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Fiscalnote & Government Transparency

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At NEA, I work actively with around 10 of our portfolio companies and passively with a few others.  In every one of those cases, I’m the youngest guy in the room.  Except in the case of Fiscalnote, where I very well may be the oldest.

When I first met founder Tim Hwang, I felt like I was looking in a mirror.  He reminded me of an East Asian version of myself.  He had the same tendencies and quirks I do: habit of trying to fit 2 minutes worth of information into 1 minute, avoiding the question of age until asked point blank, the occasional forgetfulness of when we had met certain people (in his case, he guaranteed he had met me at least 2 times before but I am willing to bet $ that we had never met), even the same thick glasses that signify way too much time in front of screens…

But that’s where the similarities end.  For example:

  • Tim, now 21 but then a teenager, was the youngest elected school board member for the largest school district in Maryland receiving 70,000 votes through via a voter targeting strategy he learned while working for the Obama Campaign.
  • Tim founded the National Youth Association which represents 750,000 youth in the US and played a large role in helping those under the age of 26 stay on their parent’s health insurance plan in Obamacare.

Somehow, Tim also is the CEO of Fiscalnote, a real time government analysis platform.  Fiscalnote aggregates and analyzes speeches, court cases, and existing government legislation at all levels: local, state, and federal.  The talented, but young, team has built a number of algorithms to predict whether new legislation will pass and have back-tested it to over a 99% accuracy rate.  Fortune 1000 companies all the way down to restaurant owners now have an easy way to figure out what legislation does or may affect their business.  Effectively, they are trying to make a very important part of government transparent.  We recently closed a round with Mark Cuban and a few others.   Fiscalnote also happens to be the first startup I’ve heard of that is moving out of Silicon Valley and to DC!

I’m thrilled to be an investor and can’t wait to watch this unfold.

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Written by sheeltyle

September 30, 2013 at 11:29 am

CrowdMed & NEA

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“In 2003, an 18 year old girl got very sick. Without any warning or apparent cause, she fell into a deep depression. She had to drop out of college. She would sleep 14 hours a day, too fatigued to do anything when awake but watch TV. She gained 50 pounds of weight and woke up several times a night with nightmares, soaked in cold sweat. Eventually suicidal thoughts entered her mind. She asked her mother to sleep in bed with her so she wouldn’t hurt herself.  That girl is my sister, Carly.” 

“Over the next several years, our parents brought Carly to 16 different medical specialists and racked up over $100,000 in medical bills, desperately seeking a diagnosis. Each doctor would treat her symptoms as best they could, but none could identify the root cause of her illness. We’d later discover that her disease affects just 1 in 15,000 females. Her doctors had never heard of it, much less seen it.”

This is the story that Jared Heymans,  CEO of CrowdMed, months ago told me.  There was so much wrong with Carly’s situation: the time it took to receive a correct diagnosis, the exorbitant costs of gratuitous visits,  the damage from misdiagnosis and mistreatment.  Parts of these issues are endemic to the American healthcare system (i.e. costs), but others can strike anywhere (i.e. the misdiagnosis, especially due to her rare condition). For example, rare diseases affect 25 million people in the US and 350 million people worldwide, yet they are often just as misdiagnosed as more common diseases because of medicine’s pronounced 80/20 rule.

At Bessemer, my colleagues invested in Crowdflower, a company that helps contributors complete microtasks via their crowd of people; and I have always been impressed with Mechanical Turk, LiveOps, and other crowdsourcing companies.  So when Jared told me that “the wisdom of the crowd” might also be applied to rare diseases, I was intrigued.  And when his vision became CrowdMed, I couldn’t wait to invest.

Jared and his team have built a platform that empowers patients struggling with their ailments—many of whom have “tried everything” but can’t get the right diagnosis—post their symptoms and history on CrowdMed for a small fee (~$199 for now).  Then, a team of MDs (note: Medical Detectives, many of whom are NOT Medical Doctors) scours the web, literature, and other sources to derive probabilities for potential diagnoses.

So far, this model has worked pretty well.  In fact, dozens of cases have been solved on the platform– some, in as early as three days.

These are cases, and  stories, like Carly’s.  Hers was the first case solved on CrowdMed, and it took 3 days.

I entered venture capital because I wanted help build businesses that, if they worked, changed people’s lives for the better.  CrowdMed is the epitome of that promise.  I’m thrilled to be both a personal investor as well as a professional partner through NEA’s recent investment.

Written by sheeltyle

August 13, 2013 at 10:10 pm

NEA India CEO Summit – Lessons from the Founder of Naukri

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Last week, I traveled to Mumbai for NEA’s India CEO summit.  We brought together a number of our CEOs who are either based in India or are directly playing in the Indian market.  We also had two speakers: the former Chairman of SEBI (India’s version of the SEC) and Sanjeev Bikhchandani, the founder/Vice Chairman of Naukri, India’s first public internet company.

Naukri, an Indian job listing site, has a remarkable story.  Unlike many companies in the west, Sanjeev wasn’t used to the notion of spending for growth and taking a short term loss to set the company up to make a long term, larger profit.  Eventually, he was convinced that in his situation, because he hadn’t yet turned on any marketing channels, there was a reasonable line of sight to spend short term dollars for long term gains.  The company raised $2 million from ICICI Ventures and the timing was perfect: a few weeks later, the dot com bubble crashed and the venture markets dried up.  Naukri then had a loss for two years before getting back into the black, after which it effectively doubled profit year over year.  Today, it is a public company (under the holding company InfoEdge) and is on a run rate of 120 crores in profit this year, or $24 million.

He gave an inspiring talk with unique pointers to our team of CEOs.  I took some notes and wanted to post them here:

  • Every once in a while, a business or sector will have tailwinds.  Recognize them, use them, and exploit them.
  • The best businesses are built on deep customer insight.
  • The question that you must ask yourself is: are you solving an unsolved problem?
  • The best CEOs are those who are able to build trust across the table.  That could be to customers, to partners, to investors, or employees.  It doesn’t matter.
  • Share recognition, power, and wealth with your best employees.  Sometimes, you may have to dig into your own ESOP pool to make that happen.  Your employees are not working for the company, they are working for you.
  • Create convergence of interest, not conflict of interest.
  • Often superior corporate governance gets a 25-28% premium.  That means transparency, disclosure of full financial statements (not required in India), and can even mean a non-executive chairman.
  • People get hooked to freedom more than to compensation.
  • Once again, give massive, massive ESOPs to the right people.
  • It’s always a collective decision when things go bad.  Rally the troops together and don’t put the blame on someone.
  • Hire for commitment, character, and competence.
  • The way to beat western companies is to be more customer driven than competitor focused.  Plus, US companies are often scared of headcount.  If you have better customer insight and an army of people, you’re tough to beat.

In the middle of his talk, Sanjeev told a story that brings together a lot of his advice on recognition, aligning incentives, and creating a convergence of interest.  During his tenure, he wanted to increase the salaries of his best people during a rough patch for the company.  He went to Bala Deshpande, now an NEA Partner but at the time at ICICI Ventures, who initially disagreed with his proposal, until he offered to cut his own pay.  She then agreed, but also gave him a separate incentive: if sales were above a certain number, he would receive a bonus equivalent to a percentage of the sales.  He told the rest of the team about this plan, who then volunteered to cut their salaries by 30% (instead of having them raised!) and also participate in the variable sales incentive plan.  Suddenly, everyone was aligned to drive the company forward and a year later, the team crushed their goals and everyone made significantly more money than they could have under their original plan.

These aren’t principles that will work only in India, or in Asia, or in emerging markets.  Rather, they feel like universal principles and universal values that can apply to any time of business anywhere.

Written by sheeltyle

November 7, 2012 at 7:17 pm

S2 Capital

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About a year ago, my close friend Sejal & I made a series of repeated observations.  In particular, we saw talented, enterprising young people building high-impact businesses around the world but not attaining VC funding— growing interesting, innovative ventures exhibiting tremendous promise and already creating measurable social value, but struggling to find the growth capital they needed. These companies interested us because they generated both IRR (although generally lower than what a typical investor looks for) and social ROI. And so we decided to support them.

We’re thrilled to announce the launch of S2 Capital, a private social seed fund not affiliated with any venture capital firm.  In our spare time, Sejal & I look for and support these young people creating products or services that are changing lives.  We invest up to $30,000 in each company in a mix of debt and equity instruments.  We’ve invested in three cutting edge companies, have formed a partnership with Ashoka Japan to support young entrepreneurs in the Tokohu nuclear disaster region, and are close to closing a fifth investment, this time in Ghana.  Our Current Portfolio:

1) Skydrop Enterprises (Kenya) – Founded by Joel Mwale, currently 20 years old, Skydrop Enterprises is a producer and bottler of low-cost purified drinking water, milk and other dairy products, and canned fruit products in Kenya. Founded in December 2009, Skybox now employs 20+ staff members and serves a community of more than 2 million people in Kenya and Uganda. The company is expanding its operations across Africa and is on track to sell a million water bottles in 2012.

2) AYZH (India) – Founded by Zubaida Bai, AYZH is a for-profit social venture providing health and livelihood solutions to impoverished women worldwide. In 2010, AYZH launched its first product, JANMA, a clean birth kit, which provides women all the components recommended by the World Health Organization for a safe and hygienic birth, using environmentally friendly and culturally appealing materials. Additional products under development include: a newborn kit, a post partum hemorrhage kit, and a groundbreaking sanitation and hygiene solution for women.

3) Angels Finance Cooperation (Uganda) – Founded by George Bakka Wilson, AFC is a business incubator, accelerator, and investment vehicle for youth in Uganda. AFC houses the Mara Launchpad, Angels Ventures, and other initiatives to directly mentor and spur initiatives that emerge out of their programs.

Check out our website for more!  www.s2cap.com

Written by sheeltyle

October 16, 2012 at 5:27 am

LearnUp & NEA

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In the oasis that is Silicon Valley, it is often forgotten that the USA isn’t a place where your employees are constantly being poached by other employers who offer more lucrative compensation packages and growth opportunities.  As this Wired piece on LearnUp states, the USA is really a place where “the unemployment rate has shot above the national average, employers are flooded with applicants, and education must result in immediately marketable skills”.  But the USA is also a place where there are many job openings that aren’t getting filled.

Enter LearnUp, a startup building a platform where employers can create video content, tutorials, links to certifications, and other resources for applicants to get highly relevant, targeted vocational training for open positions.  For example, Staples’ trainings for a manager position include a YouTube tutorial on QuickBooks, a Harvard Business School “Working Knowledge” article on “Making the Move to General Manager,” a Buzzle.com article on “Retail Store Management Tips,” and a TED talk on the “Eight Secrets of Success.”

We at NEA are excited to partner with Alexis Ringwald, CEO of LearnUp and a good friend, and Kenny Ma to help launch a company that solves the skills gap that exists between many employers and job applicants.  As Alexis says in the Wired piece, “We’re not launching a start-up, we’re launching a movement.  We’re on a mission to re-skill America.”

Decreasing unemployment, one position at a time.

This Wired article is terrific and was the source of some of the above content.  

Written by sheeltyle

August 27, 2012 at 10:26 pm

An Unreasonable Group

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I spent the past week in Boulder, Colorado at the Unreasonable Institute.  It’s a six week incubator, an accelerator, and a one-of-a-kind life-changing experience for some of the most inspirational and courageous entrepreneurs solving big problems in some of the toughest places around the world.  It was founded by three visionary people—Dan Epstein, Teju Ravilochan, and Tyler Hartung—and supported by an army of volunteers, staff, mentors, and capital partners.  It is based on George Bernard Shaw’s quote about the unreasonable man:

“…the reasonable man adapts himself to the world; the unreasonable one persists in trying to adapt the world to himself. Therefore, all progress depends on the unreasonable man [and woman].”

This batch had 22 companies.  Here is a quick snapshot of 6 of them:

1) Aquaphytex (Spain) – purifies wastewater through plants; have generated $4 million in revenue, employs 45 people, and currently provides clean water for 300,000 people in Mali, the Bahamas, Kenya and Spain.  Pedro, the CEO, didn’t speak a word of English a few months ago but was nonetheless the most popular Spaniard in Boulder.

2) Liberation Chocolate (Liberia) – Reinvigorating the once abandoned practice of cocoa farming due to civil war, Liberation Chocolate empowers Liberian farmers to take back their fields and provides former child soldiers jobs by supporting production and bringing their products to market.  Founded by a man who fled Liberia during the war then returned 14 years later.

3) Musoni (Kenya) – Making microfinance cashless for the first time in history, using mobile payments to disburse over $5 million to 7,500 clients.

4) Own Your Own Boda (Uganda) – Establishing a pathway out of poverty for Ugandan moto-taxi drivers by providing loans in the form of a new motorcycle, eliminating dependence on indefinite renting. In two years they have dispersed over 70 loans, with 22 of them already paid back in full.

5) Mobile Agribusiness (Congo) –  Run by a former Congolese child soldier turned entrepreneur, Mobile Agribusiness connects farmers, who make up 80% of Congo’s population, to vital information via mobile phone that enables them to prepare, produce and price their crops effectively and competitively.

6) Quetsol (Guatemala) – Quetsol brings light to the poorest homes in Guatemala through a solar powered box. They’ve sold over $500,000 worth of solar home systems in 16 months, illuminating over 3,000 homes and benefiting around 16,000 people.

I’m absolutely blown away by what the entrepreneurs have accomplished, and by what Unreasonable has become.  I can’t wait to keep supporting them and am so proud of the Unreasonable founders & team.

My Next Move

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A lot has changed over the past month.  I bought a gym membership in New York, then had to cancel it.  I made some really great friends in the city, then had to have quick good bye dinners over the span of a week.

I have decided to join New Enterprise Associates, or NEA, in Menlo Park.  It all happened really fast; in fact, it happened over the course of essentially 72 hours and most of it in New York, over Skype, and phone calls. And I’m really excited.

The past two years that I’ve been a part of the Bessemer family have been an absolute blessing and privilege for me.  I started in Summer of 2010 as a Summer Analyst in New York and never really left.  I stayed involved during the 2010-2011 school year while working for BVP’s portfolio company, Skybox, and coming into the BVP Menlo Park office multiple times per week.  I was running around the bay area and on my phone all the time speaking with companies, and the day after my graduation from Stanford, we issued an investment recommendation for Snapdeal.  I spent just as much time outside the country (mainly Asia) as in the USA while at BVP, and ended up being actively involved on a number of deals that went through (Matrimony.com, Skybox, and Black Swan Solar) and even more that didn’t.

The more time I spent at Bessemer, the more in awe I became of the people and the firm’s history.  A hundred years is a LOT of time in the venture business, an industry known for its risky investments and high turnover & churn.  And it has everything to do with the type of people that Bessemer hires.  They are some of the most genuine, down-to-earth, caring people in the industry.  They also happen to be really, really good investors.  I wish I could tell you some of their numbers, but all you need to do is look at some of the acquisitions, IPOs, or massive financings from the last year to get a taste: Yelp (IPO), Pinterest (Series A), Millennial Media (Seeded & Series A before IPO),  LinkedIn (IPO), Traffix (acq. F5 Systems), Vertica (acq. HP), OMGPOP (acq. Zynga), Verastem (IPO), and the list goes on!

Leaving wasn’t easy.  I know everyone at the firm, and I have a close personal relationship with a majority of the investment professionals.  It’s never easy to leave a place you love.

Still, every once in an a while, an opportunity comes along that you feel like you have to take.  Something in your gut tells you that the people are something special.  That was the case with NEA.  I’ll be a part of the US tech team (specifically the consumer team, led by Scott Sandell and Tony Florence) and the India team, while continuing to look at other emerging markets.  NEA is an investor in Groupon, Bloom Energy, Workday, and many others.  And they are a really great, welcoming bunch of people.  I could go on about the NEA people and their investments, but I’ll leave it at that for now.

I’m excited for a wild ride ahead.

Written by sheeltyle

May 22, 2012 at 5:46 pm