Semil Shah is a general partner at Haystack Ventures, a early-stage venture fund, where he focuses investments across a number of industries including vertical software, marketplaces, e-commerce, and enterprise infrastructure/devops.
Shah has been involved in the technology industry since the late 1990s as a product and business development executive and entrepreneur. In the mid-2000s, he co-founded two Internet companies, one in the consumer space and one in the enterprise space. He also advised a number of companies, including but not limited to: Stitch Fix, Poshmark, Wealthfront, and Masterclass.
Shah has been an active angel investor since 2010 and has made over forty early-stage investments. He is also a frequent contributor to Forbes and TechCrunch. Shah graduated from Stanford University with a B.S. in Symbolic Systems.
In this interview, Shah discusses a wide range of topics, including: the current state of the venture market, his investment focus and thesis at Haystack, the biggest challenge facing early-stage startups, and the most important skills for entrepreneurs.
Current State of the Venture Market
There are a lot of interesting things happening in the venture market right now. First, there is more interest from traditional investors in venture than there has been in the past. This is due to a number of factors, including the increasing maturity of the asset class and the rise of unicorn companies.
Second, there is an increase in the number of venture firms. This is both good and bad. It’s good because it means there is more capital available for startups. However, it’s bad because it means there is more competition for deals.
Third, there is a change in the types of investors that are active in venture. In the past, most venture investors were from the US. However, we are now seeing more global investors, including from Asia and the Middle East.
Fourth, there is a change in the stage of investment that venture firms are focused on. In the past, most firms focused on later-stage investments. However, we are now seeing more interest in early-stage companies.
Finally, there is a change in the structure of venture firms. In the past, most firms were organized as partnerships. However, we are now seeing more firms that are organized as LLCs or LPAs.
What is your investment focus and thesis at Haystack?
Our focus at Haystack is on early-stage companies in the vertical software, marketplaces, e-commerce, and enterprise infrastructure/devops industries.
Our thesis is that these industries are undergoing structural changes that create opportunities for new companies to succeed. For example, the rise of the cloud and the proliferation of mobile devices are causing companies to re-think their IT infrastructure. This is creating opportunities for companies that can provide innovative solutions that are more agile and scalable.
What do you think is the biggest challenge facing early-stage startups?
The biggest challenge facing early-stage startups is finding product-market fit. This is the challenge of developing a product that people want and need.
Many startups fail because they either create a product that no one wants or they create a product that people want but don’t need.
The best way to find product-market fit is to start with a small group of target customers and then iterate based on feedback.
What do you think are the most important skills for entrepreneurs?
The most important skill for entrepreneurs is the ability to execute. This means the ability to turn an idea into a reality.
Execution is important because it’s the only way to test whether an idea is viable. Many entrepreneurs have great ideas but they fail because they can’t execute on them.
The ability to execute requires a number of skills, including but not limited to: project management, team building, and fundraising.
What do you think is the most important advice for entrepreneurs?
The most important advice for entrepreneurs is to focus on execution. This means to focus on the day-to-day tasks that will move the company forward.
Many entrepreneurs get bogged down in non-essential activities, such as attending networking events or raising capital. While these activities are important, they should not be the focus if the company is not yet profitable.
The best way to execute is to create a clear plan with measurable milestones. This will help to ensure that the team is focused on the right things and making progress.
What do you think is the most important trend in the venture market?
The most important trend in the venture market is the rise of early-stage companies. This is due to the increasing maturity of the asset class and the rise of unicorn companies.
Early-stage companies are attractive because they offer the potential for high returns. However, they also come with higher risks.
As a result, it’s important to have a good understanding of the industry and the company before making an investment.
What do you think is the most important advice for VCs?
The most important advice for VCs is to be patient. Many VCs are under pressure to invest in companies that are growing quickly. However, it’s important to remember that not all companies will grow at the same rate.
Some companies will take longer to reach profitability. As a result, it’s important to have a longer-term perspective when making investments.
What do you think is the most important advice for entrepreneurs?
The most important advice for entrepreneurs is to focus on execution. This means to focus on the day-to-day tasks that will move the company forward.
Many entrepreneurs get bogged down in non-essential activities, such as attending networking events or raising capital. While these activities are important, they should not be the focus if the company is not yet profitable.
The best way to execute is to create a clear plan with measurable milestones. This will help to ensure that the team is focused on the right things and making progress.
