What Does a Venture Capital Investor Really Look For? | Yael Schiff (Bessemer Venture Partners) - Product Builder Podcast episode with Eyal David
Updated: 00:58:30

What Does a Venture Capital Investor Really Look For? | Yael Schiff (Bessemer Venture Partners)

Host: · Guest: Yael Schiff · About the host

Yael Schiff, an investor at Bessemer Venture Partners focused on Seed and Series A, says her first test after meeting founders is a single question: "Would I work for this person?" In her experience, the answer correlates strongly with a founder's ability to recruit talent, raise money and build a company. What turns it into a "yes" is a unique insight, a willingness to listen to customers and change fast, decisiveness, and sometimes the nerve to leave the playbook.

In this episode

  • Yael's first test after meeting founders is "Would I work for this person?" In her experience, an unequivocal yes correlates very strongly with a founder's ability to recruit top talent, raise investment and build a successful company.
  • A good investor wants to leave the meeting with a unique insight: something she didn't know before about the product, the go-to-market, hiring, or unique access to a market such as defense or data centers.
  • Outliers don't follow the playbook: Wonderful started in non-English-speaking markets and reached 30 markets in 20 months, and Koi built a free product and saw downloads before it ever pitched investors.
  • Product velocity isn't just building fast, it's putting the product in customers' hands, listening and fixing. "It's not new, but it's on steroids," and the speed of making decisions, and of recovering from wrong ones, also predicts success.
  • There is no single template for fundraising milestones anymore: traction can mean customers, pipeline or an inflection point. For founders struggling to raise, bootstrapping is a real option people often overlook.
  • Incumbents survive the AI shift only if they're willing to hurt their existing business: Intercom changed its name, built a new product line and, as Yael tells it, Salesforce announced it is acquiring it for a little over $3.5 billion.

Episode Description

Yael Schiff is an investor at Bessemer Venture Partners, mostly at Seed and Series A, in AI, infrastructure and cyber companies. Before that she spent five years at Via in the US, including as a GM, did an MBA, worked at McKinsey and served in 8200. In conversation with Eyal David she explains why she talks to founders "in question marks, not exclamation marks," and what she looks for in a first meeting: a unique insight she didn't know before, and above all a yes to the question "Would I work for this person?" She gives examples of companies that left the playbook: Wonderful, which reached 30 markets in 20 months by starting in non-English-speaking countries; Koi, which shipped a free product and saw it downloaded before approaching investors; and Intercom, which cannibalized its own SaaS business to become an AI company. The conversation also covers product velocity "on steroids," where AI is already changing hiring, sales and customer-meeting prep, when technology can still be a moat, mega-rounds and a longer road to IPO, fundraising milestones without a template and bootstrapping as a real option, investing in deep tech, where the opportunities are (AI infrastructure, robotics, defense and B2C), and the backlash against AI.

Chapters

  1. 00:00 · Episode highlights
  2. 00:38 · Intro: Yael Schiff and Bessemer
  3. 02:44 · "I speak in question marks, not exclamation marks"
  4. 05:07 · "Nobody knows anything": why she looks for a unique insight
  5. 07:10 · The first test: "Would I work for this person?"
  6. 09:20 · Wonderful and Koi: why investors look for those who don't follow the book
  7. 16:07 · Speed "on steroids": ship, listen, fix
  8. 21:26 · How to raise a Seed when raising is hard
  9. 22:49 · Where AI is already changing hiring, sales and customer relationships
  10. 26:20 · When technology can still be a moat
  11. 28:02 · Intercom: hurting your own business to become an AI company
  12. 33:50 · Mega-rounds and a longer road to IPO
  13. 37:30 · Milestones without a template, and bootstrapping as an option
  14. 40:39 · How to invest in deep tech
  15. 45:27 · Where the opportunities are: infrastructure, robotics, defense and B2C
  16. 49:40 · The backlash against AI: authenticity, regulation and "there will be catastrophes"
Read the full transcript
Full transcript with speakers and timestamps

Selected quotes

“I walk out of a meeting and very often I ask myself, would I work for this person?”
— Yael Schiff
“People speak in a lot of exclamation marks. I think that I, as someone who works with startups, often speak in question marks.”
— Yael Schiff
“I do believe that sometimes going off the beaten path, and going for something unprecedented, can produce results that are also unprecedented, hopefully.”
— Yael Schiff

Questions & answers

Who is Yael Schiff?

Yael Schiff is an investor at Bessemer Venture Partners, a large international multi-stage fund, focused on early stages (Seed and Series A) in AI, infrastructure and cyber companies. Before that she spent five years at Via in the US, including as a GM, did an MBA in the US, worked at McKinsey and served in 8200.

What does a venture capital investor look for in a first meeting with founders?

According to Yael Schiff, first she asks herself whether she would work for the founder, because she has seen a high correlation between that answer and the founder's ability to attract talent and capital. Beyond that, she looks for a unique insight she didn't know before, clarity of thought, and a willingness to take feedback from customers, employees and experts and to change.

Can technology still be a moat in the age of AI?

Yes, mostly the further down the stack you go. Yael says model companies like Anthropic have depth of development and the ability to attract exceptional research talent, and in lower layers like networking (for example DriveNets) not everyone can build the product. Either way, the moat has to come together with distribution.

Is bootstrapping a good option for founders who struggle to raise?

Yael Schiff says yes: you can build amazing companies that grow organically without outside funding, and today you can get very far on your own, fairly fast. In B2C and developer tools it makes particular sense to reach the stage where there's real data and usage, and only then raise.

How does Bessemer invest in deep tech when there are no metrics yet?

According to Yael, in deep tech they look for unique technology and an experienced team that understands both the field and what it takes to turn it into a business. They lean on experts inside and outside Bessemer, dive into the technology, check where the giants stand, and assess whether the team can raise money again and again over a long journey.

People & resources mentioned

Venture capital VC Bessemer Fundraising Seed Entrepreneurship AI Product velocity Go-to-market Bootstrapping Deep tech Moats Innovator's Dilemma