Carman Chan (Click Ventures): We invest starting from the seed stage. For a few companies we follow up to Series B.

By Borys Sydiuk

10 Mar, 2020

Carman Chan is Founder and Managing Partner at Click Ventures

Carman Chan is Founder and Managing Partner at Click Ventures. She is one of the top 5 Women to watch in Asia Tech (Nikkei Asian Review). She is a veteran in the technology industry with decades of experience as an entrepreneur with multiple exits, a tech columnist and a globally recognized venture capitalist.

How it’s all started? How you decided to enter the venture investment business?

I think, it is all started 20 years ago when I studied in university. I was writing a column for a computer magazine to review a software. When internet started taking off, I also wrote about internet business models and internet marketing. After that I felt a growing interest towards internet, and after graduation I founded my own startup and got a PhD offer from the Imperial College. I’ve made 3 startups in the next 17 years. Six years ago I exited my last startup and started thinking what I would be going to do next. I was planning to have my second child at that time. I thought that I might try something new, other then starting a new business. I explored different directions and decided to focus on angel investments in the technology sector. That’s how I switched to doing angel investments full time. I did 20 investments across US and Asia and found out that I really like early stage investments. I enjoy working with founders, supporting them, share my experience as either a founder, or a columnist writing about internet-related business models. This is a very helpful experience for the founders. Founders say they enjoy questions I ask, because they differ from what other investors ask and make them think about their strategy and business model. Both founders and myself enjoy those conversations. That is how I decided to make my angel investments into something more institutional and, in 2015, started my own investment firm Click Ventures. 

How do you select startups to support? 

As I said, when I was a columnist and startup founder, I looked into a lot of different kinds of business models enabled by new technologies. I developed a habit of looking around and thinking how all this or that process can be redefined and improved by new technologies. And right now I’m looking for new business models defined by new technologies. This is how I select startups – whether they utilise something not possible before, possible now, when the technology has matured. For example, one of my portfolio company – Spotify. Before Spotify, it was an era of iTunes. iTunes tried to make you to buy songs one by one instead of the whole album, store them in your iPod and listen as many times as you like. It was a pretty cool new business model at that time. When streaming technologies became more mature and stable, the new model – Spotify – started to sell you a subscription to a big a whole library. You don’t need to download songs one by one, don’t need to buy – you pay a really low subscription fee and get an access to the whole library. You may create a playlist and listen it immediately. Another example is the taxi industry. Before mobile phones, the only way to get a taxi was to go to the street and catch a passing by taxi or call it by phone through a call-centre. But now we have LBS technology mature enough and are able to create Uber or Lift that is available to everyone who has a smartphone. That is how we choose startups. We live in a world where a lot of processes were defined many years ago and we are looking for new technologies able to change this situation.

At what stage you prefer to enter?

We invest starting from the seed stage. Because we are a small fund, we cannot make follow up investments into every company in our portfolio. For a few companies we follow up to Series B.

Geography of your interests?

We are focused on North America and Asia outside of China. We don’t invest in Mainland China, because we don’t have an expertise. To invest there you need to have a completely different set of expertise and different network. 

How startup team usually find you? What are the sources of all those candidates?

We have been around for quite some time and developed a global network as well as exposure to the market. So startups find us through various channels. Some find us through our online interface, some through our speaking activities, and a lot come through investor lists. Founders love to share so called investor lists with each other. Also we have another exclusive channel – the network of investors and our own portfolio founders – who refer a lot of deals to us.

What qualities you are looking for in teams?

We are very focused on two things in founding teams: the knowledge level about running an internet business and learning abilities. Running an internet business is really different from running a traditional business, and if they know how to run it, they can leverage a lot of tools to help them to measure their own metrics, evaluate them and improve a business model. And we are looking for those who try to do something new and learn in the process. This learning ability is very important. You need to know a lot and be ready to learn all the time. Also, you need to be resourceful, have to have relevant people around you, you need to have a network to reach out, you have to learn to improve yourself – all these are very important qualities for me. We are focusing on seed stage companies, where everything is constantly changing and founders are facing all kinds of problems. Good foundation and ability to learn are more important at that stage then financial projections. 

Investors prefer to work with teams. But have you ever supported a one-person startup?

Yes, we did support single founder. Yes, I prefer to have a team, because there is too much work for a single person to do. Usually, startups don’t have enough resources or money, and founding team can share this huge workload. When you rely on hired staff to support you, it is more difficult, yet not impossible, some people can do it. And I encourage those people to look for a potential co-founder for some share and to assign some share to attract a potential co-founder in the future or even for key employees.

How many companies led by women you met and invested in?

We invest in quite a many companies that have women in founding teams. Those companies contribute about 30% of our whole portfolio – it is a very high ratio compared to other VC firms.

How many startup projects do you review per year?

More than 1000.

Do you offer education support for startups?

We don’t arrange any regular or systematic education, but we do a lot of sharings, workshops and participate in educational events to share our observation. We also publish some reports and some playbooks and offer free of charge to the founders. 

What is your due diligence procedure and how long does it take you to cover the whole way from the first meeting with founders to contact and check signing?

Usually it takes from a few weeks to few months; it depends on whether startup is ready or not. We check the metrics of the company and ask a lot of the questions based on it. We want to know how founders define their strategy and how they change it according to the metrics. We call it “knowledge due diligence” – we find out how a founding team thinks, what they know and how they execute. It is a dynamic process, not static; there is no fixed set of questions, we change according to iteration. People’s reaction is more important. Later stage investors look more on finances, early stage investors are more interested in knowledge and execution.

And how big is a check you usually issue?

It is from $100k to 1m.

You opinion: the best margin from investment to exit?

For a startup we invested into at the seed level and that came all the way through to Series B, we usually expect around x20. 

And what are your red flags? 

One is the trust level to the founder. Say, if they try to hide something or we see some inconsistency in their data, it is a very bad red flag. Another one is a really bad cap table. For example, if a founding team holds less than 50% of the shares or a so called “advisor” who doesn’t help on a full-time base, but holds a significant amount of shares, like more than 10%, it is also a red flag for me.

Have you ever rejected a cooperation proposal and then regret it? 


Accepted and regret? 

Yes. Some companies don’t do well. If they underperform, it bothers me less than when founding team start to behave differently after getting the funding. If they don’t work hard, if they just give up easily, I may regret a cooperation with such a team. 

What was the most unusual startup you ever supported?

No, no unusual startups, sorry. 

Can you name industries you really like, yet will never invest into?

If I cannot invest, I have no interest, you know? But let me say this way: my investment focus is internet-related companies. And if there is some traditional company doing its business completely offline, I may like it and its product – but never invest. 

Can you name three most breakthrough startups in the history? 

I think, these are Google, Facebook and those startups that propose a platform for online conferences are very influential now. 

And do you like where you are now in terms of your current career? Or, maybe, you would like to try something new to apply you knowledge and ideas to?

I like being a VC, still I constantly think on how to improve it, how to add value to startup in a scalable way. This is something I always ask myself, because VC business model is pretty labor-intensive, I would say. I would like to make it more scalable, so more startups could benefit. And I don’t mean just our portfolio companies, but the ecosystem as a whole.

One of our respondent compared the VC business with a game of Go. Do you agree?

Yes, I agree that this is quite an accurate comparison, because the winner takes it all – all the market, all the channels, all the exclusive assets – and suddenly you take over everything. So, the startup business model is really like a game of go. But winner is not VC, it is startup.

What do you think about women in tech industry, VC, startups? They usually run microbusinesses like nail or hair studios or cafes. WIll the situation change in the near future?

Not only in tech industry, but in others too,  there is more concerns about gender diversity issues at very different levels today. And if you check the policies and agenda against discrimination of listed companies, you will see that they do encourage women presence in board. There is a special attention in order to bring more females in different level to increase gender diversity. People are paying more attention, people are trying to improve the ecosystem, to bring females to every level, like female founders and board members – even female prime-ministers. And the ecosystem is improving. And because the ecosystem is improving, media pays more attention to gender issues, tech events become more interested in bringing more women attendees. I even heard that one of events was very eager to bring more female attendees, because their sponsor had required it. 

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Borys Sydiuk

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