Note: This article is the seventh in a series of interviews highlighting the work of interesting fund investors.
Ashok Kamal is an Executive Director & Co-Fund Manager of NuFund Venture Group, a San Diego-based early-stage investment fund created by, and formerly known as, Tech Coast Angels - San Diego. Ashok is an investor, speaker and social entrepreneur with diverse experience starting, leading and investing in organizations in the private, public and nonprofit sectors. NuFund is one of the largest, most active and most successful early-stage investor groups over the past 20+ years. They invest primarily in tech and life sciences.
Ashok, thank you for participating. When was the fund established, and is this the first fund you have managed?
We (NuFund fka Tech Coast Angels – San Diego) launched our first Annual Fund in Q4 2018. This was the first fund to run for our group, and me, although many us have been involved in other syndicates and funds for years.
What is the thesis of The NuFund? Do you focus on any particular type of founder, company or industry? Are there particular types of startup companies you steer away from?
Given our San Diego roots (and location of 75% of members) in the same foundation of Qualcomm and Illumina, for example, we have considerable expertise in “hard tech” such as bio, chips and wireless. We’re always looking for these mega trends colliding into new domains such as digital DNA or smart wearables. But we’re open to all venture-grade companies and make the majority (not all) of our investments at the “Seed+” stage between pre-seed and Series A.
Tell me a little bit about your fund size, stages you focus on, and your typical check sizes when investing in early stage companies?
Our first Annual Fund vintage in 2019 was $2.2M and the most recent (fourth) fully invested vintage was $7M. Along with the growth of the funds, which hit the SEC member cap of 249, our check sizes have increased to $250K - $500K per company. Most of our deals are along the seed spectrum but we always have a few earlier and later stage deals out of 15 – 20 new portfolio companies per year.
What would you say are the main things that differentiate you from other similarly-sized VC funds?
We run a completely democratic, member-managed fund without an investment committee who decides the deals. If a company successfully passes our <30-day DD review and a group of fund members recommends it, the entire fund membership votes on the deal and we invest if a majority approve. We run the funds on an annual cycle with a single capital call and start the new fund when the most recent fund is fully invested. Our minimum investment ($10,000) and carry (5%) are also lower than most funds and they create a more accessible onramp for our diverse membership ranging from first-time angels to other VCs.
Tell me a bit about yourself; what makes you good at what you do? Is there a particular experience or set of experiences in your personal history that you feel especially helped prepare you to be an investor?
I raised money from angel groups and VCs before I ever invested myself so I appreciate both sides of the table. Understanding first-hand that BOTH jobs are very hard to succeed in – but an entrepreneur’s job is hardest – we try to foster a culture that is helpful, inclusive and rewarding for our companies and members. More specifically, being “founder fair” means that our group is transparent, efficient and decisive. Obviously we invest in a fraction of the deals we see – just like any fund – but we try to leave all the companies with new resources and opportunities, regardless. One thing I learned from pitching my startups was that a fast Yes and No are welcomed but a long Maybe is torture.
Tell me a little bit about your LPs?
We have a mix of members (LPs) along every profile including successful entrepreneurs, C-level executives, practicing physicians, scientists and service providers, family offices, research foundations and VCs. We also strive for diversity in background, thought and location, which makes us a stronger group and better investor, overall.
Do you lead rounds or do you tend to follow other leads? Do you have a preference and, if so, why?
We lead and follow, but require a board presence – voting director or observer – in order to lead deals, and we tend to invest more into the deals we lead since there may be a stronger connection, both pre- and post-funding. If we follow in a syndicated deal, we request access to the lead’s due diligence and work with trusted partners such as other angel groups and micro VCs.
Would you consider your fund an especially “active” or “value-added” investor?
As a 300+ member network of investors, we have bench strength in many fields and functions. We don’t want to meddle with our companies unprovoked, but, whether through formal board service or just sharing social capital, we always want to be responsive to our CEOs including making introductions to customers, talent recruiting and, of course, additional funding through our vast investor network.
Are there some portfolio companies you are especially proud to be working with or simply would like to highlight?
We are proud that our portfolio ranges from cancer treatments to alternative proteins to renewable energy to mental health solutions, and many impactful verticals in between. One recent successful case study is Zigazoo, an edtech app for kids founded by two teachers, which we funded in the seed round alongside Serena Ventures (Serena Williams’ fund), MaC VC and celebrity angels such as Jimmy Kimmel. Zigazoo recently closed a large Series A round with Tier-1 investors and it’s on track to become one of the preeminent media and education platforms for children in the digital age. As a parent of two small boys, I’m happy to support a safe, fun and educational place for kids to go online.
What are the most important ways you would say the investing world changed during your time as an early stage investor? Looking ahead in the area of early stage investing, what are you most excited about? What keeps you up at night?
This question is especially apropos given the latest market dynamics reverberating from public equities down to startups (albeit with some lag in the downturn that is still unpredictable). If you invested mostly over the past 5 years, you played in a bull market. Looking at the statistics on valuations and exits, many companies were over-priced and over-funded and the chickens are coming home to roost. Fortunately, our group has generally avoided FOMO investing and stayed disciplined and focused on our sweet spot of early-stage world-changing companies. But no investor will be immune from shocks in this market.
One trend that started a few years ago, and certainly accelerated during COVID, was the virtual scope of both our membership and companies facilitated by technology improvements in our operations. When I began at NuFund fka TCA-SD five years ago, we barely began recording meetings. Now the majority of our members – regardless of geography – engage online and our infrastructure centers on a management stack of live streaming, video and chat to make the best deals accessible to members anytime, anywhere.
If you could give entrepreneurs one piece of advice about working with you or your fund, what would it be?
The 5 P’s; Proper Preparation Prevents Poor Performance. It’s the same advice I’d give for working with any fund, and generally, in life 😊. In the context of NuFund, preparation translates into knowing our investing interests and processes (which are visible online), connecting with people, and making it easy for us to say YES by, for example, having a standard data room set up with investor documents for review.
What's the greatest advice you received about early stage investing?
One of the former Presidents of NuFund, and a mentor of mine, Sergio Gurrieri, told me that people say angel investing is gambling, but if you make enough bets – you’re the house. This wisdom translated into our group starting an angel fund for easy portfolio diversification, which research consistently shows is the optimal strategy for ROI.