06: Finding Alpha in Texas - Rajiv Bala, Clutch VC
Rajiv Bala, GP of Clutch VC, a pre-seed and seed-stage exclusively investing in Texas - is committed and bullish on the region with a hands-on approach to investing, working with founders on product feedback, team building, and more to see initial customer validation before investing. Rajiv also embraces sub $500 million outcomes to drive fund multiples rather than relying on Unicorn outcomes only. This episode pushed our thinking on what we know and practice here in Silicon Valley, reminding us that there is more than one way to achieve Alpha.
Highlights from our discussion:
- Starting startups, Texas style: Is it about 24/7 work-life or work-life balance? We discussed a Texas vs. Silicon Valley approach to company building. Can it work and drive outsized venture outcomes?
- Beyond chasing unicorns: Can you be successful with sub $500M outcomes in VC? We dug into how portfolio construction starts with fund size and what scale of outcomes matters to you.
- Does previous founder or operator experience make you a better investor? Rajiv believes it builds founder empathy, skills, and experiences that make you more effective in challenging moments.
- Selective incubation as a strategy: Rajiv will sometimes work with a team for 6 to 12 months before investing to gain information asymmetry, build conviction (or incertitude), and establish a genuine relationship ahead of the check.
Topics
- (00:00) - Introduction to First Funders
- (00:58) - Meet Rajiv Bala: GP, Clutch VC
- (01:34) - Rajiv's Journey into Venture Capital
- (03:27) - The Texas Startup Ecosystem
- (07:44) - Texas-style company building: work-life balance and outcomes
- (11:06) - Rajiv's lessons on portfolio construction: diversification and fund size as key levers
- (14:08) - Where and how Rajiv sources deals in Texas
- (17:16) - Rajiv's "why" for investing: led to his hands-on investing approach
- (21:01) - Lessons from Early Investment Furnace Software: an early DevOps leader bought by BMC
- (30:03) - Rajiv's lessons from his worst investment came with an opportunity to build founder empathy on how hard the journey is
- (35:38) - Rajiv's best investment: he Converse AI journey
- (40:21) - A higher valuation isn't the end game, pick your investors for a long game
- (42:10) - Selective incubation: Rajiv builds relationships with Founders before the check and wants to see the product reach initial traction
- (48:48) - Clutch's Investment Strategy and Market Focus
- (59:13) - Key Takeaways and Final Thoughts
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Creators and Guests
Host
Aamir Virani
Helped 50+ orgs grow product and scale teams.Software Engineer โก๏ธ Product Manager โก๏ธ Founder (Nest Cam fka Dropcam) ๐ Investor, CRE, Founder@pifgov 2021
Host
Shaherose Charania
Venture Investing at @CakeVentures and @joindvc | Always helping founders | Raised on Atari, MS-DOS, Bollywood & Hip Hop. ๐จ๐ฆin ๐บ๐ธ
