1Mby1M Virtual Accelerator Investor Forum: With Greg Sands of Costanoa Ventures (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Greg Sands, Costanoa Ventures was recorded in December 2017. 

Greg Sands, Founder and Managing Director at Costanoa Ventures shares his investment focus.

Sramana Mitra: Tell us about your investing focus. How big is the fund? What size investments are you making?

Greg Sands: Costanoa Ventures invests in the entire stack of business-facing software. These are companies that change the way the world does business. We’re investing out of a $175 million third fund. There are two modes. We do seed investments, which most typically are half a million to a million and a half. Then Series A investments that range from $2 million to $6 million. >>>

1Mby1M Virtual Accelerator Investor Forum: With Guy Resheff of Grove Ventures (Part 4)

Sramana Mitra: How do you see unicorn mania in Israel? As a seed investor, you could get buried under later-stage liquidation preferences. How do you protect yourself?

Guy Resheff: One thing that I would say that’s markedly different is that, in absolute terms, the number of unicorns generated in Israel is significantly smaller. That has driven some type of thinking within the Israel venture community that strives to achieve more limited goals. There’s a lot of talk about Israeli companies being sold at prices that are too low. Multiples have not been lower, but the exit price is lower.

Sramana Mitra: You’re not really playing the unicorn mania game to that extent which is a good thing. >>>

1Mby1M Virtual Accelerator Investor Forum: With Heidi Roizen of DFJ (Part 4)

Heidi Roizen: The point is to understand the terms and understand how they impact not only your return but the motivations of everyone else around the table. When you set up a situation where someone is going to make three times their money no matter what and they’re going to be the first money out, and then another person who’s only going to make money if you sell the company for $200 million, you are talking about two people who have dramatically different ideas about what you should do strategically.

That, to me, is a very divisive thing. I’ve been a VC now for 16 years, but I was an entrepreneur for 14 years before that. I raised two rounds of venture. I’ve lived this. Even though I understand why VCs negotiate for these terms, when you do these things and >>>

1Mby1M Virtual Accelerator Investor Forum: With Guy Resheff of Grove Ventures (Part 3)

Sramana Mitra: If you look at the last six months of your deal flow, could you synthesize some of the most interesting trends that you have observed?

Guy Resheff: A common one is artificial intelligence. It’s everywhere.

Sramana Mitra: SaaS for large markets is kind of over. Everything in SaaS right now is niche.

Guy Resheff: If what you mean is that the basic infrastructure has been laid, that’s true in many ways. The caveat that I would say about that is, it really depends on the types of problem that you’re trying to solve. In our case, we are in Hardware-as-a-Service >>>

1Mby1M Virtual Accelerator Investor Forum: With Heidi Roizen of DFJ (Part 3)

Sramana Mitra: The sad thing is when you’re going for job interviews and negotiating job packages, the companies will not tell you all these details.

Heidi Roizen: By the way, I now have to say the disclaimer. I am not currently representing DFJ or my partners. I just had an argument with somebody yesterday about this. I said, “I believe that companies should be transparent about that. When you get hired, someone should sit you down because your equity package in a startup is a meaningful part of your future plan.”

I think someone should say to you, “This could go to zero. Here’s the overhang sitting over you. Here’s the waterfall chart.” Anyone coming into a company should actually understand what it takes for their shares to be worth something. There are >>>

1Mby1M Virtual Accelerator Investor Forum: With Guy Resheff of Grove Ventures (Part 2)

Sramana Mitra: A follow-on question that comes to my mind is that if you are looking for most of the core R&D to be done before you come in, what is the assumption about how the prospective company funds that R&D phase? Is it coming out of university research? Is it coming out of government agency research? Where is your deal flow coming from?

Guy Resheff: It’s a wide variety of sources. Just to make it clear, we don’t expect a vast majority of R&D to be completed. We usually enter at a point where there is a tremendous amount of additional development to be done. It’s really just the fundamental basic research that we should be able to validate. We have an extensive network of entrepreneurs that we communicate with. >>>

1Mby1M Virtual Accelerator Investor Forum: With Heidi Roizen of DFJ (Part 2)

Sramana Mitra: The subtext of all these things that you’re saying is that there aren’t that many billion-dollar exits. Ultimately, the only valuation that matters is your exit valuation. If you’ve got a billion-dollar valuation in a private round and then you exit for $200 million, what is that going to do for you?

Heidi Roizen: This is the thing that is a little troubling to me. We have really redefined success. Now, it’s coming back. It’s rationalizing again. If your goal is, “I’m going to sell my company for a billion dollars or I’m a worthless human being”, you’ve really set yourself up in a very difficult circumstance if you just look at the math. This speaks to the entrepreneurs’ fundamental motivation. >>>

1Mby1M Virtual Accelerator Investor Forum: With Guy Resheff of Grove Ventures (Part 1)

Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Guy Resheff, Grove Ventures was recorded in December 2017. He is no longer with the firm. 

Guy Resheff, Partner at Grove Ventures, focuses the spotlight on Israel.

Sramana Mitra: Tell us about your investing focus. How big is the fund? What size investments do you make?

Guy Resheff: Grove Ventures is an early stage VC focusing on deep technology companies. Anytime you see a very tough technical problem involving deep science, that’s what we are all about. Our fund size is $110 million. We invest in seed and A >>>