Meet Paige Craig, Managing Partner at Arena Ventures

Craig has invested in companies like Klout, AngelList, Postmates, Lyft and Zenpayroll

There has been a big debate over the last few years over whether the Series A crunch is real or not.

What everyone can agree on, though, is that there are definitely more seed and early stage funds now than ever before, and more people willing to give more and more money to young companies looking to make it big.

But just who are these funds and venture capitalists that run them? What kind of investments do they like making, and how do they see themselves in the VC landscape?

We've  highlighting members of the community to find out.

Paige Craig is Managing Partner at Arena Ventures.

He spent the first half of his career in the Marine Corps and US Intelligence Community and later launched a Private Military Company, driving alone into Iraq in 2003 with $10,000 and expanding across the Middle East, Afghanistan, Pakistan, Africa and SE Asia.

Craig has invested in numerous successful and well-known startups, including a few unicorns that have surpassed $1 bn in valuation. His portfolio includes Lyft, AngelList, Wish, Postmates, Twitter, Styleseat, Zenpayroll, Quizup and many more. Paige’s investments from 2009-2012 vintages have generated 74% portfolio IRR and a 5.2x portfolio multiple.

VatorNews: What do you like to invest in? What are your categories of interest?

Paige Craig: We invest in people first and the business second. We’re seed (and “post-seed”) investors focused on startups in Los Angeles and San Francisco. We like founders who know their market in and out, have an early product, and will smash through walls to get where they want to go. We’re interested in both B2B and B2C software companies and, broadly speaking, do not do hardware, physical products, adtech, or pure content plays.

VN: What would you say are the top 5 investments you have been a part of? What stood out about those investments in particular?

PC: I’ve invested in over 100 companies since 2008 so I won’t pick “favorites”. But I will highlight a handful of my early investments that particularly impacted how I invest:

• Airbnb in 2008: I discovered them on August 13, 2008 and cold-emailed them and met the team at the Brainwash in San Francisco on August 21st. After 6 weeks of helping them, Brian Chesky and I agreed I’d personally lead a $250,000 investment and Todd Rumberger drafted final docs. Following my term sheet and our closing dinner, however, Y Combinator got hot for the deal again and Brian backed out to take their offer instead. I learned so much from this deal: invest in founders who are hands on, passionate problem solvers, crafty and all-in on a massive idea. I was so impressed by the grit of this team, the design & product sense and the small but incremental progress with no resources. But I lost the deal because I was an unknown quantity (I had just left working in national security two months earlier), I didn’t push hard enough (I should have gone to YC and forced my way in or re-invested later), and I should have just invested immediately (same day / same week) rather than spending weeks working with them and refining the deal. When you see a brilliant team and a great deal you get it done. Another lesson of this deal is that everyone I shared the deal with backed out – but I remained firm in my conviction and still went forward. You can’t let other investors shake your conviction.

• Klout in 2009: I found the Klout web app on Twitter, played with it and saw the potential for a huge idea. In October 2009 I scrounged around for intros, met Joe for dinner and realized he was going big. The potential of the idea paired with the tenacity and creativity of the team really struck me and I moved quickly to take an active role investing and putting the seed round together. 

• AngelList in 2010: Nivi and Naval started off with a very low UX but high quality content and community with Venture Hacks and then Angellist. I was struck by (1) how amazing I thought these guys were and (2) how established VCs didn’t take them seriously; this delta really struck me as a positive sign. I created an Angellist profile March 2010, starting doing deals and talking to Nivi about the product and future. I was struck by his brilliance, intense focus, lean nature, understanding of his community and his absolute drive to change the world. I invested later that year.

• Wish in 2010: I tet Peter, the company's CEO, via an intro from one of my founders, Brian Wong of Kiip. I was immediately impressed, wrote the first check in days, and urged a bunch of talented investors to follow my lead. Oddly enough Peter didn’t have a product yet – some amazing semantic technology and a killer founding team. But the brilliance, drive and motivation of the team really struck me and I moved fast and leveraged my network of investors to get the deal done. This also reinforces how important founder intros are to find great deals. Wish is now “rumored” to be a multi-billion dollar business.

• Postmates in 2011: In August 2011, I told Jeremy Gocke I was looking for an “Uber for deliveries” startup. I frequently tell people about ideas/themes I think are huge and wait for good intros. A month later Jeremy sent me info about Postmates saying it fit my thesis perfectly. I asked Jeff Clavier for an intro and a month later I did the deal. This one reminds me how important it is for investors to have a vision of how the world is changing and then find amazing founders that fit those themes.

• Lyft and Zenpayroll in 2012: Both of these deals came via introductions. With ZenPayroll, I asked David Lee (SV Angel) for an intro after hearing about the deal from Angellist and quickly put in over $100k (they’re now almost $600M company). Lyft came via Raj Kapoor (Mayfield VC at the time) who wanted me to help Lyft expand into LA; I loved the company so much I immediately asked to invest in the company. If it wasn’t for David Lee, Angellist, Raj and Mayfield I probably wouldn’t have been in the Lyft or Zenpayroll deals. You need to have a solid network of trusted co-investors who help you out - being a lone wolf as an early stage investor is incredibly tough.

VN: What do you look for in company's that you put money in? What are the most important qualities?

PC: First, people. Brilliant, fast, execution-oriented founders who’ve done a lot of hard work up front and are driven to solve a massive problem. Focused, lean, strong founders who have clear conviction but are willing and eager to learn and adapt as necessary, i.e. good judgement.

Second, the idea. A unique insight on consumers or businesses; something that could be scalable someday and addresses a massive problem. It should be uncommonly great, meaning most people you talk to probably don’t get it.

Third, timing. Is society, industry, technology, or the economy working for or against you in the early formative years of the company? You can have an exceptional founder with a good idea but just the wrong timing for it...

VN: Tell me a bit about yourbackground. Where did you go to school? What led you to the venture capital world?

PC: I grew up extremely poor, fought my way into West Point and later joined the Marine Corps and then the Intelligence Community. A decade later I left service and drove alone into Baghdad in 2003 with $10k. I bootstrapped that company to $100M+ in sales over 5 years and then became an angel investor in 2008. I'm not a finance geek but I know how to read people, recognize potential in chaos and finance billion dollar ideas in their earliest days. I love helping people, I love taking on big, crazy ideas and angel investing just naturally appealed to me. After seven years of angel investing I partnered up with my buddy and fellow angel investor Jeff Lo and we decided to go all in and launch Arena Ventures.

VN: What is the size of your current fund?

PC: I can’t comment on this right now.

VN: What is the investment range? How much do you put into each startup?

PC: We typically lead or co-lead seed rounds with a $500,000 to $1 million check, part from our traditional VC side and part from our AngelList syndicate , and then re-invest to meet our pro rata in the Series A. For our growth stage deals, we invest $20 million to $100 million.

VN: Is there a typical percent that you want of a round?

PC: Our first and foremost priority is backing exceptional entrepreneurs with companies that are going to be transformational - the exact percentage of our ownership isn’t the main focus. We do aim to lead, or at least, co-lead most deals though.

VN: Where is the firm currently in the investing cycle of its current fund?

PC: We are a very new firm and quite actively investing.

VN: What percentage of your capital is set aside for follow-ons?

PC: We reserve roughly half of our capital for follow on rounds the ensure we can keep fueling the companies we support.

VN: What series do you typically invest in?

PC: We’re seed investors who take pride in frequently being the first institutional money into a startup. We invest at the Series A level primarily just as follow-on for companies we’ve previously backed. Then on the other end of the spectrum, we will write a much smaller number of $20-100M checks at the growth / pre-IPO stage of companies.

VN: In a typical year how many startups do you invest in?

PC: We make 25 to 30 seed investments per year, which averages out to one every couple weeks. We do two to three growth investments per year.

VN: Is there anything else you think I should know about you or the firm?

PC: Yes, unlike traditional VCs we share our deals with the public via our Arena Ventures Angellist Syndicate. Anyone making $200,000 a year or with $1 million in assets can invest alongside us and signup at bit.ly/ArenaVC4. We’re the first Venture Capital firm that’s opened its doors to the public. Individual investors can put in $1,000 or as much as $100,000 per deal knowing that there’s a full time team of investing professionals finding, funding and supporting the best startups in the world.