Thursday, February 23, 2017
Tx Zhuo On LA's Newest Venture Fund, Fika Ventures
Last week, Fika Ventures, LA's newest venture fund, announced its formation, led by tech investment veterans Tx Zhuo and Eva Ho. We sat down with Tx Zhuo to chat about the new fund, what investments it hopes to make, and what kind of entrepreneurs the fund is looking to invest in.
Tell us a bit about the new fund?
Tx Zhuo: The new fund is going to be focused on seed stage investment, and is pretty similar to what we have done in the past. We are investing in founders who are leveraging the use of data, artificial intelligence-enabled technologies, and automation, to solve meaningful, systemic problems in a couple of industries, including the enterprise software, financial services, marketplace, and digital health areas.
How did you get together and create the new fund?
Tx Zhuo: I first moved to LA five years ago, and Eva was one of the first few people I met. She was highly regarded by a lot of people I knew in Silicon Valley, and we connected right away. Over the last four years, we have worked together. About eight or nine months ago, we both came to a natural crossroads in our careers, and we came together, along with two other people, who we knew separately for four or five years. Arteen and I worked together at Karlin Ventures, and Matt had worked with Eva at Factual. So, it's a new fund, but it feels like it's the old crew, a wonderful group of people to work with.
When you say systemic problems, what do you mean?
Tx Zhuo: I think, where we feel today where there are lots of opportunities, is that businesses are not fully leveraging the data within their businesses. For many of those businesses, it's purely transactional. But, if you think about a business, as it scales, you end up collecting lots of data, and important data on your customers, including from different data sources. Although they might feel that data is tangential to their business, we feel that if you are able to process and understand that data, there is a huge opportunity, to gain meaningful insights that could solve very large problems in those industries.
What are you applying to this new fund from what you've learned investing in Los Angeles over the last few years?
Tx Zhuo: There's more excitement around technology in Los Angeles in the last few years. Four or five years ago, when I'd speak to college seniors at the top local colleges, technology was not their first choice of industries. But now, I see that these highly technical graduates are excited about technology companies here, particularly because of companies like Snap, Dollar Shave Club, and Cornerstone OnDemand. They've build a bedrock for future innovation. The other thing is, a lot of the investors in Los Angeles over the last five or ten years had been really focused on media and e-commerce investments, but there hadn't been a lot of funds focused predominately on B2B or the enterprise software space. However, if you see from the exits and IPOs of companies such as MindBody, Cornerstone OnDemand, and Blackline, the enterprise software and B2B area is very fast growing here. Over the last 5 to 10 years, they've led the innovation space here. We're very well positioned to capture the opportunities in that area, and support companies who are trying to build out their enterprise software franchises here in Los Angeles.
What kind of entrepreneur are you looking for?
Tx Zhuo: I think that's a great question. We are looking for people we envision as visionary pragmatists. Of course, there are many people who are bold enough to dream of a big vision, however, at the same time, they need the necessary skills and discipline to execute on a day-to-day basis. That's a unique and deadly combination which we seldom see in entrepreneurs. We want to tick both of those check boxes.
Have you started making investments yet?
Tx Zhuo: We've made three investments out of the fund so far, two in Los Angeles, and one in San Francisco. Unfortunately, all of those have yet to be disclosed. We're pretty sure in the next couple of weeks the community will start to learn about the investments we've made.
Is there a geographic scope to the investments you make, or does that matter?
Tx Zhuo: I think we're predominately focused on Los Angeles and Silicon Valley, but given we do have a team of four we will pay attention to opportunities in fast growing markets like Seattle, Portland, and New York. But, 90 percent of our investments have come from Los Angeles and Silicon Valley.
From your observations on the market, what do you think makes the difference between a successful and not so successful startup?
Tx Zhuo: I think it's the same ingredients I mentioned before. Founders have to have the combination of being able to have a big dream, yet execute. More often than not, lots of new founders are enticed to become startup CEOs, because it seems to be a glamorous business. But, at the core, to make a company successful is not easy. Many people share their positive stories, but not the negative stories they go through to succeed. Founders often come into this only thinking about the huge prize at the end, but that journey is not so straightforward. You have to have the mental tenacity to go through that process. The founders that we want to back, are founders who are excited about the journey, and can deal with both the challenges and the good times that it will take to get there.
Anything else you'd like to add?
Tx Zhuo: I'm very humbled that fifteen of our prior founders from Karlin Ventures and Susa Ventures are the investors in our current fund. There are lots of local CEOs who have started and built companies who are the backers of the fund, and we're excited to have the LA ecosystem and community supporting us, as we launch something new in our careers.
Thanks, and good luck!