In today’s funding environment, founders have a lot of options when it comes to raising early rounds — operator-angel funds, alumni syndicates, celebrities and growing seed programs at Sequoia, a16z and most multi-stage firms in Silicon Valley.
For repeat founders & A-teams, fundraising feels like a fast game of Tetris where every name/allocation on the cap table must deliver a high value per $ invested:
- relevant operating experience,
- strategic alignment with early customers,
- strong signal for the next round.
The question is never “can you raise?” but rather “what is the minimum allocation you can offer without losing their attention and access to their network?”
I recently joined Nathan Baschez for an interview on how I built WorkLife and the momentum required to invest in the best founders and inherently the most oversubscribed and competitive rounds from the earliest stage.
I hope discussions like these encourage more operators to find new ways to give back to the startup ecosystem and give founders a fresh perspective on how to drive a highly efficient fundraise where each name on the cap table becomes a core part of your early team.
How I Built Worklife from Scratch
Building a sought after fund doesn’t happen overnight. But it does happen in free time on nights and weekends.
Today, I'm an investor in seven unicorns, and Worklife Ventures' CEO and solo managing partner.
However, my origins are in marketing at Expedia and later Zendesk.
In my first week at Zendesk, I filled out a career card highlighting long-term professional goals. My plan was to move up the ranks as an operator and then make the jump to venture a decade down the line.
My appetite for investing grew faster than my timeline. I got my start advising startups while working as an expat in Sydney, using free time to teach at General Assembly. Over four years, I taught 5,000+ students. I leveraged the General Assembly platform to build expertise in early stage growth marketing and GTM strategy and to build a personal brand. From GA, I launched my own program, SaaS school. This program allowed me to:
- Advise early stage startups
- Build relationships with founders
- Build relationships with VCs
Without a masters in finance or business, I had collected the tools and relationships I needed to launch my own thing. I made the decision to accelerate my transition to investing. Inside Zendesk, I chose to work on startup-facing projects. Outside of work, I got serious about running community-building events.
Eventually, I made my pitch to Marc Andreessen (with a deck that’s been viewed over 30,000 times), created a distinctive brand for Worklife, and began investing in companies including:
- Command E
On the way there, I discovered a few tactical ways to build my VC network, which I’ll cover here.
To become a VC, don’t discount the friends & family “round”
So, how do you become a VC? A startup mindset.
Emerging funds are a lot like startups, in that Fund I looks similar to a friends and family round. Even successful angel investors have still yet to be proven as good stewards of other people’s money. To become a VC, you have to leverage the network of people who will vouch for you.
To raise my first fund, I:
- Activated my co-investor network and my portfolio CEOs.
- Exported my LinkedIn contacts and organized them in a spreadsheet.
- Emailed sector-aligned CEOs and executives in my network.
- Changed my Twitter bio to: “Thinking about starting something new. DM me for deck.”
- Gathered cold emails and inbound requests to start socializing my fundraising deck.
When I went to raise my fund, I had several things going for me.
- I was an angel investor in early stage companies that weren’t hurting for money (Webflow, Airgarage, and Command E).
- I had strong GTM insight for early stage enterprise companies, especially in helping product-led companies identify opportunities for growth.
- I built a large community of early stage founders from starting SaaS School, Zendesk Apps Marketplace, Zendesk for Startups, and investing in professional networking sites like Dev.to, Girlboss and Webflow.
- I had a trusted network of co-investors from relationships I developed while angel investing.
The combination of these helped me raise my first $5 million in 2.5 weeks and continue raising to grow the total fund size.
How to start a VC Fund: get institutional LPs on board
However, founders who want to scale their fund will have to go beyond the family and friends round, moving to pitch family offices and institutional Limited Partners (“LPs”). LPs typically invest based on a percentage of total fund size. Their aim is to create a concentrated portfolio across a number of top-tier funds.
Institutional LPs approach building a portfolio across different asset classes:
- Real estate
- Private equity
- Venture capital
This means that when pitching institutional LPs, venture capital firms are competing against more mature, stable asset classes. Look for LPs with established venture portfolios.
My strategy to scale into institutional LPs was two-pronged:
- Get sector-aligned CEOs involved from the beginning. For me, this included Eric Yuan from Zoom, Stewart Butterfield from Slack, Clark Valberg from InVision, Nick Mehta from Gainsight and many more.
- Learn from “super angels” who started their own funds, as well as from managing directors of top-performing funds.
What will LPs ask about?
- Day-to-day operations
- Core mechanics to de-risk their investment
My strong alliance with sector-aligned CEOs and managing directors of top-performing funds has been an effective strategy for establishing a strong reputation in the sea of new seed funds.
How to Become a VC Investor: Build identity and viewpoint
Today, there’s no shortage of network-based $1M-$10M micro-funds that are:
- Building credibility based on broad access to early stage companies
- Seeking small allocations in companies that have heat in the market
This can be an effective strategy to get started. However, its pitfalls are groupthink and transactional relationships with founders post close.
At WorkLife, I circumvented this issue by leveraging a sector focus and strong opinion on GTM. I provide a series of programs and services to early stage companies that help them develop their market entry strategy (top-down, bottom-up, open-source, closed beta vs. open freemium), thereby accelerating their time to product market fit. Another model of a focused fund is Forerunner. For its debut fund, the team focused on direct-to-consumer companies, built a highly differentiated brand and hit significant momentum. Since then, Forerunner has expanded into marketplaces and SaaS.
I also love Daniel Gross’s model at Pioneer Fund. As a friend to young, unproven founders, Pioneer makes bold bets based on individual potential and whitespace in frontier sectors. Gross’s personal story speaks well to “lost Einsteins”. The messaging helps Pioneer invest in big ideas from day one by attracting young talent looking for a way to break into Silicon Valley tech circles.
Discovering WorkLife’s identity
WorkLife’s identity was born from collaboration with creators and game-changers:
- O.G. streetwear creator Bobby Hundreds
- Revolutionary Instapoet Rupi Kaur
- Repeat founder Arianna Huffington
The folks helped turn WorkLife into something much bigger than an early stage enterprise-focused fund.
The new industrial revolution is here (from home), flexible working hours are here to stay, and the 4 day work week is on the horizon. Through better tools and services, WorkLife is reimagining work in this new world.
As the world becomes increasingly technical and creative, we believe there will be a thriving ecosystem of new tools and professional networks for consumers, prosumers and enterprise use cases.
Our thesis: future of work
The consumerization of enterprise in its simplest form asks: What are the tools and services that everyday people need to do their job well? At Worklife, we look for the next “BYOT” (bring your own tech) that consumers will:
- Bring to work
- Share with teammates
- Take with them to the next role
My theory is that any workplace product ten years or older is ready to be unbundled into a new ecosystem of more consumer-friendly tools. LinkedIn, Adobe and Zendesk are good examples of tool giants currently being unbundled. Their independent market sizes are large enough to support many $1B+ companies. Some examples from Zendesk:
- Freshdesk, a fast follow copycat
- Front, a shared inbox for teams
- Kustomer, “Zendesk for retail and e-commerce companies”
With enterprise, the market size is large enough to support a growing ecosystem. Founders can expand their market size by building complementary products and selling them as add-ons, and developing new buyers and use cases as the market matures.
The future of work needs more than software
On top of workplace software, we look at labor marketplaces and new ways for people to make money.
For example, a high schooler who wants their first job has to drive from store to store to hand out a paper resume showing little to no work experience or references.
Heroes (a Worklife portfolio company) is solving the problem with a TikTok-like video application for hourly workers to apply for customer-facing roles. Companies on the platform—Starbucks, H&M, Panda Express—care most about hiring friendly people. Video is a great way to demonstrate personality and alignment with a company’s mission, values and culture.
How to become a VC: competitive analysis
There are four stages to venture capital:
- Post-investment support
Sourcing can come from writing, blogging, and hosting events. However, these avenues have been fairly commodified, and many of us in the Bay Area share the same hyper-connected networks.
As a result, I spend most of my time on picking: cold emailing and finding intros to companies with a thesis or unique insight.
When I meet a startup, I proactively reach out to every other similar company. Some say this isn’t important. I I think it’s a focused strategy around competitive analysis that’s critical for pre-seed and seed stage investing.
How to do this in practice? Prepare for a meeting with original research and context. This drives a much deeper discussion and gets to an investment decision much faster.
Invest in relationships today that will help you tomorrow.
As an operator turned angel investor, my goal is to share tactical advice and help more operators build a track record on evenings and weekends.
After 12+ months of research, dozens of angel dinners and a new micro-fund, I shared the startup Angel J-Curve, a framework for operators w/ tactical advice to build & scale your angel portfolio.
I hope essays like these help others find companies, break into investing, and support the ecosystem’s overall growth.
Liked this post? Also check out:
- Keeping the Hunger, Building the Next Big Thing
- How to Raise Capital for a Startup (Without VC)
- How BetterUp CEO Alexi Robichaux Found Himself
Follow me on Twitter here.