The following interview is a conversation we had with Zamir Shukho, founder of Vibranium Venture Capital, on our podcast Category Visionaries. You can view the full episode here: Funding the Future
Brett
Hey everyone, and thanks for listening. Today I’m speaking with Zamir Shukho, General Partner & Founder of Vibranium Venture Capital. Zamir, thanks for chatting with me today.
Zamir Shukho
Thanks for having me, Brett.
Brett
No problem. So to kick things off, could we just start with a bit more about who you are, your background, and how you made your way into the world of venture?
Zamir Shukho
Yeah. Thank you. So I’d been working with startups for the past ten years. My team and I, we used to build large acceleration programs in Eastern Europe, in CIS, and we’ve built over 42 programs with largest companies in that region. And over 1500 startups completed our accelerators. And while doing so, I had a chance to see and help a lot of companies grow from Idea Stage through their first sales and then scale to global markets. And eventually me and some of my partners decided to launch a venture fund focused on early stage companies because that’s what we really like to work with. And now we are investing in seed stage software companies in Silicon Valley, in Bay Area and help them scale globally and get some more visibility out there.
Brett
And take me back to when you were, say, 20 years old. Did you ever imagine that you would become an investor and a venture capitalist or what was on your mind when you were 20?
Zamir Shukho
When I was 20, I actually had the chance to come to United States and work in different companies. That was my first real corporate job that I took here. And I did not have any idea about venture capitalism or even startups because everything was very new. I was still going through my college, I was getting a degree in economy, but at the same time, I didn’t think that I will end up investing in startups. So this was a very interesting journey. I met so many talented people on the way and they kind of helped me guide into this business. Super cool.
Brett
Now tell us a bit more about Vibranium Venture Capital. So can you tell us a bit about the fund size, the history and any investments that you’ve made so far that you can share?
Zamir Shukho
Yes, of course. So our fund, we originally started from a basic size of $10 million. Right now we’re growing it to $50 million and we closed ten deals so far. We’ve just been active for a year. We have six portfolio companies and we invested into three other funds. And we did another follow investment in one of our portfolio companies. As I mentioned before, we like investing in b to b. SaaS. So anything that can help other businesses or enterprises to be more productive software wise, then maybe do some sales or marketing software or things in fintech and financial services or even media and entertainment. Things are very interesting to us. So we try to be agnostic. We do focus a little over these three or four verticals that I mentioned. But early stage seed companies, when they start getting their revenues and first large customers, our job basically is to support them with our resources and then help them grow, raise their series A.
Zamir Shukho
And we’re happy to follow on to our best companies during series A as well.
Brett
When companies are going from seed to Series A, what are some of those common challenges you see them face and struggle with?
Zamir Shukho
So typically seed stage companies already have early product market fit so they already have some kind of batch of customers that they’re working with but they don’t have full access, let me put it that way, to majority of the market share out there. So the challenges typically they have is the scaling part or building a systematic process of marketing and sales. So we try to help with that and avoid some pitfalls and some mistakes or burning too much resources, too much cash trying to look for those different groups of customers. So we help them focus. A lot of times they don’t have focus, so they’re trying out different things, different revenue models, et cetera. So that’s when startups typically burn too much resources and run out of money and their runway gets shorter, especially in this period of time when now fundraising is much harder.
Zamir Shukho
During 2022, a lot of venture funds slow down on their investments. So startups were struggling to get additional resources and even bridge rounds to get them through this hard period. So we helped optimize some of the spending. So our portfolio companies, we worked with them through some consulting work and offered some additional expertise to help them with some kind of product development and additional features. But mostly at this stage it’s about how do you proper build your marketing and sales strategy in order to scale to larger portions of the market.
Brett
And I’m sure over the course of your career you’ve seen a lot of pitch decks and you’ve sat through a lot of pitches. Are there any common mistakes you see founders make when they’re pitching you?
Zamir Shukho
Yeah, I’ve seen, I don’t know, maybe over 3000 pitches if combine everything, yes. And I’ve been a judge in a lot of juries and a lot of demo days and a lot of accelerators, including our own. So definitely yeah, there are some common things. One of the important things I like to mention is that a pitch deck and pitch presentation itself is just the tip of an iceberg when you start your fundraising journey. So focusing way too much on the pitch itself is probably the biggest mistake that every startup founder is doing in early stage, not being ready to answer some hard questions and not being prepared for the dialogue behind the closed doors with investors. But if you’re talking about the pitch itself, I would say being too protective and not receiving the feedback and arguing a lot with investors and jury, that’s probably a bad sign because typically investors like to see that startup founder can receive feedback and can analyze whatever was said and can fix some of the gray zones or mistakes or things that might seem wrong.
Zamir Shukho
And whatever they’re positioning themselves in the market or the way they calculate the market size, et cetera. So it’s always good to have an open mind and be receptive of the feedback that you’re getting from investors, from the judges, whenever you pitch, because their best intention is to help you, not to kind of destroy your dreams or your vision. But because of their experience and because they’ve seen hundreds and hundreds of pitches before, they typically want to give you some sort of an advice to make you stronger, better and more investable.
Brett
And I’m sure over the course of your career you’ve interacted with a lot of fascinating founders and very successful founders. From those interactions, do you see any patterns? Like are there any common traits that these great entrepreneurs seem to have and share?
Zamir Shukho
Yeah, absolutely. One of the things I love about my job is that on daily basis I get to meet amazing, talented, very smart people. In many sorts. They are smarter than me, whatever they’re doing. So I love to learn from them. And what I’ve noticed them all having in common is they’re very socially active in most of the cases, they have very high EQ, they have good soft skills. And there are three things that I would outline here. One of the core traits or strong sides of a good founder is they can manage to hire the best. So they convince other talented people to join their startup even though they don’t have high salaries or don’t have amazing benefits compared to a large corporation. But somehow they convince these talented people to join their core team in the very beginning because they believe in the dream in a bigger mission.
Zamir Shukho
The second thing I’ve noticed they do is they tend to sell to the best. So if you have like a B, two B startup and you’re trying to go for enterprise businesses, some of these founders manage to get letters of intent and support, even get pilots with very big companies, which is difficult from my past experience. And the third thing I’ve noticed they do very well is they can raise money from the best, starting with some amazing angels or super angels that they’re raising from on the PC stage. Then they go into their C stage fundraising and they tackle the tier one funds and they convince those VCs to believe in them in their dream and how they’re going to change the world. So those are the things that successful founders are doing very well and all of those things are connected to other people.
Brett
This show is brought to you by Front Lines Media, a podcast production studio that helps B2B founders launch, manage, and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host, and we handle literally everything else. To set up a call to discuss launching your own podcast, visit Front Lines. IO slash podcast. Now, back today’s episode. When it comes to category creation, what are your views there? If a founder comes to you and says, Zamir, I’m creating a totally new category, what would your typical response be and how do you help them navigate that decision?
Zamir Shukho
So there is a concept of red ocean and blue ocean. We know all about it, right? The red ocean is where there’s a lot of sharks and not enough fish, meaning there’s so much competition out there. And the blue ocean is typically when you create a category or something new. I personally love new things, innovative business models, innovative technologies. But there’s always a struggle or a hardship connected to that. Basically, you have to educate your market, you have to educate your customer that whatever you’re building or doing is something better, more efficient, more interesting, cheaper, whatever the qualities of your product are. So it’s always connected to the situation where the very first company that is creating the category gets the hardest work, right? So basically, going through the jungle, chopping down the trees, paving the way for everybody else to go. And we’ve seen a few times in our history of It and Tech market, where the very first company that created a search engine or the very first company that created a social network, they were not eventually the champion.
Zamir Shukho
So there’s always this challenge when you create a category. If you do all the hard work by convincing people and the customers that this is something they should start using, then there might be a rival right behind you that will have an easier way. And if they’re lucky enough to raise money quickly, to have a better, stronger go to market strategy, you might lose that battle. So you have to be prepared not only to pave the way, but also to kind of go faster than anybody else and have this first mover advantage in the market. So if you can pull this off, you can definitely be the champion.
Brett
Now, one of the things that I hear a lot, and I’m sure you hear a lot too, is this narrative that Silicon Valley is dying or the death of Silicon Valley founders are leaving, investors are leaving. That’s what you read in the media, that’s what you read on Twitter. What’s your perspective there? Do you think that’s true? Do you think we’re really seeing the decline of Silicon Valley or is it going to come back stronger than that.
Zamir Shukho
I say numbers will fight that opinion because we still see that majority, absolute majority of all the venture deals are happening in Silicon Valley. Yes, there is some kind of a movement of people going towards, let’s say Austin, Texas. I hear some people saying, hey, we want to move there. There’s a nice new ecosystem. I’ve been to Austin. It’s a great place. There’s a lot of amazing people, but it’s still a very early ecosystem when it comes to global startup world and other countries. All of them want to come to still, you know, when we’re locally talking here, of course, we have these different opinions about how Silicon Valley is different now from what it was few years ago and how COVID affected everything. But we have to always think about markets beyond the United States because Silicon Valley is the place, it’s the magnet where everybody from around the world wants to come and wants to settle.
Zamir Shukho
So all the best, all the top startups from Africa, from MENA region, from Asia, from Europe, you name it, from LATAM. All of them are thinking and dreaming about one day coming to Silicon Valley and raising money here from investors. It’s very rare that they would, you know, I want to move to Colorado or I want to move to Austin or something else. They all know Silicon Valley. So it’s not only the local startups that are creating this and shaping this market. When we look at statistics, I don’t know, almost half of the big companies that are raising capital here are founded by immigrants, by people who moved to United States, moved to Bay Area, moved.
Brett
To you know, I moved to San Francisco about a year and a half ago. And when I did that, everyone I knew thought I was insane. What are you thinking? Who is moving there now? Everyone’s moving out. I have to say it was the best decision I ever made. Like the density of talent and investors and founders that are all just right here within like a five minute walking distance from me. It’s just mind blowing. I think that’s the thing that you can’t beat is that density and the volume and the fact that know, thousands and thousands of fascinating and interesting people to meet. I think it’s such a special and very magical place.
Zamir Shukho
Absolutely. That’s what makes Silicon Valley and SF area special and unique is the amount of talented people and the density, as you mentioned, not only founders, but also the investors. I mean, we’re talking about over a thousand different size and shapes funds and angel groups, et cetera, that are active here. And we go to these different events, me and my team, last year, we calculated from May to December, we visited 126 events to meet other founders, to meet other investors, et cetera. And we didn’t visit all of them, right? We were handpicking where we want to go. So this is the reality that if you want to kind of be out there and get yourself visible in front of investors, et cetera, this is the place to because there’s so many activities happening. All of these amazing acceleration programs, the top tier accelerators that have these demo days, all these networking events.
Zamir Shukho
Recently we had San Francisco Tech Week, one of the largest SaaS events. SaaS annual is coming up. So all of these events are amazing. And people from around the world, they come here just to spend a few days inside of this ecosystem.
Brett
And final couple of questions for you here. If any founders are listening in, I think it’d be great to hear from you the types of opportunities that you’re especially excited about. So are there any specific markets that you’re just really looking to back right now? Or any specific opportunities that you’re really excited about? And founders building, they should reach out.
Zamir Shukho
Of course, we’re looking at different trends and what’s going on right now. AI, of course, is the hottest topic. Everybody’s talking about it, but it all depends on what kind of AI, right? If somebody’s just using a chat GPT next to their technology, this is a third party dependency. But whenever it comes to trends or to hype things, we try to kind of follow it, but we don’t necessarily invest in them. That’s why we stick with the SaaS market. We see it as still it’s growing 18% to 20% a year. Even in hard times, corporations and enterprise, they don’t really cut their spending on software. So software will be growing. If you have a software but now you can add AI to it, that’s something that investors are looking for, no matter what vertical it is. So as long as you can approve that your product is needed by the market and there’s a paying customer for it and you can manage to scale quickly, this is something that venture investors are looking for.
Zamir Shukho
But for us, SaaS and software market and B, two B is something that we stick to and we believe that this is a very stable and growing market and opportunity for investors.
Brett
And if founders are listening in and want to get in touch, where’s the best place for them to go?
Zamir Shukho
The best place to get information about us is our website is Vibranium Venture Capital. Also you can find me on LinkedIn. We post some useful things for startups about pitching, about dialogues with investors, et cetera. So I’m always happy to connect. Send me an invitation and let’s start the conversation.
Brett
Amazing. Zamir, thank you so much for taking the time to chat, share your perspective, and share some of these really valuable insights that you’ve learned through the course of your career. I’ve really enjoyed our conversation and I know founders listening in are going to.
Zamir Shukho
Enjoy it as well.
Brett
So thanks so much for taking the time.
Zamir Shukho
Thank you for having me.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, silicon Valley’s leading podcast production studio. If you’re a B2B founder looking for help launching and growing your own podcast cast, visit Front Lines IO podcast
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Brett
And for the latest episode, search for category visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.
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