Founded in 2016, Afore Capital makes pre-seed investments of between $500k and $1 millionRead more...
Bernard used to lead inorganic growth initiatives for Kindle and Digital Services
Venture capital used to be a cottage industry, with very few investing in tomorrow's products and services. Oh, how times have changed! While there are more startups than ever, there's also more money chasing them. In this series, we look at the new (or relatively new) VCs in the early stages: seed and Series A.
But just who are these funds and venture capitalists that run them? What kinds of investments do they like making, and how do they see themselves in the VC landscape?
We're highlighting key members of the community to find out.
Paul Bernard is the Director of Worldwide Corporate Development of the Alexa Fund at Amazon. He used to lead inorganic growth initiatives for Kindle and Digital Services.
Prior to his time at Amazon, Bernard spent 10 years at Nokia holding Director and Vice President level positions overseeing departments including mergers and acquisitions, mobile payments, and business development. Before working at Nokia, he was an Investment Banking Associate at Goldman Sach’s and an Associate Lawyer at Blake, Cassels, and Graydon.
He has an LLB in Law from the University of Ottawa and a Masters in Management from the Kellog School of Management at Northwestern University.
VatorNews: What is your investment philosophy or methodology?
Paul Bernard: We believe using your voice to interact with technology is a major leap forward that will lead to new kinds of businesses that create value for customers. We already see the early signs of this across the various stages of companies in which we invest. Our goal is to invest in startups with entrepreneurs who share our enthusiasm for voice and who can create new experiences with Alexa or advance the state of the art in voice and dialog systems technology itself. In many cases, these are companies developing new Alexa capabilities with the Alexa Skills Kit (ASK) or creating devices with Alexa built-in using the Alexa Voice Service (AVS). In others, startups may be expanding the boundaries of the science that underpins a system like Alexa or enabling new use cases that take advantage of a voice-first interaction system. All of these companies help make voice services like Alexa smarter and more useful.
VN: What's your investment thesis and categories/stage of interest?
PB: Since launching the Fund, we have invested in over 50 companies (full list here) that span a wide range of market segments and technology areas. In many ways our investing approach has been to imagine the most interesting ways you can use Alexa and line that up with a high-quality venture investment opportunity. Some important categories to us have been smart home (ecobee, Ring, Tado), entertainment/play (Play Impossible, Sensible Object, Novel Effect), “on the go” (North), health & wellness (Owlet, Aaptiv, Aiva, Embodied.me), workplace (Tact.ai, Roby), developer tools and services (Pulse Labs, Defined Crowd, Jargon) and transportation/mobility (Mojio, ParkWhiz, Shuttl), as well as the underlying technology that expands the range of use cases that are possible with a voice interaction system (Vesper, Syntiant, Aspinity).
VN: What's the big macro trend you're betting on?
PB: Voice creates a natural, seamless way to interact with technology, and we believe it will create value for entrepreneurs and customers in ways that we cannot yet even envision.
VN: What stage/Series do you invest in (and how much is that in dollar amount for you) and what kind of traction does a startup need?
PB: Companies of all sizes and stages are innovating with Alexa. While our core investing model is designed to work with companies who are raising rounds from institutional investors, we also have built programs that address the unique needs of early stage startups and entrepreneurs. We launched the Alexa Fellowship, which supports voice education, research and entrepreneurship at 18 universities, including MIT, Carnegie Mellon, Dartmouth and Cambridge. We also recently completed our second cohort of the Alexa Accelerator, a startup accelerator built around the belief that voice will fundamentally improve the way we interact with technology.
VN: What other signals do you look for? Team, Product, Macro market?
PB: Across Amazon we start with the customer and work backward, and our approach at the Alexa Fund is no different. Here are a few specific elements we look for in a potential investment:
- Customer-centricity — Are you bringing customers new levels of ease and convenience through voice?
- Innovation — Are you solving hard problems in creative ways for your customer?
- Leadership — Are you a visionary with the tenacity required to build?
- Alexa fit — Is there potential for unique or novel applications of voice technology including the Alexa Skills Kit or Alexa Voice Service?
- Product/Service — Do you have a product or service in market that has a track record of positive customer feedback or a product or service soon to be launched?
- Funding — Have you raised institutional funding?
VN: What do you think about valuations these days? What's a typical Seed pre-money valuation and Series A?
PB: Asset prices are constantly changing. In any industry, you can typically find assets that represent the right risk/reward trade-off.
VN: There are many venture funds out there today, how do you differentiate your fund to entrepreneurs?
PB: We believe we have developed a unique approach that has resonated with entrepreneurs. Through the mechanism of the equity investment we align the incentives of the entrepreneurs, other investors and our Fund. This helps build trust. This allows us to dive deep and treat our portfolio companies like customers. We have a dedicated team of experts who work with our portfolio companies to help them build their business on Alexa and Amazon. Specifically this can translate into hands-on support, early access to new Alexa capabilities (APIs, SDKs, etc.), enhanced marketing support on Amazon.com, placement at Amazon showcase events, membership in AWS Activate, and more. In many cases our portfolio companies have been launch partners for new Alexa features and/or first in-kind use cases.
VN: What are some lessons you learned?
PB: When we started the Fund we had a hypothesis that Alexa could be “big” and that a venture fund could inspire entrepreneurs to innovate on the service. We feel fortunate that both have turned out to be true. The interest from entrepreneurs in our Fund has inspired us to continue to evolve our approach. For example, the breadth of interest in our Fund from entrepreneurs at all stages of startup evolution inspired to create the Alexa Accelerator and Fellowship programs.
VN: What excites you the most about your position as VC?
PB: It’s a privilege to work with entrepreneurs who are passionate about their vision, with whom we share a common view of the opportunity to create value for our customers, and to be able to play a small part in helping them advance their vision.
VN: What is the size of your current fund and how many investments do you typically make in a year and reserves you set aside?
PB: The Alexa Fund was launched with $100 million in funding, and we committed another $100 million in November 2017 to support the growing number of startups building with voice, especially those based outside of the US. The Alexa Fund portfolio now includes more than 50 different companies, including startups in Canada, India, Germany and Israel.
Read more from our "Meet the VC" series
Brendan Baker was the second employee at AngelList before becoming a Director at GreylockRead more...
Ackerman is also the co-founder of cybersecurity investment foundry DataTribeRead more...