Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Julien Nguyen was recorded in October 2017.
Julien Nguyen is General Partner at IT Farm, a seed-stage fund focused on Digital Health. We explore trends in the industry, as well as what IT Farm’s sixth fund likes to invest in.
Sramana Mitra: Tell us about IT Farm. What is the focus of the firm? How big is your fund? What sized investments do you make?
Julien Nguyen: IT Farm is a seed level VC firm. We started in Tokyo and we have an office in Palo Alto. Most, if not all, of our investments are in the US. We are a $16 million fund. We are investing out of our sixth fund. We have about $100 million under management right now. We usually go in at the seed level. We write the first check for $300,000. We reserve pretty much more than a million dollars for follow-on rounds.
Sramana Mitra: What is the focus? What types of ventures do you like to invest in? What industry sector?
Julien Nguyen: We have been a generalist VC for our first five funds. We have been pretty fortunate to have three unicorns in our portfolio. For fund number six, we have decided to focus it on digital health including B2B and B2C. The stage is focused on seed and maybe Series A.
Sramana Mitra: There’s a lot of double-clicking we need to do here based on what you said. First and foremost, what are the three unicorns?
Julien Nguyen: Wish is one, which is a shopping app from China to US consumers. Wish is around $4 billion. We went to the seed round. We are also investors in the early round of Tango – the messaging app. The last one is we were in Zoom’s Series A.
Sramana Mitra: Now you’re focused on digital health and you are still focused on seed. How do you define seed for B2B and how do you define seed for B2C in terms of metrics?
I’ll give you more clarity on exactly the question I’m asking. A lot of funds are categorically stating that they want to see certain amount of monthly recurring revenue already achieved before they’re willing to come in. That could be $40,000. It could be $80,000 but there are specific metrics that they are putting forward as guidance from their fund. Do you have similar bench marks or metrics that you work with?
Julien Nguyen: No, we don’t have cookie-cutter type of metrics like that. We like to see a young company that can serve a huge problem. After that, we want to see that there is a credible path to get there. We understand that at an early stage, you may not even have a clear idea of a go-to market. You may not even have an idea of the team that you will have to have.
For us, number one thing is how critical and how big is the problem you want to solve. Number two is how good is the team. Does the team have the capability to define a path to solve that problem? Startups go through twists and turns all the time. The constant there is the team. We put a very high premium on the quality of the team.
Sramana Mitra: What trends do you see in your deal flow? What are interesting developments or interesting early areas in digital health that you think are going to be big in the long run?
Julien Nguyen: It is an incredible virgin territory. What we define as digital health is the use of technology to increase the effectiveness and efficacy of healthcare. You know very well that healthcare in the US is one of the most inefficient markets to think of in all dimensions. The trend that we see in digital health are in a few categories. Number one is the efficiency; just making the process better.