20VC: Semil Shah on The Biggest Mistakes VCs and LPs Made Over the Last 24 Months, Why LP Churn is Coming, Core Lessons on Scaling from $1M Haystack Fund I to Today and How To Find, Win and Manage LPs as an Emerging Manager

**Semil Shah** (0:00)
Hashicorp, where we invested in the first round, and that was just a huge win. I think it was like the 25K turned into something like 30, 35 million bucks.

**Harry Stebbings** (0:08)
Welcome back. This is 20VC with me, Harry Stebbings. Now, today's show is my favorite type of show. Two managers sharing war stories in deep discussion, and there's no one better than Semil Shah. Join me in the hot seat for this one. For those that do not know, Semil is the founder of Haystack, one of the leading pre-seed and seed firms of the last decade. Among Semil's incredible portfolio is DoorDash, Instacart, Opendoor, Figma, Carta and many more. Semil's first fund is marked between a 30 and a 40X. And I want to say a huge thank you to Satya Patel and Hunter Walk at Homebrew, and Annand Ayer and Nakul Mandan for some amazing questions and suggestions today, a real team effort on the schedule. But before we move into the episode today, Harvard Management Company is constantly seeking out the next generation of great investors and entrepreneurs. HMC has managed Harvard University's endowment for nearly 50 years and was one of the first institutional investors in Venture Capital. Their experience and long-term investment horizon make some ideal partners to get world-changing ideas on a path to viability and success. They work as a true partner, providing insightful perspectives to help managers succeed. I personally have had the pleasure of working with the HMC team and can say that they are truly exceptional partners and savvy investors. Whether you are launching your first fund or your fifth, HMC welcomes the opportunity to partner with both developing and established managers. Have an idea you want to share with the team? Just send it to venture at hmc.harvard.edu. And speaking of amazing partners with HMC there, Mercury is building full-stack banking for startups. Apply in under 10 minutes from anywhere for FDIC-insured bank accounts, physical and virtual debit cards, domestic and international wires, and integrations with Gusto, Stripe, QuickBooks, Plaid, basically every other tool your startup uses. They also offer unusual features like API access, custom team management, and their newly launched Mercury Treasury, a cash management product for high-growth startups. And they'll even help you build your startup with Mercury Raise, which is so cool. It's a program to connect you to Silicon Valley's top investors. Head to mercury.com forward slash sign up to apply. And finally, MarketX. MarketX provides investors with a streamlined platform to access, evaluate, and exit global growth stage to pre-IPO technology companies. Plus, MarketX allows you to learn from global experts and get intimate interviews with startup executives behind the companies you're investing in. Their track record includes the likes of ByteDance, Airbnb, SpaceX, and many more incredible companies around the world. In addition, MarketX enables individual investors and private fund managers to create their own syndicates, helping every investor to become a professional VC. And since their inception, MarketX has covered over 300 pre-IPO companies and have worked with more than 50 growth to late stage portfolio companies. In 2021, they had five IPOs and acquisitions alone. Visit marketxventures.com and check out their YouTube channel, MarketXVentures. But that's enough from me, so now I'm so excited to hand over to Semil Shah, founder at Haystack.

**Semil Shah** (3:13)
You have now arrived at your destination.

**Harry Stebbings** (3:16)
Semil, this is gonna be the best podcast you've ever done. You've done a few with me, you've done a few with other people, so this is gonna be the best. We've started before with how you got into Venture, so for anyone that hasn't listened to that, fuck it, they can listen to the last episodes. I wanna go deep with you, my friend. We're gonna go with we're all a function of our histories, and so we're all running towards something and we're running away from something. What are you running away from first, and then what are you running towards?

**Semil Shah** (3:43)
In a professional context, what I'm running from is just the fear of not being able to participate in the way I want to in the ecosystem. Way before we met, there was like a long period of time where I would even confide in my wife and say like, hey, I don't know if we'll live in the Bay Area and make it here. So over those 10 plus years, I've had lots of industry friends move out of the Bay Area, when I say like involuntarily, and a lot of personal friends, especially through COVID and the fires move. And I do love living in California. I feel like it's the only place I can live and do what I wanna do.