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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.
Samantha Huang is a Principal at BMW i Ventures.
Huang focuses on investments across AI and big data, autonomous driving, Industry 4.0, sustainability, and the next generation of human experiences. She also serves as Head of Content for the Emerging Venture Capitalists Association, which is the most active nonprofit organization for empowering the next generation of venture capitalists. Huang previously worked at Robert Bosch Venture Capital and in corporate development at SK Telecom. She also worked as Lead Researcher at the Rock Center for Corporate Governance at Stanford University on research projects centered on innovation and entrepreneurship.
She holds a J.D. from UC Berkeley Law School and an MA in history from Stanford University. Samantha is also a licensed California attorney.
VatorNews: What is your investment philosophy or methodology?
Samantha Huang: My investment methodology generally follows the “first principles” approach that is common across scientific thinking. That is, I approach any potential investment by breaking it down into its constituent parts, which, in the case of early-stage venture investing, consists of an analysis of important things like the value proposition, the market size, the problem, the technology, among other sundry items. Throughout the process of analysis, I first come up with a list of questions that I need to answer to get comfortable with making an investment. I then proceed to try to answer these questions through a combination of market research, talking to experts in the field, and undertaking more detailed analysis of the fundamentals of the business. I try to stay objective throughout this process, identifying my key assumptions and making hypotheses along the way. I guess you can say that my investment philosophy or methodology is all about trying to piece together a puzzle to come to some greater understanding or truth about the state of a given company and whether it is investable.
VN: What are your categories of interest?
SH: BMW i Ventures as a fund focuses on four main categories of investment: automotive, sustainability, supply chain, and manufacturing. Within these areas, we have lots of flexibility to explore adjacent themes. What I like to say gets me excited as an investor on an individual level are investments across AI and big data, Industry 4.0, enterprise SaaS, and sustainable technologies.
VN: What's the big macro trend you're betting on?
SH: There are a couple of major macro trends that I have been following. The first is the broader adoption of AI technologies to create not just better products but also improve various efficiencies across the enterprise. The second is the general society-wide move toward creating a more sustainable future, which is forcing companies to create new innovations in the arena of sustainability.
VN: What is the size of your current fund and how many investments do you typically make in a year?
SH: Our current fund is $300 million. We probably average at least ten new investments per year.
VN: What stage/series do you invest in and how much is that in dollar amount for you?
SH: We invest from Seed to Series B. Our check sizes range from $5 to $10 million.
VN: What kind of traction does a startup need for you to invest? Do you have any specific numbers?
SH: The type of traction I need to see from a startup certainly depends on the stage of maturity of said startup.
At seed-stage, I don't generally need to see traction, since such investments are typically riding on the caliber of the founders and the value proposition.
For companies that are Series A stage, I like to see enough traction to the extent to which I can validate that a company has reached product market fit. For software companies, this means hitting some degree of critical mass from an ARR standpoint. For hardware companies, which often face much longer development and sales cycles, I do not need to see hard revenue numbers per se but at least some early successful pilots.
For companies at the Series B stage, I need to see enough traction to the extent to which I can validate that the company is at an inflection point for growth. For SaaS companies, that often comes down to making sure that their financial metrics show all the indications of a company that is scaling. For hardware companies, I ideally would like to see some revenues, though at the very least some proof points from pilot customers on the brink of conversion may also be “enough” to get me excited about a given deal.
VN: What other signals do you look for? Team, product, macro market?
SH: When it comes to early-stage investing, other key signals I look for include team, value proposition, the product, and the market size.
VN: What do you think about valuations these days? What's a typical Seed pre-money valuation and Series A?
SH: Valuations had reached their peak about six months ago but are now thankfully trending down to conform to the basic laws of physics. In recent months, venture capital firms have been rescinding term sheets, renegotiating valuations lower, or holding off from investing entirely. It’s very possible that valuations will descend even further, especially if broader market conditions continue to deteriorate.
VN: Venture is a two-way street, where investors also have to pitch themselves. How do you differentiate your fund to entrepreneurs?
SH: A core part of our value proposition of BMW i Ventures is that, in addition to providing financial capital, we enable our portfolio companies to access all the advantages of working with a big company like BMW. Indeed, while I focus on the investment side of things, a couple of my other colleagues are tasked solely with working on bridging the gap between our portfolio companies and BMW. Through this, we hope to enable customer relationship opportunities, joint development and collaboration, knowledge-sharing, and whatever else we can provide to ensure the success of our portfolio companies.
VN: What are some of the investments you’ve made that you're super excited about? Why did you want to invest in those companies?
SH: My first investment in my venture career was in a company called CelLink. CelLink produces a flexible circuit that is revolutionizing the automotive wire harness industry. When I first invested in the company, I had invested on the premise that automakers seeking to make the transition to electric vehicles would have to innovate around the automotive wire harness, which is the heaviest component in the car and therefore a dampener on an electric vehicle’s range. CelLink’s flex-circuit approach enabled a significant reduction in the weight and volume of the wire harness, and I considered it to be a key enabling technology for the market transition to electric vehicles.
I had invested in the company’s Series Seed round when I was at Bosch Ventures, in the company’s Series A round when I was at SK Telecom, and in the company’s Series B round while at BMW i Ventures. Recently, the company raised a $250 million Series D round led by Whale Rock Capital. It’s a funny but amazing feeling to look back at the first investment I ever did and see how far they’ve gone.
VN: Tell me about yourself and your background. What led you to venture?
SH: I’m one of those people who serendipitously fell into venture capital. While obtaining my law degree at UC Berkeley, I did a summer internship at Google writing legal contracts. While an internship at Google is undoubtedly one of the most fun summer work experiences a student can have, I realized then that I couldn’t imagine myself dedicating 60+ hours a week to reading and writing in such obtuse legalese. So I sought out to explore what else was out there. In my last two years of law school, I worked at Bosch Ventures, which was my first taste of the venture capital world. From there, I realized that venture capital was the right path for me. The rest was history.
VN: What are some lessons you learned?
SH: The main lesson that I’ve learned is to just be open--be open to feedback; be open to change; be open to understanding where your weaknesses are so that you can improve them. Whether it’s true or not, approach life with the philosophy that there is no cap to your growth because then you’ll never stop growing.
VN: What excites you the most about your position as VC?
SH: I’m a big research nerd. In my early twenties, I was training to become a professor of history, and back then I would sometimes spend ten hours a day reading historical documents in an archive. When I’m doing diligence for a given investment, I often feel just like my former self--a historian trying to piece together some puzzle called a potential investment. That’s why I absolutely love the whole diligence process in venture capital. I relish the experience of working with founders, learning about their ideas, and trying to come up with a state of truth. I’m happiest when I’m figuring out problems and learning about new innovative technologies that hopefully will disrupt the world one day.
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