

[00:07:38] Amit: When you're a founder and you're mostly broke and you've had, one stock, whether it's CardSpring stock or Betable stock, the idea of angel investing is very appealing. You have lots of friends, you want to diversify your risk. You want to make sure that you're able to have a little bit of equity in a bunch of companies. And so I started getting into angel investing.

[00:07:55] And so I went through my Rolodex and I had one friend, [00:08:00] Tyler Willis, who actually was angel investing and was quite public about it.

[00:08:04] And so coincidentally, his office was in my building. And so I asked Tyler to grab coffee with me and he was incredibly generous with his time. And, he gave me a primer on angel investing and gave me just a framework and a structure of how to think about it. And I started doing these angel investments and I just started taking steps in that direction.

[00:08:22] I took those steps without really understanding like what it could lead to. I never thought in my wildest imagination that I'd suddenly be a partner at a top tier firm.

[00:08:29] And I started going to different events. I went to this dev tools API event that Accel had put on. I met a bunch of the other partners that I hadn't interacted with previously.

[00:08:38] YC put on this conference called AngelConf and that was like a really cool event. I felt like I learned a lot more and I was just getting more and more involved in this part of the world while I was still at Twitter.

[00:08:47] What does it look like when a VC firm recruits you as a potential founder? Potential partner?

[00:08:47] Amit: And at pretty much one year and one day at my tenure at Twitter, both Accel and Greylock reached out to me. And presumably, they wanted to just be involved in what I was doing next, they obviously wanted to keep being in business together.

[00:08:58] And so I remember getting [00:09:00] lunch with Andrew and we shot the shit for about 50 minutes. And then he effectively, he was like asking about what I wanted to do next. And he said, you should come work at Slack. And Andrew was the major investor in Slack, from the very beginning.

[00:09:13] And, he was like, we could use a director of engineering or something. Like you should come over and, that was an incredibly generous offer and I, first of all, should have definitely just said yes, because that would have been, that would have been great. That would have been much better than anything else I was going to do.

[00:09:27] I was very loyal to Twitter. Twitter had bought my company and I took that very seriously and. I, As long as they were holding up their end of the bargain and we were still working on CardSpring and offers and commerce, I felt like it was the wrong thing to leave. And so I told him I couldn't do it, but it was a, obviously a very generous offer.

[00:09:43] And then he was like do you want to start another company? We'll EIR you.

[00:09:46] And I was like, no way I'm, I am so tired.

[00:09:51] I am broke.

[00:09:51] Like I need to make some money. No thanks.

[00:09:54] And I turned him down on that.

[00:09:56] And then I basically just said I'm doing this angel investing thing. [00:10:00] I think you're the best. I would love to invest in anything that you're a part of. I can do tech due diligence. I can be helpful. And I, I detailed a little bit of what I'd been doing.

[00:10:08] And I think that's the first time Andrew might've thought about me and like the investor context, because up until that point, he thought of me as like a founder or builder or engineering product person. And so Andrew, really kindly was just like, look, man, if you're really serious, like, why don't you just come to Accel for a day and just sit with me and just see what I do.

[00:10:25] And I honestly thought he was just being nice. And so I never actually took him up on the offer. I just thought Oh, he's just being really kind and thoughtful. That's really nice of him. But I didn't actually think he was serious. And then, over the next nine to 10 or 11 months what ended up happening is he just kept introducing me to people at Accel.

[00:10:41] And I just thought I was networking for the first two months. I thought I was just like meeting people and I'm at Twitter. I've I've got plenty of time, like I have plenty of time for coffees. And I, I ended up meeting Ryan Sweeney, who's one of the major partners here that I met John Locke and then Vas and Rich Wong.

[00:10:54] And, about six weeks or two months into it, I realized that they were actually considering me for a role. And, at that [00:11:00] point I'm like, Oh shit, what have I got myself into? Wait a second. This was going a lot better when I had no idea that they were actually considering me for a role. And I was just like, very loose with the conversation, but now I'm like, Oh my God how do I not screw this up?

[00:11:12] But honestly. I had a lot of mentors and friends who were supporting me through the process. It gave me a lot of feedback, but then the number one thing I just did through that and through all the conversations was I just tried to represent who I was and not pretend I'm something I'm not.

[00:11:25] Hilariously in some of these conversations, I was like, I don't really know too much about investing or, like this is going to be like quite, quite a learning curve for me.

[00:11:32] And I actually think in a way that sort of endeared me to them in the process. One of the key tenants of Accel is that it's an apprenticeship business and that we bring in talented people and we bring them along and help them learn the practice of venture capital.

[00:11:44] And, one of the things that's quite unique about Accel We built through the draft, we built from within, and pretty much every single partner at Accel was promoted into that role.

[00:11:53] There's only one or two exceptions. Like Almost every single person here started off as an associate or principal. And that mentality [00:12:00] has been built into the firm and by chance or by luck, whatever it is, Accel was the place that always felt like home to me. And it also had the structure that was most adept to helping me be successful here, which is, so I came in as a principal and then over time, been promoted up, to partner,

[00:12:14] Angel investing as risk diversification and knowledge sharing, especially for existing startup founders

[00:12:14] Aamir: You mentioned that part of the goal in doing angel investing was diversifying risk. I think if you speak to someone who's outside Silicon Valley, they would see angel investing as a way to get rich.

[00:12:24] So can you share why you thought about risk diversification as the reason for angel investing instead of make even more money?

[00:12:31] Amit: It's a little bit of both. So there's a version of the risk diversification, and I think the most famous example of this is in the minor leagues of major league baseball.

[00:12:37] I wouldn't say it's popularized, but it's gotten very common. So a pool of players who are all very talented will actually do this equity trading with each other because there's a very small number of them that will actually hit it big. And the amount of money that you make in the minor leagues is typically not enough to sustain a family And so they do that sort of risk pooling.

[00:12:57] And I thought of it as a way to, you want to [00:13:00] diversify risk rather than put all your eggs in a single stock or private stock. And certainly if you pick the right private stock, that has to work out really well. Part of it was also I want to be involved with more projects. I've learned a lot, the three different times I've been a founder. I want to be able to apply that knowledge to different opportunities.

[00:13:16] I actually really enjoy working on so many different problems and areas. And, while I'm thrilled with the companies that I started and going deep in a category. I think it's also just fun to work on different projects with other smart people.

[00:13:27] You get to learn a lot more. You get pulled into new areas that were unexpected to you. So I think there's just a lot of benefits to being able to do it.

[00:13:35] And then, look, the other thing that, maybe doesn't get talked about enough is at that point in my career, I had a lot of access. my peer group, whether it was you both, or other folks that were building really exciting or interesting projects, it was relatively straightforward for me to be able to get a small check into some of those projects. And so it just felt like a very natural thing to take advantage of.

[00:13:56] Venture capitalists can provide "co-founders as a service"

[00:13:56] Shaherose: So would you say now, even from the beginning days of, Hey, I had a lot [00:14:00] of access to my friends and want to support them and learn along the way, what is it for you now? What's the why, as you think about investing?

[00:14:08] Amit: It took me some time to figure it out because I think venture capital is this big shiny object and a lot of people want to break into venture. But if you don't have a why, I think it's hard to be very durable because I think, certainly in the good times, like it's a great job. Over the last couple of years, I think it it's a really difficult job. There's a lot of ups and downs and the payoff is so far down the road.

[00:14:27] I would say for me very specifically, I've been a co founder three times, and I actually think I make a really great co founder.

[00:14:35] And I think that's like a very specific role that's a little bit under, underappreciated in Silicon Valley, but you have a lot of people who want to start companies, but there are not enough people who want to start those companies with them.

[00:14:46] And to, adopt someone's mission as your own, to evangelize it as if it was your own, to, be a truth teller, to be a mirror to your partner, to, recruit the very best people into this company, to play this outsized role.

[00:14:59] I think [00:15:00] it's an incredibly important role. And I view what I do, in venture capital as co founder as a service.

[00:15:05] You're meeting really special people and you're effectively trying to decide, do I want to go on this journey with you and bring to bear my resources, my experience, my network. And, once you go on that journey, you're on the ride.

[00:15:17] Certainly the way we practice it at Accel, we're not looking for the spotlight. We want, the founder to be front and center, they're the ones doing the work, they're the ones building the company. When you think about the seminal personalities in our industry, we don't often think about the co founder who ended up supporting them, but they are critical to those companies, reaching the heights that they do.

[00:15:38] Shaherose: I love that.

[00:15:39] And I think about that for myself too. I always feel like I'm there in that zero to one phase and that first true believer. There's something about that believer that really supports that first founder or CEO, whoever getting started.

[00:15:54] Doing this for the number of years that I have, when you are the first institutional partner with an [00:16:00] entrepreneur, that relationship just persists, and that can happen at the seed, that can happen at the A., Like with some of my founders, I talk to them literally every single day, and whether they're having an up moment or a down moment, whether it's a crisis, whether there's just a venting session, whether there's a question about how to proceed.

[00:16:15] Amit: Like that high bandwidth communication, it's really fascinating to me how often it's with the first institutional partner.

[00:16:21] But I think that the bread and butter of, what we do at Accel and certainly I think all venture capital, I think it's to go early.

[00:16:27] It's to go early and to be that most important partner. And that's actually where the flywheel happens.

[00:16:32] Aamir: So when the next generation of founders emerges from those companies. They want to work with that partner too. They tend to want to work with the same person who they attribute a lot of the credit to, helping push the company in that direction. And that's just the lifeblood of early stage investing. When I was thinking about joining venture, I was talking to Sameer at Accel trying to get some advice and some thoughts.

[00:16:51] And our last discussion during that time period, he said, Aamir, let me ask you one question. [00:17:00] Do you think you have another company in you?

[00:17:02] And I said, yeah, I think I do.

[00:17:05] And he said, then why are you talking about investing? Go do that.

[00:17:09] Amit: Yeah.

[00:17:09] Aamir: And obviously I didn't listen to that advice fully.

[00:17:12] But that really stuck with me that he picked up on something, and wouldn't continue the discussions that you ended up having with Andrew and the other members of the Accel team. He just asked that question straight up.

[00:17:21] How Amit chose between being a founder again and investing full-time

[00:17:21] Aamir: You mentioned that I felt tired while I was at Twitter and I was a broke founder, but what was the encapsulating moment for you that made you say, yeah, no, I'm meant to go do investing now instead of founding?

[00:17:32] Amit: So when I was starting companies and we didn't have the exit or the moment, there was no alternative. Like I had to keep going. And so I kept starting companies.

[00:17:38] But when Twitter acquired the company, I was going through a lot of transitions in life and it just felt like a moment to just be open to what the world had to offer. So I was pretty open minded, and, in the end, I would tell you that all the paths seemed actually pretty appealing to me.

[00:17:51] Like I could go back early stage, I could start something. I actually was also pretty open to being an exec at Twitter or a similarly sized big company. Like I don't think there's [00:18:00] anything wrong with those paths. Like they were fantastic.

[00:18:02] But there was a moment that like really pushed my thinking a lot. And I remember I was in a meeting with my team that I was running at Twitter and one of my engineers, Rupak, had got there early and, I was just shooting the shit and I was just like, Hey, what'd you do this weekend?

[00:18:17] And Rupak was telling me about how he was like hacking on these Haskell servers all weekend and Rupak's just an unbelievable engineer. He's like an engineer's engineer. And I just remember in that moment feeling like I would never be better than this guy at engineering, I might've been better in that exact moment in time, but this dude's slope is unbelievable. And he just loves it more than I do. I love so much about engineering and building and problem solving, but at the core of it, he loved technology more than I did.

[00:18:43] And so I just felt okay what could I be best in the world at, what would I challenge myself if you put me in a room of 30 or 40 people? That I would just tell you, with irrational confidence that I was the best at it and, fundamentally that line of thinking led me to a conclusion: like I [00:19:00] love people. I love people so much. I love people more than most people love anything.

[00:19:04] And that comes out in how I manage people at Twitter. That comes out in how I support people now, my entrepreneurs. I run, this really expansive mentorship program at UC Berkeley. Where I have 200 kids. They're the ages of 20 to 28. They're, people who are actually legit and doing things in the real world. And, I just have a lot of love in me for supporting people.

[00:19:26] I think that's what I'm meant to do. I suppose that's the other version of the why.

[00:19:30] Maybe one day I would want to start something. I don't think it necessarily needs to be a company. And actually it's like a lot of the work I've done at Berkeley has informed where I would try to go build something if ever I want to build something, but, I, I honestly feel like there's a large part of this job that comes very naturally to me.

[00:19:47] And that's the part where you're supporting people, and you're helping those people achieve their goals or visions or dreams like I find that incredibly rewarding and incredibly fulfilling and in a super authentic way. So [00:20:00] that part really I think comes off for me and it allows me to build special relationships with entrepreneurs.

[00:20:06] Amit's first investment, and how past founder relationships build trust

[00:20:06] Shaherose: Yeah, I can resonate with the love of people as well, and I'm sure you've met some really incredible folks with all sorts of backgrounds.But let's rewind the clock, right? So here you were at Twitter. Running the show, making things happen. And then you got curious and you said, Hey, I want to start angel investing. Would love to hear about what was that first investment? How did you get conviction to say yes? How did you find that investment and how did it do?

[00:20:35] Amit: I think we should talk about my first investment at Accel cause I think that's, that may be better.

[00:20:41] The first investment was in a company called SmallStep and fundamentally it was an investment in someone named Michael Malone.

[00:20:46] So Michael Malone worked at a company that I founded. I ran engineering at that startup and then actually I left to go start CardSpring and Mike Malone took over as the CTO of the business. And Mike is just, he's just [00:21:00] an unbelievable technologist. He's a great person. He's my people.

[00:21:03] And so when Mike wanted to start a company. He called me and, I was one of the venture folks that he knew. Andwe'd had this unspoken trust and relationship and, he gave me a sense of what he wanted to work on.

[00:21:16] But it was, fundamentally it was super raw. It wasn't super well formed. I think a large part of this business, sometimes we can overcomplicate it. But a version of this business is just investing in like the five best people you know. And so Mike Malone is certainly one of the five best engineers that I know. And so when he wanted to start a company, it was a pretty quick no brainer.

[00:21:35] And that was the only investment I did in my first year at Accel. And it was like a very straightforward process. We knew we wanted to back him and we ended up giving him a couple million dollars. And he pulled together the rest of the round.

[00:21:46] SmallStep has, it's been a journey. And the funny part is, we backed him when there was no lines of code written, he had one or two people that he wanted to bring on board. And he did, and it's been, it's just been a really long journey and we've invested in multiple rounds [00:22:00] of the business. I think it was last year he pulled together a Series A.

[00:22:03] Sometimes these things can take a really long time.

[00:22:05] it's only in the last, I would say year and a half that we've really hit our stride now in commercializing the business. We just had our best quarter ever in terms of generating revenue and we're obviously pretty excited about what the future has now, but sometimes it just takes a really long time for all the pieces to fit together.

[00:22:23] Startups that don't go public in 7 years - does that hurt your model and LP relationships?

[00:22:23] Shaherose: Wow. I'd love to double click on the really long time.When you think about what's required in terms of capital deployment and capital return, which usually is a seven to 10 year lifecycle for a fund.

[00:22:35] When you look at that investment, what do you think?

[00:22:37] Amit: I would say that, this is not how we drew it up on the, on the playbook. Of course, you want there to be greater velocity, but sometimes, the companies just take a really long time.

[00:22:46] And the flip side of that, what I would tell you is that Mike has done an unbelievable job. Keeping his burn low, iterating, bringing in additional capital from different sources.

[00:22:55] One of the pieces of advice I remember back in the day from that YC Angel Conf was and I [00:23:00] think it might've been Jeff Ralston said this, he was like, "you should back founders who make something out of nothing, not founders who make nothing out of something."

[00:23:07] Fundamentally, you want to back scrappy people who are able to keep their burn low and, actually keep iterating, create something of value versus there are a lot of entrepreneurs who are really adept at raising large amounts of capital. Certainly they're all amongst us. And then, nothing ever comes from that. There are a lot of companies that have raised 50, 100, 150 million in capital and ultimately there's no, nothing of substance really built.

[00:23:27] And so I just, I give Mike a lot of credit. As long as we're getting smarter about what customers want, as long as we're producing code and building product, that's an easy thing to back and to be excited about.

[00:23:38] Shaherose: What would be something that you think about today from that first investment?

[00:23:42] Amit: I would say that, we should be doing more of those kinds of investments. And I would say that Accel over the last seven or eight years a large part of our business has shifted towards seed investing, some of that is dictated by where Series A's are clearing price wise.

[00:23:53] And a large part, I think, of the job of being effective at this is like learning how to work with entrepreneurs and learning how [00:24:00] to push them in a certain direction in a way that's effective. So if you show up at your one on one with a founder with a list of 12 things that they should be doing, it's just not going to be effective. They're not going to listen to you. And it's just a bad use of everyone's time.


[00:24:11] Conviction, not consensus - but what builds trust among GPs when startup investing?

[00:24:11] Aamir: Since we're talking about your first investment at Accel, You were in a team setting at that point. So I don't think you got to write a 3 million check willy nilly just because this person was your friend.

[00:24:23] Could you share with the audience what you had to emphasize in order to get it across the line with the partners around you, what stuck out?

[00:24:29] Amit: We are a conviction based shop, so we don't have voting. There's no minimum threshold of people who have to agree for you to be able to write a check. That sounds pretty crazy and dramatic. I know, but that's actually the truth.

[00:24:40] I've definitely done deals where if we'd put it to a vote, other people, like almost no one else would have agreed. That's part of the game. We really believe that we have to follow your conviction. The best investments come from conviction, not from consensus.

[00:24:53] If these things were obvious, everybody would be investing in them. And certainly like half of the deals we do, it's not a competitive process. I think there's [00:25:00] this belief that every single deal is a hot deal and, there's perfect information, you guys are investing. This is not true at all. A lot of these things are super non obvious.

[00:25:07] What the partnership here at Accel is meant to do is to challenge your conviction and to push you and to make sure you're thinking about things the right way.

[00:25:15] We believe that pushes you away from the. Okay I'll vote for Aamir's deal and Aamir will vote for my deals. We get away from that. It doesn't matter.

[00:25:22] And it also really clarifies attribution. At the end of the day, it's oh, Shaherose did this deal. It's not because I voted for it. She did it. She, at the end of the day, she has the decision. She has the checkbook. She can do it.

[00:25:33] In this case, there was a lot of support for the deal. I think Mike has, a lot of credibility as a founder. He's a really well known technologist. The area that he was going after is something that we were excited about. We've invested in other companies in the space. We believe that there's like a continuing evergreen market opportunity there.

[00:25:51] And the deal set up made a lot of sense. And I emphasize this last part because...

[00:25:56] When I came in, I didn't realize how important the deal setup is.

[00:25:59] And that's [00:26:00] actually such a big component of whether or not the investment makes sense. Like how much money are you putting at risk? And then, what ownership are you getting? That's obviously like a major part of every deal. But I didn't understand that if you get the deal set up wrong, it can actually turn what would otherwise be a good investment into a bad investment. It might still work out for you. You might still make money. But on, on a long enough time horizon, like if you keep making those kinds of deals, like you're going to be losing money.

[00:26:23] And I think people were excited, certainly after six or seven months of meeting companies that I, put my hand up and I was like, Hey, we should do this one. This is a really good one.

[00:26:30] Startup valuations: Amit's venture capital POV and moving targets in 2024

[00:26:30] Aamir: So since you bring up valuation, this is one of the big questions that we have, especially in 2024. In this case, it sounds like when you think about the deal parameters that mattered, it was something around the amount of money you were putting into the company. Which leads to the valuation, which leads to the ownership that you get in the company.

[00:26:45] Can you share a little bit about how you think about that today? There's all this talk online about 20 million dollar valuations. Is that too crazy for seed or pre-seed?

[00:26:53] Is a company that starts on day one worth 20 million. I don't know what the answer to that is, but I will tell you for a lot of deals [00:27:00] with really credible founders going after really exciting spaces, 20 million is roughly the clearing price.

[00:27:05] Amit: And 20 million to me, it just to give you like a version of this. CardSpring, my company. The Series A price for that post money, I think was 26 and we raised 10. Okay. And we had revenue and customers and we had a big partnership. So 26 seemed good at the time. Like we were pretty excited about that. There were high fives at the office.

[00:27:24] And now you're seeing a seed deal done with, not even a presentation, as 26 posts, four on 26.

[00:27:29] On some level it is a bit silly, but what I would say is that for us, when we're investing at those prices, and I do invest at those prices, I do invest at 18 post, 20 post, 22 post, what we're thinking through is, we're first of all putting in a significant amount of capital.

[00:27:42] We're putting in 3 million or 4 million in those businesses and we're getting real ownership, For us, what matters a lot more is ownership, not the dollars. Like it'd be more than happy to put in four instead of three because the reality is we're investing out of a fund that's 650 million.

[00:27:56] And so it's much more important that if you've decided of the [00:28:00] hundreds of companies you're meeting this year, that this is the one, or this is one of the two or three that you're going to do this year, if you're going to spend your time on it and you're going to be having coffee with the guy seven years from now, go get some ownership in this business, So that when it does have an exit, it moves the needle on our funds. It's super, super important.

[00:28:17] And I would say 20 is a lot if you're putting in, 1 million or half a million. Butif you're able to put in 2, 3, 4, 4 and a half at those prices, like you can get ownership.

[00:28:28] And honestly, the best deals I've ever done have been in that ballpark. Where we put in 4 million at roughly that price, we joined the board. And we work the company from then on out.

[00:28:37] How does a large early-stage VC think about follow-on investments and the number of startups to fund?

[00:28:37] Shaherose: And how often then are you continuing with follow on? So you come in at pre-seed with a very like specific target on ownership at that point, and the companies continue on. So what does it look like for you to continue on the relationship funding wise?

[00:28:51] Amit: Yeah, look, in the best case scenario, Accel's investing in every single round of your business kind of subsequent to that. I'd say like Slack is the canonical example where we [00:29:00] led or co led, I think, every single round from the very beginning all the way through exit. We, on the venture fund, the math is pretty straightforward.

[00:29:07] So our fund size is, I think when I started it was like 550, and this latest fund is around 650. So we've really stayed, disciplined and in that zone. And you're effectively trying to invest and call it like, order magnitude, like 40 companies. And for any one particular investment, you're not trying to put in more than 20 or 25 million.

[00:29:25] You don't want to be totally lopsided in a fund of that size, have 100 million in a company. And so when we make an investment, we set aside reserves and those reserves are for every single investment that we do, whether it's a seed or an A.

[00:29:36] We do so many seedsthe last four funds a shocking percentage of them actually go on to raise a Series A, like way higher than I was expecting.

[00:29:43] And so I think that the numbers where they more or less track is basically about the 35 or 40 percent of the time we're doing the Series A. And then 35, 40 percent of the time, someone else is doing the Series A.

[00:29:52] So we're not like an automatic okay, we'll do our full pro rata. We are really thoughtful and diligent about each of those situations.

[00:29:58] Like every single dollar that you're putting [00:30:00] in at a valuation of 500 is a dollar you're not putting in at a valuation of, call it 20 or 10, for a different opportunity. And so we want to do the best job we can for LPs.

[00:30:09] And so I would say, when it comes to the subsequent round, I would say we're extremely likely to do our full pro rata or sometimes even more than that. That's how the numbers play out. But as the company keeps tracking, maybe it's raising a hundred million at a billion. And you own 20%. We're certainly not putting 20 million of that from our venture fund. That would break the math.

[00:30:28] And as those companies get further and further away from the early stages, of course we back off and then, we have our growth stage fund and our later stage vehicles that can sometimes soak up either that pro rata or lead those late stage rounds, but every fund is different.

[00:30:41] And so I have to think about the LPs cause of course the LPs overlap between our early and growth stage vehicles, but fundamentally, as a partner in the venture fund, I'm thinking about every single dollar in there and what's the best utilization of it.

[00:30:54] Aamir: This is a good bullet point for founders to think about. I lived the same thing whenever we were doing our rounds. I think it [00:31:00] was at the series C when suddenly the pro ratas were not so easy for the investors that had come in prior. And I remember the first time, our Series B investor said, Oh yeah, no we're actually not going to do it at all.

[00:31:12] We freaked out. We're like, Oh no, is this a bad signal for the series C folks? So I think for founders, they should keep that in mind that it's not uncommon for the investors to decide not to do their full share.

[00:31:21] Amit: And it works both ways. Sometimes at those super late stage rounds, the late stage investor is like, no, no, no, no. Your early guys are doing their pro rata or the deal isn't happening. And that happens. And we, we support those companies and we put her in full pro rata in those situations.

[00:31:33] And sometimes, to be honest, there's just so much demand to get in the company and then the round, that it's actually doing the company a favor to back off from those pro rata, and they're actually like delighted because now they get, all the strategics in or they get the special individuals in.

[00:31:45] Every round is different and ultimately, we're shareholders in those businesses, so we want them to be super successful. I would say that we're going to be thoughtful and diligent about every single dollar that goes out. .

[00:31:57] Taking bigger risks earlier

[00:31:57] Aamir: We'd love to hear from you about an investment that did [00:32:00] not go so well, and what are the lessons you took from that?

[00:32:02] Amit: I think you think about " did I make the right decision with the information that I had" and then subsequent to that investment, like, how did things play out and what was the role I could have played in that company.

[00:32:11] I got involved in the Scooter Wars. Sanjay is the CEO and founder. He's a really close friend of mine. He's a really special and talented individual. He knows hardware inside and out. And most importantly to me, he just authentically lives and breathed that space in a way that like very few, if anybody does.

[00:32:27] And so Sanjay had gotten quite early to this category. He'd built Boosted Boards. He was all about urban mobility. He was just a really credible person in the category. And he had already done a seed round and was telling me about the business and it was exploding. And, there was just so much momentum in the whole category.

[00:32:44] And I remember going through the process and, I think Sarah Tavel calls it the deal vortex, where you're really trying to make sense of, all the bits of information in a very compressed timeframe and trying to decide what to do.

[00:32:55] And I indexed heavily towards Sanjay and his credibility and our [00:33:00] relationship. And honestly he had the ear of local governments. And he had the best perspective by far about how cities were thinking. Up until that point you had Uber and Lyft and they had just run rough shot over cities and it was ask for forgiveness, not for permission. And Sanjay was the flip. He was the opposite. And I thought that his approach made the most sense.

[00:33:19] So we ended up doing that investment.

[00:33:21] The lesson I took from that wasn't like, Oh, I shouldn't have done that investment. Like I'm actually really happy I made the investment. I learned so much from the process.

[00:33:29] I think that it's up to investors to be taking risk.

[00:33:32] One thing I think about is how do I push the firm to take more risk and to invest in emerging categories? It's in these emerging and fringe categories that sometimes you have the big winners you can stick to the, what is it? The rivers and the lakes that, you know, but like sometimes you got to go play in the waterfall.

[00:33:46] And the big takeaway for me was I wish I had made that investment as a seed investment because it would have represented the right risk reward ratio of my understanding of the category and where I was in terms of [00:34:00] understanding that space.

[00:34:00] And what I've done a really good job of since that investment is just managing and balancing the risk reward ratio. Of course, it's always painful when an investment doesn't work out and you lose money.

[00:34:10] When you're investing, it's important that we take risk and that we pursue next gen categories.

[00:34:17] Shaherose: That's a really subtle but great point. When you're coming in, it looks to me, that you had true conviction around the founder and his abilities, both on the technical and non technical side.Would you say it's more market timing, or was it external factors that led to this,

[00:34:35] Amit: Yeah, there were so many, dynamic factors at play,

[00:34:38] And To be perfectly honest, AI is a version of that. Like it's a really exciting category. There's so much venture dollars being poured into it.

[00:34:45] And I think that right now there's probably like a significant amount of risk.

[00:34:49] How startup investors consider incumbents in a space when assessing competition and exits

[00:34:49] Amit: I'll play naysayer cause I think it'll help people to understand the thought process behind your investment and how successful investors like to think.

[00:34:56] Aamir: If I saw that deck, I think I would have said, oh no, but Uber and Lyft are [00:35:00] already there. They're just going to go that last quarter mile instead of scooters.

[00:35:03] They'll come out with their own solution, like one, and two, this is a hardware problem. Shouldn't we just in go invest in, a hardware company in China to make these scooters and that's the real investment So how did you think about those items or anything else that, could have led you to say no to the investment instead.

[00:35:19] Amit: It's always easy to think that the incumbent is going to do it. And certainly investors have to think about that, but in some of these emerging categories, and I think the reason that we're investors is we believe that, new entrepreneurs can pioneer these fields and push them forward.

[00:35:32] And oftentimes from one of those bigger companies, it actually may make a lot more sense to make an investment or make an acquisition. And that's ultimately what played out, when you think about Uber and Lyft, it's not like they actually spun up their own fleets of scooters or whatnot. They ended up purchasing, or making partnerships or making investments.

[00:35:48] The the VC truism is that, usually startups don't die by homicide, they die by suicide. And, if you have the resources to make customers happy, to build product, to push it out there, you tend to have a fair number of [00:36:00] options.

[00:36:00] I think it's very rare that like you just get completely sideswiped by one of the large incumbents and now, as the regulatory landscape changes and maybe M&A is a little bit more fraught, perhaps you'll see a lot more of this build versus buy decision being made. And so perhaps we have to factor that in more.

[00:36:14] But, I think certainly at the earliest stages, it's fair to over rotate to just individual customer moments and experiences, because that can scale quite a bit.

[00:36:24] Headway, and what Amit has learned about identifying good startup investments in new markets

[00:36:24] Aamir: Tell us a bit about your best investment so far, ideally one where you've realized some outcome and tell us a bit about, what made you say yes?

[00:36:34] Amit: Yeah, happy to. One where I've realized an outcome, I guess I'll see you guys in four to five years from now. Man, it takes a long time for these things to play out. The other thing I don't think people realize is you don't find the great company on day one of the job.

[00:36:47] And so like for some of these companies, it took me several years before I actually intersected the entrepreneur, made the investment.

[00:36:53] And so the company I'll talk about is Headway, which is a mental health company.

[00:36:56] I often think it's not really about the result, it's about the process [00:37:00] and the inputs.

[00:37:00] And so again, it just goes back to are you backing a great entrepreneur? Are you backing it in a category that you're excited about? And lastly, does the deal setup reflect, the risk reward and the category that you're going after?

[00:37:11] I remember when I started going down the path of mental health, it was just a category that nobody was excited about. There were no real investors putting money into it. I remember Andrew telling me specifically, he said, if you keep looking at mental health, I'm going to question your mental health, it's just not a category you look at.

[00:37:27] But, fundamentally someone who I really admire and think highly of, she was trying to start a mental health company and I, I was trying to dissuade her because I was like, this is a horrible idea. What are you doing? Let's go do something else. And we disagreed and committed.

[00:37:41] And so I told her I would help her. Because I would start meeting with mental health companies so I could help her chart out the category of the space and help her find where are the pockets of opportunity.

[00:37:50] And I just started meeting with all of the mental health companies I could find. That's a motion that is a lot easier than I think people realize. When you put on the Accel jersey and you [00:38:00] say, you're looking at mental health, the reality is everybody refers to you, they're mental health companies.

[00:38:03] And so I met almost everyone in the space. Actually, what was really special about the mental health space is every single person has like a real personal connection to the category. I'd gone through a personal crisis. I had seen a therapist and that process informed my point of view in going through it. And hilariously, as I met all these companies, I became convinced that I was wrong, that there was a real opportunity. And I ended up writing our thesis on mental health. We spent about six months meeting companies.

[00:38:29] And in the end I met Andrew Adams. And Andrew Adams is probably the person in the space who had the best articulation of what the problem is.

[00:38:36] And so when go through the VC pitch deck, the first slide is always the problem slide. And the problem slide on pretty much every pitch deck in the mental health space is, mental health care is a crisis in America. We're having. X number of people are impacted by it. And it's totally true.

[00:38:48] But, I would make the distinction with, it's not actually a solvable problem. Mental health care is always going to be a crisis in this country unfortunately. I think it's just, it's like health care is, people are going to have health care problems, people are going to have mental [00:39:00] health care problems.

[00:39:00] Andrew was the first person with the correct articulation, which was mental health care is unaffordable. That is a solvable problem. And so he originally actually had the wrong solution and he had, a kind of a different approach to the space, but because he had the problem statement he was able to keep iterating, not get married to any one particular solution.

[00:39:22] And he ended up building, what is Headway today, which is, effectively a software network that brings therapists en masse in network, so if you are a therapist, you don't accept insurance. Now you do. And it completely changes the dynamics of the category. So if you're seeing a therapist and it costs $200, now it costs your copay.

[00:39:43] And so you take the same product. There's no change, there's no app, there's nothing like that. You go see your same therapist and now it costs 10 times less. It's a really remarkable, remarkably simple idea, at the core of it, but there's a lot of technology, a lot of operations behind it.

[00:39:57] And they're just, they're really organizing the [00:40:00] whole space and embracing the industry.

[00:40:02] So we work very closely with therapists. We work very closely with payers and the scale of the business is like mind boggling at this point. We're almost at 30, 000 therapists. It's by far the largest mental health group, in the world. We're doing north of 30, 000 appointments a day. It's it's pretty astonishing.

[00:40:17] It's such a privilege to be part of this company. Andrew has become one of my closest friends and importantly, like I alluded to earlier, it's just a category we were not experts in. I don't know that anyone was an expert in the category, certainly, but we certainly weren't.

[00:40:32] And we had conviction. We had conviction in him. We had conviction at the approach. It was working in really small numbers and we ended up investing, 4 million at a valuation around 20 million. I joined the board of the company and, we've been the largest investor since. We've invested in every single round of the business.

[00:40:49] That deal setup was the right structure for us to get involved with the company. If I had brought in a company at Accel and it was, call it like 60 posts or 70 posts and we're doing 15. Certainly I [00:41:00] could have done that, but I don't think that would have been the right setup for us, in just full recognition of like how much we knew and how much we had to learn.

[00:41:07] Shaherose: That's amazing. It's just so clear that, in these journeys, like we can't predict. And yet when we spend time in a space and build our view of the world, and it becomes true. How rewarding is that? So where is the company today?


[00:41:21] Amit: He's nailed it. It's a really special company and mental health care is a problem that really impacts so many people. And, you have this generation of talented engineers or product managers that are leaving Stripe and Airbnb and, Dropbox and, they're looking for what their next challenge is.

[00:41:36] And, yeah. I just find this next generation of folks to be so incredibly mission oriented. They want to be involved with special companies that they can feel really good about working on. And so Headway has unfairly and disproportionately benefited from that. Where it's just become an absolute talent magnet. Some really special people work there.

[00:41:51] Yeah. When I first invested in the business, we were doing 5,000 dollars of revenue and we're doing significantly more than that now. Like I said, we're at 30, [00:42:00] 000 therapists on the platform. And, we've raised north of 150 million.

[00:42:05] How to think about thesis investing, conflicts of interest, and competing startups

[00:42:05] Amit: Are you still investing in this space?

[00:42:07] The answer is yes and no. I mean Anything within mental health, I think is going to be tough for me because ultimately I think it falls within the umbrella of Headway. And, I'm not gonna make nine investments in mental health. So I think it'd be difficult for me to find something.

[00:42:20] Do I believe like Calm and Headspace as a competitor? No. So could we do something like that? Yes.

[00:42:25] But like more broadly, I just think that this company is the company. And so I'm unlikely to do it now.

[00:42:32] Their model that they've pioneered here, and Surabhi from YC just wrote about this like in a request for startup. It can be replicated in so many different verticals, and we are aggressively looking for those companies and want to invest in those companies.

[00:42:44] And more importantly, I just think that this intersection of healthcare and payments is so ripe for transformation.

[00:42:50] Aamir: So I'll ask you a separate question on this. While I was investing at a firm in 2017, we looked at mental health as well, actually.

[00:42:57] And there were companies out there that were [00:43:00] forming. One, one good example was a research project out of Stanford called Woebot.

[00:43:05] Amit: Oh, wow.

[00:43:06] Aamir: It was focused on cognitive behavioral therapy. Given your experiences and what you ended up learning, over the past five, six years, how do you feel about the impact of AI on this space?

[00:43:14] Right now it sounds like Headway is focused on connecting people to people, right? Do you think that's going to be interrupted?

[00:43:20] Amit: Aamir, I also met Woebot. And I think I meet an AI mental health chatbot every single week. So it is a very natural extension of the AI technology that's being developed right now. I would say I've yet to meet someone or a project or company that has something really unique on the technical side.

[00:43:40] I think as ChatGPT, and the kind of core models keep improving, I think the abilities and functionalities that these bots can provide it's like a rising tide lifts all boats. What is the company that is in the best position to take advantage of that? I tend to believe it's the Headways and our peers out there.

[00:43:56] Now, I would also describe that there's a pyramid of usage that's [00:44:00] happening out there. For people who have a significant issue, I actually think to this day still, and I believe it will persist for a very long time, talking to a professionally trained person is still the best product that we have.

[00:44:12] And we need to make that dramatically more accessible to way more people. And that's the mission of the company.

[00:44:17] At the bottom edges of the pyramid, I would say, there are companies like Talkspace that have been going after this. Or Calm or Headspace. I think there's a huge opportunity for whether it's Woebot or it's, it's successors or apps like that to give people comfort in difficult moments, but that, those are episodic versus an ongoing treatment plan.

[00:44:37] Now I think it'd be silly and shortsighted to rule anything out to be candid. So could these mental health bots get to a place where they could be just as good as a person? Possibly. I think I'd be very arrogant to assume that's not possible, but, I think it's still unclear to me what that looks like.

[00:44:54] Are those chatbots going to be FDA approved? Are they going to be able to prescribe medication? There's a [00:45:00] lot that goes into it that I just don't think we have the answers to right now. And I think that the companies who have the best distribution with the payers, with the therapists, with patients are going to be in the best position to benefit from whatever AI innovation is happening.

[00:45:14] Aamir:

[00:45:14] How Amit thinks about return profiles and seed investing today

[00:45:14] Shaherose: So let's jump in and talk about what you're up to today. You've been in the game now, seven, eight years. Maybe you could talk a bit about, what you're focused on investing, what are your check sizes and in that answer also, like, how do you decide today?

[00:45:29] Amit: So I lead seed Series A investing. Occasionally we'll do a Series B. I would say as valuations have crept up for those Series A's, like we have shifted pretty aggressively towards seeds,

[00:45:38] Shaherose: You focus on seed and Series A. Do you ever come in at pre-seed and what does that mean?

[00:45:43] Amit: Oh yeah we texted about this. I was like, what actually is the difference between pre-seed and seed? It's just a made up, these are all made up words. The reality is, when I say seed, I basically just mean first check in. And I would say that I'm first check in for more than 50 percent of the deals I've ever done.

[00:45:57] First check in, like we, we know you, we've built a [00:46:00] relationship with you. You want to start a company, like we're on your team, let's go. CardSpring was that. They were incubated. Slack was that. We were the very first check in. Cloudera was that. That's actually like a very large part of what we do, is the first institutional partner.

[00:46:12] And occasionally someone will have raised like 200k from like friends and family, and that's fine. But oftentimes we are literally, fundamentally first check in. And I think pre-seed is. It's just another term that's made up by investors who want to create like a no, you should do pre-seed. Then you can go talk to those people.

[00:46:26] We want to work with founders from the very beginning all the way through IPO and honestly, passed that as well. And so I say seed, encapsulates pre-seed cause I'm still not sure what the difference is between those two.

[00:46:36] I would say that actually it's such a great time to be doing Series A investing. I think there's some really great opportunities and entrepreneurs out there in categories that are getting a little bit less love right now. And we can get ownership for reasonable dollars in, and it makes a lot of sense.

[00:46:50] Hopefully we'll be doing a lot more of those. We're just going to react to, what entry prices are and how do we get ownership in great companies?

[00:46:57] We're generalists, like I'm a generalist my [00:47:00] portfolio reflects that. I love investing in categories that other people aren't paying attention to, But at the same time, let's not overcomplicate this.

[00:47:06] I think AI is like a really exciting category. There's so much innovation happening there. All this stuff is clear, it's going to change so many parts of how we interact with the world and how we do business and so im trying to go as deep as I can and hopefully find a couple of great investments that I can be excited about.

[00:47:21] But, outside of that I mostly cover DevTools, I cover FinTech, and based on the success of Headway I cover a lot of healthcare.

[00:47:28] Aamir: So Amit, the summary I got from you is that you focus on FinTech, healthcare and dev tools. You like to do seed in some Series A investing. And you'll go beyond that if needed.

[00:47:38] Along with that what is the check size?

[00:47:40] Amit: Like we are active investors. Whether we give you 1 million dollars or a 100 million dollars, it's the same experience. We meet with you as often as you need. We're super active with, on text or on phones with you. We're working the networks to help hire for you.

[00:47:53] And so there's a higher bar for what we're willing to get involved with. But when we get involved, we want to put in some real money. So check [00:48:00] sizes at the seed for me probably look like two to 4 million. And then Series A, it can go up or down based on this, but let's just say eight to 12 million.

[00:48:08] What founder and market signals does a venture capitalist look for?

[00:48:08] Amit: And you mentioned earlier that you look at like the entrepreneur sort of spaces that you're excited about and the deal set up. Is that the same framework that you're applying across the board today as you make, what, three investments a year?

[00:48:21] Yeah, I tend to do a little bit more than that. Especially at the seed stage, like you really can't control the timing of great people. And if a great person wants to start a company, like we're going to back them. I would say those are really the three buckets, but within each of those buckets, there are certain things that we look for.

[00:48:33] I think we all have a list of what are the characteristics we look for in an opportunity? What are the characteristics we look for in a market? What are the characteristics we look for in an entrepreneur?

[00:48:41] For me, I have a longer list than this, I would tell you that my experience with Andrew at Headway has really informed a lot of it. Someone who is obsessed with the problem to me is really important. Are you very problem focused versus solution focused? I think is like a really important thing that I look for.

[00:48:56] And then, another one that I look for is just like, how intellectually honest are you? So a question [00:49:00] I often ask is, when someone is not buying your product, what's the reason for it? And you'd be surprised how hard it is for people to answer that question. I'm surprised constantly how much people struggle with that. But, when someone gives you a very clear and sober articulation, why like a prospective customer isn't buying, That just means they're being honest with themselves, you'd be surprised how often you hear nope, everyone buys it. What are you talking about? And it's we're raising 2 million. If everyone was buying it, like you should definitely not be talking to me. And there's just a couple of things I think we look for in entrepreneurs, but that's like a very personal and subjective thing.

[00:49:29] If this job and being in the industry hasn't taught me, one thing it's it's that great entrepreneurs can come from anywhere. They can come from any background, they can be working in any space. And oftentimes it's not even Hey, is this a great entrepreneur, but is this like an entrepreneur that I can be effective with?

[00:49:43] Is this a person I really believe in? Is this a project I really want to commit myself to?

[00:49:47] Shaherose: So what are the types of entrepreneurs you're effective with? Is there something that is a negative factor for you or Oh, you're probably a good entrepreneur, but we should not work together?

[00:49:56] Amit: I wouldn't necessarily think of it in those terms, but I think there are things that [00:50:00] I look for. So the intellectual honesty is something that really matters to me. I think we all have our fair share of experience with the like reality distortion field. And that tends to be like less effective for me, sometimes it's great. You can be on the ride and like you guys, the company's really successful and that's fantastic. But, I would say for me, I think those two things really matter.

[00:50:17] The other things I look for, and I think this is a pretty common thing to look for, is an entrepreneur that can hire great people. The team you build is the company you build. What's been a common element of the most successful companies that I'm involved with is they're able to just hire and bring on just really exceptional people. And that's not often only just because the company is doing well. There are lots of companies that are doing well. Oftentimes it's, a great executive or a great product leader.

[00:50:39] How to get on the Midas List - it's the fundamentals

[00:50:39] Shaherose: Amit, imagine in 10 years you're on the Midas list. What got you there?

[00:50:47] Amit: You know, it's just sticking to the fundamentals. Backing really talented people in spaces before it's obvious, that's the way to generate the most returns.

[00:50:54] It's really hard to generate returns chasing hype cycles and investing at super high prices.

[00:50:59] So to, [00:51:00] to get in on compelling opportunities early, you either have to have a really special relationship, which is a, a large part of what we try to do with our programming and our network building.

[00:51:08] And then honestly, sometimes just being early to a category.

[00:51:11] A lot of these companies seem obvious in retrospect, and in the moment, and I'm sure you both have experienced this. It's not obvious. It's not obvious when you're investing at that early price, that this is the right company, that this is the right market.

[00:51:24] You get proven right over time, but it's really about developing your own point of view. If you are developing a point of view that is shared by so many different people, then those opportunities are priced accordingly. And then certainly, you could emerge, from the scrum with the football and, win the great investment.

[00:51:41] But I think a more predictable path is to just have your own point of view, your own independent thought process and find a great investment.

[00:51:47] A movie you must see to understand venture capital and startup investing matters

[00:51:47] Shaherose: Okay. Speed round.

[00:51:51] Amit: I'm ready.

[00:51:53] Shaherose: Okay. So who is another First Funder that you admire?

[00:51:59] The person who [00:52:00] I look up to most in the business is Andrew Braccia. He's the reason why I'm at Accel and, I've seen his relationship with Stuart and I've seen what kind of supporter he was for me when I was an entrepreneur. He sets the bar very high of what I want to aspire to be.

[00:52:10] Amit: He's why I'm in the business.

[00:52:12] Shaherose: What's a book or a piece of media that has had a major impact on how you invest?

[00:52:17] Amit: One of the things I did when I took a little bit of time off before Twitter and joining Accel, was I watched this documentary called Something Ventured.

[00:52:24] Hopefully you've read The Power Law, right? The first half of The Power Law is effectively this documentary, which was made such a long time ago. And it details, some of the earliest investments that are seminal, whether it's Genentech or Atari or Cisco.

[00:52:39] And it's just like this hokey, old school documentary, but it's about our industry and venture capital. And, it just, it gets me back to the crux of what this game is about. And I know that Twitter and, the vortex of information is thrown at you.

[00:52:52] And I hearken back to. What a cottage industry was, what it meant to really believe in an entrepreneur early, how involved we have [00:53:00] to be with companies to push them to success.

[00:53:02] It's awesome. I highly recommend everyone watch it. It's on Amazon.

[00:53:05] Shaherose: All right. Something to do this weekend.

[00:53:08] Zoom, phone, or in person meetings?

[00:53:11] Amit: I love in person meetings. I think that you just get, a signal that you can't get over Zoom or phone.

[00:53:16] But for first meetings, I'm all about Zoom. I think it's incredibly efficient.

[00:53:20] You can really get to the crux of something within 30 minutes and you can really meet a lot of great entrepreneurs and companies very rapidly versus, I just remember the logistics of the pre COVID world, forcing everyone to come to the Accel office or driving 30 minutes, 45 minutes.

[00:53:35] It's just like a super inefficient use of time.

[00:53:37] So I think that Zoom is leveling the playing field for entrepreneurs that are in different parts of the country. I would tell you that the Accel portfolio used to be so heavily concentrated in the Bay Area and over the last few years it's quite diversified where entrepreneurs are, and I think that's only great for us and our LPs.

[00:53:52] Shaherose: Last question. Social media platform of choice.

[00:53:56] Amit: I'm addicted to Twitter. I can't get off it.

[00:53:58] Shaherose: Amit Kumar of Accel. [00:54:00] Thank you for joining us on First Funders. Where can people find you online?

[00:54:03] Amit: I'm easy to find. I'm akumar at Accel. com, or my DMs are open. I'm amitku pretty much every place except for LinkedIn. There's some guy in Bangalore who will not give it to me, and I have tried really hard.

[00:54:14] Shaherose: ,

[00:54:15] Takeaways from Amit Kumar's First Funder approach

[00:54:15] Aamir: Thanks to Aamitfor joining us. That was a great interview.

[00:54:19] Shaherose: Yeah, I really enjoyed it. It was such a pleasure to hear him share his journey over the last eight years.

[00:54:25] So I thought I could share a few key takeaways that landed for me.

[00:54:29] The first was just how long of a game this really is. He had this reference to a flywheel and what he was really talking about was a relationship flywheel that sometimes you know someone for five or eight years, and you don't invest in them for quite some time.

[00:54:45] And sometimes you're investing in someone who started a different company and those employees come out of the company and you invest in them. And so being around for a long period of time in the industry, having longstanding relationships is so much a part of the [00:55:00] game. It was really great to hear him articulate that.

[00:55:03] He really just said, this is a young person's game.

[00:55:05] Aamir: That part definitely got to me too. Whenever he started talking about founders coming from companies whose founders he'd backed, that made me realize, yeah, it's a company multi generational approach and that you really have to be able to think in that long a timeframe and be willing to put in the time and effort to let that bear fruit.

[00:55:22] The other thing I really resonated with was his take on how he sees his purpose and his why, and how much it's so rooted in his love for people and his love for supporting people. And so his reference to, my work is co founder as a service really resonated with me and how I think of my role as well.

[00:55:43] Shaherose: And I just haven't heard a lot of VCs say it that way. And it was nice.

[00:55:48] Aamir: I feel like if I had heard that from someone else, if this was a secondhand interview or a story that I'd be like, ah, this is what all investors say, this is a load of BS.

[00:55:56] But I think Amit, it really comes across whenever he's discussing this. [00:56:00] And having lived on this side of the table for a while, I do think there's something to that that's unique.

[00:56:07] You can be an investor. You don't have to have this mindset to be successful.

[00:56:12] It's just that Amit does, and it works really well for him, right? This idea of being a, it's a little bit like servant leadership. It's like servant venture capitalism. That, idea makes a lot of sense for him and it comes through in the stories he's telling and how he's able to serve his and help his founders.

[00:56:28] I actually thought that went along with one of my takeaways,VC is not really supposed to be the standard path.

[00:56:34] You don't think, and I definitely fell for this too, in the same way he did when he told the Reid Hoffman story. My story relates to John Doerr at Kleiner Perkins.

[00:56:44] I thought, Oh yeah, the plan is I'll come out to Silicon Valley. I'll work for a couple of startups. I'll go start a startup myself, and then I'll start another startup. And then I'll go be a venture capitalist whenever I'm 50, and that's how you're supposed to give back to the ecosystem.

[00:56:57] And that's not the case. That is totally not [00:57:00] the way it's supposed to work. For most people, it will not work that way. And, hearing Amit talk, it made me realize, yeah, I don't have the right mindset to operate successfully at a firm in this way.

[00:57:08] Shaherose: Yeah, that's great. Another thing that I was reflecting on after our conversation was Amit's point on the risk reward ratio. When he's looking at emerging spaces that are truly emerging, he wants to take risk earlier so that it reflects the true risk reward ratio of where that industry or space is at and where he is at with regards to understanding what might go on in that space.

[00:57:33] And I loved that point, right? We need to be taking bigger risks as venture capitalists.

[00:57:38] Aamir: Yeah, I think Amit has the right thought process around risk. Something that I'm still trying to learn even today.

[00:57:45] When he was talking about the emergent categories and the risk there, he made some good points around thinking about both sides of risk. The upside versus the downside. And I think outside of Silicon Valley, people think more about the downside risk.

[00:57:57] Oh, if I put this money in, I will lose it. I [00:58:00] will lose 10, 000 if I'm an angel or, a hundred thousand dollars or a million or multiple millions if I'm at a firm.

[00:58:06] But the upside matters too. If it's an asymmetric bet, then it's definitely worth making. If things go right and they go really right? This is a bet to make. And I think Amit was articulating that really well.

[00:58:16] And it's something that a lot of us investors should think about for ourselves.

[00:58:19] Shaherose: Exactly. Another point that I was reflecting on was his focus on finding entrepreneurs who are obsessed with the problem, not necessarily the solution. And I loved that.

[00:58:31] It's obvious. And I, right now I'm looking at a deal that I'm excited about. I am really excited about the founders. I'm excited about the space they're in.

[00:58:42] As I'm looking more and more at the deal, is it really solving the true problem? So in his example with Headway he referred to how mental health is a crisis, but the real problem was cost. I'm noticing the same thing in this deal that I'm looking at right now.

[00:58:57] And it's reminding me that I'm getting [00:59:00] really pulled in by the founder and pulled in by the solution. And I asked the founder of the question this week, I said what problem are you really solving? And I didn't get the answer I was looking for. And so I'm a little bummed because I'm definitely in the deal vortex and I want to really back this founder and the space that he's operating in, but I don't know that he has a full grasp on the problem.

[00:59:24] And so I really loved that insight for me in this moment right now.

[00:59:27] Aamir: You often hear the standard pitch deck starts out with problem, solution, team, and so on. I thought how Amit was talking about the problem being so important to get right is critical. So I can see you going either way on this decision you're trying to make right now, given your interactions with the founding team.

[00:59:47] But I think that's really important for founders to hear, especially. That you're not just being judged on the technology you developed or the product you think you're making. It's that what problem is it solving? Is that problem not just big enough, [01:00:00] but also important enough to keep working on, even if your first bet, your MVP, your, first go to market fails. Are you going to keep working or are you just going to give up?

[01:00:08] Shaherose: Exactly. And sometimes founders. Get so obsessed with their solution that they forget to look up and remember that we're here to solve a problem.

[01:00:15] The last takeaway on my side was the continual reference that Amit made to deal set up. And when you hear it throughout the episode, you know what he's really referring to is having the right amount of ownership, given the fund size that he operates in.

[01:00:31] Shaherose: And I think this gives us a great contrast to the conversation we had with Jenny, who, is writing a certain maximum size check, which leads to a certain amount of ownership, which kind of infers the max valuation that she's able to tolerate.

[01:00:45] And when you talk to Amit, given he's operating out of a 650 million fund size, at the end of the day, the check sizes are certainly larger, which again, pulls us down to a tolerance for a higher valuation at seed.

[01:00:59] And so I [01:01:00] loved just learning that more specifically and seeing how that actually works.

[01:01:04] Aamir: I feel like our first three interviews have been awesome. Seeing the different sizes and how people are approaching investing in order to make money and make a difference in lives is been outstanding. We have a lot more coming and now we'll get to compare and contrast.

[01:01:18] Outro

[01:01:18] Shaherose: Thanks for listening. We'd love your feedback and suggestions on topics and guests. You can find us on Twitter/ X, @shaherose and @avirani.

[01:01:31] Aamir: Subscribe to our newsletter to get behind the scenes access, learn more about the guests, and receive the key takeaways from each episode. You can find it at

[01:01:40] Shaherose: And don't forget to subscribe and share with your friends at