But Tai said it's more about timing than anything else. "You have to be able to position yourself for a wave and be in the water paddling to be able to executive at the right time," said Tai on a Silicon Dragon webinar held April 3, the first in a series of, Ask A VC Anything. Known to be a pro kiteboarder, Tai likes to use the surfing analogies like catching the wave at the right time.
What does he look for when deciding to invest? Timing, market, team, technology of course. But what else?
"I invest in authenticity," he replied, meaning that he goes for founders who are passionate and committed to their business and not just in it for mercenary reasons. He credited three founders he's backed with that special ingredient: Zoom founder Eric Yuan, Canva co-founder Melanie Perkins and Treasure Data founding CEO Hiro Yoshikawa.
Often with early stage tech startups, the market need is not apparent and may not be so recognized for several years. Tai said he's worked with founders for up to seven years, coaching them while they keep the burn rate low until the timing gets better.
What's the biggest lesson Tai has learned as a VC investor over his 30-year career as a seed and angel investor? He's learned that he must trust his gut when making decisions, even if it goes against 'group think.' He recalls a time when he intuitively felt that a startup wasn't going to work but he went along with a group decision in part to keep everyone happy. He doesn't do that anymore.
Keep the burn rate low
Finally, what did Tai have to say about startups struggling to survive during the coronavirus criss?
Definitely, keep the burn rate low and concentrate on product market fit.
For VCs, this is a critical time too, he pointed out. If one startup in the portfolio is in trouble, it can tie up time and mental energy and ultimately could leave to friction within partnerships.
Typically though, investing during down times has turned out to be fruitful for VCs because valuations are lower and entrepreneurs more earnest and determined about reaching their goals.
For more tips from VC supremo Bill Tai, check out Silicon Dragon's on demand recording of the 1-hour long webinar. Email events@silicondragonventures.com for more info.
Next Webinar: April 9
Join us April 9, 11am-noon for our next Ask A VC Anything: Brian Cohen, 1st investor in Pinterest and chairman emeritus, NY Angels.
Sign up here: https://zoomwithvcbriancohen.eventbrite.com
