E83: Chad Byers on Why Susa is a Purpose-Built Seed Specialist [Classic Interview]
Mar 25, 2025
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Chad Byers, co-founder and general partner at Susa Ventures, dives into the firm's evolution from a $25M fund to a major player in seed-stage investing. He discusses the importance of branding and tailored strategies, exploring how they foster founder autonomy through incubated projects. The conversation touches on the dynamics of fund sizes, the need for genuine investor support, and the shifting landscape of venture capital towards sustainability and profitability. Byers emphasizes the unique approach Susa takes to enhance startup development.
Susa Ventures has grown from a $25M fund to a $175M fund by strategically enhancing its brand in a competitive market.
The firm is focusing on rebranding its investment strategies to provide clarity and enhance decision-making efficiency for stakeholders.
Susa Ventures emphasizes specialization in venture capital as a crucial competitive advantage in an evolving landscape filled with diverse capital sources.
Deep dives
Evolution of Sousa Ventures
Sousa Ventures has strategically evolved since its inception in 2013, starting with a focus on becoming an exceptional seed-stage venture firm. Initially, the firm launched with a $25 million fund and expanded progressively to a $175 million Fund 5, indicating a well-thought-out growth strategy. The vision included maintaining the firm's relevance and enhancing its brand in a competitive landscape filled with larger, multi-stage funds. Sousa’s founders emphasize a systematic approach, ensuring fund size grows concurrently with their brand to secure advantageous deal flow.
Navigating Market Confusion
With the growth of Sousa Ventures, there was a realization that its multifaceted strategies might have caused confusion among LPs, entrepreneurs, and other investors. The founders recognized that diverse investment strategies demanded distinct skill sets and that failing to clarify these could mislead stakeholders regarding the brand's intent. As a result, Sousa Ventures is working towards rebranding its various strategies to enhance clarity, preserving its core seed-stage fund, and separating different capital pools under unique identities. This restructuring aims to improve both brand recognition and decision-making efficiency within the firm.
Specialization vs. Generalization in Venture
Sousa Ventures advocates for a specialized approach over a generalist stance in venture capital, reflecting a shift in the landscape where successful investors are increasingly required to possess deep domain expertise. This shift is emphasized by the need to compete against former industry executives now venturing into investment roles. The firm remains committed to nurturing its expertise in specific sectors while fostering a focused investment culture, encouraging partners to dedicate their efforts to understanding a limited number of industries deeply. The competitive advantage gained through specialization is seen as crucial in effectively presenting value to entrepreneurs.
Crucial Role of Founders and Investments
A significant insight shared by Sousa Ventures highlights that the most successful companies often need the least intervention from their investors. The firm suggests that in pivotal moments of a startup's journey, strategic insights can significantly impact growth, while ongoing involvement may hinder strong founders. Building upon historical data and market insights allows investors to guide entrepreneurs through critical challenges without overstepping their bounds. This approach emphasizes the importance of empowering founders to lead their companies while providing assistance when it truly matters.
Predictions for the Future of Venture Capital
Looking ahead, Sousa Ventures anticipates a bifurcation in the venture capital space where multi-stage asset management firms coexist with specialized venture funds. This trend may cause pressure on firms that fall between these two extremes, potentially jeopardizing their market position. In an environment saturated with capital, there may also be a decline in historical return rates, suggesting that the top-performing funds may be even fewer in number. The strategic focus on specialization and disciplined fund sizes is earmarked as a means for Sousa Ventures to adapt and thrive amidst these anticipated market shifts.
This week on Turpentine VC, we’re sharing Erik Torenberg’s interview with Susa Venture’s Chad Byers, which originally aired in September 2023. Chad discusses the firm's journey, their fund structures, and their vision for specialized seed investing, emphasizing the importance of focus, discipline, and adapting to market dynamics.
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