Jasleen Kaur, an investor at Nyca Partners, talks about how she evaluates potential investments across wealth tech, SMB technology, and ESG areas. Jasleen advises founders on how to treat regulation during the very early stages of building their startups. She also gives her views on how overvaluation is affecting the VC/startups ecosystem.
Jasleen Kaur, an investor at Nyca Partners, talks about how she evaluates potential investments across wealth tech, SMB technology, and ESG areas. Jasleen advises founders on how to treat regulation during the very early stages of building their startups. She also gives her views on how overvaluation is affecting the VC/startups ecosystem.
In this episode, you’ll learn:
[5:48] Is early-stage investing harder than later-stage investing?
[8:12] Don’t be afraid to ‘dumb it down’ when explaining what your company does.
[15:58] Do founders need to worry about regulations in the seed and series A stages?
[18:27] Fundamental things the overvaluation game is missing
[21:37] You are not necessarily subject to the current downturn if…
The non-profit organization Jasleen is passionate about: Curry Senior Center San Francisco
Jasleen Kaur is a Principal at Nyca Partners. Prior to joining Nyca, Jasleen was a Principal at CE Innovation Capital, focused on investing in Fintech and Enterprise Software, and prior to that worked at JPMorgan in the Technology Investment Banking Group. She has worked across both New York and San Francisco throughout her career.
Nyca Partners is a New York-based venture capital and advisory firm that focuses on the fintech sector. Nyca connects innovative companies to financial institutions and technology companies as well as entrepreneurs, VCs, and its strategic Limited Partner base.
Portfolio companies include April, IMTC, Fidel API, RenoFi, Cowbell, Propel, Truv, Sardine, Additional Wealth, Tint.ai among others.
In our next episode, we invite Mike Smerklo, co-founder and managing director at Next Coast Ventures, to share his journey and lessons learned through his experiences as an entrepreneur and now an investor.
Subscribe to our podcast and stay tuned for our next episode.
Follow Us: Twitter | Linkedin | Instagram | Facebook
Jasleen Kaur: That's the other side of it, right? Which is "Okay, let's get started and let's break things. Regulations...we'll figure it out." And I think that's what the two engineers in the garage are thinking.
Gopi Rangan: You are listening to The Sure Shot Entrepreneur, a podcast for founders with ambitious ideas. Venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to The Sure Shot Entrepreneur. My guest today is a good friend of mine, Jasleen Kaur. She's a venture capital investor at Nyca Partners.
We're gonna talk to her about various topics; FinTech, startups, her focus areas for investments, and perhaps even ESG and some other related topics. Jasleen, welcome to The Sure Shot Entrepreneur.
Jasleen Kaur: Thank you, Gopi. I'm excited to be here.
Gopi Rangan: Tell us about yourself. You grew up in New York, right?
Jasleen Kaur: Yes, that's right. I grew up in New York and I went to school in New York and I started working in New York, but then I made my way over to San Francisco and I lived there for about five years, give or take. Actually am now back in New York as of mid-March. So it's really only been a couple of months.
Gopi Rangan: How did you find your way to venture capital? You started in investment banking early in your career, right?
Jasleen Kaur: Yeah, that's actually right. And prior to investment banking, I was at a startup where I spent just under a year working on building a marketplace as the fifth employee. But of course, I didn't understand the magnitude of what it meant to work at a startup at the time. For example, Instagram was a brand new app and facebook was still cool to use at the time. But I had student loans to pay and so I found myself leaving to go work in investment banking at JP Morgan. I spent five years there working on the tech group, specifically focused on the internet vertical, disruptive commerce and enterprise software side.
Some of the names that I worked with that particularly framed my experience were Airbnb, Peloton and Ring, which was sold to Amazon. Even though I worked at a startup, and even though I worked with these really awesome companies, I didn't truly understand or really know what venture was until I started working with one of the directors at JP Morgan on an initiative called JP Morgan Next, which was a way to get early-stage companies into the pipeline of the investment bank. So, we would provide advisory services to them informally as they were growing and scaling their businesses to series B or C or D. I found myself really falling in love with the early side and understanding how these businesses worked and how to actually scale them. So the director had suggested that I explore a career in venture and as I looked to leave investment banking, I found myself moving over to the venture side.
Gopi Rangan: Very interesting. You went from the dark side of investment banking to the bright side of venture capital.
Jasleen Kaur: Yes.
Gopi Rangan: You recently joined Nyca earlier this year. Nyca is a FinTech focused venture capital firm. What areas do you focus on for your investments?
Jasleen Kaur: Yeah. Firstly, Nyca has been a really awesome opportunity for me, and I'm really excited to be a part of that team. Nyca invests across the full spectrum of FinTech, but I spend most of my time evaluating opportunities across wealth tech, SMB technology, and ESG, and more specifically the E and ESG, where I have been focusing a lot on carbon emissions and the impact of the financial and regulatory world down to even the consumer level.
Gopi Rangan: Very interesting. ESG and venture capital, I don't see the topic come up very often in venture capital. I see there are some new regulatory changes and perhaps more renewed focus on this topic coming up soon. Why is this topic important now?
Jasleen Kaur: Yeah, you're right. It doesn't come up often because it's a very confusing space. It's a very new space, but it's also a very academic space. So, trying to spend time in this area, you really either have to be truly interested in it or have a background in it. The opportunity inside of it is so vast that trying to understand what angle to address it from is actually quite difficult.
Investors broadly have truly not spent enough time in the space and hiring the right individuals to do that is also very difficult. It's becoming more and more important though because obviously we're getting to that point where the impact that climate change is having on a variety of different industries is actually quite large and it's growing day by day, month by month, year by year. If we don't start taking a look at the changes that we can make at a corporate level, it might be too late, and the impact goes beyond just on a consumer level. It's actually really the corporates, the government, as well as researchers that can really make an impact here.
Our job as investors is to equip all of these parties with the right capital and with the right people in the right room to get change to really happen here.
Gopi Rangan: Capital formation is an important point of influence in making change happen. So, I hope this comes through in the next few years and we'll see some interesting opportunities for us to invest.
What stage do you invest typically?
Jasleen Kaur: I originally started at a prior fund investing on the growth side, where it was looking at companies from B all the way to pre-IPO. Now, Nyca invests on the earlier side. So, we really try to come in around seed in series A, which, I've been telling people that I genuinely believe that early-stage investing is actually far harder than later-stage investing.
Gopi Rangan: Why is that? I've always felt that early-stage investing is a lot more fun. Why do you say it's harder?
Jasleen Kaur: It's definitely more fun but it's harder because on later stage you have numbers to evaluate, you have unit economics to evaluate, you have a full scale management team to evaluate, and you have a very established competitive landscape to evaluate. So, looking at the opportunity becomes a very quantitative exercise where you try to really just understand if this company is going to be able to scale if you throw more marketing dollars at them through the capital that they're raising. And, if they're able to manage their unit economics, their margins will be great. The bottom line should eventually be great. So, it's easier to fund those companies from that mindset.
On the earlier side, you don't have a lot of that detail and you don't have a lot of the competitive landscape that's established. Oftentimes these companies are coming in to really disrupt legacy institutions that have been in place for a very long time. Trying to understand how a founder is going to structure what they are working on in terms of product-market fit; in terms of the management team that they're going to put together; are they going to be capable of understanding that? Can they price the product correctly? Can they figure out the experience to the end user and find value enough to exist that they can displace the incumbents? That's a lot of qualitative work and without having the right experience and the pattern recognition, but also to understand if you found magic or lightning in a bottle with this particular founder and their team is much harder. I think.
Gopi Rangan: Yeah. At later stages, pretty much every series B company has an excellent management team. They're all stellar. But at earlier stages, it's really hard to know whether the idea would prevail and whether the management team will be able to execute. There's too much fuzziness at the earlier stages.
So, you used to invest in later stages. Now you've transitioned to earlier stages. What do you look for in earlier stages? What's your advice to entrepreneurs so that they can be effective in their first meeting with you?
Jasleen Kaur: Yeah. So, you know, a lot of founders try to come into a meeting, trying to show off some sort of detailed chops. It's really important, of course, to have the background and the experience in what you're trying to build but what I really tell them is please explain what your company does to me in a way that my grandmother would understand. The core of being able to explain what you're doing and what you're working on is a signal to me that you understand how to sell your product and how to sell your company... because if you're unable to do that [if you have an exceptionally amazing product, but you have no way of understanding how to find that product-market fit] you're really not going to be able to take off. So, I like for the founder to explain to me what they're working on, how they're going to achieve the go-to-market and really get an understanding for their competency on both of those things. From that, I can understand how great this founder is going to be at hiring a management team that is going to surround him or her in building a really phenomenal product and getting it to scale.
Gopi Rangan: Simplicity of the story matters a lot. It shows the maturity of the founder who has spent time thinking about the problem and who can articulate in a very simple way that even your grandmother could understand. I get that, but do you worry about founders dumbing it down too much?
Jasleen Kaur: No, because the questions come from that. Right? If you can very simplistically figure out in your core what your company is actually doing, then we can dig deeper and try to understand the actual nuances of the business. So, being able to simplify what you do is not a substitute for being able to go into the detailed weeds trying to evaluate the actual problems of why you're maybe not able to scale or maybe why you can't get your margins right. Or why the unit economics are not working in terms of the customer acquisition. So, just because you can explain what you're doing, it doesn't mean that you know how to execute at the same time.
Gopi Rangan: Let's take a hypothetical example and we'll explore this. How would this work in one of your areas, for example, wealth management? What nuances would you be looking for in that space?
Jasleen Kaur: Sure. Wealth tech is a really interesting space because you can break it down from a couple different angles. There's the investment advisor space. There's the consumer side of things. There's also the access to alternatives that you should be thinking about more recently because of the demand for it on the institutional side and also the retail side. Having an understanding very core to any one of those areas that you're focused on is pretty important to understanding on a macro level, how is the industry evolving? How are access to alternatives being exposed to the institutional side and the retail side?
If your approach is to go after one particular niche inside of alternatives, my question is why are you doing that? Because there's plenty of companies around that are trying to enable access to any particular alternative but what's really missing here is the portfolio aggregation for consumers along with institutions. So, there's a variety of solutions that exist in terms of the investing, the custodian, the wallet. That is great but what's missing is: how do we think about allowing consumers and institutions to evaluate their portfolio, but maybe also get access to the advice to construct those portfolios and presenting that in an experience that is truly convenient and valuable to the end user?
Telling me that you are enabling access to alternatives is great and doing portfolio aggregation is great, but how exactly are you doing that?
Gopi Rangan: This is a vast topic. I invested in a company called Rocket Dollar that focuses on this sector. Creating access to alternate investments through retirement funds is something that's not been done before and now the opportunity exists. It's quite surprising to see that there's potentially trillions of dollars exposure that is not available to retirement funds and there's limitations on how that can be used to invest in alternate assets. And there are plenty of opportunities for companies like Rocket Dollar to create innovative solutions here. I can see why you are excited about this topic.
Jasleen Kaur: Yeah, absolutely. Digital retirement is an amazing space to look at. We've spent some time talking to really awesome people that have spent their careers in optimizing digital retirement, whether it's at the Black Rocks of the world or it's at the wealth fronts or Vestwell, even. But there's this fundamental issue that still remains, which is enough people are not saving for their retirement. The way to get them to save is staggered. How much they save is not optimized. When they're going to retire is becoming later and later, and what they're going to do in retirement has also become very different.
For example, someone who's from my parents' generation or even before my grandparents. When they were going to retire, they had an age in mind. They chose that and then they stopped working and they sort of did some passion work like golfing or reading the newspaper, getting to write. Now, retirement looks very different. When I talk to my dad, he wants to buy a farm in his retirement. So, it's about understanding how can I optimize the capital that I have saved over my career in being able to leverage that to fund the purchase of a farm, fund the running of the farm. Those types of goals are shifting over time and the age at which people are retiring is also shifting. So, understanding how digital retirement solutions should work today is about capturing a couple different things that we didn't think about before, but still core to all of that is just convincing people that it's important to save for their retirement because we have a massive sub segment of individuals that are actually just not even saving and so they get to 65 and their health is deteriorating and they don't have the funds to address those problems, or they don't have the funds to even feed themselves or buy new clothes and fund their grandkids' educations. Thinking about all of those things is partly my job, but it's also partly employers jobs and the government's job, but we have to get that conversation started.
Gopi Rangan: I'm glad you brought government into the picture, but I understand the nature of retirement is changing and how we want to spend our golden years is changing. When founders build solutions in this space and it touches regulatory aspects and government is a big portion of that (policies are important), do founders need to worry about regulations early in the seed stage and series A stage? How important is it?
Jasleen Kaur: There's two schools of thought on this. Of course, the first is 100% yes. If you haven't thought through the regulatory aspect early on, maybe you're not well equipped to start the company that you're trying to start.
You mean like two people in a garage writing software need to think about regulations really?
That's the other side of it, which is "okay, let's get started and let's break things and regulations. We'll figure it out." I think that's what the two engineers in the garage are thinking. I mean, that's where Facebook came about. But not only that. When we think about the alts industry right now, in particular, crypto, regulation was not the number one concern here. And if it was, then it wouldn't have even come about... because decentralization is the core concept of stemming away from regulation. As we see now, regulators are very worried and getting a lot more involved. But you do have to think why regulations are in place. For the most part, not all, they're there to protect the consumer or the end user of any sort of product.
If regulations didn't exist, then the wild, wild west would be the real theme of economics today. So, it's important to take regulation into account in my opinion, but it should not be the thing that deters you from building what you're trying to build, because disruption is what we're looking for and what we need in the world today.
Gopi Rangan: Break the rules, but don't break the law. That's your advice to founders. It's important to have a maybe healthy disregard for regulations so you can build something creative, but you don't want to completely ignore the regulations. And also we have to recognize that some of these regulations are archaic and they need to change.
Jasleen Kaur: Yeah, and regulations are not perfect and not all of them are helping individuals we need to help. That's the problem. Hopefully there's respect for the regulations that are protecting the consumers, but the ones that aren't please break them and talk to me about it so that I can help you.
Gopi Rangan: She's definitely an expert on this topic. She's noodled on this and researched this topic for many, many years. How many investments do you expect to make roughly in a year?
Jasleen Kaur: The fund is roughly looking to make about 12 to 15 investments per year. For me, that means that I would love to bring about three to four a year to the table. Of course, things are now shifting in a different way and things are slowing down, but what's awesome for Nyca is that we in particular are not slowing down. We're keen to find the disruptors. We're keen to find who is going to help us move the ball forward, whether it's on environmental issues, whether it's on financial services or on the infrastructure side. And that applies to every single vertical that sits inside of FinTech.
Gopi Rangan: 2020 and 2021 were very different years. It already looks very very different compared to where we are now in 2022. How has the market changed for you as an investor and what do you anticipate will happen and how are you preparing for that?
Jasleen Kaur: Quite frankly, there's one thing that I'm really excited about, which I've had a problem with the last couple of years is valuations will hopefully come down, because valuations have been inflated for quite some time now. I think quite candidly investors along with founders have absolutely been doing the wrong thing here. Founders, of course, are very excited when their company gets valued very highly. They get lots of PR out of it. What they're missing is that growing into that valuation still needs to occur. You still have to find a subsequent set of investors that strongly believes that you are valuable in that number, but also beyond that. That is the core issue that investors also have mistaken. Investors have thrown tons of capital at companies and said, "Grow. Grow. Grow." That is a wonderful thing to enable founders to grow and get a lot more people access to their products and services. But what they're missing there is the core fundamental valuations that should be attributed to these companies.
When you think about evaluating a financial services company or particularly a lending business as a tech forward and tech first company, when truly at its core, it's really not a tech company. It's a lending company. Giving it the valuation of a tech company is actually quite frankly the wrong thing to do. We're starting to see that. I think over time, multiples will converge to where they're supposed to be. It's a detriment to founders and investors if they do not stick to core fundamentals around that. Hopefully we will start seeing things calm down on that side. Overall, I think a lot of friends that I've spoken to in the industry are slowing down on investing, asking their entrepreneurs or portfolio companies to really think about conserving cash, slow down hiring.
The advice that I have for anyone who is building a company, and that is early stage is, if you are building something meaningful, and if you are building something that is truly going to disrupt the core legacy infrastructure or the way things function, then you are not necessarily subject to this downturn. What I mean by that is build prudently, of course, but go break things. Airbnb broke things in the last downturn and look where they are today. Uber broke things at the time of that downturn and look where they are today. It's because they're disrupting something that wasn't working before. If you are doing that again, then it's going to work and have faith in that.
Gopi Rangan: Downturns can be great opportunities to build new businesses. There are plenty of problems waiting to be solved in legacy industries, in banking and insurance. That's not going to go away because of the downturn, but maybe some of the hype will go away and that's a good thing for everybody, both investors and founders.
I want to ask you a question that's a little more philosophical. You've fought your way to build a career in venture capital and it's not easy. You've established a fantastic career in venture capital. What would you like to see change in the industry to make this industry better?
Jasleen Kaur: A lot of this industry works on who you know and how well you know them and what your background is and who is helping push you along. Of course, that will always continue to play a part of it. But I think it is the job of the individuals that fought to get here myself included to help push the people who don't have the backgrounds and the experience that others do forward. I actively try to do that, whether that's women, whether that's any person of color, whether that's someone who didn't come from one of the top 10 or 20 colleges, whether that's someone who didn't have the opportunity to spend as much time on their education because they had other family priorities that they had to take care of. Whatever the scenario is, it's important for us to get involved in that way.
That does not exist to the extent that it should today. Lots of organizations are creating mentorship programs and trying to get individuals more involved on that front. But you really have to do it on a singular level. Seek out someone who you can help and figure out the way that you can help them put them in front of other people and try to explain to them how the industry works and ask them to break it.
I try my best to break out of the mold that is venture today by trying to just be myself, be a little bit more candid and actively point out the problems and not do it in a way that alienates people, but asks them to transition into a better way to function.
Gopi Rangan: Very well said. Congratulations on breaking the ceiling and creating opportunities and seizing those opportunities throughout your career.
I wanna switch to the last part of our conversation and ask you about your community involvement. Is there a nonprofit organization you are passionate about? Which one?
Jasleen Kaur: Yeah, that's a great question. I more recently moved to New York city a couple months ago. I bring that up because I'm still trying to figure out an organization to get involved with here, but I can't speak highly enough of the organization that I worked with in SF.
I strongly believe that getting involved physically with a volunteer organization is one of the best things you can do. I found myself volunteering at the Curry Senior Center in San Francisco, which is a center that offers healthcare, housing, case management support, meals, and all sorts of community activities for all seniors and in particular, the most vulnerable individuals referring to those that are low income or homeless. I had no board seats and I was not affiliated with any of the senior management in terms of a role but rather I was a volunteer that showed up on the weekend mornings to help in the kitchen to serve lunch to up 200 seniors that would come in, eat food, hang out with their friends in the dining room. Honestly, it was one of the happiest parts of my week to be able to spend time with these individuals. I think there's this expectation that being on a board or in some senior position is what you need to strive for in terms of volunteer efforts. And I actually think the best impact you can really have is to show up to a place that is helping others, roll up your sleeves and just get involved in any way that you can. Volunteering truly, should just be about having fun and helping others and putting a smile on someone's face rather than trying to add something to your resume. So even if the Curry Center in San Francisco is not for you, there's plenty of other opportunities and you don't need to get started by trying to get on a board anywhere, just Google volunteer opportunities near me and get started in some way.
Gopi Rangan: Jasleen, it's always a pleasure talking to you. Thank you so much for spending time with me sharing many nuggets of wisdom based on your experience. I look forward to sharing them with the world.
Jasleen Kaur: Thank you for having me. Always a pleasure.
Gopi Rangan: Thank you for listening to the sure. Shot entrepreneur. I hope you enjoyed listening to real-life stories about early believers supporting ambitious entrepreneurs.
Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast. I look forward to catching you at the next episode.