YouSaid · the spoken record

Gaurav Jain

lines on the record: 38
first: 2020-01-06
most recent: 2020-01-06
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“It's modern health. It's a company that builds a platform for employers to offer mental and emotional well-being support to their employees. I just love the mission. There's a huge shortage of clinical psychologists in the country and globally. And this is a company that can provide that much needed mental and emotional support that we all need in a manner that is efficient with the resources.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes and no, yes, because it is like marriage in a lot of ways where you should date long enough to really be comfortable with who you're partnering up with. But no, because having fundraised myself as a founder, fundraising is nowhere close to as fun as dating. You want to get that out of the way as quickly as possible.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think it's balancing the short term with the long term. It's a similar challenge to the founders. We invest in. There's a million things to do every day. It's a very transactional business if you look at it. But at the same time, if you're trying to build a multi-decade franchise, there's a lot of upfront thinking and investment that you have to do.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I'd say one of the things because of so many funds is just that it's become highly inefficient to figure out which investor would be the best fit for the company at that stage and so much is left to chance. And I wish if I could wave a magic wand, I'd want something where you could just tell this is the investor you should be pitching for this company.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Favorite book that's a tough question. There's a bunch of candidates for that. But I'll tell you a book I just read, which I thought was very relevant to what we do in Venture. It's called The Trillion Dollar Coach. And it was actually written by Jonathan Rosenberg, who I used to work for. He's had a product at Google and Eric Schmidt, and it was about Bill Campbell, who's a coach for Larry and Sergei, Steve Jobs, many of the iconic founders in Silicon Valley. I think it was interesting for me was that I'm a very logical analytical guy, like a lot of folks at Venture. But the book really talks about what it takes to be a great coach, which is a big part of our job, as you know. And really the big takeaways for me was that don't tell founders what to do, even though I have that urge all the time, because you've seen that before. But instead to focus on first principles, so ask the right questions of the founders, so they can make, they can come to that conclusion themselves, they can make that decision on what's the right thing to do and really giving them the courage to think big, to lift them up when they need the support.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“One of the big myths in the industry is that preseed is betting on founder's resume and idea and not much more. We think this couldn't be farther from the truth. What we look for are a few things, right? First of all, authentic founders, folks that are building this not because it's a hot space, but because if you look at their arc of their career, you can see how they ended up starting this company. And we also look for non-obvious product insight, an interesting distribution approaches where they have some kind of unfair advantage or unfair kind of insight. And you can only figure this out if you're maniacally focused about this marketed use case. Their founders will spend time with that know more about the market than folks that have been practicing this for four or five times longer in that market. And I think that sort of tells you that they're very high clock speed and ability to gather information, ability to talk to the right people, and ability to learn. And we also try to understand the experiments that founders are running to date. And as we talked about some of the...”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think you cannot take it literally on what the Union Economics are, but I think you start to see some leading indicators on the idea of market poll that I talked about. If the CAC is very, very high, I think you ask yourself the question, is there a genuinely market pull? Or have these founders figured out a novel distribution channel or not? And I think if you start to see CAC come down, that's when you double click and say, well, what did you do? How is this different? What's changing? So I think it's less the actual outcome or the data. It's more the process. And then using judgment to extrapolate and where this could go.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Almost $60 billion in bookings. And with Google, the adage in advertising used to be that 50 cents of every dollar spent is wasted. We just don't know which 50 cent. Google's really popularized this idea of performance marketing. And now you have much less waste. So over time, the market is going to become more efficient, which means that it'll be smaller than what it would have been if it wasn't for performance marketing. So we think it precede it's less about trying to really get a sense of what the eventual market is going to be, but more about is there strong market pull from a small set of early adopters? And is that market pull enough to get to the next stage? Usually when we invest, these companies have little to no traction. They don't have any paying customers. But at the same time, we can call up those potential customers. We can.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“What would they be looking for? And this is where our institutional experience of having been at CET and series A funds comes in very handy. But when we see something we like, we drop everything and we focus on diligence in the company so we can move fast because we understand the world's competitive and we have to be able to move fast to get a decision to the founder so we can win the deal and be that lead investor that we'd like to be. I'm simply taught there about kind of understanding what the next round looks for. In terms of understanding what you really look for, there's prevailing wisdom around two elements really that are super dominant. One is market size and many present market sizes like the core reason leading to their excitement in the potential investment. How do you analyze and assess market size and investing state and how important is it for you? In my opinion, best companies will either expand or shrink the market in ways even the founders cannot anticipate at the precede stage. Uber, of course, you've seen the first deck, right, talks about the TAM being $4.2 billion. And they now do.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's important to move fast and mostly to be efficient with the founder's time. But I don't think it's an arbitrary race to the finish line. We're very transparent with the founders. We're diligencing and where we are in the process, what are areas we're digging into and where we can add value post-investment. And in fact, we encourage them to backchannel us. We work very hard to win deals, but ultimately the founders have to have conviction in us just like we have conviction in them. And our decision making process is very conviction driven. My co-founder and I sit across from each other. So we sink on deals in real time. If one of us sees something we like within a few hours, the other person is meeting the founder. In the way we operate is we make a list of key questions we have to answer in the diligence process. And these are basically things that need to go right for this company to get to the next inflection point. Not necessarily for this to be a massive business. Again, we have a point of view on that, but we're really trying to understand is how does this company get in this confession point? What kind of investor would invest in this company?”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“To founders, like, look, you should raise somewhere between half a million to million dollars, which we think is the right balance between having enough to really be heads down and execute for, let's say, 12 to 15 months. But at the same time, you're not overcapitalizing the company. You're not selling too much of the company too early. You're also not raising it too high of a valuation that may be hard to grow into, which would make it harder to raise it the next round. So that's sort of, you know, our recommendation to founders. Yeah, no, I do definitely agree in terms of finding that balance. And I think you're right. You don't need the 24 months when it's so early and you're really validating some of the very earliest of concepts. I do want to ask one final question with regards to the strategy before we go into really evaluation process. And it's the element of speed. We've seen a massive compression of fundraising timelines and a lot of people say the faster the decision by the master, the more likely one is to win. Would you agree with that? And how do you structure your decision making process today in terms of kind of optimizing full speed?”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Educated decision. And then look on the flip side, multiple checks prior to the next round allows us an opportunity to buy more ownership in some of our best companies. Yeah, listen, I do agree in terms of the ability to kind of grow ownership over time in those where it's maybe not so obvious. We spoke about kind of the continuum that is early stage fundraising there. You said before that startups are like planes. Can I ask, what did you mean by this specifically with regards to early stage company financing? Yeah, I mean, if you think of an analogy, like how a plane takes off, we think of startups being similar in the sense that you need momentum before you can lift off. And I think it's similar with startups and you should start and stop, right? The plane is never going to have enough momentum to take off. So what does that mean for companies? You have to raise enough capital so you can invest in the team, in the product, in the distribution to build that momentum so you can hit that inflection point. If you're cash starved, you're not going to take off. And this is where we recommend.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, we're seeing it taste more and more, as you said earlier, to go from pre-seed to A. And I was thinking that really kind of the early stages of funding, it's just a continuum and all the labels are pretty bullshit. How do you assess and think about reserve allocation today and how does that decision making for reserves differ to initial checks? Yeah, look, part of the reason we raised a big fund is because we understand that not all companies will go up and do the right. It is where having sizable reserves allows us to support companies to help them get to the next round. That's a CEDAW series A. But at the same time, you don't want to throw good money after bad. We consider each check we write, even an existing portfolio companies, as a new investment. So we run a very similar process where we will put together a memo and really try to understand is this if we were to have a blank slate, would we invest in this company today? But of course, we have the luxury of seeing these founders execute for a few months. So it allows us to make even a more”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“How many lines do you think about having in the portfolio from an initial check standpoint? I think we'll end up having probably around 30 to 40, which again we feel is a number that, look, our focus in terms of our time, our companies are going from zero to one. So the moment the companies graduate, they raise the next round. Our involvement tends to taper off. So between my co-founder and I, we're probably supporting 10 to 15 companies at any point in time, which is very doable. So as we kind of looked at the math, said, okay, 30 to 40 diversifies a portfolio enough so we can continue to take a lot of risk and continue to back founders at our very, very early. But at the same time, spend a lot of time with them, roll up our sleeves and help them get to the next stage. Totally get you there in terms of the”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“optimal numbers in your pre-seed portfolio construction theory? You know, our portfolio construction is not dissimilar to typical Series A fund, which is half primary, half reserves, or average primary check is just over 1% of the fund. We think that's a good number because it allows us to get meaningful ownership. It's meaningful to the fund, but it's also allows us to take a lot of risk. And then, of course, we have plenty of reserves, which are both used to maintain our ownership in some of our best companies, but also in a world where Series A bar is going higher and higher. We can keep supporting our best companies and help them get to the next stage as long as they're continuing to make progress against the milestones that we identified when we invested. We want to be supportive of these companies. And it's part of the reason they choose to work with an institutional fund like ours that is of a reasonable size because they know we'll be there as long as they're executing. So can I ask, is it 25? Is it 40? Is it 60?”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It's generally true that earlier you go, the more risk there is, and hence you want to diversify. But we actually find that most investors think that just because there is no traction, there is nothing to diligence. So it's like playing roulette. And we believe this, in fact, couldn't be farther from reality. We look for a few things. And my co-founder, Anna Mitchell wrote this host and tech crunch around five minutes of pre-seed investing. And one of them is exactly this, that this is just investing in a resume and an idea. But when we invest, we look for unique product insights. We look for what's your novel distribution approach. We try to really listen and learn about the experiments, the founders of Rotten to date to validate their hypothesis. We keep probing until we hear, I don't know. And just because these presees don't have traction and data, they have plenty of data.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Angel investors or scouts serve as that sort of strategic role where they can provide that insight because they're on the underground operating day to day or perhaps intros. And I think that's also very complementary to what we're doing.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Like the reason we're seeing this huge influx is really a byproduct of the intense and growing competition at Series A. If you look at where the capital is coming from for these funds, it's predominantly from Series A funds or GPs individually investing. And of course, not looking for more exposure to venture. They have enough of that. They're really looking for more deals low. So we think as long as it's relatively easy for Series A funds to raise capital, this trend will continue and perhaps even accelerate. And some of these angel fund managers may end up institutionalizing the fund and raising traditional LPs. Maybe some of them end up joining these Series A funds. As far as a forest is concerned, we absolutely love this trend. You know, we did this analysis in our fund one and our most frequent co-investor. And the same name kept coming up over and over. And it was an angel. And it makes sense because we're investing essentially at what used to be the angel around. And we're very mutually beneficial because we serve that institutional role and of course the angel.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Conflict is a big part of the business where you don't want to be in multiple companies that are kind of doing the same thing. So being generalists from a sector perspective allows you to then invest in companies that are different, but then still have a similar set of problems.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“We think that no matter what sector you're in, the problems that the companies face are actually very similar. We think there's more variance on the problems that companies face across stages and phases of the business than there are across sectors. So the company that's in B2B, SaaS, or in consumer going from zero to one, they all kind of face the same problems, right? Which is around getting to product market fit, pricing, figuring out distributions, so on and so forth. And of course, when you're going from, let's say, quote unquote 1 to 10, again, both of those companies will have sort of similar things to focus on, which is building the management team, how do you scale the business, so on and so forth. If you look at some of the best VCs in the business over the last few decades, there have been generalists from a sector perspective, but they've always been focused on a stage. So that's sort of, you know, and we believe we can really leverage our learnings from one company and apply that to a different company in a different sector. And of course.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Less and less data for the story. So series of funds are looking for other signals. And I think whether your insiders are doubling down or not is a big part of that signal.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“It puts a real risk on the company. Is that going to be the one reason that kills your company? Probably not, but it's adding risks to the business. Because look, if you come out of the gate and you absolutely crush it and it's up into the right, of course, you're going to have no trouble raising money. And frankly, that insider, that multi-stage fund that invested in your precede around will be chasing you and trying to preempt around. And of course, you wouldn't want to take that term sheet. You want to run a process. And if the business is completely gone sideways, then probably not a good use if anybody's time to continue with the business anyway. But most companies are somewhere in the middle. And that is where this adds risk to the business, where if that very large mega fund where their bread and butter is to really deploy capital is series A chooses for whatever reason and it could be a whole bunch of different reasons chooses to not invest in your company it adds question mark for everybody else is to say well what am i missing and look as i mentioned earlier series of rounds are getting done earlier and earlier which means there's”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The economic cycle shifts, the series of funds will retreat to focus on what they do best, which is investing at Series A, which is around the time when the company is getting to product market fit and it's ready to scale.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Their entry into pre seed seed is just a function of the economic cycle we're living in. They're rich in capital and poor in proprietary deal flow. So going earlier is a Started if you put in a billion dollars into it day one, like you would warp the market, you would mess the company. It's of course not true in public markets, right? You can deploy billions of dollars against an idea and not move the market march. And of course, there's derivative products and stuff. So I think for all of these reasons, venture will always remain to be a small industry. And just because you can raise the capital, you know, it doesn't mean you can deploy it efficiently. So we really think specialization is the future. It's not about one size fits all. And as the number of funds increase, competition, of course, increases. And the only way to win when there's so much competition is to become really, really good at something niche. I'm a big fan of Clay Christism's theory here around modularity and integration. And he talks about how over time, modularity will win because the customer can now mix and match on what's best on their needs. And one size fits all product generally ends up being mediocre. So we think this is more of a phase and I think over time.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“To deploy, and there are fewer good quality companies, and there's capital. So these series of funds don't want to miss the opportunity to get into these companies. And look, their ownership over time has also come down because of these institutional funds before Series A. So we're seeing Series A funds getting more and more aggressive looking to the moment there's traction, looking to buy up their 20% or so. But at our stage, and there's certainly celebrity founders that are able to raise a lot of capital, and that is not our focus, but I think for the kind of founders we're focusing on, there's still disciplined and they're still doing what we think is right for the business.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I think it does happen. I think it happens much less frequently than the media make it up to seem. Mostly because when that happens, there comes news. Hence, we all hear about it and it makes it feel like that is what is happening day to day. But the reality on the ground is for most first-time founders that are unproven, right? Maybe they were aqua hires before, but they're not celebrity founders. And when they don't have much traction, they're not raising $3 million out of the gate. They are starting off with that half million million dollars. Now, the moment there's some mode of come of traction, and if they are in an interesting space that especially if it falls in a prepared mind for a series A fund, we certainly see those rounds getting preempted and maybe those rounds are getting done sooner than they would have five, ten years ago and they're getting done at a price higher than those companies probably deserve. And I think it's because the series of funds obviously have a lot of capital.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“For institutional grade lead investors at the precede stage, that we expect more specialists to enter the category, whether they're coming in from a stage focused like we are or a sector focused. We expect more people to focus here because there really is a need in the market.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Look, I think the precede round itself will not evolve, right? We'll stay the same. The label may change. I don't know exactly what that label looks like in the future. But if you look at the actual anatomy of the round, I mean, Amazon raised a million dollar round in 94. Google raised a million dollar round in 98. Google raised a million dollar round in 2010. I can go on and on and on. And then numbers get stayed fairly stable, right? And you ask, well, why is that stable over the last couple of decades? I mean, the cost of starting a company has come down. Well, it turns out the biggest cost driver for the company at this stage is people. So the cost saving that's come from the shift to AWS, Twilio, et cetera, it's offsetted by the increase in labor costs, which is why that number has stayed fairly stable. And we expect that to stay stable in the future. So the ground will always be there exactly what it's called may change exactly how that gets funded, may change. We also expect given the incredible amount of demand.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Talking about sizable funds that can lead institutional size rounds. And I think finally there are more companies getting started than ever. The economy is great. It's becoming Uber cheap to start a company and test your hypothesis. I mean, you can literally do it even before you put your job. So I think all these three factors put together, there's a vacuum at the precede stage. In fact, a four accounts for about 40% of capital that has gone into funds exclusively focused on greed.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's a few things that we're seeing in the market. I'd say the first is that historically seed funds used to invest at this inception stage, but they have moved later and they're demanding traction. They're comfortable investing at a much higher valuation as long as there's traction in these companies. I think the other thing is that it's actually getting harder and harder to raise a micro VC fund, you know, existing LPs are getting tapped out. They're managers that are already invested in are coming back faster for more capital. And the new LPs that are looking for exposure to this part of the asset class are feeling overwhelmed by the sheer number of funds. And whenever there is a lot of noise in the system, there's a flight due quality. So new LPs are more comfortable investing in established managers instead of backing first-time managers. So you're going to see, we think of fewer new fund creations. And when we say fund, we're not talking about a few million dollar funds.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“These deals, you still need someone to catalyze, if you're trying to raise a proper round, if you're trying to raise enough money to get your next inflection point, you do need a lead investor. Otherwise, you're just going to keep fundraising in drips and grabs. And that's just not great for startups.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“The reality on the ground is very different than that perception. It may seem at the surface level based on how much money is going into venture, then she's super easy to raise a precede round. It's a small round. How hard can that be? But in fact, this is probably the hardest time in the last decade to raise your first institutional round. And the data bears it out. If you look at what Pitchbooks is saying, right, the volume of sub $1 million rounds is at the lowest point since 2012. The median seat deal is now something like $2.2 million. And these companies are two and a half years old. Round sizes at seed have doubled since 2015. They've quadrupled since 2009. So essentially what's happening here, fewer seed deals, they're much larger, and they're happening later in the company's life. So if you're just getting started, it's tough out there. And sure, as you mentioned, there's tons of angel and scout funds, but they're not leading.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“In the team, they give back to the community. The really perfect examples you can be good people and still be super successful. So those are probably my three sort of big takeaways from my time at Founder Collective. And of course, it's had a strong impact on me personally and professionally. My partner, Animater, and I started this fund to solve a problem for founders, to make it easier for them to raise that money at the inception stage. And it's really the North Star that guides us every day. It keeps us focused and disciplined on that mission we set out a few years ago. stay very, very focused on that.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Fight that inherent desire to expand and grow. Success and venture means you have to get really, really good at what you set out to do. You stay within your lane. And that's counterintuitive because staying small is actually what makes you successful, unlike when you start a company where, of course, you want to, you know, you want to expand as quickly as you can. I think the third and final one is just be a good human being. They're all dedicated to their families. They're good to each other.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Venture is very much an apprenticeship business. And I was very lucky to learn from some of the best in the business. As you know, you've had the three of them on the show before. And I'd say probably had three big takeaways from my time at Founder Collective. The first one is the maniacal focus on what's best for the founder. Everybody says they're founder friendly because it's easy. It's what founders want to hear. But in cases where what's best for the founder is not the same as what's best for the VC, that is what really tests your value system. And I saw founder collective time and time again doing what's right for the founder over what may be right for the fund in the short term. We were all founders at Founder Collective. We'd all started companies in our previous careers. And ambition and growth is so rooted in founder DNA. But success and venture actually means you have to”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“I joined a fund, as you mentioned, called Founder Collective when they were still investing out of their first fund. I was doing it for four and a half years. It was a phenomenal opportunity for me to really learn venture firsthand from who I think is some of the best in the business. But as we know over time, kind of the seed market is really shifted. And I saw this firsthand, when it was becoming harder and harder for founders to raise money at that inception stage. So when I saw this pain point, I called up a friend of mine. He was the first product manager at Twitter, then he was an investor at foundation capital. And we really saw eye to eye on this problem that was really growing for founders. So we decided to lean our previous funds and really focus on solving this problem. So we left in 2016. We formed a four. We raised $47 million for our first fund. And the rest is history.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Windows mobile Android apps. It was also my first exposure to Venture. As someone that grew up in India, I thought the concept of venture was kind of weird. The fact that somebody will trade a lot of cash, real cash for a piece of paper that holds no collateral, purely for some promise of the future. I thought that was weird, but hey, I was on the receiving end of all of this cash, so I took it. But over time, it really came to appreciate that venture capital is that engine of growth. It's one of the key ingredients of how many Americans achieve the American dream. So I got hooked. We raised a series A in early 2009. And this experience is what brought me to the Android team in 2009 where my mandate was to help grow the market share for the Android platform. We had less than a million total users on Android at the time. It was a phenomenal journey for me to kind of see Android grow from less than a million total users to about a million new users a day. But it wasn't actually until business school that I decided to seriously explore venture.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know, Harry, as a kid growing up in a small town in India, I was always infatuated by this concept of the American dream, this idea that you can create something out of nothing. And upward mobility is available to everyone. It's really what brought my family to this part of the world when I was in high school. So I did software engineering at the University of Waterloo. And they have this unique co-op program where you do six internships before you graduate. So I had a chance to work at BlackBerry, Amazon, Morgan Stanley. It was kind of cool to ship code for products in the real world while I was still in college. One of the biggest takeaways for me was that I actually didn't want any of these jobs when I graduated. I wanted to be a founder. So a few of us in the software engineering program got together and started a company. And this is at a time when iPhone had just launched 07, the App Star launched in 2008. So we decided to build this platform for media companies to create native apps. So we went to companies like Time Magazine, CNN Money, Sports Illustrated, and we built their first iPhone, BlackBerry.”
2020-01-06 · The Twenty Minute VC · 20VC: Why Now Is The Hardest Time To Raise an Institutional Pre-Seed in the Last Decade, What To Do When The Founder and VC Interests Do Not Align & The Rise of Pre-Emptive Rounds with Gaurav Jain, Founder & Managing Partner @ Afore Capital · IDENTIFIED FROM THE TRANSCRIPT · source