730 - Kirby Winfield, Founding Partner at Ascend.vc

There is no time like the 2000-20s.

To start a company, to start a startup.

You know, with the rise of the.

Internet, you can learn anything at a very low cost, if not for free.

You can build anything without needing to.

Know how to code with tools like Bubble and Adalo.

And you can get the word out.

About your products for free by using sites like Twitter, Product Hunt and Reddit.

There's no time like the 2020s to build a company. Yet one element of kind of entrepreneurship.

And company building that hasn't caught up.

With the times is venture capital. Unless you live, you know, in San Francisco, in New York, chances are you may know what venture capital is, but you may not really know how it works. You may not know who the good VCs are, and you may not know how they think. So with this podcast of forward thinking investors, I want to dive into this world. I want to help anyone in the world understand what is venture capital, who are the great venture capitalists and how do they think about their day to day with the goal to help more people understand how it works so they can go out and raise capital themselves and they can build a billion dollar companies just like Larry did at Google or Travis did at Uber or Katrina did at Stitch Fix. That can be you, but it just takes some education. And I'm using this podcast as a medium to teach everyone more about venture capital. So if you want to learn about it, you want to dive in, you want to meet some awesome investors, stick around, listen to some episodes, and I hope you enjoy.

All right, how's it going, everyone? Welcome to another episode of Forward Thinking Founders where we talk to founders about their companies, their visions for the future, and how the two collide. Except for today. Today we are doing an investor segment where we're talking to an investor all about how he thinks about investing, portfolio analysis, and all things on the other side of the table. So today we're talking to Kirby Winfield, who is the founding GP at Ascend vc. Welcome to the show. How's it going?

It's going great, Matt. I'm super stoked to be here. Thanks a ton. I've been a fan of yours on Twitter and now I'm excited to be on the pod. So thanks for having me.

Yeah, I appreciate it. I appreciate you coming on. I love these investor conversations because I talk to founders all day, every day. But when you talk to an investor, it gives the audience the difference of thought on how things work, which I always look forward to. So I think for my first question, this is the same question I ask everyone. But like, you know, venture capital is like a very opaque thing. People break in through different ways and avenues. So my first question is kind of, how did you kind of find yourself becoming, you know, the founding part, the founding GP at Ascend vc? How'd you get into venture capital? And we'll just kind of go from there.

Yeah, sure. Well, it's, you know, I took the operator path. So I was fortunate enough to sort of stumble out of college into a startup in 1996 and that company went public. Next thing you know, was with the founding team, we did another one, took it public. Then I had the super bright idea of taking over a venture backed startup that needed a recap and we ended up selling that. And I did one more venture backed startup, sold that and boom, 20 years later, I kind of realized that while I'd had a, a pretty good string of luck, I wasn't great at a lot of what it took to be a founder. And listening to the founders on your podcast talk, I mean, a lot of what they go through really resonates and I just didn't feel like I was necessarily equipped to be great as a startup founder. But what I had learned over the course of 20 years was I was pretty good at picking the right teams to hitch my wagon to and the right markets and the right, right time to make those bets. And so I kind of stepped back and thought. Maybe there's a way for me to, instead of betting my entire life every five years on one startup, maybe bet my money on a number of startups and spread it around a little bit at the same time. My founder journey was rocky. I had a ton of bad habits and health and I was on the road all the time and I had a young family who really needed me and I wasn't there. And that's a whole nother podcast. But I kind of got a chance to step back after we sold the last company and reflect on, for the first time, reflect on what is it that I, what is it that I like doing, what is it that I actually think I'm good at and what, what fulfills me? And you know, as opposed to, I think, what a lot of people and certainly what I asked myself for the first part of my career, which was, you know, what does, what would give me the most esteem in the market or what would other people want me to do? And man, I really got in trouble chasing those things. And so I was like, well, maybe I'll just start asking myself questions every year. Of like, well, you know, do you like meeting with founders? Do you like advising founders? Do you like helping them? So I actually started by just angel investing full time. From 2016, 2018. I had a thesis around angel investing in the Pacific Northwest in Seattle where I live. And the thesis was that there's a gap in the capital stack and I think in most markets there is outside of the Bay Area this gap where at pre seed institutional investors don't necessarily want to invest pre seed. When they do invest pre seed, they're often not equipped to be helpful pre seed or don't have the time and cycles because they're too focused on seed a and beyond. And so founders really, especially first time founders, really have trouble accessing value added sort of operator experience capital at the pre seed and so but I wasn't sure. So like I took a bunch of money off my balance sheet and decided to make 20 investments over the course of a couple years to try to figure out if I was good at it, if I liked it, if founders like me, if they thought I added value, if they thought what I had was unique and sort of, lo and behold, after a couple years of that, I was in some good deals. I was fortunate. I always tell people my biggest asset is by age. So I've just been around in the ecosystem for long enough that when I decided to put the shingle out and tell people I was investing, I got access to some great deals. And so in concert with that I was discovering that I really enjoyed investing. Founders gave you feedback that what I was doing was unique, at least in our market. And I had some interest from LPs so there were people that I'd put into our IPOs previously or put into angel investments alongside me who said, hey, why don't you just do a fund? And so I put my own capital into the GP commit. I had a couple anchor, anchor LPs get the commit to the fund and that kind of got the ball rolling. And so, you know, so I guess that's the very long winded answer to how I got got to got to do this fund. And you know, it's basically a second career for me. And I think the first time I've actually done something where I really feel sort of personal product market fit where yeah, I think I'm doing the right thing.

I'd love to hear some of the similarities, but I think more interestingly, differences of what, you know, when you're spending those three, four years cutting angel checks, what have you noticed the differences between being an angel investor and actually being a venture capitalist and actually managing other people's money.

Yeah, I think the biggest difference is when I was angel investing I could just bet on founders that I wanted to see win because I wanted to help them win. Whereas as an institutional investor I really need to bet on founders who I think will win. There's a big difference there. There's no cheerleader checks as an institutional investor. And so I often I'll see deals now where maybe it's outside of the scope of where I think I can be successful as an institutional investor, but it's a founder who I just love and think is incredible and really want to see, want to see when I maintain a list of 250 angel investors for that purpose. So when I do see something that's outside my swim lane where I do want to be helpful, I do want them to win, I feel like I don't feel the need to write them a check or find a way to cram them into the fund because I've got this other avenue where I share deal flow with folks and those folks have written $4 million in checks to founders I've recommended. And, and so that's kind of a, I feel like that scratches the angel itch a little bit without, you know, without sort of creating conflict in the font.

And you mentioned that you have a geographic focus. Tell me about like a little bit how you kind of like came, came up with that and, and how's it like going? I think specifically like in this market, I think like Covid kind of pop pop something open. And now like entrepreneurship is worldwide. Just kind of curious like kind of how, how do you come up with that specific thesis and how's it been going?

Yeah, so look, when I did the sort of, I would call it fund 0 off my own balance sheet, I made 17 investments in market and 7 investments out of market. So places like New York and London and elsewhere. Of the 17 investments I made in market, I think now 15 have raised follow on capital. Of the seven I made out of market, zero have raised follow on capital. So there was just super negative signal when I was seeing deals from places that I didn't have intimate knowledge of the ecosystem. The other way I would put it is I'm not so. I don't think I'm discovering fire here in terms of being an ex operator investing capital. And I, and I'm, we're very aware that if I were in the Bay Area with this strategy, I'd be, you know, just another dude and, and for me to not just be another dude and for me to have edge and advantage. Like I need to play in a market where, you know, there aren't 500 of me or 50 of me, you know, there might be five of me, there may only be one of me. And that's not to pat myself on the back. That's just saying that's the nature of secondary markets in the venture capital ecosystem. And so I think my experience angel investing combined with my self awareness around what is my differentiated value add globally versus maybe in the market that I live in. And then the third piece is I do this job because I obviously want to return capital for my investors and myself. But I believe that the way I can do that best is because I love working with founders, I love meeting with founders, I love helping founders hire, I love hearing about their problems and helping them raise money and kind of being along for the ride. And that's just easier to do when, you know, when I'm a drive to Vancouver or Portland or across town in Seattle away from you versus, you know, versus a flight. And so I think those three factors kind of combine and I guess the fourth factor is I think it's like the second inning for this ecosystem in the Pacific Northwest. It's super early. There's already $4 trillion in market cap here in tech and I feel like we're just getting started. You're just now starting to see the second order effects of the companies that have gone public or been acquired like Tableau or Docusign or Rover's gone out in a spec and obviously you've got the first wave of the Zulilies and Expedias and I'm missing a bunch.

But.

But I just now think that there's enough talent here from a business perspective. We've always had tech talent, but there's enough talent here from a business perspective that's scaled companies from A to D to public where I think great companies and multi deca corn companies can be and are being built here every year. And I believe that for me to be one of the, one of the, hopefully one of the few or one of the favorite options for founders at the pre seed in a market that's so early but so valuable, I tell my LPs like, look, you got to believe Seattle's going to create five deck of corns, three deck of corns every year and you got to believe that I'm going to be able to be in one or two of them. And if you believe that, then we've got a 3x plus fund and you know, let's go. So that's the sort of fourth leg of the stool, I guess. It's a chair for the geo focus on the fund.

So you kind of are in an interesting position because you invest in pre seed, but you invest in pre seed in like you mentioned, a secondary market, which I think is like a very fascinating place to be. And I am a secondary market myself in Tempe, Arizona, maybe even like a third. Lots of stuff needs to happen here to kind of get there. Hopefully we can help. But my question for you is, what does pre seed mean to you? Like, for you? Is it, you know, if I was a founder that just got an idea yesterday, could I come to you? Or like, when is kind of pre seed for you? If a founder was kind of listening, wondering, you know, if they reach out to you or if they're too early or too late.

You're never too early. So I've led proceeds at the idea stage and then collaborated with the founder to strategize around, fundraise and connect them with downstream capital or bringing on co investors from either our ecosystem or Silicon Valley. So I don't think you're ever too.

Early.

But I do think a lot of times investors will tell you you're too early when they mean you're just not a fit. And so I think some founders are better at explaining their vision or are more believable at the pre product stage. And I think some founders need more traction or more proof. I mean, I always say to founders like, there are three things that matter at pre seed and it's team traction and technology. And the more you have of one, the less you need of the other two. So if you're Jack Dorsey, you don't need any traction or any technology. If you have an MLOps platform that's being adopted in an open Source and has 30,000 engineers using it, nobody cares who you are or maybe even how the product works because you've got some traction. If you cured cancer, nobody cares whether it's actually a market with revenue yet. So most founders don't have any one of those things in spades. They usually have a mixture of the three. And it's my job to sort of sort out how those, how those components play together. And if it's pre product, you know, clearly the only thing that, that you have is you, your team. And so that's where, that's where, that's where this job is probably the toughest is really evaluating, you know, what qualities folks have beyond their sort of pedigree or their experience at startups which actually if you look at the numbers don't really predict value creation. So it's not easy.

Yeah, not easy at all. There are hopefully smart people working on it to solve the problem for sure. So for you, you've been in the game for a little bit, so you've seen some cycles. What do you make of 2021, 2020 Venture Capital Palooza. And how do you make decisions knowing that this market could persist for a few years or it could stop tomorrow. Do you think about that or is it kind of. Not really? Yeah. What do you think?

Yeah, so the way I talk about the sort of froth in the market is making an analogy to the ocean during a hurricane. When you're pre seed you're 20ft below the surface and so the hurricane doesn't matter, it doesn't exist. The further you go up to the surface, the further you go up the capital stack, the hurricane really affects you. So if you're, you know, if you're, if your growth stage and you know, you overpay for something because you're making like a, you know, capital es mode, you know, bet and you get caught out a year later, you know, you go to zero. If I'm you know, paying, you know, you know, if I'm paying 8 post versus 5 post on a pre seed, it doesn't really matter. I still just can focus on investing in great companies and great founders and they're either going to create a successful business that attracts follow on capital or they're not. But it's literally the first investment they take. So I feel like we're somewhat insulated from that. You know, standard caveats about sort of ownership, you know, aside.

I love that it's actually how I feel with my company Seed scout or like if you're, if you're so early it's like, I mean there's these capital wars but these capital wars are in much larger companies. But I still feel like these could be much more of a war. Like you know, in the early days of picking companies because there's so many entrepreneurs out there that are starting up.

I mean, yeah, that's it. I've been at this long enough that I remember when you couldn't start a company without a million dollars, like you had to buy switches, you had to buy servers. The barrier to entry for creating most software startups now is like literally almost zero. You need to be able to code, right? And so yeah, it's changed the landscape you know, remarkably in the last decade and as you see by the proliferation of, you know, seed firms and now pre seed firms, but it's exciting times.

So if someone is hearing, kind of hearing what you're saying, they're interested in, in what you're doing, how can someone kind of learn more about you or send VC also actually, before. Let me ask one more question before we finish it up, because I didn't cover it. Or overall, just high level. What type of firm are you in the scope of? Like, do you write a lot? Do you write like a lot of small checks? Do you lead like just overall? If a founder is looking at you as a potential partner, what should they know? And then we can kind of share like, you know, how they can get in touch or find you online and then we'll call it a day. Great.

Yeah, so we write checks 100k to 250. We typically want to be in rounds that are valued, you know, sub 10 million. Pre sweet spot is sort of like five to eight safe notes. Most of the time we can flex up for a seed in something that we really believe in or is in one of our focus areas, e Commerce Marketplace, MLAI and B2B SaaS.

And then if someone wanted to learn more about you, like on Twitter. Twitter or like social profiles, like how can someone kind of find you online or find Ascend VC online ultimately, feel free to plug any links that you have and then, yeah, then I'll be it.

Yeah. So as you know, I'm on Twitter far too often and my handle's irbywinfield. K I R B Y W I N F I E L d. Website is www.ascendvc.vc. sorry, Ascend VC. We've actually got a startup toolkit page on there that has kind of blown up on SEO because apparently there aren't that many resources like it, at least for our ecosystem. So I built this page that just has all the stuff that I wish I had when I was a founder. So like info about investors and pitch decks and you know, I mean all this stuff exists online, but I tried to put it all in one place. So check that out. And yeah, hit me up. Kirby@ascend VC is my email. Happy to connect with anyone anytime about startups.

All right, well, thank you so much for coming onto the podcast. I really appreciate it.

Hey, thanks for having me. It was a blast. Matt, thanks for all you're doing for the ecosystem.