Behind every startup, funding round, and exit there is a group of people that make them happen. This will be the first of many interviews on Venturing Capitalist with the very Venture Capitalists, CEOs, and influencers that make it all happen.
I met Mo Koyfman, a general partner at Spark Capital, a while back in their New York office and very much enjoyed hearing his views on the industry. At Spark, Mo has been involved in a number of investments including, Warby Parker, Aviary, FundersClub, and many more. Prior to Spark, Mo was an investment banker at Bear Stearns, after which he became an executive at internet & media company, IAC. Mo graduated magna cum laude from the University of Pennsylvania’s Wharton School with a degree in Economics. You can learn more about Mo’s career here.
Ilan Regenbaum (IR): Why did you choose to move from a more typical finance background to VC?
Mo Koyfman (MK): I guess the reality is that my background isn’t so typical. I was always searching for something outside the typical finance path when I finished Penn. I did start off at an investment bank, but quickly went to IAC where I started in a corporate development role but over time began to work closely with earlier stage businesses – incubating, acquiring and ultimately running them. It was quite opportunistic for me. So when I left IAC, I was looking for what to do next. I was looking at both operating and investment opportunities. But I knew that I wanted to be in the tech space. I knew I wanted to be in this growth sector of the economy where such interesting things were always happening. The investment opportunity at Spark materialized very organically, and it just made sense for me…so here I am a few years later. It was really just a series of coincidences and following my gut that led me to VC. As my former boss Barry Diller used to say, “I just put one dumb foot in front of the other.”
IR: What do you think is the next big industry that entrepreneurs or investors should be looking at?
MK: There are so many areas of opportunity; I’m a big believer that folks should focus on the areas they are most passionate about. Everything is going to be changed by the power of the Internet, always on mobile connectivity, and “software eating the world.” Everything from financial services, real estate, education, healthcare, aerospace, farming, food, transportation Artificial Intelligence, Computer Vision and other sc-fi ideas are fast becoming reality. There are so many good areas to play in. One should focus on his/her passion. Focus on the areas that you are interested in, and where you are really compelled to make an impact.
IR: Do you think the current VC model is sustainable as it is and what do you think of the rise of equity crowdfunding platforms such as OurCrowd?
MK: I believe the current model is sustainable, certainly in the near to medium term. As it relates to OurCrowd, I believe OurCrowd is simply a new type of VC firm. They have a nice differentiated spot in the market, can do interesting things, and can be successful if they can aggregate capital in smart ways and find deals in proprietary ways.
We haven’t seen a platform emerge yet that will eradicate the traditional VC model. Many of these platforms are benefiting today from a single fund per investment structure with regard to their economic returns. It will be interesting to see how long it can sustain itself.
IR: You are seeing a lot of investment money coming from many different places, whether families or pension funds, that many say are contributing to hyper valuations. Do you think all this money in the system is the cause for hyper valuations and potentially a bubble?
MK: I do think there is a glut of money coming into the space. I believe it is largely coming from mutual funds and hedge funds and other large global institutional players. This may cause a private market valuation bubble but I don’t think it is creating a company bubble or sector bubble in the historical sense [as with the Dot Com bubble in the early 2000s].
I think great companies are being built right now and will continue to be built, but I think many companies are being over-funded at extreme valuations that are seeding unhealthy habits on the spending side. If a company can raise a lot of money they tend to burn a lot of capital. If they burn a lot of capital and they don’t get to where they need to go, that can put them in a very uncomfortable position.
IR: Being that I am based in Israel and I like to write about what is happening with start-ups here, do you have any thoughts on the large number of Israeli companies that are exiting early, usually through an acquisition by an international company, rather than growing into larger companies that in-turn create more jobs in Israel.
MK: I think the answer to the question is it is good for who? If the company grows and the jobs stay in Israel then it would be great for the economy, though it may not be great for the VC, it may or may not be great for the founders…it all depends. If the companies were being bought and the talent exported out, that would clearly not be good. I haven’t seen a ton of that happening. Hopefully regardless of exits, Israeli talent continues to stay and thrive in the Israeli economy. I think that larger point is that Israel wants to see a vibrant ecosystem of independent tech companies that can create the next wave of independent tech companies thriving in Israel. I think that is something to strive for.
IR: Any companies or fields that you have found interesting recently?
MK: We have been quite interested in financial services and marketplace businesses more generally. We are really focused on design and creative product-led innovation that are taking cumbersome industries and complex experiences and redefining them. We are also starting to look out over the edge, trying to figure out what is coming next.
IR: I remember when I was still in school and I told everyone that I wanted to go into VC work and they told me that it was tough and not to get my hopes too high. Do you have any suggestions for somebody who says that VC or startups is is the career path they want to take?
MK: If you have an idea for a startup that you are really passionate about, make sure that you have the technical know-how or you have a cofounder who does. You should have a cofounder regardless, who you can go on the journey with and complement your skills. And just don’t be afraid. It is cheaper and easier than ever to get products to market.
As it relates to VC, I think the best thing is to get into a company to understand how it works from the ground up. Once you’re in the mix, you’ll meet VCs and put yourself in a position to work with them, get close to them and open up opportunities. Other than a few institutional VCs that hire people out of school, VCs generally don’t have standard hiring approaches or schedules.
IR: Is there one piece of advice that helped you get to where you are today?
MK: Trust your gut, don’t be dissuaded by the naysayers, be bold, and take risks. I think that too many of us do what we are supposed to do, not what we truly want to do. The most successful people in life are those who follow their dreams.
Mo can be contacted on Twitter @MoKoyfman, and if you have any suggestions for future interviews, questions you would like me to ask, or general suggestions or comments, please send me an email at email@example.com or post them to my Twitter @VenturingCap