Wing VC’s Sara Choi from Both Sides of the Partnering Conversation

13 Aug

Sara Choi

An interview with Sara Choi, Partner of Wing VC and Panelist at the upcoming 4D Meets AI digital partnering conference

By Rory McCann, Marketing Manager & Conference Producer, LSN

Rory McCann

Sara Choi in an investor who has seen it all. Her successful VC career started on the other side of the deal-making conversation as an early-stage founder. In our candid conversation, Sara discusses how her early experiences shaped her perspective working with fundraising CEOs. We discuss the industry of AI in digital health and life science, and her best advice for CEOs who are looking to stand out while avoiding burnout.

Rory McCann (RM): Where are we at right now with AI in digital health and life science?

Sara Choi (SC): First of all, we’ve come a long way, haven’t we? AI has only been here as a field since 1956 when it was started – about 60 years ago – at Dartmouth College. I think back then no one had any idea of just where it’d be applied and the power it could have, but now, we’re starting to see it really take shape and transform so many different industries. Specifically for digital health and the life sciences, AI has finally reached a point in maturity of the actual technology (hello, GPT-3!) – and also, ease of use – where we – founders, technologists, consumers etc. – can finally take advantage of vast data troves and really use AI to have transformational effects. I keep using that word transformation – it’s not just about a specific application, now I’m talking about AI and its power to terraform trillion-dollar industries, which I just don’t think could’ve happened before.

RM: You were an early-stage founder yourself. Tell us a little about your career path and how you got involved in VC?

SC: My path to venture was kind of circuitous. After my time at Google, I joined my co-founder’s company, and that business, like all my businesses, was in the enterprise space – using data in creative ways. That company had a pretty meteoric rise and then, unfortunately, a fiery crash. In that process, it was just me and my co-founder managing a team, managing a business really for the first time. That company had zero venture investors, and I really struggled as a founder to find my footing and to know what to do next because I didn’t really have the power of a community. So the next company (also a data-related company), we completely over-indexed. We had three venture investors in our seed round, we went through an accelerator, we really saw the power of surrounding ourselves with people that led to a better outcome.

We at Wing are enterprise investors, and we view our investments in health and life sciences as just that: truly an extension of core technology, but applied to a different vertical. A vertical obviously with nuances.

RM: What’s your investment theme with AI?

SC: I think the common theme running throughout both digital health and life sciences is that there has been a great proliferation of data that’s happened across the ecosystem… cost of sequencing dramatically decreasing, the rise of multi-omics and platforms that support that, EHR data capture, and better sensors throwing off data. We see a lot of opportunity at the intersection of data and bio taking advantage of these great vats of data using AI, math, and computation.

RM: What is your AUM?

SC: So we actually raised a fund over COVID, which was an interesting experience. I definitely have sympathy for and empathize with the founders who are trying to raise during this time. This fund was a $450M fund, and that is an increase from our last fund. This fund that we raised is extending our work early-stage, funding pre-seed, seeds, and Series A – we look forward to partnering with many founders with this capital.

RM: How many companies are in your portfolio presently?

SC: We are managing over thirty-five, and I think the exciting thing is that COVID has not stopped us. We continued to stay by our mission of helping entrepreneurs at the early stage, and actually since then, we’ve gone on to make three additional investments – all virtual – which is the world we live in.

RM: How has COVID changed your approach? Are you more likely to invest in a company you haven’t met face-to-face than you were before?

SC: The world has completely changed, so it’s pretty nutty to think about business-as-usual, but when our business is really helping early-stage founders try to achieve product-market fit, we felt compelled to continue our business to be able to back founders and their world-changing ideas. Some were founders we knew from before, and then, obviously, Zoom life can be a bit easier having developed that relationship already, but coming back to our post-COVID investments, the last Series A I invested in is a company I still haven’t met in person. We have done this all through Zoom. We spent effort getting to know one another, and I met with all the senior folks on their team, as well. That extra step of getting to know people as real people, as opposed to just a business or for their entrepreneurial endeavors, was really, really important to me during this time.

Zoom fatigue is very real. We should all just acknowledge that. Maybe it’s the person’s tenth hour on Zoom. Maybe they’re a little tired. Maybe they should be a little bit late because they haven’t gotten anything to eat all day because they’ve just been at their desk pounding through meetings. I think we should just be considerate, and kind, and forgiving – in general, as people – but especially given this strange situation.

RM: How many slots do you have left for the year, and are you changing your projections based on how the year has been going?

SC: We’re definitely very hands-on investors. I’d say we’re typically the most active investor when we get involved. With our  bespoke approach where we’re really helping build companies as true partners, it’s hard for me to say, “Oh we’ll make X number of investments per year” because a lot depends on the kind of companies we meet, if they fit our investment thesis, etc. I’d say it’s not unusual for a partner to make two or three investments per year, but definitely don’t hold me to that number because I think a lot just depends on fit.

RM: Speaking of fit, tell me a little about your tried-and-true approach to the evaluation process. What are the top factors you’ll consider?

SC: The team is the most important thing. It’s incredibly important, especially at the early stages, which is what we do, to find adept founders, typically with deep domain expertise, who really have a founder-opportunity fit. What I mean by that is, they are not just searching for a problem to solve. Typically, our founders have really felt this pain, know it intimately, and have first-hand knowledge about the things they can do to make a difference. There are certain qualities that come along with that: grit, resilience, ability to build a team. But it definitely doesn’t stop there.

Even if you have an incredible founder, an incredible founding team, in the wrong market or with the wrong timing, that team is still destined to fail, and that’s why I think an equally important consideration is market and timing. If you have a huge market, you just have more wiggle room. No company was founded on a straight line. There are always ups and downs. Things always go awry. But will the market be forgiving? Is there enough customer demand?

RM: I think that’s great that an early-stage company’s failings aren’t seen as a strike against them, but rather their response can instead be one in their favor.

SC: Oh, absolutely. We even have a term for that at Wing. We call it the Early Walk in the Woods.

RM: Well, that sounds lovely.

SC: All founders in the beginning have a little walk through the woods. It’s a journey, and I’ve been through that journey several times myself as an entrepreneur. And you know what? If you don’t deviate from your day one plan, maybe that’s because you’re missing something. Part of the founder’s responsibility is to be responsive to the market, to be nimble, to be flexible, to weigh and take in advice and change their company for the better. We think of companies as being discreet, rigid entities, when in reality, they’re organisms. They’re going to multiply and grow, especially at these critical early stages. They’re taking in nutrients – little bits of information – that help them grow in particular ways, so it’s definitely an evolution, definitely will take many tries and failures, even within the over-arching story of success. We look for that, actually. Can the founder be flexible enough to change to the market feedback?

RM: Let’s talk a little bit about numbers. What’s your typical bite size on initial investment and follow-on investment size?

SC: We typically will want to be there for the life of the company and support our portfolio companies well. After making the initial investment, we’ll reserve about 2X for follow-on. So if it’s a $1M seed, or a $5M-$6M power seed or $7M-$10M A-round. We’re really active investors, and really present as a resource throughout the life of the company to IPO.

RM: How long is your due diligence timeline?

SC: It can really depend. I’d say we’re pretty fast investors, but we do our checks to be responsible. We’re thematic investors, so that gives us a leg-up and a head-start. I try to do founder checks with people they’ve worked with in the past, just to get a sense of who they are. I always make sure to do customer checks, as well. I also might check in with some experts. Hopefully by the end, everyone feels like it was a good process. Hopefully, the founder gets something out of it, and we learn about the company, too.

RM: Do you have a typical timeline with that process?

SC: Can be faster but two weeks is really a bar to get to know someone, especially in this current environment. It’s a pretty nimble, fast process, one of the benefits for having a pretty flexible, small firm.

RM: Can you make a perfect profile of an investment that would catch your eye immediately?

SC: For digital life sciences, in particular, where it’s so critical to take advantage of the proliferation of data that’s happened through the revolution in genomics, multi-omics, etc., I look for founders who are technical experts. They don’t have to be the ones still doing the coding or CS, but they have to be technical enough that they are able to instruct their team and have an edge. They’re generally working on a platform or a tool for novel data capture or making use of data in a platform or tool. We don’t play in the space of medical devices or diagnostics. An ideal company for us is using advanced AI, ML, or math in order to create some sort of a platform selling to a customer like pharma, research, biotech.

On the digital health side, customers can be hard to sell so if you have demonstrable proof or a plan for selling into those unwieldy customers, it’s all the better.

RM: You’ve been an early-stage founder and investor. What insight do you have for a founder today?

SC: First of all, I applaud what you’re doing. Starting a company takes an enormous act of bravery, and it’s hard, even under the best of circumstances. Right now, we’re in a historically unprecedented time, and it’s really tough. Surround yourself with community, and not just a community of expert advice, also a community for your mental wellbeing. I found it extremely isolating to have gone through the rise and fall of my first company. If your mental health is not in order, there’s no way you’re going to be able to serve your company well, serve your employees well, etc. I really encourage you to seek companionship. Seek community. Open yourself up and be vulnerable to those people. I think that making that kind of investment of your time pays back in ample dividends down the road when you are in a position of strength, tackling a market in a fierce way.

RM: Can that advice be applied to your fellow investor?

SC: Absolutely, especially now as the days can blend into one another. We need to rally around community with shared purposes. It’s only together that we’re going to affect change, now more than ever.

RM: How do partnering events that bring buyers and sellers together, like 4D Meets AI, which we’re so honored to have you participate in, add value?

SC: Bringing together of people can result in pretty incredible things, if done right, and I have confidence that this one will be done right. Thank you for your very careful selection of speakers to be on narrow topic areas that are of relevant interest to the audience. I think that’s just fantastic. Congregation to bring together this ecosystem of people, and once you bring a lot of people together with smart minds and good intentions, I think wonderful things can happen.

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