Building boldstart ventures from $1M to $850M with Ed Sim
Jun 20, 2024
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Founder Ed Sim discusses inception stage investing, themes boldstart invests in, the 5 P’s of early stage investing, importance of board members, fundraising challenges, building customer relationships, and the evolution of boldstart ventures from $1M to $850M AUM.
Early-stage investing is crucial for startup success.
Building strong relationships with LPs is vital for fundraising.
Investing in resilient companies with a vision is key.
Adapting to market shifts and emerging technologies is crucial.
Diverse portfolios and long-term growth potential are emphasized.
Deep dives
Inception Investing: Investing in Early-Stage Startups
Investing in startups at the very early stages is highlighted as crucial, with examples of funding companies like Customer, Sneak, and Big ID. The process of raising fund four is described as challenging due to the need for external validation and proving the potential of the invested companies.
Strategic Fundraising Approach and Relationship Building with LPs
Fundraising strategies and relationship-building with LPs are discussed, emphasizing the importance of maintaining relationships with potential investors over time. The process of securing funding, especially for Fund four, is detailed, showcasing the journey from initial challenges to eventual success.
Navigating the Challenges of Enterprise Software Investment
Challenges faced in funding and investing in enterprise software companies are outlined, with examples like Blockdamen's resilience despite tough times in the crypto space. The importance of perseverance and belief in the vision of the invested companies is highlighted.
Adapting Investment Strategies to Industry Trends
Adaptation to evolving industry trends such as crypto winters and other market shifts is discussed. The investment approach of investing in emerging technologies like customer support software, data models, and infrastructure solutions reflects a commitment to innovative ventures and strategic positioning.
Building a Diverse Portfolio with Long-Term Vision
The strategy of building a diverse and visionary portfolio over time is emphasized, with a focus on investing in companies with unique insights and long-term growth potential. The narrative follows the evolution of investment decisions and fund growth across various sectors and stages of startup development.
Utilizing Community Connections for Startup Growth
Leveraging community relationships and investor networks is crucial for startup growth. As shared in the podcast episode, establishing strong connections with LPs and seeking introductions from firms can attract early-stage investors. By collaborating with experienced investors and seeking advice from trusted LPs, startups can navigate funding challenges and make strategic decisions.
Navigating Acquisitions and Business Transitions
The podcast episode recounts the acquisition of a customer support company by Meta and the subsequent challenges faced during the transition phase. The episode sheds light on the complexities of integrating new technologies into existing platforms and navigating financial decisions amidst regulatory scrutiny. Insights from the episode highlight the importance of adaptability and strategic planning during such transition periods.
The Evolution of AI in Enterprise Software
The discussion delves into the transformative role of AI in enterprise software development. Recognizing AI as a ubiquitous technology, the episode explores the historical context and future potential of AI integration in software solutions. By emphasizing the need for AI-enabled tools to address security vulnerabilities and enhance productivity, the narrative underscores the pivotal role of AI in shaping the future of software innovation.
Balancing Work and Personal Life Through Fitness
The episode reveals the significance of maintaining a healthy work-life balance through fitness routines. By sharing personal experiences of incorporating CrossFit into daily schedules, the discussion highlights the benefits of physical activity in reducing stress and fostering mental clarity. The importance of prioritizing physical well-being alongside professional commitments resonates as a key takeaway from the episode.
Ed Sim is the Founder of boldstart ventures, which partners with bold founders reinventing the enterprise stack at the inception stage. Ed takes us inside the journey building boldstart, from its first $1m fund in 2010 up to $850m in AUM today.
Timestamps:
(00:00) Intro
(03:48) Evolution of early stage investing(05:11) Inception stage investing
(10:32) Backing bold founders reinventing the enterprise stack(11:20) Repeatable ways to build enterprise businesses
(12:04) The 5 P’s of early stage investing
(14:12) Backing Guy Podjarny and Snyk
(18:18) Knowing when to follow-on
(19:18) The 3 Ch's of a good board member
(22:01) How Ed’s board role changes over time
(24:20) Balancing founder friendly with returns
(27:20) How to build customer relationships
(30:24) Advice for closing customers
(33:47) Creating the Seed category in 2009/10
(37:31) boldstart’s $1m Fund 1
(39:00) Why Ed didn’t join a large firm in 2012
(39:55) boldstart’s $16.5m Fund 2
(40:26) Why LPs passed on the first funds
(43:11) Leading rounds in Kustomer, Snyk, BigID, and Blockdaemon in Fund 3
(47:09) Why $112m Fund 4 was the hardest to raise(50:52) Ed’s approach to LP fundraising
(55:12) Inside Meta’s acquisition of Kustomer and sale back to the founders
(59:52) Backing Rahul from Superhuman a 2nd time
(01:00:52) The different GTM playbooks
(01:02:20) Importance of contract size and time to close
(01:05:07) Why AI makes security more important
(01:06:11) When to switch from founder-led sales(01:07:46) Backing ProtectAI after a conference
(01:08:28) Balancing between inbound and outbound sales
(01:09:55) Winners and losers in AI
(01:15:26) Building the boldstart team
(01:25:19) Lessons being an interim CEO
(01:27:15) How ZIRP pulled revenue forward
(01:29:08) The death of high growth software
(01:32:58) Identifying startup opportunities incumbents won’t crush
(01:35:00) Second order effects of AI
(01:36:46) Using "Intuitive TAM" to size new markets
(01:38:04) Investing before there’s a market map
(01:38:57) Balancing family, fitness, and career
