1Mby1M Virtual Accelerator Investor Forum: With Zain Jaffer, Partner at Blue Field Capital (Part 4)

Sramana Mitra: What check size do you write?

Zain Jaffer: Overall, $750,000. We started with a $300,000 and followed on with $450,000. Sometimes we can do million dollars plus between seed and follow-on.

Sramana Mitra: This is a wonderful case study. What else are you excited about?

Zain Jaffer: I’ll give you another case study. This is an anti-case study. Sometimes VCs don’t know what they’re doing. They come up with all of these criteria. When the rubber meets the road, everything goes out the window. This is an investment I made before I set up my VC fund.

We have a rule in our fund. We only do pre-Seed to pre-Series A. For us, late-stage is north of a $20 million valuation. I like the $5 million to $15 million valuation. We don’t like hardware. I made a personal investment called Boxable which is a prefab modular home. I didn’t have any criteria. Talking to this founder, he had so much passion. I invested at around $40 million valuation.

We looked at my VC fund and we passed on it because it was too late stage and it had hardware. Our thesis is if you invest early stage, you’ll get insane returns. This startup has been crushing it. Their most recent round was at $3.3 billion. I only invested 18 months now. It’s been a 70x return for me. We passed on it because we had to have a focus. How wrong were we? The strength of the founder was the only thing that mattered.

Sramana Mitra: I actually think that the criteria for your fund is correct. You got lucky with Boxable. For a smaller fund, trying to play that late-stage game usually doesn’t pan out.

Zain Jaffer: When I’m making an angel investment, I just want to feel good and I don’t want to do too much work on it. As a VC fund, you have to go to LPs and get money from them. They’re going to ask you for your strategy. If we had invested in Boxable, it would have been a stupid decision. It’s much easier to see a 100x return when you’re investing at a $5 million valuation than on a $50 million valuation.

Some companies are putting their treasury in Bitcoin. I appreciate it, but that’s not what your shareholders are paying you to do. At one point, we had $100 million. We were thinking about where to park it. I was like, “Can we just put it in some Facebook co-options?” My company would have made billions of dollars with that, but I would have been fired because we are not a hedge fund. My job is to run a company. If you go out of that focus, you’re breaching your fiduciary duties.

Sramana Mitra: If you translate that same thinking to entrepreneurs, you have to focus. Not having focus and organizing principles in your thinking doesn’t build good companies.

Zain Jaffer: If your pivot is not working, return the money unless your investors were on board with your pivot.

Sramana Mitra: It was a pleasure. Thank you for your time.

This segment is part 4 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Zain Jaffer, Partner at Blue Field Capital
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