The Forbes Midas List is the annual ranking by Forbes magazine of the most influential and best-performing venture capital investors in the world.
According to Forbes, in order to qualify, "Investors are ranked by their portfolio companies that have gone public or been acquired for at least $200 million over the past five years, or that have at least doubled their private valuation since initial investment to $400 million or more over the same period." Liquid exits over unrealized returns earn bonus points, as well as "large multiples on money invested for early-stage investors or large sums of cash returned for growth-stage specialists."
Naturally, as the largest venture capital conference in the Southeast, we were curious: What does it take to wear the Midas crown?
At Venture Atlanta 2020, we debuted our very first Midas Panel, hosted by Linnea Geiss, COO at PDI Software. The 2020 panel included:
- Aileen Lee, Founder & Managing Partner at Cowboy Ventures
- Scott Sandell, Managing General Partner at NEA
- Andrew Braccia, Partner at Accel
The panel was so popular that we brought it back in 2021-this time hosted by Rachel Spasser, the Managing Director and Chief Marketing Officer at ACCEL-KKR. Our featured panelists were:
There's a lot to be learned from the best in the business, and our Midas List panelists did not disappoint. Read on to experience some of the highlights from the past two years. And if you don't want to miss this year's Midas Panel, make sure to register for Venture Atlanta 2022 here!
The Forbes Midas Panel Highlights from '20
Linnea: What kind of trends are you interested in investing in now?
Aileen: At Cowboy Ventures, we're seed-stage investors. We are generally looking to partner with founders when they're raising their first institutional round. When I started as a seed investor, that was sometimes $500,000, sometimes a million dollars. Now, oftentimes it's a $2M, $3M, or $4M round. We invest in both consumer and enterprise businesses.
Tech is just an incredible driving force of change and innovation increasingly around the world. We focus on just investing in the US. We do a lot of enterprise software investing. We're really interested in what we call "unsexy tech." So basically there are just a lot of industries, or functions, that customers don't see. They aren't really front-office functions, but things that are maybe back office, financial logistics, supply chain, and operational-functions that are still running on pen and paper, or really old, outdated software.
The markets are now ready and big enough to be able to support this… Unfortunately, because of COVID, many people have realized that healthcare can be done remotely. And so we're excited about new opportunities for consumers to be able to take healthcare into their own hands.
Linnea: So you're all part of partnerships, and I think it's an interesting question and a conversation to have about how you walk the line between challenging convention and supporting ideas that are really new; ideas that you have to kind of bring your partnership along. Some investments must be harder to sell than others. Would any of you care to share some of those particularly hard sales where you really had to champion a deal internally?
Scott: Well, I'm happy to start. I'm sure this is the same story in every venture partnership, but the best ideas are very seldom obvious to everyone. So, you know, because we have a consensus-oriented culture, you'll often get very vigorous debate, but at the end of the day, we trust individuals to make those hard calls.
We know that a sponsoring partner is closer to a company in a situation than the rest of us could ever be-no matter what amount of due diligence has been done or presentations they might make to us. So our style is to have very vigorous debates, but at the end of the day, we leave the final decision in the hands of the sponsoring partners.
Andrew: Yeah. I mean, we have a very similar culture. I think as Scott mentioned, I think venture firms depend so much on the intellectual curiosity and belief systems of the partners that they've been investing in over many years to make decisions and to know a market and understand an entrepreneur better than anyone else in the firm.
Linnea: Any stories from your own portfolio about something that seemed like a harder, harder sell at a particular time?
Aileen: We are investors in a company called Guild Education that is doing quite well, and we're really excited about it. But when we heard the Guild pitch, it was two women at Stanford and they had a lot of passion about folks who are having a hard time getting career momentum going. And, in particular, people who had never finished high school or college.
And so what they had done was they basically came up with a four-hour reboot-your career boot camp. And they basically had posted on Craigslist, saying, "Hey, come to our career seminar. It's free it's four hours." And they were renting out remnant strip mall space and doing boot camps for careers. And that's what their business was like; it wasn't really a business because it was free.
So the idea was there are a lot of people who are hourly workers who are patching together a living and don't have a lot of career mobility. And we wanted help them. And we think we should probably have software and figure out how to do it remotely over the internet. But right now we're doing it live.
We think, you know, it's a really big market, but there were no founding technologists. There was no software. There wasn't really a vision for how we were gonna scale it. And now we actually partner with employers and we are an enterprise company and, like Walmart and Disney, some of the biggest employers of hourly workers in America are partners where we actually help their employees get an education and be on a better path.
It's been a complete change from Craigslist to Walmart. And it was really about taking a bet on the market [being] big and very underserved. There aren't a lot of solutions for this.
Linnea: That brings up the topic of pivots-not every deal finishes the same way it started. Does anybody want to tell a story about some of their favorite or most notable pivots in their portfolio?
Scott: We invested in a wonderful company called Tuya-and I'm sure none of you have ever heard of this company. That's partly to do with the fact that it's located in Hanzo, China. When we invested in the company, we had a one-hour meeting in a hotel in Shanghai and the founders so impressed us.
They had started a company, which was acquired by Alibaba while they were working there. They had built the Ali Cloud with a team of about 200 engineers. And then they decided that they had a vision for something else and they wanted to go off and start their own company. So they went off to do that.
We gave them $5 million and about two years into it-I'll never forget this meeting-the founders came back to us and they said, "You know, we've concluded that this really isn't working and we're wondering if we have to give you the money back, because we still have $3M of the $5M in the bank," or something like that. And I'd never been asked by an entrepreneur, "Do we have to give you the money back?"
So I sort of chuckled to myself and I said, "Well, you know, just out of curiosity, do you have another idea, something else you might wanna pursue with the remaining $3 million?" And they suddenly lit up and they said, "Oh yeah, we have this. We really have this idea we've been working on for quite a while now. And we think that all of these appliance manufacturers here in China… they all want to make their devices smart and none of them really know how. So we think we could build a solution for that."
And that's what today would be called an IoT platform, the internet of things. They have something like 80,000 products on this platform today. It'll be a public company next year. But that's not what we invested in. We invested in some very talented engineers out of Alibaba who fell flat on their faces with the first idea and had the guts to come up with another one.
Linnea: So another important macro trend that's really permeating is the conversation around social justice, equality, and activism. How are you handling some of those current diversity and inclusion topics, both within your own firms and at your portfolio companies?
Scott: I think all of us have been focused on increasing the diversity in our business for quite some time. And so the latest social unrest in the country has just re-energized us and, and broadened [that focus].
Thinking back to five or six years ago, there was a lot of interest in gender diversity. And so we started a diversity task force and, at that time, some of the women in the firm lept forward and said they really wanted to be actively involved. And that led to a big focus on gender diversity. Since then, our partnership has gone from a couple of women to 36% of the partners being women. We have two female general partners, and, and I say all this because I think it's encouraging to look at what the future holds for other kinds of diversity.
And so now, we've constituted our diversity task force to include a broader set of people (not just women). And the focus is obviously to include BIPOCs and others that are still underrepresented in the venture business. Our model is to start at home. We want to make NEA a really diverse place that is welcoming and where more people feel like they belong.
The Forbes Midas Panel Highlights from '21
Rachel: Let's talk about early-stage investments. Tell us what caught your attention about a company like Robinhood or others, and what gave you comfort that this was the right bet to make?
Jan: You are by definition making a leap of faith, and [in the case of Robinhood], Vlad and Baiju were really determined to build a huge company. They identified a really big market and made it clearer that there was a true business-a huge business-to be built.
I guess for me, the major sort of "aha moment" was when they presented their idea of this notion of platform shift [to mobile]. So from the website (and sort of an old interface) to an intuitive, beautiful product with friction removed, I guess the final ingredient was that they truly projected commitment, perseverance, grit, and clarity to go and make it happen.
Lauren: We are a very thesis-driven firm. So we do proactive thesis work every quarter. FinTech is our largest category and it's where I spend all of my time, but we're really thinking about subcategories within FinTech, that are of interest to us based on those platform shifts based on, societal and consumer trends and then going out and proactively finding companies that fit those themes.
So at the time, I had developed a thesis-which doesn't sound particularly novel now, but back in 2015, it was-around the idea that millennials were entering the workforce as the first population of truly digital natives. And frankly, they had come of age during the great recession and were inherently distrustful of legacy financial institutions.
And so this notion that a digital-first bank (like Chime) could exist seemed very apparent to me. And as I thought about all of the categories within FinTech, the most intuitive was, "Where does your source of income come in?" That's the entry point to all other financial services and it's your bank account. And so to me, that was an obvious place to look. And then when I met Chris and Ryan, with their combined depth, it was the right combination.
It sounds a little funny to say, but the reality is, that finding both kinds of financial services or FinTech domain depth, as well as technology product chops on a FinTech team, was very rare back then. And it's still rarer than you might imagine. Because oftentimes people come from industry thinking they can make it marginally better, or they come from tech looking at financial services and saying, "I could build a better product here, but they don't know how to see around corners. And they don't know what they don't know." And so it was the combination of those skills coupled with that thesis that got me really excited.
Rachel: Would love a quick story from each of you on one investment that you had that had a very surprising outcome for you and why.
Jan: The company I would use for this one is Adyen payments, valued at approximately a hundred billion dollars and has a global footprint of customers, employees, and shareholders. And it was a company where we led a Series A round in 2011. Again, I go back to payments. It's a big market. They had a great idea and the best technology in the market. So it was a kind of a no-brainer with no question marks.
But here's the surprise. As the years went on, there was always a positive surprise, and the company always over-delivered. When I look at what the business is today, I don't think I could have dreamed that the business would be this big. I mean, the whole market has lifted, and I guess I would credit it to the growth of eCommerce.
So the addressable opportunity has grown multiple folds, probably similar to when cell phones appeared in the 1990s. All of those projections were exceptionally pessimistic relative to the number of smartphones in the world today. But when you step back, it's always that size of the opportunity… and the team going to grab that opportunity that sort of makes you wonder. These guys have done a phenomenal job.
Lauren: To be completely candid, the honest answer is Chime. I think that the scale and magnitude and the impact that they've had would've been impossible to predict. So, I think it's particularly interesting because, at the time, it was not a popular deal. Pretty much everybody passed. But my thesis orientation gave me the conviction to do it anyway. I think there were a lot of naysayers and so watching them execute like crazy and then become what they've become… it's just been completely inspiring to watch.
There's more Venture Atlanta content where that came from! Check out our post, Building a Unicorn Startup, or visit our blog and YouTube channel for discussion panels, event coverage, and more from our community of entrepreneurs and investors.
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