1Mby1M Virtual Accelerator Investor Forum: With Eva Ho of Fika Ventures (Part 3)

Sramana Mitra: How do you process the current investment climate where capital is moving further and further upstream with all these larger funds wanting to invest in much larger Series A deals, how does a seed investor or entrepreneur mitigate the Series A gap? There’s clearly a Series A gap. 50,000 to 70,000 seed-stage investments and only 1,200 to 1,500 Series A’s. How do you view that phenomenon?

Eva Ho: This is a real challenge. It’s a great question. I don’t have all the answers to this. We’re watching the market dynamics change on a month-to-month and year-to-year basis. When we started Susa five years ago, the seed market was quite different. We were able to get into deals easier. Back then, we weren’t writing large checks. We were writing checks for about $250,000. We could get into a lot of deals by wanting to be in the deal.

Nowadays, since we’re playing more of a primary position and want to put in a larger check, there’s a ton of competition at the seed level. There’s a lot of funds that topped up. A lot of the big funds are also playing in the seed stage. In the past, they wouldn’t have. We’re watching those dynamics carefully. We make about 10 to 12 investments a year. We’ve had a very good record.

If you look at our first 10 investments, most of them have other well-known investors in play. We don’t believe in taking sole positions in these investments. The seed rounds have gotten bigger. They’re no longer $750,000 to a million. They’re more like $2 million to $3 million. If we put in a million, we have room for other people to be co-investors. We like to co-invest with folks that we enjoy working with.

We hope that, by having the right people around the table, the founders will have a better chance at getting a strong Series A even though the metrics of Series A keep moving up. In the past if you hit $100,000 ARR, then you’re ready for Series A. Now that bar has moved up to $150,000 to $200,000. We’re helping these companies by giving them a bit more capital to start so they have the runway to make a strong play for Series A.

Sramana Mitra: So you do seed and post-seed before the companies are ready for Series A.

Eva Ho: We have 50/50 reserves. We’re very flexible. If there’s a company where we help them raise $1.5 million and they may need $500,000 to be able to raise a Series A and we believe in them, then we’d be happy to do that extension.

Sramana Mitra: What are your parting words to our community of entrepreneurs who may be interested in working with you?

Eva Ho: We’re really excited to look at all types of entrepreneurs. My background is different from a lot of the typical investors. I grew up in Mozambique. I came over as a refugee. I grew up in a housing project in Boston. I went to school on full scholarship. My parents don’t speak in English. They’ve never sent an email.

I share that only to say that we hope that we bring a different lens to entrepreneurs from all around. Today, we don’t do global investments. We don’t know whether we ever will given that we are a small shop. We certainly are looking for investors that don’t typically look like the white male investor.

It’s not that we’re looking for specifically female investors, but we just have a broader aperture in understanding that innovation can come from lots of places and lots of types of people. We’re looking for people who are solving problems that are not just faced with the 1% of the population. We’re really excited to be in business. We’re excited to work with you.

Sramana Mitra: Thank you for your time.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Eva Ho of Fika Ventures
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