Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Ray Chan was recorded in December 2018.
Ray Chan, Managing Director at K5 Ventures and Tech Coast Angels, shares his views on the segments his firms invest in.
Sramana Mitra: Let’s get introduced. Tell us about yourself a little bit as well as K5 Ventures. What do you like to invest in? What size is the fund?
Ray Chan: This reminds me of the interview we did about nine years ago. We are based in Southern California. I manage the K5 Venture fund as well as the local Tech Coast Angels fund. Today, I’d want to focus a bit more on the Tech Coast Angels fund. We have a similar focus and similar approach. The size of both K5 and Tech Coast Angels is around $50 million.
The Tech Coast Angels fund is supported by 350 individual angels. We like to deploy as much as we can and then as soon as it runs out, we have a new fund. This is the third fund of Tech Coast Angels. We are pretty much the anchor investors for most of the angels in the area.
When we invest, we pretty much demonstrate to the rest of the individual angels that we have gone through some type of due diligence before we deploy the investments. Our investment usually is around $200,000. Once we invest, we usually are able to bring in all the other investors to up to a million dollars.
Sramana Mitra: What do you like to invest in? At the time we featured you, we didn’t have these shows yet. We had featured you in a written interview about nine years ago. How has your investment thesis evolved since then? When you look around, what looks interesting? What have you focused on?
Ray Chan: We are regional-focused. In terms of industry, we are agnostic. We don’t discriminate anything that we see. Recently, we’ve focused a lot on medical device. We are not yet into Blockchain just because it’s new to us. Also for ourselves, we don’t have a lot of expertise in those areas. We are tiptoeing into AI. In terms of industry, our focus is mostly people, metrics, and proof of concept.
Sramana Mitra: What stage do you like to invest in? When you look at proof of concept, what needs to be already in place for your community to write a $200,000 to $250,000 check?
Ray Chan: In the case of medical devices, the proof point will be some type of agreement or collaboration with some device company, or some type of regulatory approval. It varies. The key thing is we get endorsement. Also if some agreement is on the table, it means bigger companies are interested. For the consumer product, it’s all about metrics. It’s not just the features. It’s how many people love the product on a continuous basis. It varies with industry. It doesn’t have to be in revenue. It doesn’t have to be millions of downloads. Product love is something that we focus the most on.