Can you tell us a little bit about your background and path to founding Roar Ventures?
After getting my MBA, I spent almost 20 years as an operator, primarily as a founder or working with or for world-class founders. Eventually I got recruited to be the first marketing lead at Facebook and moved to Palo Alto to run that function globally. After that, I started another company and brought on Foundation Capital as an investor. I’d always been interested in venture, so when they invited me to become an executive in residence, I said yes.
Six months later they brought me on as a partner, and I spent the next 10 years investing across four of their funds. Then in early 2023, I decided it was time to write my own story in venture. I transitioned to a venture partner role at Foundation and launched Roar Ventures.
That’s quite an interesting career. Looking back, what are some of the key learnings that you gleaned from all of those experiences?
I met 10,000 founders over the course of my 10 years at Foundation Capital and also had the opportunity to be around some of the most successful and iconic founders in the world at various other points throughout my career. That includes Mark Zuckerburg, of course, but also people like Patrick and John Collison, who are the brothers behind Stripe, and Mathilda Collin who’s the co-founder and CEO of Front.
What I’ve learned from all of those experiences is that the best founders all have at least one of a small set of important attributes in common. They’re all curious, super intelligent, ambitious, or tenacious, or they are data driven or great storytellers. Most important of all, every single one of them is fiercely competitive. They hate losing and derive all of their energy and intensity from an unrelenting desire to win. Of course, for them, winning means building the best company in the areas in which they compete.
Another key learning is that velocity matters. The faster you move, the more likely it is that you’ll win. Really fast-moving companies tend to capitalize on opportunities and create a huge sense of urgency within their organizations in the service of achieving their goals. Invariably it’s the companies that move the fastest, ship the fastest, and learn and repeat the fastest that win. By contrast, the more methodical, slow-moving companies almost never meet their objectives.
The other thing I’ve learned is that it’s critical to play in markets that are unbounded. A market doesn’t have to be huge today, but it does have to have the potential to evolve into a multi-billion-dollar one as it matures.
How have those learnings impacted your approach to investing?
They play a huge part in how I evaluate opportunities. I look for teams that are highly competitive and have the other attributes I mentioned, that are incredibly impatient, and that have established a culture of shipping and getting stuff done. And, of course, those teams have to be selling into massive markets.
Can you tell us a little bit about Roar and what kinds of companies you’re investing in?
Roar is just shy of $20 million and invests in outlier founders across North America at the pre-seed and seed stage. I write $350,000 checks, have made 15 investments so far, and am targeting another 25 for this first fund. Most of my investments have been in software, but I’ve also done a few in enterprise infrastructure as well as in marketplace, SaaS, and healthcare-related spaces.
You mentioned starting Roar in 2023, which was a very challenging time for venture capital investing. How did that impact your thinking?
It made the opportunity more appealing. AI is a once in a generation platform shift that is giving birth to enormous opportunities across every space. Meanwhile, raising capital has been such a challenge that many funds are doing resets or pulling back entirely. That combination of great opportunity and more muted competitors is good for funds like Roar. So while it’s a terrible time to be fundraising in general, it’s also a great time to do so if you have a good story and a unique thesis.
You’ve touched on a number of things that you look for when investing. What else matters to you?
I also pay a lot of attention to capital efficiency. Everyone is very cost conscious right now, but in most cases that’s not because they’re really disciplined, but rather because they have to be since capital is a lot harder to come by. As more capital becomes available, many founders will loosen their purse strings again, which is often a mistake.
In my experience, companies that simply throw money at problems aren’t very effective at actually solving them. Instead, they get caught up in things like growing employee headcount, raising ever larger rounds, and other vanity metrics that don’t matter, and wind up bloated and less likely to succeed.
The best companies, on the other hand, use their capital very wisely and stay laser focused on their customers. Of course they have to invest to grow, but they only do so when the unit economics makes sense and every dollar invested leads to three, five, or ten dollars in revenue. Many companies use their product to drive growth, but spend very little on growth. WhatsApp is probably the best example of that. Back when Facebook acquired it for $19 billion, it only had around 60 employees and grew almost entirely organically.
What are the best ways for companies to remain capital efficient?
There are lots of approaches, but certainly one of the most important is using the right mix of sources of capital to fund the business. Obviously equity has to be a big part of any company’s cap table, but the most capital efficient businesses also utilize venture debt to drive growth, minimize dilution, and maximize shareholder value. In the current environment, having a healthy capital buffer and the funds to grow the business are more important than ever. When you pair that with the fact equity checks are more muted than they used to be, having another partner you can work with like an experienced venture debt provider often makes a lot of sense.
You mentioned how difficult fundraising is right now. How do you get LPs interested in venture as an asset class?
I tell them that it’s the last inefficient market and the best place for alpha in the entire financial stack. If you look at every other asset class, they are all pretty efficient because everyone basically has access to the same information. With venture, on the other hand, there’s a lot of information opacity, the nature of the inputs are changing minute by minute, and there aren’t any real tools or systems in place to solve for that, at least at the pre-seed through Series A and B stages. That leads to a lot of inefficiency and creates so much room for alpha. Admittedly that may change with AI, but I think that’s probably another 15 to 20 years away.
What’s your take on where venture is headed in 2025 and beyond?
While fundraising is a challenge today, I think over the next five years the market will be flush with capital. That combined with the platform shift to AI will lead to a culling of the herd. For investors to win going forward, they’ll have a very strong and focused thesis in terms of what they are looking for. For founders to win, they’ll have to continue to obsess about their customer and move with extreme velocity. And for LPs to win, they have to pick fund managers with the right experience, a very strong thesis, and the underwriting capabilities to support that thesis.