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Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital (Part 1)

Posted on Saturday, Dec 11th 2010

By guest authors Irina Patterson and Candice Arnold

This is the forty-sixth interview in our series on financing for entrepreneurs. I am talking to Saad Khan, partner at CMEA Capital, a San Francisco–based venture firm. His focus is seed investing in early stage tech entrepreneurs.

Irina: Hi, Saad. Why don’t you briefly start with your background.

Saad: I went to Stanford, and I studied symbolic systems, which is a cross between linguistics, computer science, neuroscience, and philosophy. So, things like computer interaction and artificial intelligence, and any kind of problem that deals with mapping machines onto the human mind and vice versa.

It turns out that the human mind is very difficult to replicate. I think the discipline was all around those aspects, first order logic, computational linguistics, and so on. I also studied economics. I graduated from Stanford in 2000.

At the beginning of 2002 or the end of 2001, I joined Garage Technology Ventures or Garage.com, and as far as I know, Garage was, I think, the first startup incubator in Silicon Valley. Garage was founded by a guy named Guy Kawasaki and a few others long before many of the things that we hear about now, back in 1998.

It really was a pioneer in early, early stage investing, incubation, and in generally helping entrepreneurs before they even had a PowerPoint presentation of what they wanted to do. So, while I was at Garage, we probably ended up with an equity investment in probably over 100 companies . . . maybe significantly more than that. The world was different back then. We certainly made lots of mistakes at Garage, but I think we certainly had a lot of companies that we were proud of. For me, it was my crash course in how you do a startup venture fund, and how you really make early stage investing work.

I was at Garage for a number of years. When I joined, we scaled up to as big as 50 people in multiple offices. When I finally left in 2007, I was one of four partners.

After Garage, I was incubating some of my own projects, and I had actually been talking to the folks at CMEA for about a year. We had been looking at deals together, had done some things, had some things go back and forth.

Then, the opportunity presented itself. They asked me to come help them build their digital media, their software practice, and we were just about to start fundraising for a new fund. I was pretty excited about the people there, what they had already achieved, and the opportunity to build on a much bigger platform.. I think it offered me the flexibility of working with many different stage companies and to do something from the ground up, so I was pretty excited.

CMEA is a mid-sized venture firm, as venture firms go. We manage about $1.2 billion in capital and have been around for over 20 years. We actually invest across many sectors, like the technology space, which is where I am focused, but we also do a lot in the energy and life sciences spaces as well. Our most recent fund was a $400 million fund. That gives you some context of the firm.

So, I run all of our digital media and Internet investments. As it turns out, every investment that I’ve made at CMEA has started off as a seed investment. I focus on the earliest stage. In that space, that’s been our strategy from the beginning, certainly since I joined CMEA about three and half – almost four – years ago.

Irina: What is the current size of the fund?

Saad: The most recent fund we raised was a $400 million fund. As I mentioned earlier, CMEA manages about $1.2 billion of capital.

Irina: How many partners are in your firm?

Saad: We probably have about 11 partners.

Irina: What is your geographical focus?

Saad: From a geography perspective, we have a global footprint, which means that we have certainly lots of investments in the United States, on the West Coast, on the East Coast, and between the coasts. We also have companies in China. We have companies in Europe and India.

Our office is based in San Francisco, but from an international perspective, what we’ve done is we’ve actually been partnering with a couple of other venture funds that we trusted in different regions.

This segment is part 1 in the series : Seed Capital From Angel Investors: Saad Khan, Partner, CMEA Capital
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