New Seed stage VC Susa Ventures takes on an underrepresented sector that could well be the future
Susa Ventures is the newest seed stage VC on the block, today announcing the final close of its $25 million seed fund. The bi-coastal firm, which was founded by a collection of four friends and regular co-angel investors, looks to play bigger than its checkbook with a focus on what it calls “companies with a maniacal focus on data.”
“Everything from legal to manufacturing to commerce will undergo a step function improvement by collecting, analyzing, and applying data in smart ways,” the team writes in its introductory blog post. ”We hope we can help many of these companies jump-start their vision to become the market leaders in their respective fields.”
The team behind Susa includes former Factual VP of Business Operations Eva Ho, former Richmont VP of Strategic Marketing Seth Berman, former LinkedIn and Factual engineer Leo Polovets, and former Silver Spring Networks Analyst Chad Byers. Despite being distributed across Menlo Park, Los Angeles, and New York, the quartet spent much of 2012 co-investing together as a syndicate angels before deciding to form a fund.
Three of these early investments were spun into the fund as part of its founders’ GP commitment – Lyst, Namo Media, and Vurb – and Susa has completed an additional 17 deals (14 disclosed publicly) since completing its first close in May, 2013. That list includes: Bay Sensors, Casetext, Declara, Flexport, Frontback, LendUp, Move Loot, Periscope, PipelineDB, Robinhood, Rockbot, Standard Treasury, Whisper, and Zephyr Health. Susa even had its first ever exit recently when Twitter acquired native ad expert Namo Media for approximately $50 million earlier this month.
While Susa will focus more on a team’s use of data than its industry, areas of interest include health, banking/finance, and education, according to Ho. The firm will look to do a total of 40 to 45 deals out of this inaugural fund, writing average check sizes of $250,000, while keeping 50 percent of its cash in reserve for follow-on investments. That check size will relegate the firm to participating but not leading seed rounds, in most cases, but it will also mean the fund will be able to spread its bets around. The firm hopes to follow-on into 25 percent of its deals.
“Our belief is that you need to come into the market with a clear investment thesis and then test and prove that out over a number of deals,” Byers says. “We feel that this is the perfect sized fund to do that.” Adding that the partners’ prior personal success allows for flexibility in their short-term income needs, he doesn’t see Susa being handicapped in its ability to dedicate resources to finding and winning deals and then supporting deals portfolio companies.
“We believe in taking a very hands on role in the companies we back – that’s one of the advantages we think we have by having four operating partners,” Byers says. “Most funds our size have one or maybe two partners. And larger funds typically focus on Series A or later, so that when they do seed deals it’s looked at like an option and they don’t offer much support. We’ve gotten the feedback from several of our founders that we’re the most involved investor that they have.”
Susa’s LPs include a mix of late-stage VCs, private equity investors, and Fortune 500 CEOs, according to Byers, who points out the strategic value each can provide in the life-cycle of a startup. It also means that the firm can syndicate additional funds on an as-needed basis if it wants to write larger follow-on checks, or participate in later-stage rounds for its best deals.
“There’s a huge amount of appetite among our LPs for these types of opportunities,” Byers says.
Data is a major buzzword in startup and investor circles of late, but there are seed stage few firms that have made it their primary focus the way Susa has. Byers notes that the firm is often compared to an earlier-stage version of IA ventures and Data Collective. The closest example, may be the fund of Ho and Polovets’ prior employer, Factual founder Gil Elbaz, who is a GP in Los Angeles-based TenOneTen Ventures. (Not surprisingly, Elbaz is an LP in Susa.) But with four partners and an ability to cover three major startup markets, Susa is uniquely positioned to take on this data-centric strategy at the early stage.
All four Susa partners are still adjusting to the psychological shift of being investors first and operators second, Ho and Byers acknowledge. “We treat Susa like a startup,” Byers says. “Our product is how to best serve the startup and entrepreneur community. We’re learning from data and feedback and working to improve that product every day.”
Ho adds, “It’s a big shift. You go from startup mode of making lots of little decisions every day to now making fewer but bigger decisions as an investor. But it’s been exciting and interesting and fulfilling. This isn’t a hobby though, we’re taking a long-term view. We hope to be investing together for a long time out of multiple funds.”
The origins of the fund name are interesting. Susa is actually a reference to the world largest family of gorillas (28), which is based in Rwanda. When it came time to brand their new firm, Ho recalls that each partner began sharing things that were important to them and experiences that had been impactful. It turns out that each investor had at some point visited the Susa gorillas in the past, all independently, and found the experience to be transformative.
“We think of the launch of Susa as the formation of a new family, so we thought the name was appropriate,” Ho says.
Susa will do well if it ends up with even a handful of gorillas in its portfolio.