To Impress This VC, Deliver on What You Promise

Jennifer Fonstad is the rarest of finds in Silicon Valley: cofounder of a woman-run venture capital fund. By the time she launched Aspect in 2014, with partner Theresia Gouw, Fonstad had already made the Forbes Midas list, climbed Mount Kilimanjaro and closed a deal while in labor. As an investor, she avoids divas at all costs, and don’t expect her to write a check and then disappear; collaboration makes her tick. Her primary focus is the $150 million fund: Series A rounds -- about $1 million to $6 million, and mainly for small cyber­security, digital health and mobility businesses preparing to be huge.

(Read on Entrepreneur)

ForeScout Technologies

Their approach: Focus on growth

Want your VC to be a backer for life? Deliver the promised growth. That’s how ForeScout Technologies, a San Jose-based cybersecurities company, scored three investments from Aspect Ventures investors. The first came a decade ago, from Fonstad’s partner. Then in 2014, the first week Aspect Ventures was formed, the duo backed ForeScout again because it had a need they could appreciate: “The company was growing quickly and needed sales and marketing experience,” says Fonstad. ForeScout also hired a new CEO to help expand its services -- for example, it figured out how companies can monitor lots of new devices inside a network, now that employees bring hordes of gadgets to work. That led to even more growth, which is why Aspect invested yet again in January 2016, this time as part of a $76 million raise in which the startup was valued at $1 billion. The unicorn status doesn’t impress Fonstad. “It’s an interim valuation,” she says. But she sees steady growth -- in revenues, operating margins, customer base. When that happens, the valuation just comes along, as will the investors. Again and again.


Their approach: Elegance, not buzzwords

Artificial intelligence is hot, yes, and plenty of entrepreneurs try to ride this shiny new toy into the arms of investors. But Fonstad says that means she has her guard up for ideas that seem designed only for splash. “AI is not an end in itself,” she says. “It’s a tool.” In 2016, the New York-based startup Troops pitched her on its product, which uses AI to help salespeople. Need a report from Salesforce, say? Ask the Troops-powered bot (from within Slack) and, boom, it delivers it like a personal assistant would. Fonstad found this “elegant” and “seamless” -- which is to say, when people use it, they don’t think about the AI. They just like the product. Second, she loved the chemistry among the founding trio -- Dan Reich, a serial entrepreneur; Scott Britton, a marketing and sales whiz; and Gregory Ratner, the engineering brains. “They showed mutual respect,” she says. This is critical to helping them share information to move the business forward. Fonstad likens them to a three-legged stool: “You need all three legs to hold it up.”

The Muse

Their approach: Matching values

Lesson to entrepreneurs: Your peers can be big boosters -- and investors listen. Several entrepreneurs drew Fonstad’s attention to The Muse, a millennial career site that today has 50 million users and 700 corporate and nonprofit subscribers. Fonstad had long been thinking about the radical changes taking place in the workplace, and was “looking for companies that could take advantage of the extensive disruption.” The Muse satisfied certain must-haves on her list: They showed that they were prepared to listen, learn and adapt, she says. She loved hearing about how it already made changes. For example, The Muse originally focused on women only but, when it saw who used the site, quickly broadened to include men. And it radically rethought the online recruiting process. LinkedIn, the granddaddy of professional websites, is transaction-oriented: Recruiters woo prospects based on job descriptions. But The Muse aims to foster long-term relationships between employers and current and prospective employees. “It’s not just about getting a job working for a company but also where the company’s values match the individual’s values,” Fonstad explains. “That resonated with me right away.” She invested in 2015.

Here’s How Snap’s Wall Street Debut Could Spark An IPO Boom

By Jennifer Fonstad

I remember when Aaron Levie came into our office and pitched Box Inc. in 2005. He wanted to drop out of college because of the opportunity he and his co-founder Dylan Smith saw around information sharing in the cloud. It was not long after the Google IPO, and we were seeing a stream of young entrepreneurs taken with Google’s success. Hosting in the cloud was nascent, but Aaron saw a world where information should be accessed from anywhere and it was just something he had to do.

(Read on Fortune)

Like many young entrepreneurs after the successes of Yahoo, Google, and Facebook, all Aaron saw was possibility. He was right, if we look at the market for IPOs and M&As in the years following the triumphs of these tech giants.

Will Snap inspire the same? That is the billion and billion, and billion dollar question.

As an investor in technology for the last two decades, it looks like it just might. Sometimes it just looks so easy. As we saw with Snap, you can take a couple of smart young entrepreneurs, a cool app, 158 million users, and then everyone thinks they can do it, too.

And that’s a good thing, as the notion that it may be possible is often a key impetus behind future cycles of innovation. It’s possible for a new start-up to spin out of a company like Snap, as we have seen with Google and other tech startups. Entrepreneurship and innovation thrive on possibilities.

And storied IPOs remind investors, corporations and Wall Street of the possibilities, too. Historically, the number of IPOs, M&A deals and investor dollars typically saw an uptick two years after major tech companies, such as Yahoo, Google and Facebook, went public. The role these companies have played is critical – to our culture, our economic vitality, and to the next generation of innovators.

In the two years after Yahoo went public in 1996, the number of IPOs rose by 45%, compared with the previous two years. When Google made its debut on Wall Street in 1994, IPOs rose by 80% during the two years following the public offering; for Facebook in 2012, it rose by 60%. What’s more, nearly $100 billion poured into venture during the two years following Facebook’s IPO, which was almost double compared with the previous two years.

The M&A markets saw similar increases. The two years after Yahoo’s IPO saw three times more M&A deals than the two years prior. Similarly with Google’s IPO, M&A deals during the subsequent two years nearly doubled. So for the ecosystem, these moments are important indicators of what smart risk capital can bring – in terms of financial returns, products, and job creation.

We will likely see similar activity in M&A as corporations use the start-up community to stay relevant. And yet, even if the response doesn’t match prior years, sometimes it just has to inspire that next Evan Spiegel or Aaron Levie. And now, with Snap as an LA-based company, they don’t even have to be in Silicon Valley anymore.

Jennifer Fonstad is co-founder and managing partner of Aspect Ventures.

Fundraising as the Female Founder of a Startup

Lynn Perkins of UrbanSitter sees signs of change as she works with the next generation of women heading new ventures.

In Silicon Valley, female-founded companies face a significant funding gap. Companies with only female founders accounted for only 3% of the total dollars raised by startups in 2016, according to data from venture-capital tracker PitchBook Data Inc. One reason may be that women, according to PitchBook, make up just 6.3% of investment professionals with board seats at U.S. venture-capital firms.

UrbanSitter founder and Chief Executive Lynn Perkins is no stranger to fundraising. In the past six years, she has raised $23 million for her site, which helps parents find babysitters and nannies, and she’s currently gearing up to raise more money. Ms. Perkins has raised capital at three different startups. She raised funding for a startup for the first time in 1998 at age 24, when she was the first outside hire at the company. Then after she left, she co-founded the shopping site

Now that she has been through several funding cycles, Ms. Perkins works with younger female founders to help them develop strategies to raise funds for their companies.

In a conversation with The Wall Street Journal, she recalls the first time she and her female co-founder at pitched the women’s retail site to a room of male investors who she knew would never use the site. Edited excerpts of that interview follow.

A bigger challenge

WSJ: Tell me a little bit about what was going through your head when you walked into the room full of male investors.

MS. PERKINS: It’s always a little intimidating to go in. You’re sitting there and everyone is looking at you. It’s probably how actors feel when they do a show. Because the last two companies I’ve raised for are really focused on female consumers, it makes it even feel a little bit more challenging. The end consumers are most likely female, and you’re a female. I always try to find an icebreaker to connect the investors to the business, because they’re probably not our end consumer for the most part.

WSJ: Did you ever feel you were treated differently as a female CEO when you were pitching in Silicon Valley?

MS. PERKINS: They’ve felt a need to bring women into the meetings. I would suspect there are more female associates who attend our meetings than attend some of the other meetings. I would also say there have been a few firms where they have also pulled someone in from their operational side, like someone from their accounting team, especially if it’s someone who has young kids and would use the service. They’ve tried to compensate for the fact that they don’t have females on the investment side. It feels forced.

WSJ:As a mom yourself with three children, did investors ever ask how you were going to balance being a parent and a CEO?

MS, PERKINS: Surprisingly, no. Nobody ever asked me.


Why Former Tech Execs are Leaving Google and Twitter to Start Health Care Companies

Personal and family medical issues are prompting some of the Valley's best tech minds to try to fix our broken health care system.

(Read on Fast Company)

When Stephanie Tilenius, a former senior executive at eBay and Google, decided to start a health-coaching app, many in her network were incredulous. "Everyone thought I was crazy," she recalls. "Some people loved that I wanted to do something to help others, but a lot socially ostracized me."

For many entrepreneurs, the health sector offers an enticing opportunity—with strings attached. It's an estimated $3 trillion market and is still dominated by a cadre of traditional players. But many in the technology sector have shied away from the industry after witnessing many high-profile failures and realizing that change doesn't happen quickly. "Silicon Valley operators and investors see that health care needs better technology," explains veteran health IT consultant Ben Rooks. "But they learn quickly that health care isn't about radical disruption; it's about slow evolution."

Despite the challenges, a small but growing group of former technologists from companies like Google and Twitter are in it for the long haul. In many cases, their motivations are deeply personal: A family member lost to chronic disease, or a brush with the broken health care system. I spoke to four former tech executives about their reasons for moving into health care, the cultural differences between the two sectors, and the challenges they've faced along the way.

"Because patients deserve better than a seven-minute visit."—Stephanie Tilenius, former VP of commerce and payments at Google and former GM and VP at eBay and PayPal.

Stephanie Tilenius started her career at e-commerce companies like eBay and PayPal, and eventually ascended the ranks to become a senior vice president at Google. But prior to joining eBay in 2001, she spent a few years at an online drugstore called PlanetRx. That early experience in health care had a lasting impact on Tilenius. When her father got sick, she felt an even stronger pull to quit her steady tech job to make an impact in the sector. "My father had multiple chronic conditions and went from doctor to doctor," she recalls.

These days, she is the CEO of a startup called Vida, which provides virtual care for patients with chronic ailments. Before starting the company, Tilenius reflected on her father's need for "continuous care," which would involve all of his care providers communicating with him and each other between office visits. Tilenius believes his heart attack could have been avoided, or at least delayed, if he had received better care than a "seven-minute visit, in which all his doctors would all just tell him to change his diet."

Unlike many of her peers in health tech, she made a point of working closely with medical centers that were already developing clinically validated programs for treating patients with chronic disease like diabetes, depression, and hypertension. She started Vida to make these programs more accessible by shifting some of the components online, and connecting patients with virtual health coaches to inspire long-term behavioral changes.

At first, many friends and acquaintances in her network couldn't understand why she'd leave a successful career in tech to start a health company that would likely grow and monetize at a slow pace. "People didn't understand why I would leave a senior role and money on the table," she says. "In Silicon Valley, it's about hypergrowth, and if you're not doing that, then there's something wrong." Likewise, many in health care were skeptical about technologists moving into their own complex sector. Tilenius believes that she'll ultimately show her detractors on both sides that new platforms will emerge in health care, starting with mobile and cloud, and that companies like Vida will be at the forefront. Ultimately, she asks, "Don't you want us crazy Googlers to help people by building companies and taking risks?"

"It's a quest for purpose."—Katie Jacobs Stanton, former VP of global media for Twitter, and Othman Laraki, former VP of product management at Twitter and former product manager at Google

For Othman Laraki, the CEO of Color Genomics, the migration of technologists to health care is inevitable as the so-called "internet generation" ages and their priorities change. Laraki's company offers a $249 test to screen people for gene mutations associated with various cancers. Laraki says he left a job in product management, in part because he learned that he is a carrier of one of these mutations. He also found through his research that those with an early awareness of their disease risks can take proactive and preventative steps. "Color started with a simple question," he recalls. "Is this test something that could benefit my family as well as other families out there?"

The shift to health care hasn't been easy. One of the key differences between the two sectors, he explains, is the criteria for success. "In tech, [the adage] is kind of true that 'if you build it, they will come'," he says. "In health care, the quality of the product is like No. 10 on the list." Other factors are more important, such as price, privacy, patient safety, relationships with key industry stakeholders, and so on. Laraki is confident, however, that this will slowly start to change with more data flowing in health care and the trend toward consumerization.

In the meantime, he says that Color Genomics has been able to get an edge on its rivals, in part due to the technology background of its founders. As an example, the company started out by pricing its product in a unique way. The founders made the test affordable enough for most patients to pay out of pocket. "It was unusual, but an effective way to reach a lot of people." Most gene-testing companies will instead choose to work with insurance companies to maximize revenue, often at the expense of its patients. By iterating continually on the product, a talent acquired at Google, Laraki says the company was also able to cut the time it took to develop a fully compliant in-house lab from the expected one year to just three months.

The response among those in the tech community to Color has been mixed. "I get a lot of, 'That's interesting,' or, 'Huh?' says Laraki. But he and Chief Marketing Officer Katie Jacobs Stanton say that many of those same people want to get involved when they simply explain the opportunity. For Jacobs Stanton, the decision to join Color came after she watched her brother and father battle cancer. But she also had practical reasons for coming on board: "I follow the three-principal model," she says. "Who are the people? What is the product? Could I help?" Jacobs Stanton, who is also an investor in Color, joined the company only after being convinced on all three fronts.

"I wanted to build something of everlasting value."—David Vivero, former vice president of rentals for Zillow

David Vivero recalls a not-too-distant past prior to the Affordable Care Act in which a person with a chronic medical condition, himself included, could be denied health insurance. Things may have changed on that front, but many people still feel regularly dissatisfied with their experience in health care. That prompted Vivero to start a company geared to consumers and patients (most health companies are business-to-business). "I wouldn't say it hit me like an epiphany," he says. "I started with an image of a single page that could be a window into an important health decision, and then it evolved." For Vivero, another motivator came after he became a parent: "Now, having a child, I wanted to build something of everlasting value."

Vivero's startup Amino aims to provide transparency for patients on physician quality and price so they can make more informed decisions. One of the challenges for Vivero has been to convince veteran health technologists that there's a route to make money through consumers, he says. Aware that many companies have tried and failed to improve transparency, some industry experts are skeptical about his chances. "The first movers tend to have arrows in their backs," he explains.

But Vivero is convinced that technologists have a good shot at improving some aspect of the health experience if they stay humble and bring in experienced medical advisers. He says many entrepreneurs fall into the trap of eyeing the multitrillion-dollar opportunity and casting their net too wide without realizing that one sliver of the industry could be worth hundreds of millions. "When you are out there speaking with the bluster of a typical Silicon Valley entrepreneur, try to modulate it," he advises would-be founders. "Start with empathy, and a desire to get it right for each individual user."

What Trump Doesn’t Get About Silicon Valley’s H-1B Visas

Aspect's Jennifer Fonstad addresses the impact of President Trump's immigration ban and possible reform of the H-1B visa program on the start-up community.

(Read on Fortune.)


As President Trump signals his intent to severely restrict immigration in the U.S., the technology industry has moved swiftly and vocally to challenge his administration. Just last week, Uber CEO Travis Kalanick resigned from the president’s Economic Advisory Council, after users criticized the ride-sharing company for allegedly exploiting a taxi protest against a temporary immigrant ban and for Kalanick’s relationship with Trump.

Nonetheless, Trump appears unmoved by nationwide protests or any other signs of oppositions against clamping down on immigration, which leads me to wonder what are the risks that America, particularly tech executives, see that Trump does not?

Through an executive order, the Trump administration is considering reforming guest worker visas as part of a larger push for immigration reform, although officials have not proposed any new rules that would target companies with the H-1B “dependent” classification. These visas are available to foreign workers on a temporary basis for specialty occupations - highly specialized knowledge and experience not available otherwise to that employer. The technology industry relies heavily on these workers to bring talent and perspectives that enable startups to compete in the global marketplace and win. The current cap is for roughly 85,000 per year, down from a peak of 195,000 in 2003. There is currently a much larger demand for these visas than are currently available and they are chosen on a lottery basis.

One change that is being discussed is changing the way H-1B visas are granted. During a recent White House briefing, Press Secretary Sean Spicer noted reforming the H-1B visa program is on the table for President Trump. Rather than being based on the current system that involves a random lottery, officials may base it on salaries and give preference to those earning higher salaries in an effort to boost US wages.

The problem with that approach is that it overlooks the business model of most startups, where employees often take lower salaries in exchange for an equity stake in the company. By basing the issuance of visas on salary, startups could find themselves less competitive in finding the right kind of talent. Startups don't have the luxury of paying the highest salaries; many are scrappy and they rely on investors with big stakes in the company. Often times, employees take pay cuts in exchange for equity stakes in a company that might not succeed. This is a personal risk for employees, but it also offers them an incentive to work harder and see the company do well on the assumption that if the business does well they will see a payoff, too.

To name a few, companies like AT&T, Comcast, DuPont, eBay, Google, Pfizer were founded by immigrants. Losing that talent would be a huge loss, and if those entrepreneurs go to other countries, such as China, America risks never see those jobs again.

Let's work together to make it easier — not harder — to feed the engine of productivity and job creation that our country needs to stay ahead. Let Silicon Valley, Silicon Alley, and all of the great pockets of innovation all over this country do what we do best - build great companies with the best talent we can find in the world. So it’s critical to keep the H-1B lottery system in place, and raise the cap to attract the talent America needs to continue innovating. This is the only way to ensure the next generation of great companies with fantastic jobs for Americans will be born. It's how America will continue to be great, now and in the future.