Feb. 19, 2021

How to break into VC and how Array ventures invests in solving big problems. By Shruti Gandhi

How to break into VC and how Array ventures invests in solving big problems. By Shruti Gandhi

Shruti Gandhi, General Partner and Founding Engineer at Array Ventures talks about how she managed to get into the VC space and what are the most valuable skills needed to do so. We also discussed investing in Deep tech and the big problems that it's solving and how Shruti approaches it.


Shruti's SubStack: ShrutiGandhi.substack.com

Shruti's LinkedIn: https://www.linkedin.com/in/shrutigandhi/

Array Ventures: https://www.array.vc/#/

How Shruti broke into the VC field: https://www.linkedin.com/feed/update/urn:li:activity:6739646432044711936/

Extremely detailed book on becoming a VC from the ground up: https://docsend.com/view/dvufhb27r5bzrpym

Transcript

And in this episode, we'll mostly talk about how can 1 become a venture capitalist from nothing, because truly wrote a great article on this subject. And today, we'll discuss that and how Trudy herself became a venture capitalists.

So let's kick it off by giving us some background on yourself. And on a re Ventures. My quick background is,
I guess,
as you talked about that tweet,

Tweet storm is I started out from my early days of not even having a place to go to college to.

You know, not having, uh, basically any connections then work. I just landed to the US.

From India, and from there on, I became an engineer, I started a company.

And got into venture about a decade ago, and about 5 years ago, started my fund a re Ventures where we invest in B to B, SAS, enterprise companies.

Um, and, uh, we like writing 1st, check into founders that have not raised any capital before. Uh, we like helping them get to their next stage of their of their company.

So,

usually,

when we invest,

there's no revenue or or even oftentimes companies haven't even been formed from that stage to the follow 1 round of getting to a 1M ARR,

and then setting them up for 10 millionaire and the follow on round that comes after that. So, that's where we're highly involved from that.

0T to 10 and 0T a series a stage. Um, and, uh, we love data businesses. We love the machine learning businesses, but.

We invest across the stack on infrastructure, cloud, security, back end things, middle Ware solutions, and then also application layer. So, if you're starting accompanying these categories. Definitely. Give me a call. Sounds good.

And by the way,
at the end of the episode,

we'll make sure to mentioned that all the information on every Ventures is going to be in description for so,

if someone is in that field and seems like a good fit for ready Ventures,
he'll definitely have a good option to play right there but 1st question before we move on to the major

subject of today's discussion is the thing that I saw on your LinkedIn, which is your founding partner.

I mean, general partner and accounting engineer as a venture. So, what does this founding engineer mean?

Fighting engineer means starting from nothing to designing.

Your whole firm I was an engineer by training I also have worked as a as an engineer for, for a decade, and have masters in underground and computer science. So when it started my fund.

I approached that in a similar way. What.

You know, from early days of laying out the project and the plan.

And everything needed to go around it. So my early website was hacked up by me.

Um, you know, logos made by me.

So this is exactly the same set of things you would do if you were starting a company.

From starting a picking a name and, and a logo and a mission and a deck. And so we actually, I did that for my own fund.

But that's usually how we're valuable to our founders, as we invest in them as well from those early days.

And then helping them with closing their following round. So that's, that's what it means. I'm basically engineering the whole process for everyone from their early days.

Especially if they haven't done it before. So they don't know figure it out on their own again alone.

Perfect and got it great answer and now, let's move on to the major subject of today's episode, which is how do you become a venture capital? How do you get in this super hard to penetrate fields? So surely 1st of all.

Let's quickly discuss the article that you wrote in this subject. So, for those who have not read it yet, could you give us some bullet points from the article?

Yeah, I think network is really valuable.

So, 3 things network is really valuable.

Giving and taking, I focus a lot on the given and taking part and giving is the most important thing.

In my books to build out that network so actually I have written a bunch of this on, especially on the network side and sourcing side on.

Our sub stack on the com,
basically,
where we talk about getting into venture what it takes to be in venture, um,

the this 2 parts of giving and taking in and networking and then the 3rd part to get into venture is to really have a point of view.

I think a lot of people.
You know, I get many many messages in my inbox about.
Wanting time from me very few people.
You know, do the 2nd, and the 3rd part I mentioned, which is beyond the wanting to create a network. I'm wanting to give so.

Everyone has something to give, but most people don't they always want to take, right? Like, I want 15 minutes of your time, but for what? Right? Like, I don't have a clarity on that. So, the point of view part is where.

Is what comes in now, which is I want 15 minutes of your time to talk about.
You know, progression of data driven.
Approaches and enterprises, and here is my point of view here. Right?
Something that specific catches my attention over. Just I want 15 minutes of your time and a recent. Recent grad from so and so, but no one's really offering, like, what they want to give.

And so, once I get to work with you and get your time, this is what I want to focus on. So, that's how I would focus a little bit of the. How do you get into venture? Is those 3 things of.

Having a point of view talking about.

And sharing that openly and giving back and saying.

I want 15 minutes of your time and yours are can be valuable. And if.

Those 15 minutes go well, and you kind of work resonate well, with the person that's on the phone with you, then it's about hey, Here's what I think I can offer to you.

And, you know, I know you're busy and I know everyone's.

You know, busy and getting started. Adventure is something that is hard to do. Uh, but here's how I can be valuable. So, if you think there's value here in both ways.

Then I want to get started out with helping you. I think this is like, along the lines of how.

You crack the quarter venture in some ways um, otherwise no, 1 really has time to give you and even if you're like, 1 of the best students, unless you came from, like, a warm intro, which lot of us are not fortunate enough to get.

True true. Warm intros are hard to get and he has giving back. That's best advice. Possible. A lot of especially young entrepreneurs don't really understand parts and that's.

Oracle, you gotta, you gotta figure out what value you can provide and just be super clear on your intentions while you're trying to get this communication and what you're trying to give back. So, now, then we've talked about this, you've also mentioned, uh, you know.

College education being a good student a few times in just the previous answer. So we're driving here to the next question that I had plans, which is, why do you think college education is so important for a good VC or even engaged entrepreneur?

Actually, that's a good question. I don't necessarily think it's important on its own.

But what is this is how it's helped me, and maybe it was going to help you differently.

But the way it's helped me is coming to the U. S with no networks.

At all and no role models or nothing.

Um, I thought college education gave me that.

Infrastructure to build my network.

To learn the language, even like, I didn't even speak proper English at the time to build out that understanding of the country.

Generally, like, you know, how it operates, how people operate.
So, for me, those kinds of things were valuable at that time that I wouldn't have. Gotten by just, you know, at the pace you get.
By my immersing yourself on a campus with.

Hundreds of people, so that was why it's important to me. It was important to me at the time and just learning pop culture, learning things like, and again, you might joke as to why you need all that. But you do.

It's, it's what connects us with a lot of other people. And if you don't have that understanding, oftentimes you can go get it on your own or, you know, for someone like me, that framework of being in college was valuable.

So having said that, why do I keep going back to college again? And again um, the 2nd time I went to college was to get my masters in computer science and again, this is before the current market. This is 20 years kind of journey right?

Um.

So, the 2nd piece, the master's speech was important, because to me, it felt like it gave me the credibility at that time. I thought I was going to go work for a big company. So I thought it gave me the credibility.

To yeah, I have the masters degree from a top university, um, which is Columbia University and then the 3rd degree was and by the way it did help. Um, and.

I got that degree because my employer was paying for it, so I never took time off, but any degrees, even my undergrad degree I was working full time. Really? Um, for 40 hours at that time. So.

But in the 3rd degree was my business school and. Honestly, that was 1 of the best degrees, because.

It gave me that it was also again from a top university. So, to me, it really mattered to get it from some of these degrees from top universities. If I could if obviously, once I could get in.

Was it gives you a different network.

Oftentimes, the people, you know, are connected to people you want to get to with 1 or 2 degree of connections. You know, you started on the call saying we have.

So many people in common, right? I think that network is valuable either. You have to go build it in the ways I mentioned before by giving and.

Having a point of view, and having some background and fundamentals around it.

Or you can build it on your own, which takes a lot of work, especially in a place, like times, like pandemic error. I mean, how are you building your network? Right?

Um, so that's that's generally, I feel like why college degree was valuable to me.

But again, you don't have to go to 3 degrees like me and who all the things I did, but it was just valuable for me at the time. And.

It really completely changed the way I I have operated.
And honestly, the sops, the solve this, the things that you cannot get by just hustling I feel for for me.

Were things like getting confidence confidence from people at these top universities who see a lot of students.

And still, um, you know, choose to.

Operate with someone like me was a big validation because as someone like me, who did not have any, as I said, networks, people connection.

Validation I didn't really know anyone to work worked in a corporate world. Even I was not sure if I was doing anything. Right?

So kinds of places gave me that confidence, especially once I interact with other classmates.

who've been at top funds, and top firms and top corporations.

And and despite that, I feel like, I was able to add something to, you know.

To the, the study groups or the conversation we're having and so those are long winded way of saying why was valuable for me it's not valuable for everyone but it was for me.

Yes, absolutely. Perfect answer very.
Very usable. So here actually, I.
Kind of expected this kind of answers so I've prepared something like a concert arguments, but.

Not really at the same time. So I've seen a lot of not a lot of but if you venture capitalist who broke into this VC world by joining programs, like Catherine fellows or venture university or some other programs that I forgot.

So, for you, personally, do you think those programs are valuable enough or do you think they can substitute like, a masters degree?

It's a good question. I think it depends on what you're trying to get to.

My goal with different degrees were different, but my, with my business school degree, I wanted to really.

Learn about entrepreneurship and I don't know.

If that was what I got out of it, but I did, um, you know, if you, if I were to say, you know, if I was a technical.

Person without the business school degree, and if I wanted to start a company I should in this day and age, I shouldn't have done what I did.

Um, but at the same time, I did gain things that I didn't think I was gonna gain the confidence. The mentorship, the network.

Which, I think was super valuable to me, but if I were to go.

Say I want to go join the top consulting firm.

Is my career track, which I'm sure your audience is not not looking for that yeah. Then I wouldn't.

Then I would say that, then go to go to the university right? I think it depends on what you're trying to get out of it. If you want to learn some of the best.

Technical things, I wouldn't necessarily say, go go get your masters anymore times have changed and.

But if you want to learn from some of the best professors at some of the top universities. So, then you can go work at their labs.
I mean, if that's a pat, you want to go for, like a page or something then.
Then I would say, explore that option right again it all depends on what your goal is.

If you want to go, start a company, you can, but again, remember you have to have something unique to offer.

And if you don't have something unique to offer, then 1 Avenue is to get network and knowledge from the universities.

100% absolutely correct. Just like the previous answers so.

Let's pretend that the person who's listening to this episode is already planning to become a venture capital. So he or she already knows that 2, 3, 4 years I will be a B. C. so what kind of skill set would you recommend them developing or start?

Developing right now, what kind of skill should they start working on? What should be what should they be focusing on right now?

Building research skills as the highest skill you can do.
Building is another amazing thing. You can do research skills important, because.
You can go out and say that I know how to, you know, look at an industry and figure out competitors. Figure out what this company does figure out, you know, like, so basically all that requires a lot of

research skills, and you can use us go somewhere else as well. So I would say that definitely develop those. Um.

And then the sales part is very, very important. You're always selling your product to a founder to be.

Um, so end of the day, that is an important scope to have.

Um, and when you have that skill, you're also going to learn that.

It takes the personality, which is very similar to a salesperson that that kind of gets you into venture in some ways. That's very true. Very true.

And therefore, I always recommend founders read a bunch of books on sales how to run those calls etc etc. Because there's similarities between sales calls and peach calls her.

Huge, absolutely huge but, at the same time, please do not oversell because investors hate that as well that there has to be a very, very thin line that you cannot cross.

So, now that we've discussed this, you know, complicated part of it, let's move on and pretend that we're talking to the majority of our listeners today. Wage are mostly founders.

So, for them, from their perspective, what kind of skill set should they be looking in while choosing a venture capitalist to work with.

As a founder, what would I choose in a VC? Exactly. Yeah, I think it varies again, but the biggest thing, if I were a founder today, I would look for is.

Someone who was vested with me I think there's, there's a lot of capital out there. For from people who just want to invest a small check.

And you, and kind of hope for the best from you, and when things are not going well, um, you know, I think.

It's it's okay they don't care enough because it's not that much capital that they've invested anyway. So I would look for someone who's actually putting their capital dollars time.

And that time is the most important thing.

Because end of the day, when things are not going well, you need those people and they will roll up their sleeves and help you figure out whatever you need to for the very least. If they're the least helpful they will still be on your side.

And you wouldn't be doing it alone, which is actually what the founder journey is lonely.

So, you're getting a friend on your on your side that has vested interest as you because most people don't understand the ins and outs of this.

And explaining to them takes a lot of complicated.

Effort in time, so why not just get an investor who also wants you to succeed and wants to help you succeed on your cap table? So that's the 1st and foremost thing. I would focus on.

And how can you identify the investors actually.

Invested in terms of time, you know, he know that they will make sure that's, you know, even in the bad days, they will not abandon you. How can a founder early on understand that.

I think it's very straightforward like someone like me, you can easily read that from many sources. Including my own founders will tell you that. So talk to other founders and see who they like. Invest, would they like, taking money from.
Also, the vc's will tell you and for someone like me.

We don't like say France, for example, we'll do them some once in a while, but we don't like them because I like taking forties. I want to actually help you.

And that's the difference, right? Like, I'm telling you, I want to be valuable. I'm telling you I want to spend more time with, you.

So, basically, that's something you want to focus on, right? I think. If so there are some people who will tell you that we're just.

Writing 50, k100 K to 50 K checks and a 1M dollar round it's not enough for them to pay attention to. So I think it, it goes with the whole round dynamic.

The check size and then what the visas are telling you, and then you triangle letting all this.

From other vendors, they work with absolutely. Great advice. Speaking y'all reaching out to other founders and figuring out if the investors get, how should founders approach that? So let's say they're currently talking to 1 investor, who seems to be interested.

How should they proceed in with the interview and other founders? Should they actually asked investor to introduce them to a few other founders who they invested in? Or should they reach out to those founders by themselves?

I think 1st of all, if you are a founder, you have to learn the skill of reading between the lines. You know, it's going to be a valuable skill to do have, which is if a sales.
If a company is a customer is telling you, they're gonna close, you know, how.
How fast they mean or not? Right? It us reading between the lines.

Same with the investor meeting when investor is telling you something or not telling you something read between the lines to understand what they really mean or what they're trying to say.

Um, and you can ask them, you can ask them. Hey, can I.

Can I reach our 2 founders in your portfolio?

And then, you know, and can you give me some names.

That's 1 way if you do know other vendors in a portfolio that you're already connected to.

You know, you can, you can, you can reach out as well. I think it's a, it's a good hygiene. Think you do or if you don't.

A lot of founders, a lot of investors these days are.
Very public about everything they do, and I think you can read up a little bit more about them and see

if that matches your owning those of how you communicate and and operate. And will you get along with this VC?

So those are examples of doing that. True. True true. Most species nowadays are very transparent on what they're doing. How they're doing. I would say, like, I know 80% of vc's are very active on Twitter or LinkedIn, or they're participating on podcasts.

So, it's definitely pretty easy to make research nowadays on the investors. Yeah. Take your time to do this stuff is going to help you in the long run. So sure. You've actually started a company on your own. So you've been a founder. Yourself.

Can you tell us a little bit more about that experience?

Honestly, it's pretty bad. I, I'm impressed by every founder that does it so much better.

Here's the thing there's 2 find types of founders or finding ideas. 1 is.

Passion driven, um, this is like.

You know, I, I, I have a baby and I realize how hard it is.

To find services as a mom so I'm going to start to.

Passion project, and it could apply in a better business as well like, oh, I think I was I need collaboration tools because it's article every people kind of thing.

And then other is inside driven.
Based on your experience, and I think.

I like to back the latter category, which is inside driven. I think passion projects are not bad. And they're in fact, a lot of successful companies have come out of that out of it that way.

But a passion projects.

End up with no different. Like, you end up with the same differentiation, like no differentiation basically because you don't have an insight into the market.

Outset of your own pain point or passion. So if you combine that passion with the experience.

It's a powerful combination and that's what we like to invest in a founder that is passionate about a category, but they also know the category. Well.

So 1 of our companies that were companies, we invested in.

Is a company called, and the founders were passionate about solving the fraud detection problem, and they actually were on the fraud team at Google.

For many years on various products. So that is a powerful combo but if you come to me and say, I want to solve something.

In the fraud detection space, but I haven't done anything in that category. My experience has been in something completely different.

Not even tending tangentially related then then it's a problem, right? Like, you don't have the product. Product founder fit per se. Mm.

Yeah, right and that's that's a really.
Powerful definition I'd like to use a founder product fits Super.

Important and a lot of founders don't really think about it before starting a company and I've seen a lot of those features, because that's part of the work of being very early on investors.

So yes, that's very common end speaking of some common stuff. What do you think is the major mistake that's early stage founders do that. You personally see a lot.

They picked the wrong investors because.

Sometimes when you're raising money, everything, it's easier to raise money in the 1st check. There's a lot of money out there.

But getting money from the right investors helps you set up your next few rounds.

And, yeah, they, they raise money from the wrong folks, just because they're getting a lot of momentum and they just forget to.

Create a good round dynamic um.
They don't talk to customers and that's a problem.

They end up starting something out of passion, but not talking to enough customers outside of their bubble.

And that's something that founders should.
Definitely not start coding until they have few customers that they know that they can.

You know, that, that they can sell the product too, and they would pay for the product. Oftentimes people say all customers will pay once I have a minimum, you know, prototype or this or that. And I would say that's a wrong approach.

Because you're building in the dark, perfect. I'm just taking some notes here, because I personally love it. It's definitely going to show up on my Twitter and on this, you know, career advice. We're moving on to the last question.

If today's app is, we choose a call to action so truly what is the 1 thing that you want to lose? Her introduced? As soon as the episode is over?

Sorry, what was this question? This question is a conversation. So what do you want to only send it to do as soon as the app is is over.

If you're looking to start a company. Definitely jot down your your.

Thoughts on a, not on a deck, but actually, like, in a 1, 2 pages of a document word, like document. Um, and then I would say.

Figure out why you should be starting that the company are solving that pain point. What's your different approach and differentiation really there? Why why are you solving that problem? And why is it different than.

What anyone else has done in this space before so find your competitors. Um, and then from there on.
Literally, you know, talk to customers.
1020 30 customers. How many of you can get.

Um, to understand if they agree.

With this this value prop, you're offering or the problem statement, you're, you're creating and the solution you're offering. Um, and see.

The critical thing to talk to them about is when I have the product ready, will you buy it? And how much are you going to pay me.

That kind of homework and lead to a really good exercise on. Understanding if you should really build this business.

Charging drop. Yeah, and that's what I want to listen to do. 1st thing after they listen to this podcast, do this.

And if you found this space, where you found the customers wanting to buy your product, if you build it.

And you have a good team, and you have a differentiated point of view, please call us. We are exactly the fund to help you at that point to.

Help you get to the next stage and help you close these customers and.
Basically, everything you need to get started to get to a 1M are and set you up for 10M for.

Perfect perfect. And yes, that's going to be my call to action. My call to action is going to be check out the description of this episode. I'll leave a lot of links that were mentioned in this episode, especially links to the LinkedIn opportunity.

Also, the link to the article that Trudy wrote on venture capitalists, and also a link to array Ventures of course.

So if you feel like, you're a good fit if you think that it's time for you to start working with adventures, then definitely check out the descriptions. This episodes, all the info will be there and as usually have a good day.