Sandhya Hegde

In vertical SaaS, the very best companies landed with a product solving a specific, burning pain point that horizontal solutions solved badly and then became broad product suites over time (ServiceTitan, Veeva Systems, Doximity, etc). My partner Gordon Ritter calls this “layering the cake”. In vertical AI, the landing wedges are much more brittle. While the painpoints they solve are very real (and often unaddressable by SaaS alone), they’re also much more likely to commodotize in the near term as the tech advances. 👀 Therefore, the need to layer the cake in vertical AI is much more urgent than in vertical SaaS. 👀 The best vertical AI CEOs not only recognize the dynamic, but talk about it openly. Helps those around them keep up the speed of innovation and their eyes on the bigger prize.

83

13 Comments

A common mistake early-stage VCs make is confusing good decisions with good outcomes. Good outcomes don’t always mean good decisions—luck often masks flawed reasoning. Focus on process over outcome bias. Invest in strong decision-making frameworks, not just duplicating “wins.”

70

15 Comments

Many AI-Native SaaS companies are taking too much of an opinionated approach to workflows for enterprises It's making it more challenging to get companies to buy and successfully implement. Instead of trying to build a "one size fits all" solution, here’s three approaches I’ve seen work incredibly well when going after the enterprise: 1. Start with a low-code/no-code custom workflow builder and layer on AI Features A company like Fuse Finance is making it super easy for lenders, credit unions and community banks to adopt as they have a customizable UI with agentic tools being built on top that deliver clear ROI in many ways. Unlike a customers current software, which require tons of engineering time to make any changes (which most banks don't have the resources for), Fuse now makes it 10X easier to make any changes to the process while still harnessing the power of AI. Companies with custom workflow builders find it not only easier to sell, but have quick implementation timelines, easy user onboarding, strong customer satisfaction scores + NPS and lower numbers of CX tickets vs. opinionated user interfaces that require a ton of change management 2. Build on top of the industry standard, outdated 3rd party app Datasnipper, a $1B startup backed by Index did exactly this. How? They built AI to empower Auditors with an intelligent automation platform, sitting on top of excel. By building on top of excel, Datasnipper's users feel right at home and it reduces the friction of change management in a big way for all parties involved. 3. Go into the company with forward deployed engineers, build custom workflows and integrations and then find ways to productize it for other customers Palantir is the obvious case study here and people are catching onto this playbook. My thesis is that we'll see dozens of companies launch with this consultative approach, going after Accentures ~$65B of revenue. What many VCs used to mistake as a services company model is now widely accepted as a new GTM strategy based on a two key things: 1. Palantir's success 2. Unlocked acceleration of software development driven by AI Firms, including ours, General Catalyst, Elad Gils and Jared Kushners are all partnering up with large enterprises to launch new companies that have an easy time selling in what feels like are custom builds, but in the longterm are clearly going to be products. Working on an AI software solution with either of these three approaches? We'd love to chat.

335

54 Comments

My predictions for what 2025 will look like for the world of startups 1/ Funding toward legacy vertical SaaS businesses will hit an all time high in 2025. 2/ Flight to SF: SF will be the place as a preseed & seed founder to raise their first rounds. The emerging founders will pop in in SF first before making their ways to NYC and beyond. 3/ Year of Exits: We'll see a lot of the companies that couldn't exit in 2022-2024 start to exit this year through IPO, M&A and more. Will add much liquidity towards the VC market and drive LP diversification versus in 2024 where $35B of the $72B raised towards VC firms went to the top 9 venture funds in the world. 4/ Early stage fintech makes a comeback: The peak for early stage fintech was 2022 with $4.1B raised across 970 deals. 2024 early stage fintech numbers fell to 5 year lows with only $1.9B raised across 505 angel, preseed and seed deals. Seeing some improvements in funding numbers from quarter lowers which was Q2 2024 and some improvement in Q4 2024. Macro trends, AI, and some late stage funding for later fintech cos gives me an impression early stage fintech will rebound next year. 5/ RTO is coming back: The best startups will no longer be distributed but will return to the office in 2025. We'll see an increasing amount of startups, especially the early stage ones, emphasize in person work and hires. 6/ Biohacking the supermarket: Interest in health and longevity for consumers and the advancement of AI are long to lead to more demand for personalized food plans built for each individual person. 7/ Built for you: media and everything we consume on the internet will become for you. Think an extension of the for you page on Tik Tok but for everything else you consume, shop and watch. It won't be long until media becomes personalized to you and I and your favorite influencer is actually AI. 8/ Digital Twin Simulations: Someone will build out your digital AI twin for decision making. From testing career changes to planning relationships, these virtual replicas could provide insights into life’s "what-ifs. 9/ AI buyers: Just like with the rise in SDRs, we'll soon see a company test our buying with AI. Take product features, demos, pricing and more into account and AI will optimize to buy the right vendor stack for a founder based on exactly what they need.

130

11 Comments

At Forum we look at thousands of deals each year across our Accelerator and Pre-Seed funds but only end up investing in a little over 1% of those startups.  As an early stage VC, I am in the business of saying no to nearly every startup I meet, and while there is nuanced rationale for many of the startups I pass on, a vast majority of businesses that don’t meet the qualification to get funded typically fall into one of two buckets. ▪ First time founders have a tendency to go out to market too early to raise pre-seed capital ▪   I’m sure most founders have heard some iteration of this from VCs that ultimately pass on their business.  In some cases it's a blanket excuse covering up for other pass reasons- perhaps a VC doesn’t believe in a team or isn’t bullish on the market opportunity - but in many cases founders simply haven't proven enough to the market to warrant an investment. I meet many teams with an articulate vision for the product that they want to build, but they either haven't performed enough customer discovery to prove demand for their initial wedge product, or need to raise pre-seed capital to build out an MVP.  In those cases, pre-seed investors are unwilling to underwrite those risks.  To be default fundable, teams need to be able to keep costs low, perform extensive customer discovery, and ship some version of an early product - pilots and early paid customers are key. A huge piece of this is having founding engineering talent on the team. ▪Not every startup is a venture opportunity ▪ By definition, a venture backed business is solving a problem within a market opportunity so massive and so desperately needed, that its growth rate is off the charts.   It spreads like a weed, absorbing almost unlimited amounts of capital to fulfill demand within its customer base.   Each year there are maybe 20 companies launched that ultimately have venture scale outcomes. The bar to reach this rarified air is unfathomably high and the reality is the vast majority of founders simply aren’t building for opportunities that have the potential to be one of these generational companies. Many startup founders view VC as the only viable option for capitalizing their business, but not every great business is a venture business, and most successful founders never take VC dollars.  In order to reach an IPO/acquisition large enough to generate venture returns, a startup needs a credible path to $100s of millions in revenue. This is the standard by which early stage opportunities are evaluated. The flip side to this, and I share this feedback often with founders I meet that are building interesting business in non venture markets, if you are able to scale to $10- $20M in revenue that can be a massively successful outcome for a founder.  There are investors who focus on these type outcomes, namely lower middle market PE shops, and the typical path to those deals is a bootstrapped business or a friends/family capital raise.

96

13 Comments

As we explore a seed round of VC funding for Avnir, a mentor has driven into me to "interview them as much as they'll do their due diligence on you!" When I consider professional etiquette important to me (and probably every serious founder), I am reminded of what I've coached hundreds of executives on over the past two decades: "Your culture is a culmination of behaviors you're willing to tolerate!" So, here is a Top 10 List of Professional Etiquette crucial to long-term strategic relationships between VCs and founders: 1️⃣ Respect for Time—Punctuality, Efficient Communication, and Timely Feedforward are demonstrated and genuinely felt. We would both rather me invest time in building the business. 2️⃣ Transparency—Clear Expectations, Honest Feedforward, and Disclosures on conflicts of interest or resource limitations save everyone unnecessarily wasted cycles! 3️⃣ Professionalism—Politeness, Confidentiality, and Objective Evaluation allow courteous interactions, respect for proprietary information, and avoiding bias in evaluating the founder's meritocracy. 4️⃣ Empathy—Understanding the Journey and Constructive Dialogue acknowledge the uphill battle founders face while avoiding unnecessary criticism and providing supportive guidance, demonstrating a genuine interest in their vision. 5️⃣ Integrity—Fair Terms, Follow Through, and Avoiding Overpromising honor commitments during discussions, and create realistic expectations from the relationship. 6️⃣ Co-Creation—Value-adding Mindset and Team Player Attitude accelerate the founder's ability to gain traction and position the VC relationship as transformational vs. simply transactional. 7️⃣ Humility—Avoiding Arrogance, Condescension, and Open-Mindedness acknowledges that both parties have unique expertise to add and enhance the receptivity to unconventional ideas, approaches, and perspectives. 8️⃣ Listening Louder—Present, Engaged, and Clarity of Intent eliminates distractions, brings out what's not being said, and jointly crafts better questions to help uncover the unknown and the undiscovered. 9️⃣ Encouraging—Supportive Communication, Positive Reinforcement, and Inspiration help celebrate small wins and key milestone achievements. It's ideal to light a fire within the relationship rather than under anyone, which seldom lasts! 🔟 Playing the Long Game—Relationship Nurturing and Post-Investment Care establishes the runway for a lasting partnership rather than simply pitching a deck and closing a deal. After the investment decision, sustaining the relationship will determine the partnership's long-term perspective. Jason M. Lemkin, Peter Bell, Cassie Young, and Ed Sim - you exemplify world-class in the relationships you build with your founders. Did I miss anything? #VCFounderRelationship #AlignedExpectations #RelationshipsMatterMoreThanEver

24

4 Comments

This is a solid basic primer. Over the years, I've observed a growing overlap between Private Equity (PE) and Venture Capital (VC) mandates. Today, some VCs are ready to invest hundreds of millions, particularly in companies with the potential for significant growth or hyper-growth (10X+ over 10 years) and irrespective of typical Stage A, B, C classification. Meanwhile, some PEs are shifting their focus to companies in the later stages of VC funding, targeting more moderate growth (3X-5X over 5 years). The expectations and approaches of PEs and VCs are overlapping and in some cases converging, as both feel they might be missing out on value capture opportunities.

8

1 Comment

VC platform teams rarely add meaningful value to portfolio companies. They’re mostly a tool for GPs to justify raising larger funds and collecting higher management fees.

23

5 Comments

Our Micro SaaS portfolio company just hit ARR / FTE productivity rivaling $50M SaaS firms. Here are 4 lessons we learned along the way: Focus on operating leverage, not just revenue growth. EBITDA/FTE is an excellent scoreboard. Lean teams move faster and punch harder. Return on effort matters more than chasing scale or deal size. Where have you most recently created operating leverage in your business? #ARR #MicroSaaS #BusinessEfficiency

21

4 Comments

Perfecting your product and GTM strategy are surely important. But Box CEO and co-founder Aaron Levie argues there's one factor that outweighs all others in startup success: recognizing and capitalizing on tech and macro tailwinds. Fighting against them? You're setting yourself up for failure. Our full conversation here: https://lnkd.in/gEAPFR-A

12

PE - How to Use AI to Unlock Growth in Portfolio Companies All PE firms and portfolio companies should be thinking about unlocking GTM and growth via AI (i.e. not merely ChatGPT or other LLMs but actually implementing apps that are "AI Agents"). 1. What are "AI Agents"? - AI agents are autonomous systems powered by ML and natural language processing, designed to perform tasks with minimal human intervention - They can interpret data, determine the workflow & direction (i.e. make decisions), and execute actions across various functions, continuously improving through self-learning 2. Examples of using AI Agents in PE portfolio companies: - For Sales: AI agents handle lead qualification, respond to inquiries, book meetings, and provide personalized product recommendations, ensuring no opportunities are missed - For Marketing: Generate campaign briefs, segment audiences, create tailored content, and analyze performance to optimize outreach efforts - For Customer Success & Support: Provide 24/7 support, resolve customer issues autonomously, escalate complex cases to human agents with full context, and ensure consistent, brand-aligned responses 3. How PE portfolio companies benefit: - Efficiency: Automate repetitive tasks, enabling teams to focus on high-value activities - Scalability: Handle growing customer volumes without increasing headcount - Personalization: Deliver tailored experiences using real-time data insights - $ Cost Savings: Reduce operational costs by streamlining workflows 4. Business Impact for PE Portfolio Companies: - Accelerate GTM Execution: Faster lead conversion, better customer retention, and enhanced marketing ROI - Improve Metrics: Boost Customer NPS, CSAT, and efficiency - Enable Growth: Scale operations seamlessly while improving team productivity. 5. How PE Firms Must Think About Adoption - Define clear portfolio objectives to use AI agents (not just LLMs) - Ensure integration with existing CRM and data systems - Prioritize high-quality data and ongoing performance monitoring - Use AI agents to complement existing GTM teams, focusing them on automation ------------------ #pe #privateequity #investing #ai

14

Founders–before you pitch your product, investors want to know: Can you sell? Grace Gong shared why this skill matters more than any metric. Grace Gong is an author, angel investor, founder of Smart Venture Media, and host of the Smart Venture Podcast. She offers practical guidance on navigating the startup ecosystem in her books 'How to Be a VC' and 'How to Be a Successful Founder'. Known for spotting promising founders, she emphasizes sales skills, strategic thinking, and execution. In a recent conversation with Grace, one big takeaway stood out: The ability to sell is non-negotiable for early-stage founders. Whether you're pitching to investors, securing a design partner, or recruiting top talent, the question is the same: can you sell? Grace emphasized that, as an angel, she looks for founders who can demonstrate this skill early—often before the product is even fully formed. Here’s what selling means in practice: 👉 Convincing a lead investor to anchor your round 👉 Recruiting the best talent to bring your vision to life 👉 Securing letters of intent from potential clients or design partners 👉 Building a cap table that shows the confidence of your network (past bosses, coworkers, or even friends willing to back you) Grace shared a great example: after introducing a founder to a potential client, she watches closely to see how the founder engages and closes. A founder’s ability to sell, she says, is about more than just metrics—it’s about proving you can create buy-in at every level. As a founder, if you want to stand out, start honing your ability to sell: 👉 your team 👉 your vision 👉 your product 👉 and yourself It’s one of the clearest indicators of future success. Founders, how are you developing this skill?

53

3 Comments

One of my proudest moments as an investor occurred today as Alaffia Health announced its series A because it shows how the Aperture® Venture Capital vision of multi-level, multi-generational #impactinvesting is succeeding in the marketplace. Here’s the model in its most basic form : ✅As diverse fund managers with meaningful capital to allocate, we are changing the VC landscape every day just by doing our day jobs. ✅As Black/Brown investors with ~40 years experience collectively, Aperture GPs have access to talent /excellence that others do not, so our portfolio *organically* is more inclusive by race, gender and geography even while optimizing for financial outcomes (all about the alpha). ✅Our most successful portco’s are using financial #innovation to solve market problems that impact underrepresented demographics and underserved communities. Alaffia Health is a shining example of the impact portion of our overall fund thesis, and we couldn’t be prouder of TJ Ademiluyi and Adun Akanni, MPH, PMP - the dynamic brother-sister founder duo whose vision we have steadfastly supported on their journey. Congratulations to TJ and Adun from William Crowder and myself, as well as the whole Aperture team- Marjorie King Philip McKenzie Yves Louis-Jacques Tanvi Lal Michelle Dhansinghani Lisha Bell Katie Kelly Amy Chung Cindy Chong, CFA Brian Fernandes-Halloran Monroe France Jayden Pantel Darren Herman Evan Wladis Neal Triplett Thomas Scriven Peter Ammon Irina Bit-Babik Tim Milanich Rob Rahbari

37

18 Comments

I've invested in over 300 startups over the last 5 years, and there is one common trait that nearly all failed early stage startups share - they don't run a proper customer discovery process. You can read about the importance of customer discovery all over the internet, but that practical application of it among first time founders is still extremely low. We look at over 10,000 deals each year Forum Ventures and I see firsthand just how few founders actually excel in this process. One subset of founders simply doesn't do it at all. It's a classic archetype - build product in a vacuum without running any validation cycles. Typically the founder profile here skews more technical/product where founder-led sales feels out of character and not an area they enjoy spending time. Often founders think they can "product their way" to initial customers, but more often than not that new feature set they are excited about fails to generate user demand, simply because they never asked anybody if they care about what they were building. There is a classic startup'ism - first time founders focus on product, second time founders focus on distribution - and it rings very true within this subset. The second group of founders actually understands the importance of running discovery and leans into it early in their build process. While they have the best intentions, ultimately they come up short because in practice they don't actually know how to run an unbiased process. Discovery that focuses around a feature/solution set will skew toward lukewarm positive responses from potential customers, "sounds interesting, let me know when the beta is ready". The reality is no one is going to tell you that your baby, in this case your product, is ugly when it's far easier to just smile and nod. Founders often take this false signal as validation and race to ship a product that ultimately falls flat on its face. There is an art to soliciting feedback from a potential customer. The process emphasizes questions on their existing workflows, bottlenecks they experience in their day to day, understanding what motivates them and how they measure success in their role. This is a critical area we emphasize when evaluating investment opportunities, and a process we are very hands on in assisting our portfolio companies. Having a strong network is a massive advantage when launching a startup but close network relationships have the potential to give false signals across a customer discovery process. There are ways to combat this by being very deliberate when once solicits feedback from their network, but there are definitely bonus points for net-new out of network customer validation.

572

152 Comments

Instacart is a market leader when it comes to leveraging AI tools to boost productivity at work. I had an amazing conversation with JJ Zhuang, Instacart’s Chief Architect, who has shepherded over 50 AI-driven initiatives to market across the org. We explored what catapulted Instacart to the forefront of AI integration, supporting radically diverse use cases across various functional areas. One striking insight (echoed by Ethan Mollick and others elsewhere) is that you often don't need specialized tools for specialized work. Frontier models like GPT-4 can seamlessly adapt to a wide range of functions and use cases. They're not just for engineers; they're incredibly versatile tools used by marketing, comms, and legal teams. From generating code to proofreading and ideation, GPT-4 empowers every department to leverage AI for enhanced productivity and innovation. By integrating LLM’s like GPT-4 into their workflows, teams can streamline processes, automate repetitive tasks, and unlock bandwidth for new creative possibilities. How can you harness the power of AI in your own work to boost productivity? Share your thoughts below 👇 Want to hear more insights from JJ? Check out the full podcast episode by clicking the link in the comments.

8

2 Comments

Trying to get from $0 to $1M ARR? Find your PMF. Obsess over identifying a problem that a big enough market urgently needs solving. Talk to your customers about their most painful problems and validate your assumptions. Not all feedback will be valuable. Focus on insights from your early adopters—they become your ICP and shape your product. Stay true to your core customer profile. Chasing revenue or artificially widening the PMF dilutes your product's effectiveness. Your product can only meet so many needs. Tailor every feature to your ICP. Your first version is your Minimum Sellable Product (MSP). Make the MSP easy to use and beneficial. With customers using your product, continually collect feedback to improve: 1 - Offering 2 - Marketing messages 3 - Sales calls 4 - Pricing structure 5 - Demo flow If you reach $1M ARR, congratulations! Your product has real demand. Next, it’s time to think about scaling to $10M ARR. More on that soon.

63

7 Comments

Want a front-row seat to the frontier of tech? We’ve got the role (or two) for you! We’re expanding our frontier-tech team at Blackbird by hiring a Frontier Tech Investments Associate and Foundry Fellows! Got questions? We've got answers... 1️⃣ What are the roles? 🧪 Associate = a full-time VC investment gig in our Blackbird Investments team, working directly with me. We’re looking for someone with a science and/or engineering background and more curiosity than they can handle. You’ll grow your own investment brand and practice, support our portfolio founders, and will help build Foundry, our early-stage frontier-tech accelerator. ✨ Foundry Fellow = a casual/contract gig in our Blackbird Investments team, ~15h per week for 3 months. The Fellowship is ideal for PhD students and ECRs who want to learn more about startups and VC. You’ll go deep on emerging areas relevant to your expertise (or curiosity!), get a front-row seat to groundbreaking companies in those areas, build out your non-academic network, and develop a solid writing practice. 2️⃣ Why are you hiring? We love frontier tech, and we’re ready to grow our team. 3️⃣ Wow, it’s so great that you’re starting to look at deep tech! Look, we get it: we don’t make a lot of noise about our frontier tech investing. Buuuut we’ve been deep-tech investors since we backed Tim Kentley-Klay to found Zoox back in 2014—we’ve been on incredible journeys with PsiQuantum (building the world's first utility-scale quantum computer right here in Australia!), Inventia Life Science (transforming drug discovery with high-fidelity cell models), Remedy Robotics (surgical robots for remote endovascular procedures), Opto Biosystems (minimally-invasive neural implants to treat cancer), and more. We believe that frontier technologies, and great frontier-tech investing, will be part of the solutions to the greatest problems humanity faces today. 4️⃣ When do applications close? May 31st at 11:59pm AEST. 5️⃣ I have more questions! I’m sure you do! Clare Birch and I are hosting an AMA to answer any and all questions about these roles. Want to know what a week in the life of our team looks like? What’s keeping us up at night? What our ideal candidate looks like? Come along and find out - registration link in the comments 👇 Apply for these roles: Associate - https://lnkd.in/gCfj4EUJ Foundry Fellowships - https://lnkd.in/gj6ATZVZ If you know anyone that we should meet, send me their details! Cameron Elise Ben Andrew Robin Joseph Adelaide James Olivia Lucinda Raghav Jesse Christie Mohamed Tom Amee Pablo Haya Loong Hon Joshua Benjamin Megan Harry Denzil Matthew Diana Daniel Tom Deanna Justin Amar Lilly Stone Thomas

113

4 Comments