The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch

20VC: Ash Fontana on The 5 Core Characteristics That Make Data Valuable, What VCs Can Learn From Italian Craftsmen and Howard Marks & The Importance of Vertical Integration In Scaling Today

Nov 18, 2019

Ash Fontana, Managing Director at Zetta Venture Partners, dives into the transformative power of AI in venture capital. He discusses the five core characteristics that make data valuable and how essential proprietary datasets are for businesses today. Ash reflects on his journey from Australia to the U.S. venture scene and shares insights from his time at AngelList. He emphasizes the shift from systems of record to systems of intelligence, highlighting the importance of real-time data and vertical integration for competitive advantage.

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ANECDOTE

Early Influences

Ash Fontana's childhood interests included computers and business analysis.
His family's vertically integrated macadamia nut farm inspired his investment approach.

INSIGHT

AI-First vs. Traditional Software

AI-first companies prioritize building predictive models and getting quantitative feedback from machines.
They differ from traditional software companies that focus on product features and qualitative feedback from humans.

INSIGHT

Data Moats

Proprietary datasets are crucial for AI-first companies to build superior models.
Data moats are real and are assessed by accessibility, fungibility, dimensionality, breadth, and perishability.

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Ash Fontana is a Managing Director @ Zetta Venture Partners, the fund that invests in AI-first companies with B2B business models. As for Ash, prior to Zetta he started the money side of AngelList, where, he launched online investing, created the first startup ‘index fund’. He also ran special projects like AngelList’s expansion into Europe and the UK. Simultaneously, Ash led syndicates and made investments in Canva, Mixmax and others. Before AngelList, Ash co-founded Topguest, a Founders Fund-backed company that built customer analytics technology and was ultimately sold in an 8 figure transaction 18 months after the company was founded.

In Today’s Episode You Will Learn:

1.) How Ash made his way into the world of venture with AngelList and how that led to his joining Zetta today, investing exclusively in AI? What did Ash's time working on his family farm teach him about vertically integrated businesses? What were his biggest takeaways from AngelList and working alongside Naval?

2.) What does AI-first really mean to Ash? How crucial is it for companies to have proprietary datasets today? Are data moats truly defensible and real? What are the 5 characteristics that determine the level of defensibility of a dataset? How does Ash analyse the quality of a dataset? What does Ash do to determine if they are predictive of value?

3.) We often hear the term, "system of record", why is Ash so much more excited by the "system of intelligence"? Why is the basis of competitive advantage shifting from SaaS today as a model? How do the margin structure vastly differ when comparing AI-first companies to SaaS companies? How does that mean one should view capital efficiency?

4.) What does Ash believe drives business model quality? What are the commonalities in the business models of those that have made it big? Why does Ash believe it is difficult for incumbent companies to become AI-first? How difficult is it for incumbents to acquire smaller AI-first firms and integrate their policies and technology?

5.) Why does Ash love Howard marks and what has been his biggest learnings from studying him? How has Ash applied these learnings to his investing today? What has Ash also learned from the Italian masters of design? How has this study helped Ash as a VC? What has Ash optimised lately? What is Ash's favourite optimisation?

Items Mentioned In Today’s Show:

Ash’s Fave Book: The Strategy of Life: Teleology and Mechanics in Nineteenth-Century German Biology

As always you can follow Harry, The Twenty Minute VC and Ash on Twitter here!