Hi there 👋 I'm Elizabeth co-founder and General Partner at Hustle Fund. AMA
I co-founded Hustle Fund, a pre-seed fund for software entrepreneurs. Previously, I was a partner at 500 Startups, where I invested in seed-stage companies and ran the Mountain View accelerator. In a prior life, I co-founded and ran an ad tech company called LaunchBit (acq .2014). Let's talk about startups, founder mindset, and more. AMA 👇
Hi Elizabeth - I think it's awesome that you have experience as a startup founder yourself. How has that experience impacted how you invest? Which role is harder - founder or investor?
@webb_knudsen1 Oh gosh - I think both are hard (with the caveat that the investor role is as an emerging VC fund manager). For both, you have to do 2 things that are particularly challenging: 1) Marketing / customer acquisition. 2) Fundraising Both are just hard activities to do. As a founder, I thought that being an investor would be way easier, but we do way more fundraising mtgs than any of our founders. And our B2B lead generation process is very similar to what I've done before as a founder. One thing that I think is a lot easier in being a VC, though, is that you don't have to manage people or as many people. And that's also really hard. For startups who get off the ground and get to scale, people management (and recruiting) becomes a real nightmare...because well people... :)
@elizabeth_yin1 great and honest answer. Thank you!
Hi Elizabeth! Thank you for starting this wonderful startup life thread. I'm always telling folks: you never lose when you launch a business. Entrepreneurship is the best personal development program out there! You tap into your brilliance... level up your skills... and build strong resilience, tenacity and persistence muscles. If the business doesn't work out, you'll try again OR you'll bring these outstanding transferrable skills to your next gig.
@andelyons Thank you, Ande and yes! Lots of ups and downs (and mostly downs), but so much personal development and growth I wouldn't trade for anything else.
Hi Elizabeth, I've been following you on Twitter and YouTube. You're awesome 😎
Great to meet you on here Elizabeth, will check out Hustle Fund.
Is there such a thing as too early? And what kind of data do you look for to asses a v early opportunity?
@robin_161 Yes - we receive a lot of applications where people just thought of the idea yesterday or thereabouts. I think there's a lot of homework that is helpful for founders to do even if they are pre-revenue and trying to pitch. Some questions that one should be able to answer: -who is your customer persona? -what is the day in a life of that person? -what problems (concretely) does that person have? -what alternatives are being used by that person? -what is he/she doing / paying to use those alternatives? -who pays for the current solution? who uses it? and how much? -how do you find 10 people of that customer persona? -what are hypotheses around where you can find 100 ppl of that customer persona? 1000? -can you pre-sell this? etc....
@fxlabs I think the biggest difference is in who is driving the car. As the founder, you're driving the car. As an investor, you're not. When I first became an investor, my mindset when I saw a business was to generally be very optimistic about most businesses. Because I saw *myself* running them and thought about how I would run them. But as an investor, you're not running anything. So, I got some hard lessons on being too optimistic about people and their abilities when I first started investing.
@elizabeth_yin1 Thats a great answer, its the people that make the company and you are essentially investing in them.
At what point should a startup stop bootstrapping?
@kirby_montgomery There's no right or wrong answer here. I think the considerations here are about what your goals are for the company, how quickly you want to grow, and how much you want to own your own destiny. Goals: If you bring in investors, since they are effectively middle(wo)men, they will need the company to be very large in order to make money. Having a large goal (billion dollar + exit) is impt for investors. You can still build a billion dollar business as a bootstrapped company, but you have more optionality to not to as well. Speed: Everyone wants to grow quickly. (in theory) But, often the best thing to do for a company is to do the same thing over and over and grow that really well instead of expanding into 5 other things with more capital. If you do want to expand into 5 other things, you need to be prepared for utter chaos and poor management. Not everyone wants that. Lastly, if you want to have complete optionality on the company and decide what kind of outcome you want, bootstrapping is the way to go. If you have investors, they may take Board seats (and be your boss) and will be able to block / have a lot of input on potential acquisitions. It's important that if you raise money that you always aligned w/ your investors so that you can control your destiny as much as possible. But there are always horror stories where ppl are not aligned and the founder ends up losing everything as a result. :( My recommendation is to raise money when you know exactly how to put it to work $1 in becomes $1.01 out. And raise from people you think you trust. If there's any sense of distrust, walk. It's not worth it.
Is there an ideal timeline for startups to go from pre-seed to seed that investors look for when deciding to invest?
@leeconstantine No hard and fast rule, but the fastest companies tend to go from product to $1m in < 1 year. More typical for good companies, $1m in < 2.5 years. So working backwards, if you raise a pre-seed at no revenue, under this timeline, you might be raising a seed in 6-12 months. But, again, there's no typical, and sometimes it takes a while to figure things out. If you have to pivot, I would say your "start time" on the idea was post-pivot and don't incl all the other time you spent on other ideas.
Thanks for doing this AMA, Elizabeth! As an investor, you must have gone through a million pitch decks and talked to many founders so what mistakes do you think they can avoid?
@5harath Haha -- too many. At this point, I've seen 30k-40k pitch decks in my career - yes. However, the big buckets of pitfalls: -sell the dream but be honest (sometimes ppl will put logos on their slides for customers or investors when they haven't closed yet); make sure it's clear between what has been done vs what you are working towards -don't dive into too many details on your deck; you can always answer investor questions in a conversation but you don't want some minutia detail to prevent you from getting a mtg; e.g. I'm raising $2m (when you'd be open to raising $500k) -- an investor just may say it's out of scope
@elizabeth_yin1 Talked to my mom just now, she is disappointed you didn't become a doctor, like your mom.
Are there any cornerstone lessons you learned as a founder that you make sure to pass onto every one of your portfolio founders?
@andygcook Ooof -- so many tough lessons! Probably the big one is around people management -- esp when you're pivoting or experimenting with a number of things. Employees feel whiplashed around, and no one likes their work thrown out, when you're pivoting or are not sure what the right direction is. Spending a lot of time communicating this framing is really important when you're pivoting for team morale sake.
Hi Elizabeth. Thanks for connecting. I think we follow each other on Twitter. What are you working on at present? Mark
@imarkphillips Building out Hustle Fund! Hustle Fund is fundamentally a company. We started with our VC firm, but we now have many other business lines run by other GMs. Our mission for the company is democratize wealth via startups by impacting capital, knowledge, and networks. We have 20 people now working on programs like Angel Squad (our angel program), Hustle Fund Scale (our late stage angel program), Redwood School (our growth school) 3 crypto initiatives, and more to come. It's fun!
Hi Elizabeth, good to see you starting it here. I am following your work for many years now, just dropping in to say Hi. :)
Hi Elizabeth, have you invested in startups in Europe? If yes how many? And if not, what is your near future plan or opinions about investing in startups based in EU (or the Nordics)? Thanks!
@denny_wong2 Yes, I've invested in European startups before. When I was at 500 Startups, it was a lot and I often went to Europe to scout. With Hustle Fund, we only have 2 companies incorporated in Europe (out of 300+ companies). Here's why so few (tl;dr US gov compliance): https://mobile.twitter.com/dunkh... I would love to do more, but we need to solve for US gov compliance a bit more at scale. Perhaps someday this is a separate European fund. We don't have a timeline for this though.
@elizabeth_yin1 Yup! read your earlier tweet around US Gov compliance. A lost for the EU startups, much opportunities still between EU-US as the EU eco-system continue to grow. Do keep up the good work in sharing your thoughts, experience and making startups investment more accessible for all!
Great to connect with you Elizabeth! I will definitely check out Hustle Fund 🚀
@edgar1 I would take a step back and think about: 1) Are you still excited about doing a startup? 2) If so, are there other problems (with the world wide open) that you are excited about solving? 3) if so, perhaps do customer development in those other areas Sometimes people need to take a break, make some money, and then get back at it. Finding product market fit is hard (and a lot of luck IMO), and sometimes you just need to reset a bit.
@elizabeth_yin1 Thanks for your answer! I will definitely get to thinking this weekend. Definitely still excited about doing a startup just need to think about everything
Elizabeth! You know I've admired you and the Hustle Fund's approach for a while. I'm curious how your strategy or process has changed since starting (and scaling!) the fund.
@rrhoover Thank you Ryan -- that's really kind! And likewise, I admire all you've built w/ this site and Weekend Fund! Because we now have a lot of portfolio companies (300+), we've had to spend a lot of time on scaling. Processes, technology, and scope. In the beginning, it was @ericbahn and I running around kinda doing everything haphazardly and working w/ our companies 1:1. That was fine when we had even say 50 companies but then it got really challenging. We now do a few things at scale: -we encourage founders to help each other on Circle and we'll weigh in too -we run programs / workshops to help a lot of ppl at once (mostly with growth via our Redwood School) -we do a lot more async; I record a ton of Loom videos that seem to address people's qs in a faster way -we hacked together our own technology platform to keep track of things in a more systematic way. Our principle Will Bricker built our triaging system to triage deals quickly and also our system for doing deals quickly. With just a few clicks, we can send out a SAFE, a clear to wire email, and collect onboarding docs for our auditors. There have been growing pains along the way esp when each of these initiatives were in it's infancy, but it's neat to get scale as a VC.
@elizabeth_yin1 appreciate you sharing. I knew you had a ton of investments but 300+ is wild!
Seeing what's happening rn in the world many American funds turn away from Russian and other post-soviet founders. Do you personally count nationality such as Russian being a red flag?
@ivandothetrick We do not hold Nationality from anywhere against a founder. We cannot invest in Russian incorporated companies.
Hi @ivandothetrick 👋 I am Moiz, founder of https://grandeur.dev. Barging in the conversation because I have been there (almost, originally based out of Pakistan). In my experience, nationality doesn't really matter (we raised from multiple US VCs). But the location of core team matters. For starters, incorporate in USA. It will open so many doors for you (particularly, if you are a global company, like targeting US users). But if you are solving a local problem (e.g. Uber of Russia), then it is actually much better to raise from local VCs. Because local VCs will help you solve a lot of regulatory problems in long run.
@elizabeth_yin1 I meant Russian founders in the US obv. Not investing in Russia-based enterprises. But I guess I got the answer. Hope to see more talents from post-soviet space in your portfolio then ✊
@moizhusnain We are the venture studio based in New York scouting at post-soviet space and trust me I've seen it all. My question here is based on experience of hundreds of founders I met in person. Post-soviet founders is highly underrepresented cohort not even recognized here as one and now it's getting even worse. I think @elizabeth_yin1 told the truth, at least the one she believes in. But I will truly believe in it when I see these talented founders among The Hustle funds deals. So far the % of founders coming from post-soviet countries getting here pre-seed funding is catastrophically low.
Thank you for having me! I think I answered everyone's questions, but if not, you can find me on Twitter @dunkhippo33 and ask there. And if you are interested in pitching Hustle Fund, please apply at hustlefund.vc
How should founders be thinking about mental health?
@bradley_miles_ This is a big topic and probably not one I can do justice to here! :) That said, I think it's impt to schedule time to rest + reflect to help with mental health (and burnout). I believe that founders should take (most) weekends off (obviously there will always be sprints). Cut back a LOT to focus on just 1-2 that matter. And also schedule in time to rest at least 1 week per qtr. It doesn't have to be a fancy vacation. Just time to think about other things and decompress. I think this helps a lot with mental health. When people are exhausted, they don't have the fortitude to overcome challenges. (This is also why depression is linked w/ lack of sleep). I'm no therapist, and I realize that all of what I just wrote above is tough to do, but I do think if founders add it to their calendar, it will force ppl to do it -- just like any other meeting.