Q&A with Ali Hamed
Ali Hamed is a Managing Partner and Co-founder of CoVenture, an early stage VC firm that builds software for its portfolio companies.
At CoVenture, Ali co-leads the deal team, and in the last two years, has helped lead investments in close to twenty of CoVenture's portfolio companies. Before CoVenture Ali spent time as a consultant to governments, financial institutions and domestic logistic companies. He even went ahead to co-found POPSHOP, a co-working space based in Ithaca, NY and is a mentor to various accelerators around the country.
Q: What’s your favourite interview question?
A: I had an investor once ask me what my co-founder’s favourite meal was. He wanted to know how well I knew him by seeing how often we ate together.
Q: Ha! That’s interesting - did you know the answer?
A: Yeah, salmon.
Q: This is a pretty standard question, but what VC’s do you personally look up to?
A: There is a guy named Josh Wolfe, he founded a firm called Lux Capital and he tends to invest in really unpopular stuff and seems to do really well doing it. He started a fund while he was pretty young and unqualified and I’m very inspired by that. I feel like almost every time I talk to him I end up repeating everything he says to everyone else just because I’m so inspired.
The guys at First Round are really good too, incredibly smart, they find a way to never make enemies even when playing in a really competitive space, and they just win, over and over again. I have a lot of respect for Paige Craig, he has an opinion about everything which I think is a bold thing to have.
Q: Cool! So CoVenture seeks out people who are looking to solve real problems, do you think that’s your competitive advantage?
A: We have a few competitive advantages. With early stage investments, you’re faced with two risks, the first one is market risk “does anyone want this?” the other is execution risk “can you build a product and ship it?”
We mitigate market risk by finding founders with domain expertise rather than finding engineers who want to solve a problem in a space they don’t understand very well.
We mitigate execution risk because our team writes a lot of the code. So that’s one advantage, the other is that we have a lot of engineers on our team and if you have an investor whose sort of technical, when building an internet based company, that might be useful.
Finally, we can invest earlier than other VC’s can, and instead of competing with them we work together.
Q: Do you see yourself continuing as an early stage investor then?
A: We’re happy where we are, we spot amazing deals, it’s our competitive advantage. We’re earlier than most other VC’s and that puts us in a position where there is not a lot of competition. Most funds will only invest in rounds that are over a million dollars in size and I would rather not compete with those firms.
I don’t like trying to compete with really smart people, I would rather stay in a less competitive space for now.
Q: Makes sense. Any thoughts you would like to share on the product/fundraising balance for an early stage founder?
A: You should always have proof that what you’re going to do is going to work. Most of the time you don’t even need to build a product. We’ve looked at companies where the founder has done everything manually and then proved that if he had software then he could do it a lot faster and he’d be ready to start a real business.
When you have a high level of conviction, then people people are not investing in your business as a favour anymore but because it’s now a good opportunity for them.
Q: Great advice! So, you talk about failure in your Medium articles; where did you feel that made you transition into wanting to become a Venture Capitalist?
A: I actually started investing in startups opportunistically. I felt like there was something I could add to companies and I just ended up doing this. I never had the clear goal of becoming a VC.
Since failing, I probably protect against downside risk quite a lot, an example would be raising more money than I need to give myself more time, or I just won’t take certain risks like going all in on something. Having failed and feeling the pain of failure inspires me to run this business for the rest of my life.
Q: Any advice you’d like to give to give to your past self?
A: One mistake I made was believe that my field of work was the most important thing in the world and the world is really big which is why you should always have respect for people who do other things.
It’s good to be passionate, but people can be equally passionate about equally important things that have nothing to do with what you’re doing. Another thing is don't create enemies.
Q: When people come up to you at events, what do you want to hear in that 10-15 second window?
A: This is actually kind of funny, usually the bar is set pretty low at events so all people need to do is not be weird and sort of smart. You know someone is going to come up to you in ten minutes when they’re just sitting there staring at you. It’s simple, just introduce yourself and let me know you have a startup running and you’d like my contact info so you could e-mail me about it later.
If you pitch me your idea on the spot, chances are I’m not going to remember it.
Q: Any advice for building your network?
A: Do favours for people. Do shit that you want to one day get paid for. Figure out what you’re good at, if you’re not good at anything then get good at something that a lot of people need.
Doesn’t matter if you’re still in college and have no work experience, figure it out, get work experience, learn a skill. Next step is to just tell everyone you’ll do it for them for free and as soon as you’ve done it for one person than that’s your work experience.
Do it for a few others and then eventually you’ll tell them that if they want you to keep doing this they’re going to have to start giving you money.
Once you’ve helped some people they probably owe you favours and can start introducing you to people.
For example, you want to know an awesome way to network? If you send me three awesome deals in Ottawa then I’ll introduce you to anyone you need to meet in New York. Now if you send me three shitty deals, I’ll just stop responding - and not because I’m mean, it’s just really easy to find shitty deals.
Q: Great to know! Any last thoughts you’d like to share?
A: I would tell people that rules, in the way of doing things, are great suggestions, but they’re only guidelines that you should only follow if they make sense.
I have an example that I like to give because it’s helpful for students who are going through the process of applying to university. So, if I were applying to Stanford University, to get in their computer science department - something I’d imagine is hard to get into - the typical student would get straight A’s throughout high school, take a lot of AP classes, do a bunch of extra curricular activities, play a sport, and become interesting in some way. After all that, you’re still competing with a bunch of other people who all did that too.
So if I were applying, what I would do is in my sophomore and junior year, I would look up who the profs are in that department, read their papers, e-mail them with questions, try to find a way to argue with them, and then ask to meet them in person to talk to them about the paper that like ten other people actually read and they’d be shocked. I’d work on becoming friends with them, and then a year later, with my mediocre test scores, I’d e-mail them and ask for a letter of recommendation for me to get into their department.
If I get four or five letters from profs in the department that I’m applying to, I think I would probably get in.