Each week on The Cap Table (TCT) we highlight investors, operators, founders, and industry leaders in the private markets to share their tribal knowledge of how to get onto “the cap table.” Know someone we should feature? Let us know here!
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TCT Rising Star Badge: Investor
We're thrilled to announce this week's exclusive with Shomik Ghosh, Principal at Boldstart Ventures! Always reading & sharing the latest and greatest when it comes to the technical aspects of Enterprise Software, he's been coined a TCT Rising Star: Investor by TCT! He's also an active Angel Investor (Logixboard, Koyfin, Interview Schedule, amongst others), with experience on the cap table as an institutional and angel investor. We discussed:
How he assesses and measures founders' hustle 👁
His secret sources for learning everything SaaS 📚
Angel investing advice 👼🏼
Cap Table advice ⺇
The state of Enterprise Software in 2030 🔮
TCT: Thanks for sitting down with us, Shomik. Let's jump in.
How did you start out with regards to your career? What gravitated you towards making a switch to venture capital?
I actually started my career in debt capital markets at a bank called PNC, so I was as far away from tech as possible. In Pittsburgh at the time, there weren't a whole lot of startups, and I was mostly involved with loans and bonds of energy and healthcare companies. Facebook had just IPO'd around that time, though, and I got interested in how investors were valuing the company. That interest drove me to come out to San Francisco and dive into tech investment banking to learn more about how to value tech companies. From there, I quickly learned about startups and eventually found my way to venture capital.
I had always thought I wanted to join a value-oriented hedge fund because I had read The Intelligent Investor by Ben Graham and studied all of Warren Buffett's shareholder letters. However, venture capitalists told me that instead of studying 5-10 business per year, at a VC fund, I could study hundreds of companies and see the formation of competitive advantages in real-time. That made me dive into VC full time, and I haven't looked back since.
In the meantime, as I was prepping for hedge funds, I was studying a lot of enterprise software and particularly infrastructure companies. I was attracted to the mission-critical nature of the products and the attractive economics of the businesses. In order to learn more about what products were truly mission-critical, I started reading engineering blog posts from companies and going deeper and deeper down the infrastructure rabbit hole :)
You joined Boldstart Ventures as a Principal in November of 2019, a new role for you (previously served as an Associate). What does the Principal role entail? What's been the biggest learning curve to date?
It depends on the firm, but in my experience, Analyst -> Principal is all sort of a similar role. A majority of our investments at Boldstart are in pre-product companies, so we are truly day one partners with our founders. Given this dynamic, as an early-stage VC, my job is to be a central node of a network that can benefit our founders. So in effect, my job is to know advisors, investors, talent, customers, and media so that I can be in the best position to augment our founders. What that entails is talking to a lot of people, reading, and connecting dots.
For example, if I read a good blog post from Superhuman about speed and then hear in a board meeting for one of our companies that they're trying to understand tradeoffs between speed and new features, I can first send that blog post and then offer to connect them to the best contact at Superhuman to help think through that problem. In some cases, I can offer advice myself from what I've seen at previous companies or from studying public companies, but it's always best, in my opinion, to connect actual practitioners to talk through specifics.
There's a constant learning curve in early-stage investing, which is what makes it so fun and challenging. There are problems you haven't seen before and new stages for companies in different verticals. Some patterns and foundations match, and you can leverage those to help, but there's also always new stuff popping up in each instance at each phase shift in the company. The biggest learning curve for me, in particular, has been learning how to talk to F500 CXOs about their needs and being able to synthesize that to find startups or just resources that could help them out.
Boldstart is a first check investor for Enterprise founders. You note on your LinkedIn that your job is to back founders with conviction and hustle. How do you assess and measure hustle for Enterprise founders (including soon-to-be founders)?
At the pre-product, day one stage where we invest at Boldstart, we are evaluating the founders on their opinionated views of the product, differentiation in approach and underlying architecture that allows for barriers to entry, and how that translates into affecting business outcomes for customers. That may all seem nebulous, and certainly, there's a decent amount of art and luck to it, but there's also some science.
Every year, I reread Balaji Srinivasan's startup engineering lecture at Stanford called "The Idea Maze". In simplistic terms, it's a framework to understand how deeply someone has thought through an idea. The founders with "hustle" will have made their way through the maze, usually over a few years.
For example, a few of our founders have started robust communities around topics and explored the problem space for a long time before launching a company. The goal wasn't to start a company per se; it was more to help solve this problem and then realizing the only way to solve it was to do it themselves. Several other founders have invested significant money or time in projects before deciding that it was the right time to start a company.
This is hustle, and we measure it by hearing the founders' stories of how they met their co-founders, how they started the company, why they started the company, who they've talked with, what wireframes do they have if pre-product, etc. Notice that most of this is actually occurring when they're "to-be founders" because, by the time they're founders, they've been through the idea maze.
You're seemingly always at the forefront of the technical aspects of Enterprise SaaS, with an engineer leader-like mindset around infrastructure, DevOps, etc. What's your secret for learning and absorbing these concepts?
It's weird because I didn't start diving into infrastructure and technical components immediately.
First, I started off loving studying business models (not necessarily for investing but just reading about them and learning what made them work). That led me to mission-critical products like towers for telecom, credit rating agencies for bonds, payment rails for fintech, and finally, software infrastructure. What's interesting about all these is there are common frameworks that can be drawn throughout these products in completely different industries. From there, I dived deeper into infrastructure really in order to tease out what was truly mission-critical vs. nice to have.
My go-to resource is always talking to friends or acquaintances that have expertise in a certain area. From there, I just ingest a lot of podcasts, YouTube videos, articles, and engineering blog posts. In the back of my mind, I usually hold a few key concepts. An example of one is that software is mainly solving a human coordination problem, so I'm always looking through the lens of how does this tech help solve and accommodate that. I've now started using Roam Research to document all the things I've read to create a sort of graph knowledge database where the learnings can build on top of each other.
Some particular content that has been helpful to me has been:
Garth Rushgrove’s DevOps Weekly
Justin Gage’s Technically
Grant Miller’s EnterpriseReady
Jeff Meyerson’s Software Engineering Daily
My colleague Ed Sim’s What’s Hot in Enterprise
Patrick O’Shaughnessy’s Invest Like the Best
Dropbox Eng Blog
Segment Eng Blog
Stripe Eng Blog
...and of course , The Cap Table!
What are the areas of Enterprise Software that you're most excited about from a growth perspective?
Honestly, it's hard to know until a special founder shows us the vision for a product. That being said, we continue to focus on developer productivity as F500 companies are increasingly becoming software companies. At Boldstart, we joke that almost every F500 now has websites that are "developer.fortune500.com". So dev tooling will only continue to grow in importance as these companies become more agile and cloud friendly.
Another thesis we are particularly excited about is GitOps applied across all business units. Version control dramatically changed software development, and before that, dramatically changed productivity & modeling with excel. Now this concept can be applied across data, APIs, HR, Finance, Sales, etc. Being able to roll back and see inputs and metrics associated with that point in time offers a lot of value. There's plenty more that we have in mind, but in general, we keep a flexible mind as founders will show us the way.
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The year is 2030. What's the state of Enterprise Software?
I talked about this earlier in the interview, but I am highly excited about large enterprises continuing to adopt software to enable key business outcomes. What's even more interesting about this trend is the new business models and pricing models that are widely becoming more understood. With enterprises now allowing more "bring your tools to work" in a cloud-native world, the business model and distribution of software is changing.
At Boldstart, we like to talk about the sandwich model.
Whether you approach the market with a top-down salesforce or with a bottoms-up product-led adoption model first, I believe all software companies will need to be comfortable in the end with the hybrid model. The consumerization of IT means buyers and users (which in many cases are not the same) all need to be happy with the product and actually engage with it. In fact, ARR is widely known to be an important metric, but increasingly, retention combined with product usage/engagement are equal if not more important metrics to track. If engagement starts slipping, customers may churn regardless if the CTO believes this product is the best thing since sliced bread. On the flip side, if you've created a product that developers love but don't show the business value to the managers and buyers, then the company is unlikely to get much traction.
Dashboards, reporting, best practices, are increasingly becoming key differentiators to product-led models to engage the key personas who may not be using the product daily. These models are still fairly new, though, and being iterated on, especially with open source commercial businesses becoming more prevalent. I'm excited to see what this helps unlock in 10 years. Progress in business cycles usually oscillates between technology innovation and financial innovation. Cloud software was a huge technical shift, but part of the driver was the financial innovation in bringing recurring subscription sales to software (no more large one-time purchases) and removing capital expenditures from the customer's balance sheet (improving free cash flow).
The sandwich model still has a lot of maturing to do but is a similar go-to-market innovation that should unlock a steady stream of new & exciting software businesses for some time to come.
Do you have any mentors? If so, how has this contributed to your success to date?
I have had plenty of mentors over my career. I would say the constant has been my parents. My dad has been a long term investor since the day he came from India without even knowing what "investing" was. My mom has this innate ability to make anyone feel at home. I'm constantly learning from them. However, at Boldstart, I am fortunate to work with some amazing colleagues who all teach me different things, and additionally, I learn a lot from our founders as well. I could not ask to be in a better position to continuously learn from some of the smartest people that are compounding their knowledge as well.
You're also an active angel investor (Koyfin, Interview Schedule, and Logixboard, to name a few). How did you get into angel investing? Have you made any recent angel investment you can share?
I'm a big fan of angel investing. These days on Twitter, there are all sorts of discussions going around about the minimum check size that angels should commit. That is frankly ridiculous in my mind. Angel investors will be some of the hardest working investors on the cap table, even for small check sizes. Many of them are not doing it for the financial gain. They believe in the company but also are usually risking an amount that they could lose all of and hopefully still be ok. Angels are missionaries through and through. Part of the reason we at Boldstart like doing pre-product, first check to invest so much is a similar dynamic. You're partners from literally day one, and we highly value the angels that we are fortunate enough to invest alongside.
The way that I got into angel investing was literally just investing whatever I could at the time into founders that I knew very well, such as friends from college. The benefit I get from this is being able to share in their ups and downs and also be even more incentivized to help in any way I can. Unfortunately, with my day job, I don't really have as much time to devote to angel investments as before, so I haven't made any new ones recently, but who knows when a friend will start something next!
As an angel investor, what's the biggest cap table "mistake"?
I think it basically boils down to two mistakes.
One is just the mistake of omission. When you find a founder(s) that you believe in, not only is the financial reward asymmetric (you can only lose what you invest and make much more), but also the same goes for the participation in the company. Jeff Bezos is famous for his regret minimization framework, and mistakes of omission are exactly those. You don't want to regret not investing in a founder you truly believed in.
The second is a mistake in terms of diligence on the person. This is why I stress knowing the founders well if you can. Venture and angel investing is a people business. Products change, company strategy pivots, but the core people usually stay the same. You want to avoid a scenario where you made a mistake by investing in someone who was not high integrity because that will haunt you for life.
As an angel investor, what's your secret for getting on the cap table?
Again, for me, I've mostly backed close friends who I've known for a long time. However, when I have angel invested in others, it's normally because I've been an avid user of the product or have some sort of expertise or passion about that area. This visibly comes through in the interactions with the founders. When that is the case, the founders themselves also get caught up in the energy and want to work with you. So regardless, even if it's an oversubscribed round, they'll make sure to find room for you since they know you are going to be a huge champion of the product. The other way to go about it is to be close friends with other angels that you respect. Hopefully, they know your areas of competency well and will tap you on the shoulder when they find an investment that would be a good fit.
Thank you for your time and thoughts, Shomik. We look forward to the continued success of you, Boldstart Ventures, and the various organizations you're a part of!
Follow Shomik on Twitter (@shomikghosh21) for more insights into Enterprise SaaS, VCs, startups, and more!
Deal News 7/25-7/31
Tire Agent raises $5,000,000, led by American Family Ventures | Tire Agent is an online tire retailer that makes the tire shopping experience more personalized, accessible, and affordable.
WhizAI raises $4,000,000, led by Healthy Ventures | Cognitive Insights For Life Sciences | Fast, Easy and Contextual -- Everything BI Was Supposed to Be
Altis Biosystems raises $3,100,000, led by VentureSouth | Altis Biosystems is a biotechnology company developing research tools for the pharma and biotech industries.
LOOM raises $3,000,000, led by Slow Ventures | LOOM is a well-being brand empowering women through reproductive and sexual health education.
Grubbly Farms raises $2,900,000, led by Overline VC | Grubbly Farms - Recycling the Past to Feed the Future.
Epic CleanTec raises $2,600,000 | Epic CleanTec is decentralizing wastewater treatment and reuse into individual buildings or groups of buildings.
Injective Protocol raises $2,600,000, led by Pantera Capital | Injective Protocol is a front-running resistant, layer-2 exchange protocol.
Paragon raises $2,500,000 | Paragon is a low-code platform that makes it easy to build product integrations and deliver the features your customers want, faster.
New Age Meats raises $2,000,000, led by TECHU | New Age Meats is a biotechnology company that develops healthy cultivated meat grown from animal cells instead of animal slaughter.
MBX Biosciences raises $34,600,000, led by Frazier Healthcare Partners | MBX Biosciences is a preclinical-stage biotech company that creates therapies to treat rare endocrine diseases.
Mantra Bio raises $25,000,000, led by 8VC, Viking Global Investors | Mantra Bio is the creator of REVEAL, an exosome engineering platform combining computational biology and lab automation.
Ermetic raises $17,250,000, led by Accel | Enabling enterprises to protect identities and data in the cloud by powering access policy definition and enforcement at scale.
RangeForce raises $16,000,000, led by Energy Impact Partners | The world's most comprehensive cybersecurity simulation & skills training platform for SOC, DevOps, AppSec teams.
Wyze Labs raises $15,000,000, led by Norwest Venture Partners | Wyze Labs is a smart home device company that aims to make smart home tech accessible to everyone.
Whistic raises $12,000,000, led by Emergence | Whistic enables users to conduct and respond to security reviews on a single platform to grow with their needs.
Move raises $10,000,000, led by | A Brand New Supermarket
Cover Technologies raises $10,000,000, led by Founders Fund, Lennar Corporation | Cover’s mission is to make living in a thoughtfully designed and well-built home a reality for everyone.
KloudGin raises $8,200,000, led by Cloud Apps Capital Partners | KloudGin is a combined one-cloud industry-focused field service and asset management solution that automates work management processes.
Hevo Data raises $8,000,000, led by Lachy Groom, Qualgro VC | Hevo Data is an automated Unified Data Platform that helps companies understand their Users and Customers Better.
AstrumU, Inc. raises $7,650,000, led by Kingdom Capital | AstrumU is a translating educational experience into economic opportunity!
boostr raises $7,000,000, led by Vocap Partners | boostr is a CRM and order management platform designed for the media & advertising industry.
Immertec raises $6,000,000, led by Benvolio Group | Immertec is a real-time virtual observation platform for remote, fully-immersive surgical and medical training.
StreamLayer raises $4,000,000, led by KB Partners | StreamLayer is an online media platform that develops interactive viewing experience for mobile video services.
Thrive Earlier Detection raises $257,000,000, led by Casdin Capital, Section 32 | Thrive is a healthcare company focused on saving lives by making earlier detection of cancer a routine part of medical care.
Geltor raises $91,300,000, led by CPT Capital | Geltor is a bio-design company that makes proteins used in beauty, food, & beverage products like collagen and elastin, but without animals.
Tempo raises $60,000,000, led by General Catalyst, Norwest Venture Partners | Tempo is a home fitness platform, combining equipment, training guidance, and social motivation with 3D sensors and artificial intelligence.
True Link Financial raises $35,000,000, led by Centana Growth Partners, Khosla Ventures | True Link is a diversified financial services firm dedicated to providing services for at-risk demographics such as the elderly and disabled
Lemonaid Health raises $33,000,000, led by Olive Tree Ventures | Lemonaid Health is a direct-to-consumer primary care platform that uses technology to change the way people interact with health care.
Instrumental raises $20,000,000, led by Canaan Partners | Ship hardware products on time with high-resolution manufacturing data.
AI Foundation raises $17,000,000, led by Mousse Partners, You & Mr Jones Brandtech Ventures | AI Foundation develops sustainable AI which aims to move humanity forward through the power of decentralized, trusted, and personal AI.
OpenSpace raises $16,000,000, led by Menlo Ventures | OpenSpace offers photo documentation which is automatically pinned to plan location with AI.
JetClosing raises $9,000,000, led by T. Rowe Price | JetClosing is a digital real estate title and escrow company that aims to create a modern and user-friendly real estate closing experience.
Polyarc raises $9,000,000, led by Hiro Capital | Polyarc is a Seattle based creative studio building new and original worlds through the visual and interactive magic of virtual reality.
Covr Financial Technologies raises $7,500,000, led by | Multi-carrier digital life insurance platform that is white-labeled and distributed through financial institutions.
Ro raises $200,000,000, led by General Catalyst | Ro is a telehealth startup that operates digital health clinics for men and women along with smoking cessation.
Sema4 raises $121,000,000, led by BlackRock | Sema4 is a patient-centered predictive health company and a leader in diagnostic testing.
Density raises $51,000,000, led by Kleiner Perkins | Density builds the technical infrastructure for cities, buildings, and spaces to measure how they're used.
Chorus.ai raises $45,000,000, led by Georgian Partners | Chorus.ai is an AI conversation intelligence cloud platform for sales team that can transform conversations into data and insights.
ClimaCell raises $23,000,000, led by Pitango Venture Capital, Square Peg Capital | Powering Actionable Weather Insights Around the World: helping people manage weather-related challenges with the best information & insights
Alydia Health raises $13,900,000, led by AXA Investment Managers | Alydia Health is a medical device company.
Heal raises $100,000,000, led by Humana | Heal offers house calls and video appointments with doctors for primary care, as well as digital monitoring and telepsychology services.
Guideline raises $80,000,000, led by Generation Investment Management, Greyhound Capital | Guideline is an all-inclusive 401(k) and full-stack solution that automates plan administration and compliance to growing businesses.
BioTheryX raises $35,000,000, led by MSD Partners | BioTheryX focuses on the development of therapies for hematological malignancies.
Stack Overflow raises $85,000,000, led by GIC | Stack Overflow is a platform for developers and programmers to write the script for the future.
Eargo raises $71,000,000, led by Gilde Healthcare, Longitude Capital | Eargo makes direct-to-consumer hearing aids, allowing customers to access help for their hearing loss from their homes.
Remitly raises $85,000,000, led by PayU | Remitly is a mobile payments service that enables users to make person-to-person international money transfers.
Sources: Crunchbase, LinkedIn, Twitter
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