Alexa Binns, a seasoned investor and marketer, takes us through her remarkable journey from non-profit roots to establishing herself as a venture capital investor, overseeing her family office alongside her three sisters. Drawing from her dual roles as an angel investor and limited partner, Alexa provides invaluable insights for founders and venture capitalists alike, enriching the conversation with her wealth of experience and perspective.
Alexa Binns, a seasoned investor and marketer, takes us through her remarkable journey from non-profit roots to establishing herself as a venture capital investor, overseeing her family office alongside her three sisters. Drawing from her dual roles as an angel investor and limited partner, Alexa provides invaluable insights for founders and venture capitalists alike, enriching the conversation with her wealth of experience and perspective.
In this episode:
[2:03] Alexa’s path to venture capital: Discover how Alexa transitioned from her role in a non-profit organization to making her mark in the competitive world of venture capital.
[8:26] Three critical aspects that every founder should understand about angel investors to optimize their interactions and avoid common pitfalls.
[12:38] The significant impact of new emerging managers on the venture capital landscape and what this means for the industry.
[16:40] The "Three S’s" – sourcing, selecting, and stewardship – essential criteria for assessing and choosing the best emerging fund managers.
[22:33] The current state of investment in female founders: are they receiving the funding they rightfully deserve?
[28:11] Swimming with Allocators podcast, where limited partners share their decision-making processes in VC investments.
The non-profit organization that Alexa is passionate about: Norman Lear Center USC
About Alexa Binns
Alexa Binns is a seasoned investor and marketer, known for her acute ability to identify emerging trends and technologies. Over her career, she has risen from associate to partner in venture capital, making significant investments at firms such as Maven, Halogen, and Spacecadet. Some of her notable angel investments include Chipper Cash, Sana Benefits, and The Flex Co.
In addition to her investing prowess, Alexa brings a decade of operational experience, having developed both digital and physical products for high-profile clients including Planned Parenthood, MTV, Disney, and Target. She excels in innovative marketing strategies; her accomplishments range from writing a master’s thesis on building a brand on YouTube to helping sell the Twitch influencer marketing platform NoScope. She was also nominated for a Mashable Award for her work with Foursquare and pioneered some of the first advertising campaigns on Twitter.
Alexa also co-hosts Swimming with Allocators, a venture podcast that offers insights from the limited partner (LP) perspective. Alongside Earnest Sweat, she interviews top allocators and industry leaders weekly, exploring their strategies and perspectives on the next decade of venture capital.
Subscribe to our podcast and stay tuned for our next episode.
Swimming with Allocators. The concept of the podcast is that VCs should shut their mouths and let the LPs talk. So we are inviting a different limited partner on the show each week to explain how they're thinking about allocating to venture capital.
Gopi Rangan: You are listening to The Sure Shot Entrepreneur - 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. I'm your host, Gopi Rangan. My guest today is Alexa Binns. Alexa is an angel investor and a limited partner.
She's been a venture capital investor at a few firms like Maven, Halogen, and Speedcast Ventures. She's also had experience building products and working at startups and large companies. And more recently, she is an active limited partner in a bunch of funds. She represents her family office on behalf of her three sisters.
They invest in funds and in startups. We're going to talk to her about her view about the venture capital ecosystem. And how does she see trends evolving over the past a few months, especially with all the markets changing. We're going to ask her about her specific focus and specialties in CPG and how building a startup in those areas are interesting, challenging.
Alexa, welcome to The Sure Shot Entrepreneur.
Alexa Binns: Thank you for having me, Gopi.
Gopi Rangan: Let's start with you, where you grew up. You grew up in Phoenix, Arizona, right? And then you came to Silicon Valley when you were studying at Stanford for undergrad. And then eventually you made your way to the venture capital ecosystem.
Tell us about that journey.
Alexa Binns: Absolutely. I am, as you said, I'm one of three sisters. I am the daughter of a two time exited entrepreneur, has sold his first ultrasound business before I was even born. And I am the granddaughter of, on the one side, a poultry farmer and on the other side, a fortune 500 CEO.
So the fact that I'm speaking to you today with any family office to speak to is, is really a, it's sort of like a cliche of the American dream. Um, I recognize that this, this point of privilege that I'm here speaking with you today, for sure. At Stanford, I would call myself a very well rounded kid. I was on a sports team, and I made a bunch of student films.
I made a Bollywood musical. I was a Pi Beta Kappa, which basically means I was a giant dork in every subject across the university. And with this sort of overwhelming interest in too many subjects, I ended up working in non profit my first five years out of school. First at the Kaiser Family Foundation, where I got to work on cool public service announcements with NBA stars and pop stars and rappers, and then helping Tom Steyer and his crew get a think tank off the ground all about clean tech and climate tech. So I think most people in the Bay Area, their day job is working in tech and on the evenings and weekends, maybe they're helping out with nonprofits they care about.
And I had a little bit of the reverse in my early 20s where I was basically volunteering for some of my friends early startups. And one fun example, I get the call from a Stanford classmate and he says, I've got potential huge client coming into town. Can you moonlight as their client rep just for the sales meeting?
And so I sneak out of my nonprofit job, meet them on Sand Hill road in the Sequoia board room. And luckily we go around this table and everybody does intros before we get to me. And I have a chance of mentally noting who works at the startup and who works at the customer. And it gets around to me and I gesture over to a gal I've never seen before in my life.
And I say, "ah, Jale, I'm on Jale's team. Should you decide that this is the solution you need? I'd be your point person moving forward." You know, and I continued to have to join these conference calls with these guys sort of quietly hiding in my cubicle for the next few weeks until they landed the deal and they were able to hire somebody to actually manage the client.
So I think the next major milestone in this story is that my parents were in their late 60s, maybe 67, 68. That would put me at, you know, 27, 28. They gave my sisters and I our inheritance. The bulk of it in the form of a single trust in which, there's a few things I think that are quite unusual about this.
First, my parents are and were then very much alive, and second, the format was that we would manage the capital as a family. So you know, each of us came from different perspectives. We each had access to different networks, and the idea was that we'd be able to source and vet these things using our unique perspective.
This extraordinary gift of capital also came with an extraordinary gift of confidence. You know, this, this is my mother and father saying, "we believe you all can figure this out." There is not a black sheep among us. My sisters are exceptionally talented. You know, we've got Ivy league, Stanford, Stanford, three master's degrees between us, but none of us have ever had a Wall Street internship.
You know, you wouldn't have said, "ah, yes, that's the finance one. Put that one in charge, right?" We're all very much left brain, right brain kind of people. And so that began my sort of internalization of even myself as an investor. This is something I never would have described myself as previously. And initially, because my network included all of these people, I was really sourcing LP investments.
These are sort of the beginning of micro VCs and, and what are now called emerging managers. I was bringing some direct deals to the family and I was working with Target at the time. So I also ended up making some angel investments in products that I knew I was helping get on shelf. They say that angel investing is the fastest way to lose your money, and I am not willing to be garbage at anything I do.
And so I sort of sucked it up and said, you know what, if I'm going to be doing this, I want to learn how to do it professionally. And despite being in my early thirties, I went and found myself an associate level job in venture capital. I started at the bottom and have since been very lucky that I've worked for these GPs that have trained me. I've made it up through principal to a partner. You know, the person you're having on the podcast today is a sophisticated venture capital manager, but I don't know that you would have thought that if you'd seen my Bollywood film when I was 21,
Gopi Rangan: it's great to hear the story. Uh, American dream came true for your grandparents, your parents and for you now, with the new family office that was set up, it was kind of DIY. You had to learn, all three of you, how to deal with this, what to do with it, where to invest, what's your mission, your objective, what's the long term plan for all of this. And without having any Wall Street experience before.
Alexa Binns: Exactly. Exactly. I think now it's my job not to mess it all up, you know, with my grandparents shining down on me.
Gopi Rangan: What sport did you play when you were in college?
Alexa Binns: I was on the Stanford sailing team.
Gopi Rangan: Okay. I want to talk more about the Bollywood movie you worked on, but let's get back to venture capital.
Let's talk about first as an angel investor. And I want to talk about your perspective as a limited partner as well. I've worked with many angel investors and I've started angel investment groups as well and I agree with you that it's the fastest way to lose money. It's very hard to be disciplined.
It's very hard to access the high quality deal flow you need to build a portfolio.
Alexa Binns: Yes.
Gopi Rangan: What is your advice to founders? When they meet angels, how do they pick the right angel to invest in the company?
Alexa Binns: Absolutely. Collecting your very first friends and family and angel checks is really a bet on the person. And if you don't naturally have that network, things like angel groups, et cetera, are your next best option. But the secret about angels is that this has zero urgency to them. There's always something else they could go invest in.
This is kind of a hobby. And so what can happen is the process gets extremely dragged out and you get a lot of questions and a lot of time spent for relatively little money. And so I think the thing to do as a founder raising from angel networks in particular is to create some kind of urgency so that there is an external deadline by which they need to come to a decision.
And it can sound scary because if you think somebody is a maybe, giving them a deadline maybe sounds a little like showing your hand. Maybe you're kicking them out of the deal, but the truth is if they're going to come to a yes, they can come to a yes tomorrow. They don't need a month. And they can always come in at a higher valuation later.
So I would use some kind of external deadline. We've got XYZ sales conference coming up. So we need to be able to hire the next two engineers to be prepped and ready for when we do land a couple of new clients. Whatever it is, come up with a deadline and don't be scared to wrap up those conversations. Angels have all the time in the world and all the money in the world so they can be a little infuriating.
Gopi Rangan: As a founder, it's very hard to have those controls. How do you push the conversation to the finish line? And unless you do that angels don't have the urgency to make any decision, so they might take the time. So it'll be very helpful if the founders can be mindful of the fact that there has to be a plan to get the angel to sign and close and wire the money.
Alexa Binns: Yeah. The angels want to feel like they've gotten in on something hot and great. So give them that FOMO a little bit.
Gopi Rangan: I would say this advice is suitable for venture capital investors as well when they meet limited partners. Limited partners are notoriously slow in making decisions. They don't have any urgency.
If you think that angels don't have any urgency to invest in a startup, LPs rarely have urgency to make any decisions. And if you really push them hard, the answer is no. So how do you balance the decision making process and making sure that you actually get them through the finish line.
Alexa Binns: Yeah. With an angel, truly the investments really only make economic or financial sense if you're getting in early. For limited partners, more time in many cases, it is really a long term relationship that you're building, where they want to actually be with you as you build your track record. So at least the patience maybe pays off as a venture capitalist who is courting LPs where I think the longer a relationship goes with the angel, the least likely it is that they're going to actually finally come in and commit.
Gopi Rangan: That's a good way to look at it. The more time you spend with an angel who's kicking tires, uh, they're likely wasting your time and they're not going to invest. But with a limited partner who spends time and is interested in learning more about how you're building a VC firm, it's getting more and more likely that they would invest, otherwise they wouldn't spend the time.
With an angel investor, they are willing to lose the money. They understand the risk of building a business, it could go to zero, and they're open to that possibility. LPs don't want that. Like they want to make sure that you can actually build a firm and there will be this fund and subsequent funds. And you have a vision for the firm and you are skilled in the craft to make sure that you will make decent investments and definitely not make it go to zero.
But the question is, how big will this be? Will you be able to hit a few very big winners? And for them to understand and form an opinion about the VC, it will take some time and it's not a one conversation when you make a decision. Very interesting to see the contrast. Can we talk about what's happening in the market recently, especially as an LP because that's a more nuanced perspective and poorly understood in the world.
VC is difficult to understand, but LP world is far more difficult to understand. What is happening in the market today? What are things that you're excited about? What do you expect for the rest of the year and next year?
Alexa Binns: Yeah, absolutely. I'm a cohost of a podcast where I get to interview LPs, so I am in the process of picking these brains that we're speaking of.
One interesting trend we're seeing is the number of wealth managers, sort of money managers, fund of funds, et cetera, that are positioning themselves now in this space as somebody who can help you navigate the huge increase in the number of emerging managers. I can tell you from my personal experience working at three of these sort of emerging manager size funds that the first required sort of like your classic back office consultants, Aduro, with a full legal team, Gunderson doing the fund formation.
And so despite being A $15 million fund, then a $60 million fund. That's a lot of overhead. That's a legitimate business to get up and going. Today, you can start a VC fund on a platform like Angel list, Pass Through, or using Carta as your back office, which really allow people to operationally get a fund up and running so much faster.
So this explosion of emerging managers, people who are VCs who have maybe a $10 million fund, a $20 million fund, a $30 million fund, has created an opportunity for people who haven't necessarily had access to a winning strategy. Traditionally, the idea was if you weren't in the brand name funds, there was no real upside in venture and therefore you were better off not participating. But this new emerging class, the argument is that you still have a chance if you're selecting the right emerging managers. You still have the opportunity of a 5X - 8X as opposed to the more established managers where you're looking at maybe a 3X and you probably can't even get in. So that's the main trend I'm seeing is a lot of people are selling this new kind of product, which is almost manager selection layer where they are going to interview the 1000, up and coming emerging managers who are raising fund one, fund two, and help you get access to those select few who are going to have really exponentially remarkable returns.
Gopi Rangan: There was a time through the nineties and through the early two thousands when there may be like a total volume of 100 to 200 VC firms that really mattered. If you paid attention to the top, 20, 30 percent of them, you got pretty good coverage of the sector.
Now, there are hundreds of VC firms, and so many of them, especially at the pre seed, seed stage investing, and it's very hard to keep track, very hard to even know all of them. It's impossible to tell who's at the top 20, 30 percent. They all are young and by the time they've figured out and established a track record fund five fund six they're ready to retire.
So yeah That's not the traditional way as an LP to wait for performance and everything to come through and then start investing. It's too late. So if you want to access, you know high returns in venture capital as an LP, you have to learn a new art of sifting through lots and lots of emerging managers and picking a few strategic investment thesis that you align with and then get into fund one, fund two of some of these emerging managers.
That's very hard to do.
Alexa Binns: I do think the explosion of emerging managers is great news for founders who are fundraising because there are hundreds more people for you to go pitch. Yes.
Gopi Rangan: So what questions do you ask emerging managers, especially in the first few meetings where you're deciding whether you want to spend time with this emerging manager even before, well before making investment decisions?
What are some things that get you excited?
Alexa Binns: I think I'm lucky that I'm in this unique position that I've, done the job. And so I can look for basically anywhere where I think somebody's got a better edge than I do, particular element, right?
LPs talk a lot about three S's. Assessing managers on their ability to source, their ability to select of the founders they're meeting, and then support or stewardship.
So I'm looking for emerging managers who have something there that I know like is golden that I don't necessarily have, right? And I'm sure Yuri Sagalov wouldn't mind me tooting his horn a little bit. He's a great example of somebody where I said, "guys, this wayfinder, he's doing something I'm not able to do." He had been an advisor to YC specifically for founders on their initial pilots. And he was raising his first fund with the idea that he would continue to source from YC, but he also has this network of repeat YC founder VCs and they come to him early on because they know he's going to help them get from seed to series A successfully because that early traction. And I'm mostly a consumer tech investor. So he's also focused on areas that I see exploding where those deals aren't the kinds of deals I'm going to be able to support or steward in a way that he really can. So I think that's kind of my unique approach is where do I see somebody who's like, frankly, got a chance of beating me or getting me access to something that I think is, is really sweet.
When I texted a couple of YC founders to ask about Yuri, it was like 'most helpful advisor that I had at YC'.
Gopi Rangan: Which part is more important for you access or is it screening selection or is it support stewardship?
Alexa Binns: I think because there are so many emerging managers, what I've come to see is that there's 15 people working on any given business idea. And what you'll realize once the press releases start coming out is, "Oh, there was a really A+ team that these guys never got to vet." There was only one echelon of people who even knew about the A+ team working on building this kind of product. And so, I think sourcing theoretically becomes irrelevant once we have AI, etc.
If you're an investor, for example, in the series B or C, there's a known universe of deals. And so at that point, you're literally just tracking, waiting for people to be ready for you to come in at B. But at pre-seed and seed stages, historically, there's no known universe. There's no known database. And people sort of say, "Oh, well, that's going to go the way of the dodo."
But I do think if you're investing in the second best team or the third best team working on a problem, that's, that's still a sourcing issue. And so something like, you know, Yuri, who's seeing teams that are up to YC standards, I think is good signal to me that he's going to see some of the best teams working on a problem.
Gopi Rangan: The sourcing is always a challenge for any investor, even all the way to later stages. But sourcing is definitely a challenge at the earliest stages because there's so much noise at the earlier stages. And how do you find the right founders to back? And like you said, are they the best in that category?
You're going to make one bet in that category. You're not going to be able to invest in others, even if you meet them later. And how do you know without having met everybody that this is the best team, including future teams that might come in that space. The selection process is especially challenging at the earliest stages because there's not much data available.
There's not much information about the companies. They sometimes have barely a slide deck and some ideas on concepts. They may not even have written the first line of code. What kind of due diligence can you do? What kind of information can you go after to evaluate them? And that's very hard to do.
At later stages, you have something. May not be perfect, but you have something to go with. It's very difficult. And adding value is also very difficult. Supporting them. They have so many challenges in the beginning. In some ways, these are simple type A challenges, but the answers to those challenges changes the course of the business. So you have to be very careful about how to advise them.
What do you do to make sure that they can unleash potential and they're not just following your advice. And it's a complicated world when it comes to investing in early-stage startups. I can see how all of these three things are important. And depending on the firm, you focus on one more than the other.
Alexa Binns: And I think for folks who are interested in doing venture capital themselves or angel investing, those qualitative skills are highly valuable in this nebulous sort of pre seed, seed stage.
If you're a quant, you're going to be much happier in the late stage. where there's a lot of data to dig into and you're able to compare more apples to apples. I think part of why I'm able to thrive in the pre seed and seed stage is that I do have this much more sort of like renaissance humanities kind of background where I think it makes actually some really, um, analytical people quite uncomfortable.
Yeah. And the LPs tend to be far more quantitative people. They are, um, filling in their spreadsheets with the major KPIs of, you know, how each fund is doing, how each fund is tracking on their marks.
Gopi Rangan: I want to talk to you about some of your favorite topics, uh, like investing in female founders, for example.
The good thing about the recent trends in venture capital with more emerging managers coming in is more diverse founders get funded because there are new types of VCs you can raise money from. And that includes ignored parts of the population, which female founders are a big portion of that. They don't get funded as often.
Do you think we've solved the problem or do you feel like we're just beginning to solve the problem or is it going in the right direction where the best founders are getting funded by the best VCs, what's happening?
Alexa Binns: I love that that's the framing for that question. No, I think we're in the very beginning.
There are early champions. I got to work for Jesse Draper who has a fund, Halogen Ventures, where she's been a very early advocate for investing in female founders. For a myriad of reasons, there are so many problems that women still face today that have not yet been addressed by technology. So there's huge opportunity sets to still build for that customer. I think we are so early, however. So I call this Kamala Harris territory. You know, we haven't yet had a female president. We've just barely had a female VP. And so for female founders out there, you're a pioneer. It's a little bit of a narrative that we have in this country that everybody's got equal access when in fact, I think, you know, the data that shows that 2 percent of capital goes to women. What that means to me is that there is 2 percent of capital available to women.
And so if you are getting going, I think there's a couple of things that just given where we are today, the reality of the of the system can be really helpful. I think one, we have a lot more young women graduating with technical degrees. If you look at the requirements to be a YC founder team, they are looking for technical talent.
They want technical founders. And so the Bay Area in particular just has a bias for founder teams with technical talent. And we're going to see lots more women who fit the mold that VCs are looking forward to invest in. I think that's one thing that's really in our favor. And I think in the meantime, co ed teams raise just as much as all male teams. So the short term solution I think is to surround yourself with male counterparts who love having you around and treat you as an equal, if not a boss, and can be part of the fundraising process.
Gopi Rangan: I see those positive trends. I'm optimistic that we've arrived at a time when this trend is now sustainable and it's going to continue to grow. Looking forward to more of that. Which firm do you think is doing well and doing it right in this space?
Alexa Binns: Interesting.
Gopi Rangan: Anyone that you've invested in?
Alexa Binns: I guess for my personal investments, and this is because there is so much bias still in the system.
The women who have managed to raise a lot of capital are doing things in industries that people trust. A woman's got a good perspective. So biosciences, there are a lot more women in positions of leadership. Historically, there's a lot of success with female leaders in hard sciences.
And I do quite a bit in Femtech, for instance. So of course we're going to trust female founders in a space who are addressing things like a menopause or, or pregnancy, et cetera.
Gopi Rangan: Those are fascinating topics. I see lots of opportunities for founders to build solutions in those spaces. And it's very exciting to see that we're beginning to get a strong female perspectives and investor perspectives in those areas.
You've been on various sides of the table. You've worn different types of hats, pretty much every role in the venture ecosystem. If you were to change one thing about the venture capital industry, what would you do to make it better?
Alexa Binns: Oh, interesting. We can poll the audience to see if this would be helpful or interesting to them.
There is something called the blacklist in Hollywood, where the best scripts that don't get bought up and, and produced can be basically nominated by people in the business who came across the script, read it, loved it, but for whatever reason, couldn't convince their team or their boss t o make the show to make the movie.
And I think we could use something similarly now that we have so many emerging managers, almost a list of, we don't all have the capital to write the minimum 100 K check for instance, into a merging manager, but what if we could all sort of play this fun game of saying, "you know what? I discovered the band before the band was cool."
I think it would be fascinating to kind of pull the VC ecosystem every year on which emerging manager, which fund one or which fund two would be the one that you'd your money on. Cause I think it would be a healthy thing for us all to start thinking more with the LP perspective that in fact, venture capital is an extremely competitive sport, both from trying to win the best deals, but also distinguishing yourself in a rather commoditized market as an emerging manager.
Gopi Rangan: Yeah, more transparency on who's doing the real work. Data on performance will be very helpful to make this ecosystem even better.
We're coming towards the end of our conversation. I have two questions. I want to talk about your podcast because you're also fellow podcast host. What is Swimming with Allocators about?
Alexa Binns: The concept of the podcast is that VCs should shut their mouths and let the LPs talk. So we are inviting a different limited partner on the show each week to explain how they're thinking about allocating to venture capital.
And it's a voice that's generally not heard from much. And so, um, some of these people are tough to get access to. They are intentionally off the radar a little bit. And so hopefully we are helping bring some of that transparency and education so people can understand ultimately these are the people we all work for the pension funds, the endowments, the high net worth individuals, the fund of funds - these are our customers.
And this is a chance for them to get to actually take the mic.
Gopi Rangan: Very exciting. I've started listening to your episodes and I've become a fan. Thanks for bringing more light into the darker side of the venture capital ecosystem. Last question about your community involvement. Is there a non profit organization you are passionate about?
Which one?
Alexa Binns: There is a very cool organization called the Norman Lear Center based out of USC's Annenberg School. It addresses something that I think is so magical. So they offer free consulting to anyone in Hollywood who's interested in writing more accurate information about anything related to health.
So, I know Gopi, you care a lot about mental health. They end up serving as consultants on a lot of the TV shows, movies that we've all watched. A cool example would be, like, Pixar's Turning Red. There is a character on the movie, who has a continual glucose monitor. Yeah. And so we're normalizing things. We're addressing bias through popular entertainment and particularly around things where there's a lot of stigma. This might be really clever way to basically educate the public without being heavy handed. So I'm a big fan of the Norman Lear Center and the work they do.
Gopi Rangan: Alexa, thank you very much for spending time with me today.
It's very rare to find someone who actually has a lived perspective as an angel, as a VC, as a limited partner, and other types of roles. You span the entire ecosystem, the entire spread. Thanks for sharing your personal perspectives, candid examples based on your own experiences and your thoughts. I look forward to sharing your nuggets of wisdom with the world.
Alexa Binns: Thank you.
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.