This story first appeared in Term Sheet, Coins2Day’s newsletter about deals and dealmakers. Sign up here.
Fika Ventures, a Los Angeles-based seed firm, has raised $40 million for its debut fund. The firm’s general partners are Eva Ho, who previously co-founded Susa Ventures, and TX Zhou, who co-founded Karlin Ventures. Both have worked as operators – Ho co-founded startups Factual and Navigating Cancer and worked at Google and YouTube for five years after Google acquired Applied Semantics. Zhou was previously the CFO of Lit Motors. The firm’s limited partners include Cross Creek Advisors and Knollwood Investment Advisory, as well as 15 founders Ho and Zhou backed in prior funds.
They started Fika to invest in seed-stage enterprise companies, noting that L.A.’s tech scene has thus far skewed e-commerce, digital media, and adtech. Enterprise tech is just beginning to flourish in the city. Jason Nazar, co-founder of Docstoc, come to L.A. To start Comparably, a business software startup. Ian Swanson, who sold his company, Sometrics, to American Express, started DataScience, a data science company, in L.A. There’s also Renew.com, an L.A.-based senior citizens benefits platform launched by Kevin Nazemi, co-founder of Oscar Health.
Zhou notes that L.A. Colleges generate the most engineering graduates every year, but as of a few years ago, they didn’t want to get into early stage tech companies. That’s changed with the rise of large tech companies in recent years, including the soon-to-IPO Snap. “Now the tech sections of job fairs are oversubscribed,” he says.
Fika is particularly keen to fund data-focused startups. “It used to be that data was only in the hands of the C-suite,” says Zhou. “But now it’s available to everyone in the organization, from the sales force to the people handling customer success.” That’s an opportunity for software companies.
One thing Ho learned from her time at Susa Ventures is that acqui-hires aren’t always a great backup plan for investments “We made very fast bets into technical teams from schools like Stanford, thinking there would always be an acqui-hire outcome,” she said. But the amount of money and nurturing that goes into a company that ultimately takes an acqui-hire deal never pays off for the fund. “We’re screening for founders that have the mentality to do the long game and the opportunity to build something substantial,” she says. They’ll also maintain a tight focus on seed-stage deals. The firm has made three investments to date.
This article has been corrected to note that Jason Nazar founded Docstoc, not ZocDoc.