S10E5: Starting and Scaling a Venture Firm with Eva Ho, Co-Founder and Managing Director of Fika Ventures

A lot of folks get into venture thinking it's gonna be like quick money. If you do succeed at all, it's gonna be 15, 20 years. They're like, we're gonna get that carry check in like 7, 8 years. If you're doing a $20 million fund, just know that you're probably not gonna make money for a decade. We're gonna get that carry check in like 7, 8 years.

Welcome back to season 10 of The Room Podcast. Claudia, can you believe it's been 10 seasons?

Madison McIlwain truly cannot believe it will be 4 years of The Room with you this year. I'm thrilled to be back behind the mic with you for season 10. For all of our listeners since season 1, you truly have been with us for some formative years.

If you're new here, Claudia and I started The Room podcast with the mission of opening the door to the room where it happens, in turn sharing the stories from some of the world's most iconic founders and funders. All in an effort to inspire and educate the next generation of entrepreneurs. And thanks to you all, we were recently listed on the Forbes 30 Under 30 Media list for 2024.

So why us? We're two best friends who met as product managers in 2018, then realized as we were making career transitions into myself, founder, and Madison, funder, wanted to talk to the entrepreneurs that had built great companies. Since starting the podcast, I founded Pryve, a commerce payment startup. Raised venture capital and have faced a ton of challenges. Madison became a partner at Defy VC, was the first investor in my startup, and is now at Harvard Business School and is a pair VC scout coming to the table with the fresh funder perspective.

Over the course of 9 seasons, we've had over 88 guests amassing over $50 billion in enterprise value, ranging from conversations with the former founder and CEO of Zillow, Spencer Raskoff, to Michelle Zatlin, the founder of Cloudflare, Grammy Award-winning artist Sierra, and the creator of Next.js and CEO of Vercel, Guillermo Rauch.

Looking forward, as we continue to expand both online and offline, we are excited to announce the Room Podcast Summit in summer of 2024. The best way to stay in the loop is to subscribe to both the podcast and our newsletter, which you can find at theroompodcast.com.

Before we dive into today's story, we have a few short messages from our sponsors.

Silicon Valley Bank, now a division of First Citizens, remains fully committed to serving founders, executives, and investors across the innovation ecosystem. As the largest banking team focused on technology, life sciences and healthcare, private equity, and venture capital, SVB is uniquely positioned to deliver specialized lending and financial solutions clients need to reach their ambitious goals. Find out more at svb.com.

Perkins Coie is a leading full-service international law firm known for providing high-value strategic solutions for startups and investors. Lawyers in Perkins Coie's emerging companies and venture capital practice support the most innovative entrepreneurs and investors in fast-moving and high-growth sectors across the country while addressing the myriad of legal needs that arise when fundraising and scaling their business. The firm's tailored legal services are informed by an understanding of each client's discrete needs. To learn more about Perkins Coie, visit perkinscoie.com. In this week's episode of The Room Podcast, we're diving into the world of venture capital through the lens of the venture capitalist with Eva Ho, the co-founder and general partner at Vika Ventures. Fika Ventures is a seed fund based in LA that focuses on creating impactful and scalable technologies while investing in visionaries who lead the way in data-driven and AI-powered industries. Eva's journey is both inspiring and indicative of her resilient spirit. Born in China, raised in Mozambique, and later moving to the US as a refugee with her parents, Eva's formative experiences have shaped her into a formidable entrepreneur and investor. She attended Harvard University for undergrad whilst living at home just 3 miles away from campus. This experience only further fueled her drive to succeed. Transitioning from roles at notable tech companies like Google and YouTube, Eva took the leap into venture capital where she has since championed a more inclusive and equitable investment landscape. We trace her start of investing from being an angel investor. To founder of Sousa Ventures, to ultimately today with Fika. Her work extends beyond managing director of Fika, including her involvement with AllRaise, an organization aimed at increasing diversity in founders and funders. With her roots deeply planted in technology and community building, Eva is at the forefront of nurturing startups that aim to solve significant societal challenges and is passionate at doing so within the LA ecosystem. Key insights and themes in this episode include the role of personal history in professional pathways, knowing when to leave and take that leap of faith as a founder, and the evolution of the emerging manager landscape. Let's open the door. First of all, Eva, thank you so much for joining us today here in The Room.

Thanks for having me, Madison McIlwain. So excited about the conversation ahead of us.

We're looking forward to it as well. And like with any fun conversation and story, we love to start at the beginning with our guests. And so we're curious, where did you grow up and how has that shaped your view of the world?

I'll tell the super bridge version. I mean, I think perhaps it's a bit unusual. I grew up in Mozambique, Africa, born in China, and then came over to the US as a refugee after the war. So the family of 6, we were immigrants and we had to start all over and we're lucky enough to be the recipient of a lot of the greatness of of America. So from Medicaid, food stamps, public housing, public healthcare, public schooling, you name it. The system has been so generous to us. And both my parents are second-grade-educated individuals. My mom is illiterate, basically can't read or write. And not that they're not amazing role models in so many ways, but I didn't have the traditional, I would say, role modeling or like, this is a career you're supposed to take. Here are the books that you're supposed to read. Here's how to think about planning. A professional life. For them, it was pure survival for all of us, 'cause living in the housing projects even through college, my parents were just like, "Make money, get yourself out of this place. Look around you, you don't wanna be here later on." And I think that was a major motivating factor, seeing how they struggled. I wanted a better life for us. And I think very luckily, these sort of US institutions, I think, embraced myself and my siblings and we were able to get the education, et cetera. And I think that so much shapes the things that I care about today, how we thought about building the companies I've been involved with, including Fika, and most importantly, the types of people I like to invest in, not only from a capital perspective, but from a time perspective.

Well, first of all, thank you so much for sharing that. And it's an incredible reminder of the opportunity that we do have here in America and just how many entrepreneurs gravitate towards that. And I know Claudia personally also moved to America as a young girl, and I've heard her share that in different instances of how it's been a motivating factor. And so wonderful to hear that for you there was a relationship between what you learned as a kid and had brought that into what became an incredibly successful career. And I guess in that vein of early identity, becoming a founder, was that the thing you always felt like you were meant to do?

No, I think, uh, you know, the bit I was taught or what I saw where I grew up in Boston was really the summit of the life is like becoming a doctor. Maybe a lawyer or maybe a business person, a consultant. And that was even later in my life. When I was younger, like before I was 18, I had no frickin clue. But, you know, in college, that was what everyone else was doing. And my parents certainly didn't encourage me to be like, oh, you know what, have you thought about teaching or other things? You make the most money by being excellent. It's a fairly conventional belief, especially for immigrant parents. And the arc to what I'm doing today is not one I imagined. And more importantly, The risks associated with founding anything was not in our vernacular. However, looking back, I think organically, um, my dad, this extraordinary human who since he was a kid just made his way in the wilds of Africa, feeding himself and basically making enough money to create a life. And we had a little restaurant that in itself was entrepreneurial. Of course, I didn't really get that till many years later, cuz I was like, no, I don't really have any good examples. And perhaps that was not like a chosen path, but certainly there are risks and things that you do in doing something even basic as running a small business that I take with me today, like things like work ethic and customer service and things like that.

I would certainly argue that takes more tenacity than maybe even some of the journeys people go on through what would be more conventional founder path. And so just seeing that manifest in what became you attending Harvard for undergrad and just an incredible realization of that commitment of your parents and yourself. And looking back on that time for you, I know Claudia was at Harvard for undergrad. I'm currently here. How was the entrepreneurial pulse on campus and the mindset around what is the thing you're gonna do with this incredibly shiny degree?

Such a great question. I actually wanna turn around and ask the two of you because Clearly I'm a different generation and I can't say I really understood much of anything when I went to college, more so because my family was living 3 miles away in the housing projects. Those worlds did not converge. And as such, I don't think mentally and psychologically I was as present as I could have been to understand what it meant, the gift of going to school of that caliber. I got in, great. They gave me a scholarship, I could pay for it. And my parents are like, of course, that's where you go. Like we didn't, we didn't think about like, oh, here are all the schools, like let's go visit some campuses. What do you wanna study? Like, it was, okay, you did X and you got this, great. The crazy thing is when I graduated, nobody showed up for my graduation. Not because they didn't care, but because they were working at the restaurant. They couldn't take that day off. So that maybe puts it how the whole thing was not really special. And going backwards, if I could rewind time, I would treat the experience, the community really differently and from an entrepreneur, like, I think it was one of those things where I think about it today, what these schools have to do to really work with people like myself, Claudia, like the immersion that requires for you to feel day one that you are on even moderate equal footing of understanding what the rules of the game are. Because when I stepped in, I was like, what is this? Like, I was like living underneath the Prince of Denmark and I just didn't know. I didn't know. I mean, you guys had been there the first meeting in the house and I was like, oh my God. Like I was cutting my own hair 'cause I couldn't afford a haircut. I think that sort of shocked, and it wasn't so much fear, it was more just like an out-of-body experience. I think at the end of the day, I didn't take advantage of all of it, but it always made me feel, being there, that I could do anything I wanted. Nobody treated me differently despite the fact that I felt so different. My professors, the student body, nobody said, oh, you're that kid from across the river. Everyone was like, oh, you, you're here. So You must belong here. I think that's the gift of a place like Harvard is the possibilities are infinite. And certainly my generation, I don't think the notion of being an entrepreneur was really like a normal thing. People still went to consulting and got their PhDs, et cetera. I think today, Claudia, it'd be very different. I imagine the sentiment and the desire is much higher for folks who wanna just come outta college and wanna just like do their own thing and create their own destiny. Back then it was still a bit more traditional.

Even looking at my 4 years there graduating in 2018 compared to some of the students that are there today, I think there's even been a bit of a stepwise function change in just entrepreneurship even in the past 5 years where I felt similar to you when I was on campus. There were these tracked paths, there was a lot going on, people were doing a bunch of different things. And so I think it really took me probably 3 years to reflect on what do I actually care about? What is actually exciting? Because everyone was doing something so different, but I would say the main chord was definitely consulting recruiting. Let's talk about banking. Let's start to talk about big tech. Whereas just a few months ago in 2023, went back on campus and spoke at the engineering school and the amount of entrepreneurial desire was really crazy to me where there were freshmen and sophomores starting companies, looking for angel checks. And that was definitely not something that I feel was so persistent in 2014.

Yeah, fascinating. What about you, Madison? How does HBS feel today?

The graduate school experience is unique in the sense that the competition is different. So I don't think Harvard undergrad considers himself competing with very many people, whereas I would say that HBS does think they're competing with GSB. And because there is such an organic chemistry of the Bay Area around entrepreneurship in graduate school, that they actually maybe invested a ton now into the Harvard MBA experience to be entrepreneurial. For— I mean, actually taking a class today this whole term called The Entrepreneurial Manager. It's more indicative of the landscape of success is viewed more through the lens of building and scaling a company. I think something like 50 to 60% of HBS graduates are considered a founder in some capacity by the time they hit 70. So the scale of what they've decided at the institution is the success track is entrepreneurship. And so in that vein, it's something that's much more embedded in the coursework and then in part embedded in the academic resources, frankly, the students that are attracted to the program today. So I'll be curious to see what my classmates end up doing and deciding to do in the next 2 years.

It's really encouraging. It's not a surprise, but sometimes I think adaptation takes a little while. I wanna be expert. You're not Stanford in good and bad ways, because I see other Ivy Leagues that I feel sadly have been a little bit more left behind because they waited a little too long, and it's often very hard to change tradition and et cetera. So it's great.

I'd love to spend some time talking, Eva, about your career out of Harvard and really getting into the tech landscape. Early in the first stage of your career, you had a range of technology experiences across startups and big tech. From head of marketing at Applied Semantics to co-founding Navigating Cancer, a health startup, to even being a product marketing manager at Google and YouTube. Looking back at these experiences, how did you find your way into tech and what was the common thread across these roles?

The initial entry was purely accidental. I went into sort of consulting after college because that was the highest paying job, not as high as McKinsey. It was a tier 2 consulting shop, and my parents were unemployed and had been unemployed since my days in college. So my mind was always about where can I make the most money and what, what do I have to do to do that? If I just had followed that too long, I think I would've been a really unhappy person. But accidentally I had come out to the West Coast and I met these two guys from Caltech. And I think what for me was the two worlds of like the consulting, the finance was That was very much buttoned up suits. And I felt that in business school, like I was just like, again, just total fish outta water. 'Cause everyone came day one dressed in a suit and wanting to find a job. And I'm like, I don't know what this is really. I want a job, but I didn't know how to play the part. And I never had worn a suit before. I'd worn suits from my father's basement. And so I think the thing that attracted me when I met these two Caltech folks was they're like in shorts and they're like, oh, we're building something cool. It's something to do with the internet. And I was like, okay, I can come to work like that. And honestly, that was like the nerd of us all not knowing what it meant to run a company drew us together. And that ended up being Applied Semantics. So it's just like, it really, it sticks to me of just gravitating to people more than even the idea, more than even all the bigger comps package or whatever. I was drawn to these two people. Um, and that changed my life. And from there, I think all the sort of benefits of being tech, which the two of you know, is just The early days of being part of Google and whatnot was obviously appealing. Like, why would I work for like an insurance company or even a CPG when I could be on this fun campus in Mountain View where people were all like-minded, ambitious, curious, and just wanting to change the world? And maybe it was like super idealistic back then, but I got that bug really early and I was like, okay, this is where I belong. And luckily I caught those waves and then caught a couple other waves later on, but That was the initial draw. That was, to me, a really good fit.

It's interesting to hear you speak about early Google and the culture of Silicon Valley and how in many ways that was the draw for so many bright minds to come to San Francisco in the Bay Area and start building in tech. It was like, how do we do anything but the standard consulting finance job in a suit working 14-hour days? So. It's interesting to hear that. And I'd imagine at the same time there was this really strong community of people building and building businesses. I'd love to dive a little bit deeper into your transition from operator to investor. It's certainly a path that a lot of folks today contemplate. We noticed on your LinkedIn that you list a number of angel investments ranging from Nest to Trade-Z. In a small world moment, Matt Rogers was actually our first guest on our podcast. Could you tell us a little bit more about how you actually started to angel invest?

That road, even from a big tech company, Google, coffee cozy, well-fed, well-paid, to jump into a startup, Factual, like people thought I was like nuts just 'cause they're like, why? Like, it was 2008, why would you do this? I was on YouTube, everything is like fun, but I always leaned a bit into things that to me pushed me harder and gave me a sense of just being able to forge my own path. I think at Google it was just super comfortable. I was like the girl with the little bag from LA and a little Google logo, and I was like, oh, you're the Google girl. I mean, these are early days, you know, and it was so easy to like your identity be like merged with this company. But at the end of the day, I wasn't Google. I didn't found Google. I was part of a wonderful, but part of the cogwheel. And I think there's something in me that always felt I wanted to build something on my own with my own abilities and bet on myself. And the investing side, I was also oddly accidental because angel investing for many people, not just for myself, is just a very weird thing. Like in our world, everyone's like, angel investing, it's like buying a cup of coffee. But for the rest of society, like in the world, angel investing is not something anybody understands or can actually do. It's crazy to be like, oh, put $50,000 in to a person who's 25 with a deck. That's Crazy. So that's how I felt when I was offered the opportunity. So I was like, no, like that was like twice as much as my whole family made. I mean, we were living on $20,000 a year while we were running our little restaurant. Like, no way. Why would I do this? In my mind, it wasn't that I couldn't afford it. It was more like the opportunity cost. Like I could just give that to my family. But I had, you know, a good friend, Seth, who just said, hey, just give it a shot, Eva. Like, just give it a shot. Do like 2. If you don't like it, don't ever do it again. So I did it and I'm like, oh, that wasn't as painful as I thought. In some ways it's a random luck. 'cause it was NASDAQ. If it was something else and it blew up like 6 months later, I would, I would've gotten a different learning, a lesson from that. And then that led to Sousa Ventures. So again, never thought I wanted to be an investor. I was on the other side table like you. I had raised money. I raised money from interesting people like Andreessen and whatnot. And even though I'm inspired by some VCs, I would, to be frank, the majority, I was kind of like, no, like that's not, that world is not for me. And when I got the shot to do Sousa and then to do Fika and I said, hey, It could be done a little bit differently. You could actually build a firm that's more aligned with my values. And now you can do that. Like back then you really couldn't. Like back then you had to play the part, you had to look a certain way, like all the stuff to raise money. Now I think venture and the LP ecosystem, they're much more open to different profiles of people building funds to the extent that today we have 3,000 funds under us. You might've seen that number under $300 million, 50% iDiverse. So the world has changed for the better, and I, again, feel lucky I caught— I got caught in that wave.

You mentioned Sousa as really the next wave as you started investing, which got founded in 2013 and still an active fund today. I believe Sousa still focuses on $1 to $3 million seed stage investments. Tell us a little bit more about how you went from investing in Matt at Nest to getting Sousa off the ground as a full fund.

Suso, in 2013, there was probably like 50 early stage funds approximately. Now there's so many, and back then there was still a place, like building a seed fund was still like a new thing. Today everyone is building a seed fund or an early stage fund. I was with 3 friends. Leo was with me at Factual. Chad got introduced to me through Seth and Chad's family. The Byers are really illustrious, storied family out of the Valley, and they taught me the ropes. They were like, oh, just come together as friends and do this sort of pilot fund. Let's see what happens. None of us really thought we'll be doing this 10 years later, to be frank. We're like, okay, let's pull some money, let's see what this thing could feel like as a hobby. That first taste was again, very fortunate that we were able to get into some really good companies like Robinhood and Flexport and all these things. But 3 years into it, I was kind of like, okay, if I was to take this seriously, how do I want to construct this? And that's how Fika was born. 'Cause I wanted to come back to LA and We commit to the community here and have a smaller partnership and do things slightly differently. So I love the sushi experience. Love those guys over there. Still close friends of mine and they've had immense success. Super happy for them.

It's so impressive when you see people who take that leap to maybe leave something that is succeeding to pursue their true vision for what they wanna see in the world. How did you gain the conviction to know when to leave something that you started.

Yeah, it was another of those decisions like leaving Google that people were like head scratching a bit because Sousa had so much, even though we were small, the people around the table were mighty and raising money was not hard and would not have been hard because they were at the center of Silicon Valley. And so it would've been easier to stay, but again, it's that little entrepreneur, little bug in me that said, hey, if you were to build this your way, I was also relying on their network. They were just surrounded by wealthy people. If I really want to prove to myself that I can do this and do it off my own sweat equity here, let's give it a shot. I didn't know whether it was gonna work. There was one point when we were like sub-25 after trying for 4 or 5 months, I was like, you know what, my partner TX, you could just take the fund. It's not gonna be big enough for the two of us. It's not really working. I didn't know going into it, I was ready to give it a go, but we had at some point, if it didn't work and we didn't raise enough, I was gonna just let my partner take it forward. It worked and here we are. And I'm not the type of person that says, hey, try for 5 years raising and if, you know, keep going no matter what. There is a reality to life where you have to weigh those risk and reward and not everyone can make no money forever. I work with a lot of emerging managers today and as they think through, like, especially in this environment where raising is ultra hard, there's just realities to life. I was lucky I had a little bit of a cushion and I could bear those 6 months and obviously doing a fund, as you both know, it takes way more than 6 months. It takes like 6 years before you make a single penny because you're like doing capital calls and all this.

Yeah, I just wanted to tease out that sub-comment that you made there around getting to $25 million, and I'm assuming you mean you got $25 million of committed capital for your first $40 million fund, and just that inflection moment of maybe what was a first close versus actually having what you had hoped and planned on fully committing and deploying. Did I hear that right?

You're spot on, Madison. I felt at one moment the most we can do was $25 million, which honestly would've been okay. It was just not enough for the two of us. At that point, both TX and I had offers, very large offers at bigger firms, and there's economics involved. I can't do this little thing. And so I was weighing some of those realities. So today, as I work with lots of folks who are raising, we talk about the first close, multiple closes, we talk through the strategy, all, all those things, and I always think to talk through with them what is the minimum viable fund for you to really do the craft and do the work you want to do. And you may have set out to have 50, but if you really think you could do it at 20, do it. Build the proof points and you could go from this, especially if you're a solo GP. So having some flexibility and being authentic to the narrative and also authentic to the portfolio and the economics, you could pull it off. Nobody's gonna be like, oh, you didn't get to 50, so that's it. There are many scenarios where there's some flexibility depending on what you wanna achieve.

Thank you for teasing apart the nuances of the behind the scenes of starting a fund for the first time and raising that initial fund. This was around 2016 when you were building the first fund of Fika with your partner TX. You mentioned how much you raise and what the structure of the fund is often tied to what you wanna do with the fund and what you really wanna see in the world and back. Fika, the name comes from a Swedish word, which is a cultural activity, getting a coffee, chatting with friends. Tell us a little bit more about how this name plays with the aha moment and really the mission of what you wanted to do with Fika.

I wish it was like a glamorous story, but the reality is having done naming for so many of the companies from Applied Semantics, which was like long and techie and nerdy to Sousa, because Leo and I had visited the Sousa gorillas in Rwanda. Naming is one of those things where you just put down a bunch of things, and for me, I wanted something short and then when I saw the meaning of fika, there's actually a really fun New York Times article that came out a couple days ago about in, in Sweden, this is the joy of the day where you get to drop the pretenses, you leave your laptop behind, you leave your agenda behind, and you're supposed to just connect with people. And sometimes they do it once, sometimes you do it twice. And I can't say I do this every day with every interaction, but that's my goal. My goal is to just like spend time with the two of you. And really get to know you. Certainly, yeah, there are a lot of pitches and all that stuff, but that's really the joy of life. And I said, hey, if I can marry the joy of life with also helping founders build cool things, that's why we chose it. And it was available, so as a domain, and that's, that's kind of it.

So I think that there's so much importance behind a name. And similarly for naming this podcast, it was a Hamilton song and it fit our theme and our vision for genuinely a change we wanna see in this ecosystem. And it is really a mindset shift. And so I love that. And sometimes it's about what's available and what story hasn't been told. And so just hearing a little bit of that glimmer for you all and the Fika mindset that it embodies today is really special. And staying a little bit in the 2016 era, raising that initial fund, we talk a lot on this podcast around getting to market in a fundraise for a company, but we don't often talk about the funder side of those things. So, We're a little curious, who was the first LP to say yes to investing in Fika?

The only reason we're able to get to 40 is because we were able to get an institutional investor. We pitched 600 people. I have that initial database. I think to the outside world, everyone felt like, oh, you guys raised it in 7, 8 months. What was the magic? And I was like, oh, there's no magic. We talked to 600 people and we got some subset to commit. But to be frank, if the institutional didn't come in, We probably would not have gotten there. So Greenspring was our first big commitment, and I'm so grateful to them. They had a microfund strategy back then. It was so novel, the notion of microfund and betting on microfunds. And they came in and they committed to helping us get other people. It's rare, I think today as I work with emerging managers to raise money, I always like, can you find that node? Is there like a supernode of, or someone who is really not only wanna make money from you, but really wanted to invest in you? And that means really helping you because emerging managers need very different assistance than some more blue chip or somebody like a big GP coming out of a big fund or someone who has a lot of their own wealth to kick off a fund that most folks are starting. They're risking everything and they don't often have the network and the relationships and the know-how on how to get started. So anyways, Greenspring was just so instrumental in helping us build that early base. And from then on, that catalyzed Fund 2 and Fund 3. We were very fortunate.

I love that foil of, we did talk to 600 people, but then we did it in 8 months. So it happened overnight. And just pulling back that story of what that tenacity, which we spoke about earlier, that's core to who you are, is being pulled through in the origin of Fika and getting to that anchor LP who saw the conviction, saw the commitment, and was excited to then be your true partner to bring around what you said is the multiple funds today. And, and we're gonna talk about where Fika is today, but before we dive down more into some of the management side of building a fund. I'm curious, really coming from a place of personal curiosity, you've invested across marketing, product, healthcare ecosystems, and really the world is your guys' oyster in terms of investing at the seed stage. And that investment strategy spans across sectors and evolves. How do you think about building a trend and a thesis from, not from scratch, but from that depth of experience you and your partner have?

It's increasingly hard is the short answer, meaning back then you could say the LPs asked the typical question like, what differentiates you? You could say, well, you know, I'm doing enterprise in LA. That was new when we started, and I was doing cloud, deep tech, data. Today I get pitched a lot by funds and I have to really ask second order questions because, including Fika, when I'm pitching Fika, I'm like, why are we special? There's tons of talented managers out there with good operating backgrounds, with unique access, all sorts of stuff, right? Like domain expertise, whatever. It's hard. And I think to win, not only to survive, but to win as a smaller fund, you have to continue to adapt. And that's the thing I think about all day long is where we started and where we are today is super different. LA remains an interesting ecosystem. We invest across North America, but even in LA, because we've enjoyed successes among companies, meaning we have now quite a number of unicorn companies. When I started, there was like 10, now there's like 80. Covering all industries with success begets other people coming in. So now we have GPs from Founders Fund and Andreessen all setting offices and doing great things here, and it's great for the ecosystem, but Fika no longer is the game in town, right? There's lots of other good people. It's an evolution. And I think from a thesis perspective, we stayed pretty core. And not that I think if you're starting a fund, you can't diverge and or evolve the thesis, but I think LPs do like that you come in with a clarity of like, This is where I think I can win. Give me a few years to prove it out with the initial dollars, and from there you compound and add on to that. It's hard, I think, when you start like, I'm an enterprise, and then later on like, oh, maybe I'm more like a generalist, uh, because somehow you got like a winner in that pile and some, and then later on you're like, oh, maybe I'll do some crypto. Um, that's harder. And maybe by default we're not good consumer investors. We know our limitations that we've stuck with the sort of enterprise and tech area and We have now a decent portfolio and that just adds, but it's a patient game, Claudia Madison. Like, I think the pitfall today is because we've lived through these 10, 12 years of such easy times that a lot of folks get into venture thinking it's gonna be quick money. They're like, we're gonna get that carry check in like 7, 8 years, like the conventional. No, you're not. Carry checks now are like 15 years. If you're doing a $20 million fund, just know that you're probably not gonna make money for a decade. and then the big money, if you do succeed at all, is gonna be 15, 20 years. And I think folks who come in knowing that will be better investors versus like, oh, I'm gonna flip it, I'm gonna mark up, I'm gonna do some secondaries, and I'm gonna be multimillionaire by the time I'm 30. I'm like, if you're lucky, you may, but that's not the, that's not the journey. Those are not the outcomes.

That's a super helpful context on both just how you felt intimately in the ecosystems of shifts over the last 8 years with Pika and what that means as a go-forward investor and how you're thinking about buckling up for what might be a longer return cycle as we look towards the next 8. And in that vein of what the future looks like from a, for investment standpoint, I'm just really curious, the mindset of an investor, how you think about getting to conviction on investments and what colloquially is known as the pounding the table moment. How have you over the last 8 to 12 years across your funds thought about that moment of knowing when to say yes and that art and science of early-stage investments?

This is a, not only a super good question, but a hard one to answer. And this is, I think in many ways, to be very frank, what makes or breaks a fund. Because if it's just you, if you're a solo GP, you have your idiosyncratic way of making a decision. If you're a team and your team grows, things change. Everybody has their passion areas. Everybody has their own conviction. And so now you need some sort of rubric to make sure that decision-making is not only fair, but it drives the best outcomes. And we haven't perfected it, by the way. Speak with a lot of other fund managers. I'm sure Trey talks about like, how do we choose? I think for me personally, what I've learned over the decade of doing this, the early days, I was very much like social signaling was a thing. First round capital was involved. I'm like, oh yeah, like please let slot Sousa in, like give us a tiny piece just to be in your Even your like oxygen. Now I'm having seen a lot of data. There's no other GP that's gonna have a better, a winning record from like everybody's gonna pick right, everybody's gonna pick wrong. Sequoia has a big failure rate, same as us. But when they get it right, they get it really right. And because of the numbers behind the probability behind the game, the craft, I shouldn't call it a game, we've gotten more confidence in just getting to conviction ourselves and trying to ignore learning, but ignoring often the very heavy signaling, especially the last few years where if there's a crunch times, you have to make decision quickly. So you're using very minimal signals and amplifying those. And we've made some bad decisions in, in that manner. And for me now, outside of the table stakes of competent, good people, domain expertise, whatever, pre-revenue, post-revenue, whatever, I do my best to just understand the psychology of founders because what I'm finding now this past year is a lot of people quitting because there's no penalty for quitting in the tech world. People go to YC knowing that even if they take $1 or $2 million and they quit in 9 months, but they put it on their resume on LinkedIn, it's still a badge of honor. Nobody's gonna be like, you failed, I'm not gonna give you more money 3 years down the road. 'Cause you know, you went there, then you went to Nvidia, collected a nice check, and then you were like, I'm a startup. That's the culture. People can fail multiple times and that's, there's not their fault. That's how the incentive systems work. But For us, like, it's painful when we make a bet on somebody and 9 months later they're like, no product market fit, I'm done. I think from a behavior perspective, that's the change over the last year is people have different opportunity costs. And I get it. Like some folks are, if you start a company in mid-40s and you're, you're heading against the wall for product market fit and like a year later you're not there and you have to feed your family and your kids and you get offered by some other big tech company to make half a million, million a year, especially if you're an engineer. Like, I get it, I get the pressure and, and I never force anybody to stay in the game or stay at the startup at all, but trying to like suss out the folks that are really in it and why they're in it and not in it irrationally. Like there's also those folks that do this as a hobby and like you give 'em $3 million and 10 years later they're still doing the same thing. That's not necessarily good either, but folks that are really motivated to say, hey, I really care about this and I'm gonna do everything possible to make it successful. It's, it's not even about the money, but It's how they define success for themselves as solving this problem. That's what we're really trying to calibrate towards.

That really resonates because I think 3 years into building what I'm doing, it's been so much harder than I could have ever imagined leaving an APM role in a big tech company. And it is just fascinating to see how a lot of my peers and friends started at the same time. Some quit after 6 months, and it's interesting to tease apart why they got started. Others became really big successes and are crushing it and are amazing. Others maybe still haven't been able to get beyond that pre-seed and it's been 4 years, and then it's more of a question of, is this the right thing you should continue to push on? A question for you is, tell us a little bit more about some of those traits and the psychology learnings that you really look for when betting on, on an early stage company and team?

A lot is why that problem for you? You could solve anything. You're brilliant. There's a thousand problems out there. Why this? And how much have you really studied? 'Cause a lot of folks, they'll come up with an idea and two months later they're like, I gotta raise $3 million. I'm like, how much work have you really put into thinking through this? 'Cause it's not about the money, it's about your time. Every year for you, Claudia, is a big deal. And that's on the flip side when I work with founders to shut down their companies, and I actually often sometimes encourage that. If I feel like they're just spinning, but they're afraid to tell me that's not working, they deep inside know it's not gonna work, but they're afraid to tell their investors that's not gonna work. So they're just like hiding in the basement. And I'm often the first investor to say, how are you feeling here? Are you gonna do something tomorrow that might yield a different outcome? And if they say no, I'm like just banging my head, like full permission on, on my side to let go. But I think in the initial conversations, it's really just spending time with you and saying, why do you wanna solve this? What in your background, what chip do you have to really wanna solve this? What's influenced you in wanting to solve this? Sometimes it's a family thing, sometimes it's a partner that struggled through something. If it's health, I often especially think complicated things like health, asking a lot of whys and really trying to get that person to be the true person to me and be honest. That's the heart of it. And there's not like a set of questions necessarily, but I know when I'm sitting across from someone there's just this fire. Bessemer wrote about this. There's the temporary fire where you're just like excited to found a company, you know, it's like a new thing and they're like, you're so excited. There's 3 founders, there's that excitement, which I think is temporary because that will go away very quickly. But it's this long-term like inner fire where I'm like, will you go down to a salary of zero if you have to, if you believe this can work? And I'm not saying like you mortgage your house, but there are times every founder has to go through where you have to look yourself in the face and be like, Wow. Like I've sacrificed a lot and will I continue doing this? And so it's that metal and that sort of fortitude I'm looking for. And those are the people I'll bet on all day long above even the problem, above everything else. I'm like, okay, Claudia is the one. If I'm gonna make one bet on subscription payments in e-commerce of all, Claudia's the person.

Everything you're saying really resonates for me on the investor side. And I think as someone who was very early in their career to start in investing, I had to go on a journey to build self-trust for what you're calling out as an instinct, coupled with great data and, and great insight that you're gathering from everyone around you in the space. 'Cause no one's an expert at everything. And I think that's one of the biggest challenges to being an investor in the early stage is trusting yourself and knowing when to believe the story the person across the table is telling you, or have a sense of what you know to be true about the world. And believe that perhaps the stories aren't lining up and it's not gonna be a great fit for a true long-term partnership.

Yeah, Madison, I think I felt that even when I started Sousa, I didn't trust myself even though I'd operated for a really long time. It's a completely different set of muscles because if you are an optimist, everything is possible, right? If you're a skeptic, everything is hard. And in any individual or team, like you have these conflicting feelings and polarity and it's sort of how do you work through that? And even as a data person, like I think I probably err towards too much data sometimes. And early days I looked at TAM and all this stuff, but none of it really matters. Yeah, because there's all these factors that like come into making something work or not work.

HPS has so many frameworks and when you've been in the real world and then you come back into the framework universe, you're like, okay, cute framework guys, but I'm gonna tell you when you're sitting across the table The framework is not always the thing that pushes you to yes.

Absolutely. Absolutely.

We could talk for hours about such a myriad of topics, but frankly, we're a little behind on time, so I'm gonna skip through on a few of these questions here and just first of all, congratulate you on having $250 million, almost $300 million under management today with Fika and continuing to build the brand and the community and really the entrepreneurs behind your incredible platform. And in an insane way, you also were not just doing that, you also helped co-found AllRaise along the way, which is building a more equitable future in venture capital. And as someone who was actually a recipient of an AllRaise cohort, I know the work is so important for the ecosystem. And I think an extension of what AllRaise does is create safe spaces for authentic networking with individuals who don't feel included in maybe what they see sometimes in the venture ecosystem. And I'm just curious for you, what has that concept of building a network been like and how has that shaped your career authentically?

AllRaise in itself is a startup and we are evolving in how to do the work we want to do, but the mission has stayed very true and similar to when we started, which is driving equity both on the funder and founder side. And it doesn't answer your question directly, but it's working in that there's product market fit. Like people believe in it and it hasn't been done perfectly. We went through 3 CEOs, like I get it. It's a nonprofit, it's hard. I mean, it's volunteer-based, it's hard. I think where I have the most glimmer of hope is when I travel around the world in random places, they're like, oh, I saw you were, we could be doing a pitch and they'll be like, oh yeah, but it's of all the things they'll pick like AllRaise. They'll be like, I saw that you were tied to AllRaise and they don't even know if I'm a founder. Like I, I could care less, but, and they're like, what's that about? Like, looks really exciting. And that's when I realized the scale of the need for this community. And if we achieve nothing, I think a lot of folks have gotten value from just feeling being a part of something and that we're all honestly struggling through similar things, no matter whether you're a GP or you're an associate or you're a college student wanting a job in tech. The commonalities of where the struggles are, and it's not about color, it's not about gender, honestly, it's just like inherently as humans, This is a very elite system. It's built for people not to belong and to be a small part of trying to break that down, not for some charitable reason, but because I think we are gonna have a better world and better economics and a healthier economy by being diverse. It's been a privilege to be a part of it and it's ignited so many beautiful relationships like Mara, like Trey. The minute we all get together in a room, there's just this feeling like we're here together. But now it's always, how do we actually have measurable impact? How do we help women actually win more deals, be on the cap table of the best, biggest companies, generational companies? That's the challenge. I think while VC firms now get, you need to have women on your team, all that stuff, and it's slowly moving and all that, and we're encouraged, but at the end of the day, until we have women founding and be on the cap tables of the best companies out there, We haven't done it yet. So there's a long way. It's much, it's younger, it's fresh. Like there's a lot of new blood coming in and the CEO Paige is honestly extraordinary. If you haven't met her in person, you should. Yeah. So it's a really amazing chapter.

Absolutely. We're really excited for the future of the landscape investing, all of the work that Allraise is doing there. We've obviously spoken a lot about investments that you and the Fika team are making. And so given that you're investing across applied AI, health tech, deep tech, so many different verticals, is there a recent investment that you've made that really knocked your socks off? What was it about it?

The one I've been really excited about is called Sunbound Homes. It's payments for senior care. We've looked for a long time. We did an investment called Upwards for childcare, a space that like VCs don't wanna touch. So many scar tissues and roadkill, yet its upwards have done super well and it serves like all Americans for childcare, not just like the rich. I have the similar hope for Sunbound. I think the senior care space, and we're not, we haven't gone into it lightly. That's certainly, it's a vogue area, elderly care, et cetera. We've looked at a lot and trying to find the wedge of a very complicated industry where there could be some early impact in making things more affordable and getting people in places that are safe. So they work a lot with like Medicaid patients for all types of senior cares. And the team, Manny and his team, I've known them for 2 years. We looked at them when the idea was slightly different. They're 3 young guys that were freshmen at Harvard, and I spent time looking in their eyes asking them like, why did 3 young guys from finance from New York wanna work in assisted living, like calling into assisted living and nursing homes? I asked them multiple times individually together, and I am so proud of that group and whether they work or not, like the joy of being part of that team that just really solving something so critical and their authenticity in wanting to solve it, it's really fun.

You saw the fire in their eyes.

Yes. Yeah, I did. That was a quick one. The second time around, it was quick.

As we come up on time, we'd love to ask the hero question that we ask to all of our guests on the podcast, and we ask that this answer be in a professional context, less family members, but who is a woman that has had a profound impact on your life and your career?

I don't wanna be fake about it. There's probably not a single woman that has done it for me. It's a community of women throughout my life. 'Cause I never, I think this mentor question's always so hard for me because I could say Susan Wojcicki when I work with her at Google. Amazing. Obviously learned a lot. But then there's also like the teacher in high school in Latin where she saw this little person who was shy as a bean and said, hey, I'm gonna sit her in front of the class and give her a shot because I think she can do decent things. It's all those people together that mattered. It's, it's never been a single person, and I'm grateful for every person that's given me a chance along the way. Yeah, there are a lot of folks, but thank you for the question.

Thank you so much, Eva, for being on The Room today. It's been truly an honor and such a pleasure. Hearing about your story, I feel so energized to tackle the rest of my day and challenges ahead. Truly, thank you so much.

It's such a joy to spend time with the two of you. You're really the next generation of leaders, and I'm just so happy to be part of this, and hopefully, like, we'll stay in touch.

Absolutely.

Thank you so much for joining us at The Room Podcast. If you want more from The Room every week, subscribe to our newsletter at theroompodcast.com/newsletter. /newsletter. We'll be back next week with a new episode and inspirational guest. Tuesday, 10:00 AM Eastern, 7:00 AM Pacific. See you in the room.

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