Monday, September 27, 2021
Interview with Richard Wolpert, Acrew Capital
Our interview this morning is with Richard Wolpert, a longtime Los Angeles venture and angel investor. Wolpert has been at Accel Partners as a Venture Partner, in addition to being involved with such efforts as Amplify LA, his own startup, HelloTech, and hundreds of angel deals. We spoke to him about his move to Acrew Capital (wwww.acrewcapital.com), and got some of his thoughts on how best to get a funding deal done.
Tell us about how you ended up joining this new fund?
Richard Wolpert: I joined Accel at the end of 2006. When I joined, there were, not including the founders, two of the elder statemen of the fund, and probably only six to seven Partners. I was working closely with Theresia Gouw, Jim Breyer, Kevin Efrusy, and Andrew Braccia, plus Rich Wong and Ping Li. I felt I really was involved in the fund, and went to partner meetings, brought them Vox Media, brought Kongregate to them, which eventually sold to GameStop, and brought them John Hering from Lookout, when it was known as Flexilis. Lookout is now a long run, but it’s doing great. Accel has grown so much since I joined, I think they probably have 25 investment partners now. They have been great for me, but there’s not the same level of participation and engagement now that they’re so large. Theresa Gouw, one of the three founders of Acrew, worked closely with me from 2006 to 2013, when she left. Acrew is, age-wise, a younger fund than Accel was when I joined in 2006, and a lot smaller in terms of number of partners, roughly at the same size that Accel was when I joined. I left Accel on very good terms and let them know I was leaving at the end of last year, and stayed involved until July of this year. I got involved with Acrew last month, with August first as my official start date, and I’m on the partner calls already and contributing.
What are you looking for, as an investor? Richard Wolpert: When I was at Accel, they had a section on their website called Prepared Minds, which is a very clever way of explaining the four or five categories they focus on. When you are a popular VC firm, you can see a hundred to two hundred deals a week, so you don’t really have the time to filter through all of that every day. You have to just look at some of the categories you focus on. Obviously, if it’s a super-hot deal in a super-hot category, you might do it, so that’s not 100 percent of your deals, but as a guard rail, that’s about 80 percent of your deals. If I look at Acrew, the areas are fintech, security and infrastructure—which are Theresia and Mark Kraynak’s background. There’s Work Reimagined, which is everything around the workplace, and Data Interconnected, anything related to data, and Community Activated. Those are our core perspectives, where they are trying to do most of their deals, but that’s not going to be all their deals. Some of those are broad categories, for example, Work Reimagined. In terms of size, they can write a 500K seed check, and can also write a 10-15 million growth check. They are sort of stage agnostic, don’t have to be the lead, and are very collaborative with other friends. I am not only focused on LA, but I will certainly bring more LA deals to the team. I will be involved in all of their deals. That said, for LA, it’s good, because here’s a Silicon Valley firm that is specifically saying, while Richard is not just a Los Angeles partner, and isn’t just focused on LA companies, he can bring fast growing, LA companies to us. Another one of the Founding Partners is Vishal Lugani, who spent quite a bit of time in Los Angeles at Greycroft Partners. I was at a VC meeting this morning, with Moonshot Capital, Crosscut Capital, BAM Ventures, and all the other typical firms, and what we really are missing in Los Angeles are growth funds. There aren’t any billion dollar funds in Los Angeles. Although Acrew doesn’t have a billion yet, they most certainly will be there in two to three years, and that’s great for Los Angeles, and not just Richard. Acrew is a Silicon Valley firm with a co-founder who spent five year at Greycroft, and has a new Venture Partner also interested in SoCal.
Where are deals today, and how are people making deals happen?
Richard Wolpert: I’ll give you a metaphor. People used to say to me that the best way to run a company was to hire the best employees, and the best way to hire great employees is through referrals. The best employees always come from a referral. Although headhunters are a necessary evil, and you sometimes have to have them, the best employees come from one of your existing employees or investors saying I’ve got the right person for this. I think, as a venture capital firm, the same is true. I have been doing this now, as an individual, and with Accel, and with Mailroom Fund, for 20 plus years. I k now everyone in the space here in LA. People here don’t usually take the entire deal, and as a venture capitalist, you get referrals from past CEOs that you have backed, second time CEOs, other funds looking at a similar space, and people telling you here’s a space or a company with traction that you really need to pay attention to. One signal is, when you get a recommendation from more than one person in a relatively short period of time. I remember that with Sometris with Mailroom, which was a great exit. Three people in the same week told me to talk to this kid Ian Swanson. Of course, he’s not a kid anymore, but that was back in 2006, and three people I knew, liked, and trusted told me to talk to him. I knew, even before I met him, that I would probably invest in the deal.
So, it’s category, reference, and signal. As a startup founder, even just focusing on Los Angeles, it’s never, ever been better. It used to be you could only find friends and family funding, and maybe a little bit of Series A funding. If you didn’t make that leap—and 99 percent of the companies diden’t—you were done. Now, you have friends and family, and angels, and you have pre-seed funds. I’d consider those funds like Amplify, Dustin Rosen at Wonder, and Derrick Norton at Watertower, and even BAM Ventures, even though they took two companies public, since they were part of ZipRecruiter and Honest Company. There are also a lot of seed funds, some a little earlier, such as Mark Mullen and Jim Andelman at Bonfire Ventures, Crosscut Ventures, Fika, TenOneTen, all the people writing a half million to $2 million checks. Then you have Series A funds. The point is, as a founder, you can go to everyone from friends and family, to angels, to a pre-seed fund without a product, and then you can build up to a seed fund once you have product and Series A when you have revenue. The valuation and money you can raise is up and up and up. Twenty years ago, Series A was raising $2M to $3M, and now that’s a seed fund. Twenty years ago a Series A was valued at $10M to $20M, and that’s now a seed fund. Twenty years ago, you would raise $10M to $20M at a $40 to $50M valuation as a later stage round, and now that’s Series A. Los Angeles is now as vibrant as ever for raising money. I think we’re number three or four in the country for deals, behind Silicon Valley and New York. We’re kind of like UCLA and UC Berkeley with the Boston Area, fighting for who is bigger and better. Obviously, Austin can’t be ignored, but if you look at Los Angeles, there are more and more venture capital funds here every single year. It’s a great place for entrepreneurs, because we’re building an ecosystem, with more and more people placing money in startup founders.
So, what do you tell startups looking at all these funds why they should look for an investment from you and Acrew? What do you bring to the table?
Richard Wolpert: For founders looking to get funded, they need to understand that I’ve had four successful startups. Three I have sold, and the fourth is Hellotech, which is doing amazingly well, having handed the reigns over to Greg Stiner about three years ago—we’re partnered with Target, Walmart, Simplisafe, Amazon, and many others. So, I’m a four time, successful founder. Chance Technologies, my angel investment company, has made investments in over 100 companies. Two had a great exit this year. So, to borrow that phrase from Mark Suster at Upfront, I have really been on both sides of the table. I was also an executive at Disney from 95 to 98, and Chief Strategy Officer at RealNetworks, inventing streaming media. So, I’ve been an executive at big and really big companies, a startup founder four times, and an angel investor a hundred times, and with a venture capital firm for 16 years. I’m still part time as a founder at Amplify, too. Someone told me I was the “OG angel investor” in LA, which I like. In terms of Acrew, not only is the team great, it’s very diversity focused. If you look at the website and at the team, there’s one white guy on the entire team, and everyone else is female or a person of color. Teresia is female, and Asian, and a first generation American, and actually came here from Indonesia when she was under 10. One of their pitches, is that everyone might be talking about diversity, but this firm was funded with a focus on diversity. Plus, they have the experience, are smart, and have great connections, and it’s not just diversity on their cap table but a network to help bring diverse people on board the C-Suite and diversity to the executive team.
Thanks, and good luck!