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

20VC: Multi-Stage Funds Investing At Seed Are Option Value Investing, Why The Biggest Enemy For Venture Firms Is Group Think and How Running Companies Changes Your Investment Mentality with Manu Kumar, Founder @ K9 Ventures

Mar 23, 2020

Manu Kumar, founder of K9 Ventures and digital networking innovator at HiHello, shares his journey from entrepreneur to venture capitalist. He discusses the rise of pre-seed funding and the challenges of groupthink in investment firms. Manu emphasizes the importance of diverse opinions and offers insights on managing a lean investment portfolio. He also reflects on the dual roles of founder and investor, highlighting how operational insights inform investment strategies. Tune in for valuable advice on navigating the evolving landscape of startup funding!

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INSIGHT

Private Market Shift

The venture landscape has shifted, with value creation happening more in private markets.
This leads to more capital, longer private lifecycles, and larger private funding rounds.

ADVICE

Seed Funding Considerations

Founders should prioritize company survival over high valuations from multi-stage funds at seed.
Multi-stage investments at seed can be mere option values, jeopardizing future funding if things go wrong.

INSIGHT

Multi-Stage Funds in Seed

Multi-stage funds entering seed might be driven by new partners needing experience.
This strategy of providing a 'playground' for new partners may be temporary.

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Manu Kumar is the Founder @ K9 Ventures, one of the leading seed firms of the last decade with a portfolio including the likes of Carta, Lyft, Twilio, Auth0 and Lucidchart to name a few incredible companies. Prior to K9, Manu was either the founder or co-founder of 4 companies, 3 of which with successful exits and the 4th being the fantastic Carta. Manu also has an incredible model with K9 where he not only invests in companies but also founds them and is currently the founder and CEO @ HiHello, the company that allows you to network smarter providing digital business cards designed to help you curate and grow your network.

In Today’s Episode You Will Learn:

1.) How Manu made his way into the world of venture having founded 4 prior companies and how he came to found K9 and be one of the OG's of pre-seed funding, having coined the term?

2.) What does Manu believe have been the biggest and most significant changes in the early stage market over the last 7 years? How does Manu evaluate the rise of operator and scout funds? Would Manu agree with Semil Shah, "founders are voting with their feet and taking multi-stage money at seed?" What advice does Manu give to founders on taking multi-stage money at seed? How does Manu evaluate their aggressive movement back into the seed stage? Why is it?

3.) Given Manu only makes 3-4 new investments per year, how does Manu think about and assess his own portfolio construction today? How does Manu think about building temporal diversification into the portfolio? What does Manu believe is the biggest mistake early-stage managers make in the first few years? Why does Manu believe that "group think" is so dangerous for funds today? What can they do deliberately to avoid it?

4.) Manu not only invests but also founds companies at the same time, how does Manu split his time and what does his day look like? What are the benefits of investing and operating simultaneously? What are the biggest challenges and drawbacks? What elements did Manu believe as an investor before starting his new company, HiHello, that he has now changed his mind on, post founding the company?

Items Mentioned In Today’s Show:

Manu’s Fave Book: How to Win Friends and Influence People

Manu’s Most Recent Investment: Workona: A Better Way To Work

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

Likewise, you can follow Harry on Instagram here for mojito madness and all things 20VC.