Did you make angel investments before you launched Homebrew? How is that different from seed investing at a VC firm?
My cofounder Hunter Walk and I both made angel investments before starting Homebrew. The biggest difference is that when you're investing your own money versus other people's money, you don't have to abide by a certain strategy or particular rules. For example, we’ve made several angel investments strictly based on our relationships with founders. But that wouldn't be the only criteria as professional money managers, which is what VCs are.
How do you learn about markets and/or consumer behavior you're not already familiar with, or products for which you’re not the target market?
One of the most gratifying and challenging parts of being a VC is that you should always be learning. We try to learn in several different ways. First, we learn from successful founders and look where there is new innovation in areas we haven’t considered. Second, we do primary and secondary research. We also learn from expert investors in specific areas where we don't have deep prior experience (like hardware or healthcare). Finally, we publish, give talks, and host small dinners where we get feedback and insights that educate us.
What did you learn by coming at investing from a large tech company as opposed to being a founder?
We learned so much across our experiences at Google, YouTube, and Twitter, but the most important parts were about people: we learned what great talent looks like and how to hire it. We learned what traits make good and poor managers. We learned the value of company culture. I think those experiences informed what we look for in companies. Along with product and go-to-market, we regard people and organizational design as one of the critical pillars of company success.
Would you recommend coming from a large tech company?
[Regardless of size, it’s best to] be a part of a fast-growing technology company with a mission and team that you're excited about. You can learn a lot from failure but there’s nothing that can replace the muscle memory built from having extraordinary success. When you're early in your career, the mentors and network at a larger company can have incredible long-term benefits. We wouldn't be where we are today without our experience and the people who bet on us early.
Do you have any advice for aspiring investors who don’t have a founder background?
Being a founder isn't a required path to becoming an investor, but having empathy for founders and being able to counsel them effectively is. Ultimately, the best way of learning those skills is by being close to founders in some way. You can work with them at the growth or later stages, invest in them as an angel, or see others mentor via apprenticeship with experienced VCs.
What’s one thing about venture capital that surprises you–something that you didn’t expect before you started investing?
Because we're exclusively seed stage focused, I will say that I've been a bit surprised by how much cooperation there is. Because institutional seed VC is relatively new, I think more investors approach it with a "grow the pie" attitude than the VCs at more established funds.
What kind of companies are you interested in backing? What founder should email you today?
We back fantastic teams going after problems that fit our Bottom Up Economy thesis. These founders are solving a problem that is deeply personal to them. The pain that's being addressed should be acutely felt by a large population of people who are willing to pay to have it addressed. And the product should do one thing incredibly well for one type of user right now, but have the potential to deepen and broaden over time. Specific areas we're interested in include mortgage, insurance, agriculture, and skills/workforce training.
Homebrew has a higher percentage of female founders than many peers. Why? What could your peers do better?
Thirty percent of our companies are founded or co-founded by women. We approach all investments with an open mind, but with a focus on the founders and what makes them special. For example, many investors looked at Carly and Danielle (of theSkimm) and saw two women who had never worked in tech or started a company with a "cutesy" email newsletter. We saw two women who loved news, saw why it was failing a huge audience, and who were building a media company that helped people be smarter about the world.
We've both also had incredible experiences working with women at all levels. We worked for a female VP at Google, hired female PMs, and worked closely with female execs. We get referred to female founders quite often, and now we have a portfolio of female founders who can talk about us as board members. None of that would matter if we didn't approach investment opportunities with an open mind.
Our peers could do better by not dismissing ideas because they're "not the target customer" or because the founders don't have CS degrees from Stanford. Investors should be working their networks hard to get referred to female founders. It's matter of priority and effort.
Do you feel you still have representation gaps in your portfolio? How are you addressing them?
We still have a huge underrepresented minority gap in our portfolio. We're not proud of it, and working to fix it. We have open office hours, volunteer time to organizations focused on introducing them to tech, and we're building our networks to get more of those founders referred to us. We just signed a term sheet with an underrepresented minority founder building an awesome company in fintech, but we have a lot of work to do there.