500 Startups’ Christine Tsai talks about the most important factor to landing startup funding – and it’s not what you think
After hearing about Christine for years, I was excited at the opportunity to finally sit down with her to learn about how she successfully broke into the venture capital world, what other women can learn from her experiences, and how she makes the decision to invest in other women’s dreams to make them a reality.
While I was expecting to get to know Christine the VC, I also had the pleasure of getting to know Christine the working mom, her approach to work/life balance, and how, that very morning right before we met, she faced the challenge most moms have dealt with at some point over the course of motherhood: locking our keys and child in the car at the same time, and in Christine’s case, still making it to our interview and her panel in front of hundreds of women, on time.
As for how she finds work/life balance, Christine and her husband have their parents close by to help with their two young sons, the older of which is in preschool, and with some flexibility from her husband, Christine balances her high powered position as Managing Partner at 500 Startups with motherhood and being a wife.
There are several catch phrases that are thrown around these days such as “lean in” and “having it all.” How would you define having it all?
As a working mom, you carry a badge of guilt because someone is missing out. Even though there are a greater number of women in the workforce today and more women have successful careers, the cultural and societal expectations around a woman’s role are slow to change. Women still are asked how they do it all but no one asks a man how he does it all. Men don’t necessarily share the same guilt for choosing to attend an evening work event instead of coming home to the family because it is expected that men have to work and they are expected to be out. For a man, spending time away from the family is what it takes to grow one’s career. But women are expected to balance family with a great marriage and a successful career. We are expected to make a choice, and we as women tend to place the expectation on ourselves to do more, that we are not doing enough. And, again, we wear a badge of guilt because something will slip.
As women we are raised to be team players. But, no matter how successful we become, we still contend with the imposter syndrome, where we tend to wonder “do I belong in this room?” The answer is yes, we do.
Women in tech are few and women in capital are a rarity. But, women such as yourself and a small group of other female VCs are slowly helping to change the face of the venture capital industry.
How did you get here? Can you share any helpful tips for women who want to follow in your footsteps?
I’ve been working in tech for a long time and spent most of my time at Google and YouTube. I had a strong interest in venture capital and startups, and this interest pushed me to find a way, made me figure how to form my own path and meet people in the venture capital space and to get involved. I did not get into venture capital through the finance track. I came up through my operator experience at tech companies, and of course, through hard work and perseverance. For example, when I worked at Google, I’m a fan of Fred Wilson’s blog and I cold emailed him to invite him to speak at Google, to which he replied and accepted. Dave McClure, my current partner at 500 Startups, is another example of a cold outreach. You have to put yourself out there and make the connections that you want.
You’ve had great success with cold outreach, such as Fred Wilson and your partner, Dave McClure, which has resulted in solid wins for you. What do you think you did right to get a response and was it daunting to just reach out?
The valley is very serendipitous. It certainly helps that I’m from Google and even though Google had a lot more attention in the past than now, there is instant credibility which is attributed to working with Google. While it’s true that having at least one degree of separation is very helpful, don’t let it stop you from reaching out if you don’t know the person. It’s critical for founders to have the hustle quality to meet the people they need to meet…in other words, you have to count on yourself to make things happen. Having said this, as a founder you have to strike a balance and not be too aggressive because the Valley is small and your reputation matters. But, one thing is for sure: Whether you are raising money for your startup or inviting someone to speak at your company, you have to have the hustle quality.
How do you define failure for a startup?
Failure is that the startup ran out of money and can’t raise more. The company can live on as a zombie company, or could get acquired by another company, including in the form of a talent acquihire/fire but that does not mean it was a success. That’s why founders have to stay ahead of the curve and know how to raise money. Back to having that hustle quality which is critical to raise money.
Tell us about the work that 500 Startups is doing around its commitment to invest in women in tech, specifically the 500 Women AngelList Syndicate, and how it is different from #500Startups?
500 startups is a fund, which has three main funds and the accelerator program is a 4-month program that we run in three different locations. The AngelList syndicate is a vehicle to help women-led businesses attract funding and get more female founders into our program. Examples of such companies include Kiwi Crate, Famebit and Wanderable. We are committed to fixing the gender imbalance in tech. Further, diversity is core to our values at 500 Startups. We believe this and practice it every day.
What is the one top quality that you think leads to access to capital for startups?
The team or founder(s) has to be able to hustle. It is critical to grow your network. There is no set formula for raising capital, but one thing is assured: your network is critical and relationships are everything. Raising capital comes down to a business of relationships. Everyone can have an idea but execution is key. Having that hustle quality makes all the difference in the world to raising the necessary capital to execute and get to market.
Can you explain the hustle quality? Any specific examples?
Get out of your comfort zone! You have to be creative to find ways to make connections and this is going to be different for everyone. Do pitch competitions, attend conferences and find creative ways to talk to the speaker, even if it means walking with them to the elevator or their car or finding them in a coffee shop. The elevator pitch has evolved into the coffee shop pitch. Try to find out where your target audience can be found, what are the local hangouts such as coffee shops where investors like to go, and make sure to have that coffee shop pitch ready to go. From local coffee shops to cold emailing, it’s all fair game. But, this doesn’t mean that founders should stalk investors or show up at their doorstep unannounced.
Your have a great portfolio of successful companies including Wildire, MakerBot, Viki, TheRealReal, CreditKarma. Is there a single common factor that these companies had in common, leading you to invest?
Hindsight is always 20/20 and looking back, we didn’t have a clear idea at the time as to which company would or wouldn’t be successful. But the one common factor is that they are the poster children of our type. Yes, 500 startups has a type: clear revenue model, bringing in customers, generating revenue, clearly defined target customer going after a specific space. But, usage is key and drives validation of the idea, so having traction is critical.
Also, the team is a huge factor. There are some investments where the team looks great up front but doesn’t work out. Then there are the late bloomers, where the team starts off slow but then kicks in with compelling usage metrics.
How do you find the companies in which you invest?
This goes back to the need to have a wide network. The advantage of having a vast network is that referrals are a huge source of deal flow for us. Referrals from sources such as coinvestors, LPs and former coworker networks through Google and YouTube are very helpful. We are more likely to look at and respond to a warm intro of a potential company from within our network.
You are a role model for women looking to become VCs. Other than your interest in becoming a VC, is there anything specific that you recommend for women interested in pursuing this path?
I try to make myself available as much as I can to help other women and help with mentoring. There is no straight path to becoming a VC. While it used to be that one had to come up through the finance track, more and more VCs are coming into the field with an operator background. And this trend seems to be growing where more and more people are joining VCs based on their domain expertise. This domain expertise is important for entrepreneurs who also have a choice and are looking for people who can add value to their startup such as a huge community, which is something 500 Startups brings to our companies. Startups want to join forces with investors and VCs who can help with customer acquisition and distribution, and scale the business.
This post was originally published on Talk Radio News Service.
Featured Image Credit: 500 Startups