Meet Kimmy Paluch, Managing Partner at Beta Boom

Steven Loeb · February 21, 2024 · Short URL:

Beta Boom is a Salt Lake City-based firm that focuses on founders with lived experiences

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.

Kimmy Paluch is co-founder and Managing Partner at Beta Boom

Paluch grew up in Kingston, Jamaica and fell in love with computers as a kid and was often found tinkering, running command line code and inevitably breaking them. She is a tech entrepreneur, former software engineer, and diversity advocate. In college and early in her career, she was often the only Black woman computer scientist in the room. She developed the whitespace gaming division for LeapFrog Inc. and served as Director of Digital Marketing for a 3D printing toy startup in the Midwest.

Paluch has a B.A. in Computer Science and Spanish from Dartmouth College and an MBA from MIT Sloan School of Management. She’s been recognized as one of VC Journal’s Women of Influence, Impact Magazine’s Women of Impact, and Utah Business Women of the Year.

VatorNews: The way I like to kick these off is by having you talk about your philosophy and your methodology. Why did you decide to start a venture firm? Why did you feel there was a need for a Beta Boom, and where do you fit into the venture ecosystem?

Kimmy Paluch: We recently did some research on this, there's almost 50,000 firms out there globally, so you do have to ask yourself, why start another one? I actually started my career in the Bay Area as well, so I was in the Bay Area for about 12 years, I was in Oakland before moving to Salt Lake. So, I was in and around the VC space and the startup space basically my entire career, but I will say I was more on the periphery. I was doing product innovation in the Bay Area with my partner, who's now also in this firm with us, we started this together. And so, there are multiple reasons why I did this: I was doing product innovation for startups and corporations and we basically called ourselves a startup for hire, so we would plug ourselves into startups and corporations when they were doing early stage development of a product, help them build it out, help to build out the teams, and then get it to market. All that fun zero to one stuff was what we were doing. It struck me mid career that a lot of what I was working on was very much one percenter problems and so it was the bubble that really pushed me actually to go into the venture space, because both my partner and I looked at ourselves and said, “we feel like we're not really solving the problems for the majority of Americans.” A lot of what we were solving were trivial, not as meaningful problems and we wanted to see that change. We looked at ourselves and we said, “the big problem is financing. These problems are being solved because people choose to finance these problems.” That's really what sparked my interest in getting into venture to begin with. I started working for a venture firm and got my crash course and that really exposed that, yes, there's a huge opportunity here that we're missing. Part of it is that we're in this bubble, and we probably need to get out of it. So, really, what we wanted to do was focus on a different profile of founder solving these core problems that we thought were meaningful problems that can really affect the majority of society. In order to do that, we knew we needed to get out of the Bay Area so that's why we moved to Salt Lake. We wanted to get to the middle of the country, and start solving those things. 

Beta Boom is pre-seed and seed, we do early stage because that's where our core was when we were in the Bay Area, and we're really looking to invest in what we call tenacious founders that are living these problems of the majority of Americans, and solving meaningful, impactful problems. So, we're focusing on industries like digital health, FinTech, the future of work, and we also look at SMB SaaS, as the majority of job creation happens around small and medium sized businesses. For us, it felt like we're missing out on the biggest opportunities because of the type of founder that was being looked for, so we wanted to look outside of that. We don't just invest in founders that are coming from elite colleges or elite backgrounds, we really are looking for those that have faced adversity and these problems and are solving them.

VN: I'd love to hear about Salt Lake City and Utah. It'd be great to hear why you chose Salt Lake City specifically and what are the opportunities in that area right now? What's coming out of Salt Lake City?

KP: We chose Salt Lake for a couple of reasons: when we started on this journey we were looking at where capital was being allocated and, as you probably know, the majority of the allocations are still happening in three major markets, with about 50% or so of going to the Bay area, then you have New York, Boston, and LA grabbing for the rest and that intrigued us. If you're singularly selecting for geography that way, what else are you missing out on? And so, we did a landscape across the US, with the Carolinas, Texas, because Austin had really emerged during that time, Chicago, and Silicon Slopes, as it's called, so the Salt Lake area had already gotten on the radar at that point. It was around 2017 when we started really looking at things, we made a visit here at the beginning of 2018 and I met with several ecosystem partners here, drove around, and it felt a lot like what Silicon Valley felt like in the early days. We said, “there's a lot of things happening,” and the density of where it was happening was really interesting. I'm a data person, I like a lot of data, so we were looking at the numbers too and the numbers speak for themselves: this ecosystem has been number one in business for many years, it also had the highest productivity of outcomes that we were seeing for exits. So, we decided we wanted to be in a rising tech hub that was producing a lot of activity and also represented that, and that's why we chose Salt Lake. We really just wanted to be in an ecosystem that was really highly evolved. I will say there are a couple other personal reasons: I love being in the mountains and outdoors, so that did help push things over the edge for me. Also, geographically it gives us great access because we wanted to access the middle of the country, so the South, Chicago, Midwest, so we liked how it would also give us access as a hub being able to go across the US since we knew we weren't only going to invest in the Utah ecosystem but we'd like to be centrally located. 

What's happening here? Lots of outcomes. We saw Qualtrics exit twice, so they're really good at enterprise SaaS. With Salt Lake City the first thing to think of is also Mormon culture and it's productive for those reasons. It's been a really productive sales hub so there's a lot of great talent there. There's an undercurrent of impact that speaks to the soul of what Beta Boom is and that's one thing that we tap into; there's a lot of things that we're trying to foster here. When we invest and when we think about what we solve for, how can that also align with the values that we hold? So, that's something that we like.

VN: You mentioned some of the categories that you invest in, and one of those was digital health. That's a space that we've really been focused on so I'd love to hear what you see happening in that space, specifically right now. Obviously, we're post-pandemic at this point, a lot of the things that came up during the pandemic, like telehealth and all that, have receded a little bit. So what's hot right now in digital health? What's happening that's exciting?

KP: This is where my love has really sparked for me as well. When we started out we were generalists and we did that on purpose, because we're really good at software and we didn't necessarily want to pigeonhole ourselves. But I knew digital health was going to be a big piece: we did it when we were in the Bay Area, it’s a piece of what we have experience in, but I didn't realize how big it was going to be for us. Right now, about 50% of our investments are going toward digital health because as we kept looking at the deals that were coming in, it just kept standing out. One, there's a lot of activity since we just came out of the pandemic, as you mentioned, so there are tailwinds, but the exit opportunities are massive. The other thing is, if you think about our thesis, as I mentioned, we really are looking to solve the biggest problems that society faces. For me, health is number one, it’s something we need access to since, as Americans, we are probably in the worst society when it comes to having access to health care, and we know what the outcome looks like for people that are not served well, which we saw exacerbated during COVID. Those are just problem spaces, and they're huge, and they're not being served, which has basically led us to lean into that even more and I know that they will continue to be that way. 

So, where are their opportunities in the health space? Everybody's going to say AI and health and that's the absolute truth. AI is going to be transforming everything, especially anywhere where we have data and where we have huge problems. It's going to change everything, but I go deeper than that. Why is it that we have a system where Black women are dying at a higher rate when they're having babies? Why are we in a system where when COVID happened the majority of people that had the worst outcomes were the most fragile in our nation? Those are the areas that we look at and say, “how can we solve those problems?” We have a company in the maternal space that's called Canopie, and they're able to better identify problems like depression and anxiety and triage for health systems so they can prevent one of the biggest mortality rates for women. That company has been doing extremely well, they've signed multiple health systems, and they’re getting adoption across their base, because they're using evidence-based approaches in order to solve this problem. Those are the kinds of things that we want to see, tech being applied to not necessarily usurp our healthcare providers, but to support them and be able to have better outcomes. Those are the areas that we look for and that we like to leap into. We have several in the portfolio that are essentially doing that. Whether it's AI or anything else, how do we use tech to create better outcomes in our society? 

One area that I haven't invested in yet but I'm very interested in is the intersection between health and fintech. Around 40% of Americans are holding on to health debt that they can't service because our society has been built on insurance systems that don't provide care at an affordable rate. That, to me, is still a big piece that we haven't solved as society. There are players that are trying there, but I haven't seen anything that's really cracked the nut. 

VN: You talked about the impact that you want to have, but if you were to define the macro trend that you're betting on, what would that be?

KP: We see an opportunity because people aren't investing where we’re investing. As VCs, we basically bet on that we can source and select better than the rest and there's a support piece too. We're investing on the macro trend of ordinary founders doing extraordinary things that VC is ignoring. That's essentially what it is because if you look at the rate at which we invest in, let’s say, the alumni coming out of top 10 universities, we just did this research on pedigree and how it affects where investments go, the top 10 funds are about 2x over index. So, that offers an opportunity; if people aren't investing in these kinds of founders then we have an opportunity to exploit that. The data is there that says that you're just as likely to found a billion dollar business if you're outside of the top funders than if you're from these top 10 universities. 

VN: It sounds like you have a real focus on underrepresented founders, I would guess that probably includes minorities, women, people who generally have been excluded from venture capital for a long time in Silicon Valley. So, can you talk about how you think about that?

KP: Fundamentally, especially for early stage, we're investing in the founders. Everybody says it: ideas are a dime a dozen, the data that we have to go on is really around the founders. There is obviously a little data that we're getting on their execution at the early stage, but it is the founders. 

I think about diversity a lot more broadly and a thing that we learned really early is it's not just color of skin and gender, it really is the lived experience that someone is bringing. That's how we're looking at things. When I got into this we did do a lot thinking about diversity and measuring, and we still do, so about 95% of our investments are female led, but they're all female or BIPOC led. The reason that it's important to think beyond that is, if you look at diversity investments, even for some of the diversity funds, they're still investing in the same profile of founder and that, to me, is not necessarily unlocking what we need to unlock. All the studies on diversity are about the experience, background, and how that brings different perspectives and what we're trying to tap into is more of is, what is their perspective and where have they come from? So, this comes to be even socioeconomic, like how many people are investing in those that actually have lived off food stamps that are now trying to solve problems for people that are living on food stamps? That's the way that we like to talk about things. Also, we know the problem, I tracked the numbers: 2% of venture going to all women teams, 14% to mixed gender teams, so there's an opportunity. Anytime anything is that imbalanced there's an opportunity.

VN: Let's talk about your fund a little bit. What's the size of your current fund? How many investments do you make a year? And what does that come to in terms of check size in the initial check, as well as over the life of the company?

KP: Our current fund is $14.5 million. We’re aiming to make about five to eight investments a year, we can go up to 10 but we're averaging about five to eight investments per year. Our initial check size is up to $350,000 and we do reserve for follow-on. So, in a follow-on round we might roughly double our position in our company, so $350,000, maybe go up to just shy of  $1 million.

VN: You're very early, obviously, pre-seed and seed, so I'm assuming that at that point there's not going to be traction for those companies. Or maybe I'm wrong about that. Being that early, do you actually expect to see a number of customers or revenue? And if so, is there a minimum amount that you want to see from them?

KP: We actually are investing in companies with traction because of the geographies that we invest in. We don't do idea stage investments. What I will say is it is early, $350,000 and we are pre-seed, so our average monthly revenue right now is about $5,000 a month but we don't have any thresholds, we actually look at everything. Especially when you think about the health investments, they're selling into health systems, sometimes they're on small pilots or small paid pilots or unpaid pilots, so we'll look at those and we've invested in that.

VN: Okay, so you definitely won't invest pre-product.

KP: I would definitely say no. 

VN: So, how do you vet the product? I guess it depends on the space; but let’s say it’s a digital health company and they're selling into health systems versus a consumer product. It’s probably easier to vet a consumer product, you just use it, see how it works, but if they're selling it to health systems how do you vet that?

KP: My partner and I were both product people before so we actually rely on the products a lot. It's why we like to see products in the market, because then there's something for us to base things on and to actually build on and support them. And so, we actually use every product that we invest in, to the extent that we can. If we can’t, if it's too early, then we typically will talk to partners that have piloted with them, ask for demos, and then also just evaluate it as much as we can, whereas the products may not be fully usable. 

Especially because it's so early, we like to see some form of product differentiation’ product differentiation is extremely important in the beginning. There is, obviously, some difference, because in the beginning you have to get something out into the market, we understand that, but if what's in the market and the plan is copycat that, to us, doesn't indicate something that's going to win the market. So, we like to use the product, we like to understand what the roadmap is, we spend a lot of time with the founders talking about how they think about it, how they think about differentiation, competitive threats. Those things are more telling about whether a product can win a market versus an idea on paper that won't give us enough information.

VN: How do you determine product differentiation? How do you make sure that this product is differentiated from what else is on the market?

KP: It's extremely difficult! VCs like to be the smartest person in the room but the fact is hindsight is 2020, it's that you're smart 10 years later. So, we use it, we look at what else is in the market. There's also an intersection between product differentiation and messaging differentiation, so we look at the marketing as well. And what we find is it’s really hard because, at the beginning, founders typically don't know how to tell you how they're different. It's really hard for them to articulate what their differentiation is and that's actually made it really difficult in our early screening process. It becomes easier once we're at a later stage in the conversations with a founder, because we have more time to spend with them, we have more time to dig in and hear how they think about things or what plans they have but, at the beginning, when you're just looking at a deck or an intake form, it becomes difficult for us to tie what they're saying and what could be there and the potential that could be there. But, in the end, we're investing in potential and so we've lined our process up to try and figure out early on, can we identify those that we don't think have anything and then dig deep with the ones that we do? We use the product as much as we can, where we need to, where it's not clear, we'll talk to the customers that are using it, and then we look at even architecture, trying to understand how they built things that could potentially bring a moat. It's not a scientific process, it's not even probably foolproof, but we try and do as much as we can to understand how this thing could take over. When people first looked at Google, they would have been like, “Oh, it's a search engine,” but if you dig a little bit deeper, you can see why people are using it. If you see that they have traction, and traction breaks everything else, then you know that the market is telling you that it’s differentiated. That's when traction really does help. 

VN: I definitely understand what you're talking about: I talk to a lot of very early stage companies and you can tell which ones have honed their message and which ones haven't. When you talk to the CEO, you can tell who has figured out how they want to sell their idea and they know exactly how to do that and who hasn't. 

KP: I'll get more concrete with you: this is one of the things that keeps me up at night. I'm always worried, will someone come to me and fill out my intake form and they just don't articulate themselves well and will I dismiss them too early? That has to keep every investor up at night. You had it, you saw it, and you missed it. We ask probably 100 times throughout the process, “how are you different? Why would a customer choose you over your competitor? How would that competitor take your customers away from you?” We ask these questions so many different times, because it's a very critical piece for us about whether a company might make it or not. And so, we just added to our intake form for people to give us a demo, because we realized that sometimes founders can't articulate it but maybe they can show us, so we added that piece in to see if we could get more information at the outset before I say, “come back later.”

VN: Let's talk about the current state of the market. For a long time one of the questions I would ask for this column was, “are we in a bubble?” And we don't ask that question anymore because the bubble popped. Things have definitely cooled down, especially from 2021 and 2022. So, where are things now in terms of valuations and in terms of the ability for companies to raise money? How have things changed? And how has that affected the way you invest?

KP: The markets are hard, they're very, very challenging and last year, in particular, got even harder. Everybody was saying, and I agree with it, that there's a return to sanity, which needed to happen because 2021 was really inflated and the valuations that we were seeing were really crazy. Now we're basically laying in the beds that we've made because those valuations were not even supported at that point. 

For us, not a lot has changed. We've been valuation disciplined from the beginning and, as you probably know, valuations vary a lot by geography. So, a lot of the inflation that we see around valuation go around pedigree, elite founders tend to be able to get a premium on their valuations, to the extent of 2x and 3x what another founder might get. So, given our geography and our discipline, we've actually stayed really pretty disciplined to what we want to look for. We're not investing in companies that are raising valuations of $10 million or more, we look at $10 million or less. If it goes over $10 million, we’re pretty disciplined about not doing it.

That said, it's a challenging market, so everybody had a hard time going back out, we're still seeing more bridges than we're seeing first, clean rounds and there's a challenge around the flight to safety. When the markets did what they did, everybody went back to what they thought was safe: one, obviously shore up your current portfolio, so that's where the bridges came from, and then also go back to what you know and what you feel is safe. You talked about the diversity numbers, those coming back down is going to be expected. We've also been talking about who gets investment, those that have more traction are getting more investment. So, the volume has dropped at the seed level but the actual size of rounds stayed the same. The difference is what traction those companies had and so that bar has completely changed. Companies that we invested in for pre-seed were targeting and getting $100,000 ARR, but that was no longer enough for a pre-seed round, we're seeing like three to five times that, you need to get to $300,000 or $500,000. So, that's the hard part for founders is they don't know where the bar is and some investors don't know where the bar is anymore. It's just really, really changed and it's made it difficult, because whereas you, as a founder, may have planned to have 12 months runway to this milestone, the milestone just changed and your runway isn't enough anymore. And so, the challenging part of the market right now is figuring out what milestones you need to hit so that you can make sure you can raise the next round.

VN: In some ways, it's probably a good thing, right? I mean, the companies that deserve the funding that have proven that they have the traction, that they will actually be big businesses, they're the ones that are going to be continued to be funded and the ones that probably in the past would have still raised money, even though they probably shouldn't have because they didn't have the numbers, and they probably were going to fail eventually, they're not going to raise that funding anymore. So, in a certain sense, it separates the wheat from the chaff and the companies that deserve it, that have proven themselves, are the ones that are going to get funded going forward.

KP: Absolutely. What I like about it is capital efficiency is now king again and it should be. We've always said, “keep pushing out potential profitability, keep pushing out even making revenue.” That's challenging and we've seen things like Uber where you can't just continue to be unprofitable forever and rely on private market money because who's going to suffer in the end? Either you're going to IPO and hurt the public markets, or you just keep spending bleeding money in an unprofitable business. So, there is good sense and sanity in this and, I agree, the right ones will go forward and, hopefully, the new companies that are being built are going to be doing it with capital efficiency first. That's actually something that we look for: those people that have lived through adversity and have had to stretch a dollar will know what this feels like and how to get through this and that's important because, running a business, you can't just run it forever as if money grows on trees because it doesn't and that's important. 

On the pre-seed stage for post-money valuations and things like that, they’ve stayed the same as well. I think the median is at $6 million now, which is reasonable. Again, pre-seed is all over the place, whether they have traction, don't have traction, they’re at the idea stage, but everything started late and it's been trickling down so this year is going to be troubling also for pre-seed because it hit seed very heavily last year.

VN: Tell me about your differentiation as a fund. Obviously, there are a lot of funds out there, many of them going after the same limited partners, I would imagine, who are going to put money into you. So, you have to pitch to them, and you have to say, “here's what's different about me, here's what's different about Beta Boom, here's why we should be the ones to deploy your funds.” What's that pitch? How do you differentiate yourself to LPs?

KP: LPs are managing their own portfolios. For us, the differentiation is pretty clear in what we say to them: we're investing in meaningful problems, not fads. And, by the way, that's important in terms of the markets that we're about to go into. The founder piece is also important to us. When we think about who's in your portfolio and what companies you’re investing in, we have a different way of looking and selecting founders and companies. So, that's also a very different piece of a portfolio that you can put in. And then the third thing is also that it's just a different exposure, we are investing in rising tech hubs so we've explicitly decided not to invest in the Bay Area, although it was my hometown. We're only investing in rising tech hubs in the US so that's not something that all LPS have in their portfolio, because a lot of companies are still focused on the main tech hubs.

VN: And that really appeals to the LPs? When you say, “I'm going to be investing in different kinds of founders, different kinds of geographical areas,” they really respond to that?

KP: They do. So, two things to make that summary clear: meaningful problems, meaning we're not doing pet apps and trivial technologies that we don't need. And then, secondly, yes, it's different exposure in terms of what geographies and kinds of companies that we're going to be exposing them to. I will stress one thing: that meaningful problem is important because a lot of our investors are actually investing in that piece, aligning what we want to see in the world with the money that we're putting to work and the money that we make. It is forefront for us. And so, all of the investors that we have in our LP base, I believe that that piece was what got them most interested first. The rest of it basically reinforced the why. 

Then the third thing I'll say is when we got into this, like I said, I came at it with a scientific approach, looking at VC and what they were missing. We are building a different way of doing VC and that vision piece is important because when an LP invests in your first fund, they're not thinking about just this fund and done, they're thinking about a longer relationship and what you are building. We are the founders that we invest in and the LPs look at us the same way. And so, our vision is really that VCs can work differently to unlock different opportunities. We created everything from the beginning to the end to think about how we unlock under the radar opportunities that VC is missing, and that will excite any investor. If you can expose an opportunity you can get anywhere because of the way that we look at the problem and the way that we've built our firm. From how we make ourselves accessible at the front end for selection, 50% of our investments are going to people that come to us cold inbound, sight unseen, they come through our website, and 50% are through referral. The way that we select them, I've beaten that dead horse, but we're looking for something different. And then the third thing is how we support the founders, we are really, really hands on with the founders. We have a growth team that works with them alongside them weekly to help our founders with their issues, their challenges.

VN: You sort of answered I guess a little bit of my next question, which was going to be how you differentiate yourself to entrepreneurs. I think that there's a vision that people have of venture capital, where its founders come on their hands and knees and beg you for money. And maybe it was like that at some point but I don't think it's like that anymore, especially for the best founders. They’ll have their pick of the litter for who they want to take money from. So, you're also pitching yourself to the founders themselves. What's your pitch to them to say, “here's why I'm a good partner for you”?

KP: The first thing is we give you a fair shot and we're accessible. We don't want founders being judged by whether they can get a warm intro from us; I don't believe in the warm intro and I find it insulting to judge a founder by that because that’s network bias. So, we try to be very, very accessible and, again, say that we're going to give them a fair shot. Any founder that comes to me, I always first thank them. I say, “thank you for the opportunity to look at this investment,” because, as you said, they have their choice, and they chose to ask if we would be interested in investing. That's the way I try to look at it. I also tell my founders that: “never put it as an investment ask, it’s an investment opportunity,” because you're not asking for anything, you're offering an opportunity for someone to partner with you and to be involved in a potential big outcome.

The second thing, and it has been really transformative, because they’ve told us so, is that we realized that, especially for early stage, when you have accelerators and other things, they’re very much cookie cutter programs and they take you through things that sometimes you don't need. When we were founders, my partner and I, it was all these people telling us what to do; you have advisors and mentors thrown at you and it’s like, “you should do this, you should do that,” and it's in the how that you things get done. I started listening to the book “Atomic Habits” and they talked about looking at the lagging effects, the things that we want to happen, but those things don't happen until you start building processes and systems that lead you to get to those outcomes. So, that's what we focus on, we want to give them a growth team and work with them as partners to help them actually execute day to day, because those day to day execution pieces are what comes with outcomes. So, we're trying to do a support system for them weekly to help them reach their outcomes. Our founders have found tremendous value in that.

VN: Let's talk about some of those companies you’ve invested in. Talk about what it was about those companies and those founders, when they came to you and you sat across from them, that made you want to invest in them. What made you excited about those companies?

KP: The thing that always sticks out to us is how close this problem is to the founder. They talk about founder market fit and sometimes I think it’s the last thing we talk about but it's easy to give up on a startup. It's a really, really hard journey. Talk about the ultimate roller coaster: you will want to get off so many different times. And so, we like to see that lived experience because if you're solving something where you know that challenge, and that you're so, so committed to solving, that perseveres over everything else, and so we are looking for that piece. I like to think of it as founders that have lived that adversity, it helps them to actually stick it out. And, by the way, we're obsessed with what makes a company or a founder successful versus not and that piece has always been at the top for us. 

One example in the FinTech space is called Bolder Money, they're making financial health accessible to the masses. Their platform is essentially focusing on the emotional and behavioral side of money to help solve the debt crisis that we have in America. They're helping their members to overcome that and build wealth and they're doing it through a virtual coaching platform. It's proven to be very effective. It's also very interesting that 90% of their base is women, and they've helped grow their wealth; last year I believe it was close to $3 million dollars that they added in wealth for their members. We love that approach because it was actually blending a human and tech approach to solve a problem that everybody's having: how do we actually understand our finances and be able to have a healthy financial lifestyle? Why we like them was, again, their lived experience. Actually, it was a male and female team, the woman was a money coach for her co-founder and they came together and decided to actually build the company together, so we loved that origin story. Again, extreme domain expertise. She'd been a money coach, an accountant, and a CPA, but also had financial troubles and dealt with the guilt and the shame of having that experience of being like, “I'm so educated, and yet I am also in debt.” And so, we knew that they understood the problem, and that they had something really different. We hadn't seen anything that was actually doing that. There were a lot of things like budgeting and money trackers, but they got to the core, which was the shame and emotional side, which is a piece that is hard to overcome in terms of changing your money habits. 

The second company I'll talk about in the digital health space is called OK2StandUP. Again, a phenomenal founder out of Pennsylvania, and they are essentially preventing senior falls. So, this is an application of machine learning that is really, really interesting in the health space. They're identifying in real time when a vulnerable senior is about to have a fall, and all the other fall prevention platforms that are really doing it after the fact, after a fall has happened, or way too late for a caregiver to intervene. As you probably know, senior falls can be deadly. So, they’re allowing caregivers to respond in real-time and prevent falls before they happen.

VN: So I guess it would be sensor technology that they use? How did they determine if the fall is going to happen?

KP: It's uniquely tracking how seniors get up to. So, how seniors get up is very different from how you or I would get up and so they actually are using accelerometers to detect when they're in the process of doing so and then they can create alerts depending on, again, learning about the seniors and their health parameters to determine whether this is something that should be elevated to the caregivers. This is a founder that came in from academia, she did it in an academic setting and realized, also having had that personal experience in her life, that this was something that nobody on the market was doing. 

VN: Let's talk about your career, you obviously transitioned from being the product manager that you said to your VC. What was that transition like? 

KP: Entering VC is really, really difficult. Everybody says that breaking into VC is the hardest thing to do. I never had ambitions of getting into VC; like I said, I started as an engineer, then I started studying engineering and marketing teams, I did user experience, and I've always loved the interaction between humans and tech. Even when I was an engineer, I was more interested in how do you make it usable versus something that only engineers can use? I've always had the perspective that you can build innovation until somebody uses it, then it's meaningless. So, that's where I came from my background. 

When I decided to make the switch to VC, it wasn't easy. I was 35, I had a mortgage and two kids, I had already gotten out of business school for three or five years. I went back to business school in 2009 and graduated in 2011 and, at that point, I was thinking I’d go back and be more of a product marketer, but I actually continued to work on my consulting and I fell into working on problems I didn't want to be working on. So, then I ended up switching to EdTech; I was working for LeapFrog and that was my first moment where I realized, “hey, I can have an impact in the work that I'm doing and still do something I love, which is working in tech.” That spark was what triggered everything else for me. And so, when I decided I wanted to change what I was doing, it wouldn’t have been easy for me to just a step back and say, “I want to become an analyst and make an analyst’s living,” because I couldn't stay in the Bay Area and afford everything else, it wouldn't have worked. So, I actually started as a fellow doing it part time for 10 hours a week, and it was a great crash. I could have gone down the path of taking a really long time and building up within another firm, but I didn't see anybody doing what I wanted to do and that was the biggest struggle for me. I could get trained by people doing things the wrong way and I wanted to do things the way I thought it should be done. And so, my partner and I did something crazy: we actually put our money where our mouth is. We just liquidated everything that we had in the Bay Area and put everything behind this but we believed in this enough and so we jumped into VC by using our own capital. So, our first investment in our first fund was all GP-based, so we made those initial investments basically on our own and we said, “we're going to build our own track record because we believe in what we're doing.” So, we invested in 10 companies and then we went out to raise Fund II and thankfully other people saw the vision and saw what we were trying to do and then got behind us. It was extremely difficult, I don't recommend people do it this way because it takes a really long time to raise a fund, and all my gray hairs have come from this process, but they're fully worth it because I believe in what we're doing and I would put even more behind it. I think this is an opportunity where we’d be failing society if we didn’t take advantage of it. 

VN: I'm sure you had a certain vision of what it was going to be like to be a venture capitalist, versus whatever the reality of it is. What are some of the things that may have surprised you about being a VC?

KP: There's so much time spent on legal stuff! It’s interesting because I basically went straight into being a fund manager and investor, so I'm building a firm while also investing. And so, it's all consuming and all encompassing. I knew it would be but not to the extent that it's been, so that that's been a surprise. 

I didn't think about VC that much, I'll be honest, when I was early in my career, but I think people have thought that it's glamorous, that you just sit around meeting founders all the time, being able to sit back and say, “no” and judge people and throw your opinions around as if they matter more than other people's opinions. I would dispel all of those myths: that's not true, it's an all consuming and difficult job but I don't want to oversell that either, there are harder jobs. The final thing I'll just say is, I feel very privileged to get to work alongside these incredible founders that are changing the world. That's the piece that fuels me the most. The part that's hard is the saying “no,” and trying to tell founders that X, Y, and Z is the reason that you won't invest because sometimes they don’t want to hear it and, second, I could be wrong and I try to tell them that. “These are my two cents, do whatever with it you will.” That's probably the hardest part of the doubt.

VN: What's the part of the job that you really love the most? What's the thing about being a venture capitalist that really gets you out of bed every day and makes you want to do this?

KP: The ability to unlock some incredible innovations is really important. My partner, Sergio, before we went on this journey, even before we were thinking about VC, he wrote an article saying that he wanted to move from affecting one person to a billion people. Think about that scale of impact: how do you go from saying, “I'm going to impact one person, 10 people, 100 people, I'm going to build a company and hire 20 people,” to saying, “I want to affect a billion people.” That triggered part of this. How do you scale impact? For us, this is how we do it: if every dollar that we're able to put against a founder that is doing something incredible, that has ripple effects that are going to go on for way past our time. So, I’m thinking of this from a legacy building perspective and that's why I get up every day. It's why I tried to align in EdTech to get something that was meaningful for me that I knew my kids could be proud of. And that's the piece that gets me up every day. I'm thinking about this as I invest in ordinary founders doing extraordinary things. And that is the impact that I want to leave.

VN: Is there anything else that you want to talk about anything else about yourself or about the firm, about the spaces that you invest in?

KP: I feel like we're always in unprecedented times, but going back to the first part of our conversation, I believe that flight to safety is really dangerous at this time. Prudence is good, I'm glad that valuations are going down and we're being more judicious about what we're doing, but flight to safety can be very dangerous. We should be pushing boundaries a little bit more and that's what we're doing here. We are always trying to think, “how do we get 10 times better, 100 times better, think differently and challenge the way that we think?” That's important. I had a conversation a couple days ago with my kids and there was a quote I used to have behind me in my setup, it was the Nelson Mandela quote that says, “may your choices reflect your hopes, not your fears.” That's the thing that drives me and the thing that I hope we remember when times get hard.

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