Office Hours: we are pre-seed investors at Hustle Fund. We’re Shiyan Koh and Elizabeth Yin
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Office Hours: we are pre-seed investors at Hustle Fund. We’re Shiyan Koh and Elizabeth YinFeatured
Posted in:Venture Capital Office HoursFundraising
Hi everyone! We are @shiyan and @elizabethyin from Hustle Fund, a VC fund that invests in preseed software startups in the US, Canada, and Southeast Asia. Shiyan: I’m a managing partner at Hustle Fund. Prior to Hustle Fund, I was VP of Business Operations and Corporate Development at NerdWallet, where I led a team of 20. Prior to that, I was an investor at Bridgewater Associates and IVP and started my career in investment banking at JPMorgan. I have a bachelor’s degree in economics from Stanford and an MBA from Harvard Business School. Elizabeth: I’m co-founder and general partner at Hustle Fund. Prior to Hustle Fund, I was a partner at 500 Startups and co founded LaunchBit, an ad tech platform that was acquired by BuySellAds. Prior to my founder journey, I was a product marketing manager at Google and worked in business development and marketing at different global companies. I have a bachelor’s degree in electrical engineering from Stanford and an MBA from MIT Sloan. Ask us anything about investing, supporting early stage founders, marketing, angel investing, the founder journey, launching a fund, and more!
ElphaStaff·Feb 14, 2021ElphaStaff·Feb 14, 2021Thanks so much for joining us @shiyan!Elphas – please ask @shiyan your questions before Friday, February 19th. @shiyan may not have time to answer every questions, so emoji upvote your favorites 🔥👍🏾➕
Thank you Shiyan and Elizabeth for being here! I have a couple questions regarding supporting SE Asian women startups. 1)How have you seen the trend for women startup changed in SE Asia? 2)And what have you seen is the most successful way to empower women in developing countries with limited political freedom and human rights? Have you encountered any issues politically when it comes to funding women’s businesses in these countries?
Thanks Tina! Will let Shiyan weigh in on this :) since unfortunately I don't know really anything about SEA!
Hi @TinaNGUYEN,Thanks for your question. We see a fair number of female founders in SEA, either leading or as part of founding teams. I would always love to see more - we definitely have a ways to go before we reach parity. It is still a fairly young ecosystem, so I expect that we will need to see the cycle play out with the SEA unicorns getting exits, employees getting liquidity, and being recycled back into the ecosystem as founders. On Q2 - I’m a believer in the power of business to create economic power, thus enabling women to have more degrees of freedom regardless of where they live. I have not run into any issues politically funding women in the countries where we invest (North America and SEA).
+1 how do you stay on the ground about what’s going on in startups, especially at a pre-seed phase?Kudos to you both for sharing your time and knowledge here!
Hi Nicole and Chrissy! Yes - some thoughts on all this here: https://scribe.ai/s/S0O5p7rQ48RVKCffhN4X
A lot of staying on the ground is triangulating all the different conversations and data points we are seeing. We can see what themes are trending based on our top of funnel deal flow; when we get into diligence conversations with companies, or do projects with our existing portfolio companies, we start to get into the details of what the latest technologies and issues are, and finally we also chat to other investors frequently, as we share deal flow with them and vice versa. Twitter is also a great place to pick up hints on what people are excited about in specific fields - if you can curate a list of folks who are early adopters and technologists, then you can start following clues that way as well. Hope this helps!
What are the key skills or attributes you think make a great founder or founding team? Conversely, what are your red flags?
Agree with Elizabeth! For me - Prioritization of the most important things is what makes or breaks founders. There are always 100+ things to deal with when starting a business, but only 1-2 are truly existential. Is the founder able to identify and focus on these existential issues? This ability to prioritise shows up in how they spend time, money, human capital.
WOW I’m screenshotting these two answers and putting them up on my trello board. Thanks for sharing!
Hi Laure - some thoughts here: https://scribe.ai/s/3g3FaqqGMwI5drqE7UljI forgot to address red flags: being cagey and the opposite of things that I look for (i.e. not focused (doing too many things) / not thinking about go-to-market / spending too much money.)
Thanks to both of you for being here! My question: how can someone with very little experience of startups but lots of transferable skills from corporate get more involved with entrepreneurs and innovation?I’ve been coaching as a side-hustle but would love to formalize and help entrepreneurs who are looking for funding or are trying to build amazing teams with my skills. Background on me in case it helps: 25 years experience as a specialist Product Owner in global corporate roles in businesses from 2K to 250K employees. Experience in attaining large scale investment for multi-year portfolio transformation projects. Very experienced people leader with highly motivated teams, and strong business communicator.
Thank you so much @elizabethyin for taking the time to answer my question. It was really helpful. 🙌 I will follow your advice. My main challenge with in-person networking is my location but hopefully I can work around this somewhat and find local startups that need help. Thanks again! 🤩
Hi @shiyan & @elizabethyin 👋🏽Thanks for being here!I am an early stage startup, a visual search engine for special occasion dresses. I will be launching my MVP 2/28. As an early stage startup, what ducks in my row should I have before thinking about talking to investors, and when I'm ready, how would you suggest creating those relationships with investors?
Hi @TalishaWhite - congrats on your upcoming MVP launch. Before pitching to investors, think about “what would they have to believe” in order to invest. It’s probably quite similar to what you’re thinking about in terms of hypotheses to validate in your MVP. The more things you can validate or at least collect data for before pitching, the higher the chance of success.
Thank you so much for your response!
Hi Shiyan and Elizabeth! What type of traction/validation are you looking for in a B2B SaaS vs Enterprise for a pre-seed round?What are the most critical factors for you to choose the investment in such an early stage?
Hi there, I am the founder of Nova, we are a IT marketplace that offers both product and service for companies at one-stop. We believe the market looks more promising than ever in China, but I have concern about international investment, more specifically, can my company, which is based in China, get funded by investor in the US
Hi Charlotte - yeah this is a bit of a problem unfortunately. :( Video thoughts here: https://scribe.ai/s/1SwPByZUzQMxs5Ve1rKY
Thank you for the response, it's really helpful.
Agreed with Elizabeth’s point below. The broadly applicable point for markets with a lot of capital already (China, India) is that investors also fear the lemon problem, e.g. why can’t this deal get funded by the people who know the market better? If I’m seeing it as a US fund, there must be something hairy that I don’t know about. It’s safer to decline the deal. This is less true for frontier markets that don’t have domestic capital sources to access. In these scenarios, it’s about getting comfort for around a market you don’t live in, and being able to diligence the founder sufficiently given that the investor is not in-market. We see US funds writing checks in Africa, LatAm, SEA.
@shiyan @elizabethyin thanks so much for participating in the Elpha Office Hours! A few questions that I'd love your takes on: (1) With less than 3% of VC $$ going to women/female-founded companies it almost seems like VC is actively trying to *not* invest in us. I can't believe that there are so many fewer women founding companies or that we're *that* bad at pitching. So, based on your experience, what gives? (2) Last year, "edtech" had a banner year last year with 130 deals equalling $2.2B, but little to no investment was made in companies serving the K12 education market. Are you getting pitched K12 ideas and if so, what is your reluctance to invest in them?(3) Given that you all are a *pre-seed* fund (and thank you for that!), how can we help the rest of the VC landscape (and to some extent founders) come to a common understanding of pre-seed vs. seed vs. Series A and the metrics associated with each? We've run into the challenge of pitching a lot of folks who say they are pre-seed but seem to be asking for Seed/Series A metrics. While we're always grateful for a conversation and learning from these opportunities, it does become a bit of a time suck for both founders & VCs to have pitch meetings when the timing/risk level isn't yet aligned.
*up* these questions and wrt(3): I keep hearing 10k MRR is what to strive for as a SaaS startup. However, I hear that from Pre-seed to Series A investors alike (once even from an Angel investor). There is probably not one number that is ultimately correct, however, maybe you can shine a light on your rough understanding of the metrics in each? + the tradeoffs: investing in metrics vs. team?Thanks!
Hi @elizabethylin, thanks for the answer on #1, that opened my eyes and I am curious too about how much of the pre-seed and seed investments these days go to female founders. I am working with Wilson Sonsini and they publish a quarterly report about investment trends by stage. I'll check if they can add this parameter to their report and help find out if there is progress on this. I am happy to keep you posted on the feedback I get if you would like.
Thanks for offering that! Would love to see it. DocSend might also be a good source for some of these early data points (albeit self-reported).
Interestingly enough, just got this invite from DocSend with data on pre-seed raises, and they hint that gender is still coming up: https://try.docsend.com/pre-seed-fundraising-webinar?utm_campaign=Web%20Content%20%7C%202021%20VC%20Fundraising%20Report&utm_medium=email&_hsmi=112410785&_hsenc=p2ANqtz-8qBB-cm3WqaPi42iH8lQDw-DuAJRTM7knZv_dbAgw1N9OyrOigzenRGLIkVYRJLH_BN-WQhOkAvyWKZWHEykaBw1F5Ig&utm_content=112410785&utm_source=hs_email
@elizabethyin thanks so much for the very thoughtful reply! Loved that you taped it to make this more conversational. I'll dig in on the numbers for VC capital to women in the earlier stages to see if it's getting any better. Given how many Black women are starting new businesses (and have been--https://www.forbes.com/sites/ruthumoh/2020/10/26/black-women-were-among-the-fastest-growing-entrepreneurs-then-covid-arrived/?sh=6633b88d6e01) it is especially disheartening to see how underrepresented they are in getting capital. While I understand the concern about the sales cycle in K12 and the disinvestment, there are a lot of experienced founders who know how to sell to K12 and navigate those. And, as we're seeing when we pitch, there are much bigger wins per sale than a lot of other SaaS. There are also a lot of companies who can have global reach with their product--for instance, Israel just awarded $1.5M to two Israeli-based firms asking them to build what we're building and we're on deck to pitch to the Canadian government. Might there be a way to bridge this concern about the sales cycle & funding in K12 (there are still billions being spent!) for VCs? Thoughtful public-private partnerships could dramatically help schools with innovations they actually want and improve the diversity of the qualified workforce who ultimately ends up in tech, while still making sizable profits. As for being *truly* pre-seed, thank you, again! We'll be sure to reach out to Hustle Fund when we're ready to pitch. Thanks, again, for your thoughtful reply and for engaging with the Elpha community!
Hi! Thanks so much for doing these OH! What do early stage investors think about a startup taking out a loan?
Hi @shiyan and @elizabethylin, thank you for being here!We are an early-stage marketplace, launched an MVP last year, and testing growth channels.We have a list of great known marketplace experts but we are not sure how to contact and connect with them. How do you suggest doing that?What type of traction/validation are you looking for in a B2B2C for an early-stage round?
Hi @elizabethyin, thanks so much for the advice, I didn't think about Twitter this way and was hesitant to engage but now will certainly do that!I have early indications of a strong unit economic model with network effects and the begging of traction in a large market. Will it be possible to have a call with you?
What do you think of crowd funding seed money like Wefunders or a kickstarter?
Hi Daphne - great for founders but needs some ironing out for investors.More thoughts here: https://scribe.ai/s/3tCdNd6zrB9gzBpcCe4k
Hello @shiyan !!! Thank you for offering your help, I think this is just what we all need when we are starting on this trip. My name is Leslie. I am a graphic designer, I work as art director at an advertising agency, and my knowledge really is in those areas where I am 13 years working. I worked with some animal rescue organizations and I love dogs. so, how about a couple of years ago? I had an idea to make an application that will provide dog owners with information about services and discounts but that at the same time would allow them to be part of a community of dog lovers. I already have a MVP and now my biggest challenge is to know how to monetize with this idea since so far I have financed it Sola and I am stuck because I have no idea how to present a financially profitable business model for an investor. Thank you for any help you can give me. 🌟
Hi Leslie - I realize this q was not directed at me, but I decided to give it a crack as well. https://scribe.ai/s/WbU36JEpRjLgXIzp3hn0I hope it's not too harshly direct and hopefully it's a bit helpful!
OMG!!! Thank you very much for your advice. I will take these tips very seriously, once again thank you. :)
Hi Elizabeth and Shiyan! Thanks so much for doing this!Given that your portfolio is all very early stage founders, do you spend a significant amount of time advising and offering support post-investing? I work at a boutique software design and development studio - would love to hear your honest thoughts on hiring in-house vs. outsourcing a tech or product team.
Thanks so much, Elizabeth! Great idea recording a video answer - I appreciated it!
I see from your site that you usually invest about $25k and are comfortable being the first check into the company and setting the terms - when you do this, how do you support the company in finding other investors to make up the rest of a round? For example, if a company is trying to raise $500k, would you invest and then help them find a lead who would invest the majority, or would you help cobble together a bunch of checks similar in size to yours?And what ownership do you typically target?
Hi James - We typically help founder by making introduction to other folks who could be interested. Given that the majority of startups in the pre-seed/seed stage raise on SAFE notes, the concept of a “lead” is a little out-dated. It can often be faster to assemble a number of small checks quickly on a SAFE note rather than waiting for a lead to write a bigger check.
Hi @elizabethyin, I believe you may have accidentally double-linked to Mei's answer above. Is there another place I can find your response? Thanks for responding to everyone!!
Hello Shiyan, I would like to ask what drives your VC fund to invest in pre seed start ups and what is your edge in terms of your investment porfolio? I would like to learn more on your current companies you decide to invest in, I have connected with you on Linkedin as well.
Hi Jeanie - I realize this one is for Shiyan, but my thoughts here: https://scribe.ai/s/3icTIEMh9BeEDJsUo03Q
Hi @elizabethyin thank you so much, and I would like to get a more detailed understanding. If I want to send in some information to you or your team, how should I proceed?
No question; just wanted to thank Elizabeth for her tweets. Everyone should follow Elizabeth Yin on Twitter. She is an incredibly talented tweeter. Incredibly relevant content with very practical approaches and real impact.
Thank you so much Jen!
Hello @shiyan @elizabethyin - Thank you both for doing this! Do you ever take a gamble on a solo founder (and team member) without the right pedigree? If so, what do you look for to write that check?
Very curious about this too!
Hi Dayo! Yes and yes! More thoughts on that here in this video: https://scribe.ai/s/ebxj95jHxzPpv3knhaxg
This is really great @elizabethyin, thank you for taking the time to answer my question! Good to know that there are investors out there who don't base solely on team/pedigree etc.
Hi @shiyan and @elizabethylin, thank you for positing!I'm in idea stage fintech by myself and looking for co-founders but I wanted to have your advice on how to support other early stage founders like myself? Also when do you think will my startup is going to be ready for pre-seed money if a little sway is ok!!
Thank you so much for recoding answer Elizabeth! I tweeted you follow up question. Looking forward to chat! Have a great weekend!!
Hi Shiyan, great to have you here, Hustle Fund is bridging an immerse gap. My questions are;1. Is Hustle Fund interested in startups in Africa anytime soon?2. As an investor do you sometimes stand up for or advise female founders who have made bad choices with initial investors that threaten their startups or gave overeaching terms for their investment that makes it difficult to raise more?
Hi Feranmi - I realize this q isn't directed at me, but I'll weigh in anyway :) Some video thoughts here: https://scribe.ai/s/hmQEXUkCJCFZxHNKTqXq
Thanks, Elizabeth I am a founder of a Nigerian start-up, so in terms of speaking, YAAAYY that you are considering this, even though it's tough out here. I do hear you on the challenges of undoing a contract that's not very amicable, if you can share tips on how to go about it from your experience, it will be deeply appreciated.
Can you share your process and journey to launch a fund? Was it all you raising the money or did you have to do a fundraiser? If you had to fundraise how did you get others to buy into your vision? What led you to launching a fund? What did you have to consider or work on before getting started?How do you decide on companies to invest in especially as one who deals with early stage founders, how do you take calculated bets that’s a win for both you and the founders?How would you advice someone looking to launch a fund to go about it? What do you think they should be aware of and work on in order to prime the fund for success?
Hi Yami - sure video thoughts on that here: https://scribe.ai/s/dKn9yrIvlZrWC6ehJy9fAlso, I wrote this when we raised our fund 1 in case it's helpful: https://elizabethyin.com/2018/12/19/how-i-raised-my-11-5m-vc-fund/
Thank you, Elizabeth
Hello @shiyan and @elizabethylin! Appreciate your amazing advice! I'm interested in launching a fund later in my career but would like to invest/get exposed to investing in startups now. I've only scratched the surface looking at AngelList Syndicates and would value your insiders opinion on how someone like me can get involved.How can an individual with some extra capital get started with angel investing now, any resource recommendations?Off the top of your head, are there any good getting started with angel investing books to read? I've been recommended Angel by Jason Calacanis as one.
Hi Robin,Back in 2018, I joined a women's angel group called Pipeline Angels. I'll leave a link here. https://pipelineangels.com/I'm recommending it because they have a learning program to teach women HOW to become angel investors -- they teach everything from how to evaluate a team, how to read a cap table, how to perform due dilligence etc. Then, they give you a list of about 30 companies that are interested in pitching to you and your cohort, you'll select about 6 to give a pitch, and then you'll select 1 or 2 to actually invest in. Pipeline's lawyers will draft the SAFE for you.I found this group to be incredibly informative and supportive. I attend their monthly dealflow calls to learn about new investment opportunities, and best yet, all of the founders that pitch are women or femme.If you'd like to learn more about my journey with them, feel free to DM me.
Do you invest in solo founders who are FT mother’s as well? I see on your FAQ page that a founder must be full time, what does that look like in terms of commitment throughout the day? I am working hard on my startup whenever I get the chance throughout the day (early mornings, nap times and after bedtime) but not sure that is considered to be enough to submit an application. Thank you!
@shiyan @elizabethylin You are such a wealth of early stage knowledge. Have you thought about better ways to scale your expertise so you can help more early stage female and minority founders become invest-able?
Hi Shiyan, Elizabeth:Are you accepting invitations to 1:1 discussions? Lori
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