20VC: 'The Best Seed Investors Hunt' with Paige Craig @ Arena VC

Paige Craig is a Founder and General Partner of Arena Ventures. He is an experienced angel investor who has invested in over 110 startups in the last seven years, including companies like Lyft, AngelList, Wish, Postmates, Twitter, Styleseat, Zenpayroll, Quizup and more. Paige spent the first half of his career in the Marine Corps and US Intelligence Community and later launched a defense contractor, driving alone into Iraq in 2003 with just $10,000 and expanding operations across the Middle East, Afghanistan, Pakistan, Africa and Southeast Asia. In Today’s Episode You Will Learn: 1.) How Paige made his way into the wonderful world of VC? 2.) What were Paige's biggest takeaways from his previous career in the military? How did this shape his investment thesis? 3.) Arena VC have both the fund and the AngelList syndicate, why did Paige choose this dual model? What have been the drivers of it's success? 4.) What does Paige believe makes a great VC? What aspects of himself would he like to improve upon? Is an inherent fight mode common among VCs? 5.) What advice would Paige give to someone looking to start a syndicate? What would Craig recommend to someone looking to join a syndicate? Items Mentioned In Today’s Episode: Paige’s Fave Book: Ender's Game Paige’s Fave Blog or Newsletter: Mattermark Daily As always you can follow The Twenty Minute VC, Harry and Paige on Twitter here! If you would like to see a more colourful side to Harry with many a mojito session, you can follow him on Instagram here!

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Harry Stebbings?

  I am Harry Stebbings and you are listening to the 20 Minute VC and starting the show with something a little different today, two product recommendations, not at all sponsors, I hasten to add, that I've been using very much lately and absolutely loving. The first is Blinkist, which you might have heard from our episode with Ellie Wheeler at Greycroft. Basically Blinkist condenses all these really long business books into awesome 15-minute read summaries with the key points, so you can read five to 10 books a day even. I absolutely love that and that's a must check out, that's Blinkist. And then number two, I have to plug my own and I would love to hear what you think of my latest podcast with Jason Lemkin at Saastr, taking you inside the world of SaaS, speaking

• 0:41Harry Stebbings?

  to the biggest and best operators and VCs on all things hiring, scaling, marketing, and much, much more. And I'd love to hear what you think of that and you can find that on Saastr, S-A-A-S-T-R, on iTunes. But now, back to the show today and I'm so delighted to introduce a phenomenal guest in the form of Paige Craig. Now Paige is the founder and general partner of Arena Ventures. He's also an experienced angel investor, who's invested in over 110 startups in the last seven years, including some pretty incredible companies, so let's name some. There's Lyft, there's Angel List, there's Postmates, there's Twitter, there's Wish, and many more incredible companies.

• 1:22Harry Stebbings?

  And another awesome thing about Paige is there's no McKinsey, Bain, Goldman background, because we all know how much I love those types. Instead, he spent the first half of his career in the Marine Corps and US intelligence community, and later launched a defence contractor, driving alone into Iraq in 2003 with just $10,000 and expanding operations across the Middle East, Afghanistan, Pakistan, Africa, and South East Asia. But before we dive into the show with Paige, I'd also like to tip our hats to the kind folk at Massimark, who've provided all the data and analysis for the show today. And if you've been living under a rock and haven't signed up for Massimark Daily, then come on, it's a must. All the best startup and VC articles in one place, from my good friend Nick Frost at Thinker on Twitter.

• 2:07Harry Stebbings?

  But without further ado, I'm delighted to welcome Paige Craig, founder and general partner at Arena VC.

• 2:19Speaker 01

  You have now arrived at your destination.

• 2:22Harry Stebbings?

  Paige, welcome to the 20 Minute VC. I'm a huge fan of your writing and it's an absolute pleasure to have you on the show.

• 2:29Speaker 02

  Thank you, Harry. I'm glad to be here.

• 2:31Harry Stebbings?

  Now, can you give us a little walkthrough of your career so far and how you ended up investing at Arena VC?

• 2:36Speaker 02

  Yeah, man, you know, I spent most of my life, the first half of my life, in the military and national security community, very different from tech. I built up a private military, sold that business, and about eight years ago, decided to go start working with entrepreneurs and I just started writing checks. And honestly, I didn't know a damn thing when I started. I just tried, like founders would try. I tried and failed and tried and failed as an angel investor. And eventually, over years and years, I think I got a little bit better, I got a little bit more experience, and I realized I love what I do. And I started a fund early this year with one of my best friends, Jeff Lowe, called Arena Ventures.

• 3:21Speaker 02

  And all we do these days is invest in founders very early, usually the first money in. And we're very active investors. That's sort of the short summary of my life.

• 3:30Harry Stebbings?

  And you mentioned that your slightly unorthodox entrance into VC with your military background. So taking that into account, how do you think that shaped your investing thesis? And what were your biggest takeaways from that experience?

• 3:42Speaker 02

  I think it shaped me because, sort of like a novice founder, I walked into investing knowing nothing, and so having no preconceptions about what was right or what was wrong. And because I didn't know anything, that ignorance led me to doing what I thought was right, which was to focus on the people. And so I've, since day one, always focused on the characteristics and the behavior and the attitude and the drive of the founders first. That's my first Filter for how I think about investing. And then second, I think about the product and the market and and the business, which is important, definitely. But to me, the qualities

• 4:24Speaker 02

  of the founders are the most important, the most enduring part of any company. And the only thing you can truly understand as an early stage investor. And I'd say that my ignorance led me to that realization.

• 4:36Harry Stebbings?

  And let's talk about the fund itself now. And Arena VC is extremely unique in the way it's a VC coupled with an angel list syndicate and now three point nine million dollars. So congratulations, that's unbelievable. But why did you go for this dual approach to investing?

• 4:53Speaker 02

  I I did it because, you know, I I talked to Jeff, um, my my partner last year. And sort of, you know, I I seed funded Angel List uh about five years ago, because I believed in the vision of crowdfunding back then. And finally, you know, this year or last year, it was a reality that we could actually pull in investors, not just the already wealthy with their big funds, but we could run a fund and and do well by our LPs and ourselves, but we could also extend investment to other savvy investors who may be, you know, businessmen or businesswomen in their own industries. These could be professors, they could be

• 5:33Speaker 02

  engineers. We could bring early stage investing to the masses of accredited investors by doing syndicates through Angel List. And that, you know, that excited me, the opportunity to bring in, you know, in each deal, you know, eighty to ninety other early stage investors who could all benefit from how we, you know, run our fund. And the and the way we work is that we, Arena Ventures, invest. And every time we invest, we share a part of that deal with the Angel List community and they get to invest in in that deal at the very same terms that we do. And it's an amazing opportunity. This has never existed in the world before. And I wanted to do it. Uh, very selfishly, I I love the cause that Angel List is behind,

• 6:17Speaker 02

  and I wanted to support them and also do well by ourselves.

• 6:20Harry Stebbings?

  And why do you think your syndicate has become one of the most successful? What are the key drivers, do you think, to your success?

• 6:27Speaker 02

  Probably because we tell people about it. I mean, that's, we we tell people on email and we tell people on conferences and. We tell people, hey, this is what we're doing. We're not ashamed of it. So we talk about it. I think if you look at any of the other top syndicates out there, you'll find that the people who have top syndicates have gone out there unashamedly and told people, hey, I'm doing this, set my flag. And, and after that, I think they look at our, our performance or history and some people will probably talk to the founders we've backed and realize that we're, we're good people and we actually give a shit about the founders and we have had great results. So I, I think it's a combination of telling the world, hey, we're doing this. And two, when you do look at what we're doing, we're actually really good at it.

• 7:08Harry Stebbings?

  And people look at you at Arena Ventures when they're kind of looking to invest in a syndicate and see two great investors. But what do you think makes a great investor and what do great investors add to their companies?

• 7:20Speaker 02

  I'd say, so my biggest quality, when I, when I looked around and built our team, so we're a team of seven people here at Arena. The biggest thing I look for in an investor is someone who innately wants to help. As an investor, I, I view our biggest responsibility after, you know, looking for our LPs and picking the right deals is my job is to want to help a founder and whether that is stealing talent for you, you know, getting a partnership together, thinking of you and making right connections every day. I think great investors genuinely love the people and the businesses they invest in. And they have a natural quality about themselves where they want to help and serve those founders. So that's, that's probably the most defining thing about us.

• 8:05Harry Stebbings?

  And is there any aspects that you'd like to improve on yourself as an investor?

• 8:09Speaker 02

  Yeah, you know, I'd say if you know me well, I'm a, you know, I love the people I work with and back. Um, I can also get extremely irritated and aggressive, uh, which is good in, in some situations where we need to fight, you know, with regulators or we need to fight with competitors. I can be very, very aggressive, um, and I have to think of that consciously all the time. Luckily, my co-founder is, uh, uh, as well as my girlfriend, Laura, are amazing balances for my natural tendency to want to go into fight mode versus sometimes negotiation mode. I'm.

• 8:48Speaker 02

  And so that's, that's the thing I have to work on and keep in my head constantly is that I'm a natural fighter, I'm, I'm very aggressive, but that's not always the best answer to every situation.

• 8:57Harry Stebbings?

  Do you find many VCs have this fight mode that you just mentioned?

• 9:01Speaker 02

  I think people in general, I mean, VCs are just people, so you'll find VCs who are very intellectual, some VCs are very diplomatic, some VCs are very aggressive, some VCs are fucking idiots, some VCs are genius, like it's a, it's an entire range of, you know, unique person, you know, it's definitely unique personalities, you know. If you look at the tops, you're not going to find so much averages, but you will find very unique and interesting people. I know all investors are not aggressive, it's a different range of personalities.

• 9:29Harry Stebbings?

  And then moving on to the more kind of broad crowdfunding industry as a whole now. We've seen crowdfunding evolve and really impact the early-stage investing environment. Do you believe it poses a threat to the more traditional form of VC?

• 9:43Speaker 02

  I think it's one more animal in the, in the kingdom, you know, there's, there's going to be late-stage funds and there's going to be early-stage funds and there's going to be crowdfunding. And everyone's figuring out how to work with this new crowdfunding movement, you know, we've, we've adopted our strategy, which is to run a traditional fund plus crowdfunding together, but I don't think it displaces any key categories, I think it does threaten early-stage funds that maybe are weaker. I think that Angel List definitely brings more transparency to the world of angel investing

• 10:22Speaker 02

  and early-stage investing, you know, nowadays, if you're an investor and you're not on Angel List, it's sort of like a couple of years, a few years ago, when people were like, oh, you don't have a LinkedIn profile, how do you actually have a job? And so you have to have an Angel List profile and by doing that, you, you know, if you want people to pay attention, you have to put your portfolio up there. And increasingly, Angel List is getting more information about when you did that deal, how much you put into the deal, what your returns are. And so I think Angel List is driving more transparency into the environment, which is good for all of us, it's good for founders, it's good for LPs, it's good for syndicate backers to have that transparency.

• 11:00Harry Stebbings?

  And do you think Angel List will move into doing Series A and Series B? I mean, you know, your $4 million almost could cover a Series A, a small Series A, do you think we'll see that happening?

• 11:10Speaker 02

  A hundred percent, I think, uh, it, you know, it's not necessarily that Angel List moves into it, it's that. The syndicate leads and other players will use Angel List to do pre-seed, to do seed, to do A, to do B.

• 11:24Harry Stebbings?

  And what advice then would you give someone looking to join a syndicate or looking to start one themselves, having the experience that you've had, what would you recommend to them?

• 11:33Speaker 02

  If you want to join a syndicate, I'd say go out there and, you know, just look around the list and people. I think most syndicate leads actually respond to the people, so you can reach out to them depending on your your check size. If it's very small, you may just want to watch people and observe what deals they do and look to their blogs and see you connect with. But at the end of the day, if you're going to go back syndicates, it's a portfolio play. So go find a syndicate lead or two that you like and try to back as many deals as possible. You're better off investing in our portfolio, whether it's mine or Jason or Tim's or someone out there. Invest in their portfolio, not one deal.

• 12:14Speaker 02

  If you're going to start a syndicate, please do it once you have some real fucking experience, because there's a lot of people start syndicates who have no business doing so. But it's the same with people who start funds and have no business doing so. If you're going to invest other people's money, you should at least have a few years' experience investing your own money or have been investing money in another fund and have true performance. Please don't treat Angelist syndicates as a way, this is my unbiased opinion, not Angelist, but don't treat Angelist syndicates as training wheels for becoming an investor. It's a very real step into being an investor, so please come armed with experience and your own money and do, that's that's my unbiased opinion.

• 12:58Harry Stebbings?

  And when you compare your investment strategy from when you were angel investing to when you started as a VC and then with Angel List, did it change hugely when it suddenly transferred from being your money to someone else's money?

• 13:12Speaker 02

  It's a very big difference in terms of responsibility, but I really don't feel it's that much different nowadays because I have, you know, I came into being a VC after having. Many years of investing my own money. So I I feel super comfortable in this world. I know how to find deals. I know how to evaluate them. I have my own thesis, my own frameworks. I know everything from the finances, the legal, the operations. I, you know, I I'm really experienced, so I feel very natural moving from being an angel to a VC. Uh. The biggest thing is that I have a great team of people around me that can help me close deals and find deals. And we write bigger checks. Other than that, the process of finding the deals and closing the deals seems very,

• 13:55Speaker 02

  very much like I used to do as an angel, just with a better team around me.

• 13:58Harry Stebbings?

  And you said you know how to find deals and how to evaluate deals. And you recently wrote an amazing article on the four differing methods investors use to source deals. So what's your favorite or dominant method of sourcing deals now?

• 14:14Speaker 02

  I I'm naturally a hunter. I I love going out to, you know, the hackathons and the house parties and on the street and to the accelerators. I love to go out there and hunt and meet new founders all the time. That is by far my my favorite activity. Yeah, that's my that's my favorite activity.

• 14:33Harry Stebbings?

  Do you think that's quite rare for for a VC at your stage? You know, you're very senior in the in the VC industry. Do you think many very senior VCs and partners at VC funds are still hunters?

• 14:45Speaker 02

  I I know that the good ones who are early stage are hunters because, you know, if you're further up the ecosystem, if you're a series A, series B VC, obviously, all the great founders have been funded by someone. So you're gonna, you know, naturally, a lot of your deals are gonna come through sort of the trading and sometimes the the trapping and sometimes the foreign mentality. But as an early stage, you know, a pre-seed seed investor, all the good ones go out there and hunt, which doesn't mean everyone does, but all the good ones do hunt.

• 15:16Harry Stebbings?

  And you wrote in another blog post that you learn from every deal, every founder interaction and every meeting. So what did you learn most from the Airbnb situation, would you say?

• 15:28Speaker 02

  Uh. Move faster, you know, just like founders, VCs need to execute. So these days I decide, you know, very quickly and when I make a decision, I act upon it. Which which is two different things that people forget. Sometime, many times in life, we make decisions in our head. And we fail to translate that decision into action. So that Airbnb experience led me to making decisions and then following that up with, you know, an offer or a check or just getting shit done versus letting that decision sit around my head and get permutated and changed over time.

• 16:02Harry Stebbings?

  And if you if you make those decisions much quicker, does it not make it harder to evaluate the founding team?

• 16:09Speaker 02

  Uh, why? Why do you think it would make it harder?

• 16:11Harry Stebbings?

  Well, because if you shorten the length of time, maybe to say due diligence. So if you if you concluded that Airbnb deal quicker, you may not have had time to know Joe or Brian in as much detail and be as sure as you were that they were the right team to found Airbnb.

• 16:26Speaker 02

  I guess it depends on your skill. I feel very confident that I can spend, you know, days with people. You know, these are long sessions too. Most of these sessions uh turn into three hours, six hours, eight hours of medium of people. But that's that's plenty of time to understand if these are the people that we want to invest. It's uh spending a week with a new team is a lot of time.

• 16:49Harry Stebbings?

  And and then what other moment has provided the most profound learning point for you in your investing career?

• 16:55Speaker 02

  I think uh the value of my existing portfolio. So I I haven't written about this yet, but I wrote probably the fir- the very first check into a company back then known as Context Logic, which is now wish.com.

• 17:12Speaker 02

  And and they're a very large e-commerce player now, billions of dollars. That came from an introduction uh from Brian Wong of Keep. I I really believe in staying in touch with all my founders, not just helping them, but great founders attract other great founders. And so they're they're an amazing filter for me as I think about meeting people. I constantly ask my founders. In fact, we just closed a deal or are closing a deal this week in New York, which came via a founder that I backed five years ago. And I really value the the founders I work with, not just in the transaction mode of the companies they are building today or the companies they may build five years from now. But my founders have great opinions and great networks of their own, and I really value the introductions they make for me.

• 17:57Harry Stebbings?

  And if it's okay with you, we're gonna move into a quickfire round now.

• 18:00Speaker 02

  Shoot.

• 18:01Harry Stebbings?

  So your favorite book and why?

• 18:03Speaker 02

  Oh man, uh, Ender's Game. I read that when I was a little kid and it it just made me feel like I was so fucking right that I need to go out there and like do my own shit and shake the world.

• 18:13Harry Stebbings?

  What was that, sorry? Ender's Game?

• 18:15Speaker 02

  Ender's Game.

• 18:16Harry Stebbings?

  Okay, and then your productivity tools, what are your must haves?

• 18:20Speaker 02

  Oh man, uh, Lyft, so I don't have to waste time driving. I get lots of work done in my Lyft cars. I use Pipe Drive for CRM and to stay in touch with all the deals that we're running. Gmail and the Notes app is rudimentary as it sounds. I use Notes, the Notes app, all the time versus Evernote to keep simple lists of things I need to do. That's about it, man.

• 18:41Harry Stebbings?

  And then the most read blog or newsletter for you?

• 18:45Speaker 02

  I read, uh, Mattermark actually. Mattermark is a

• 18:48Harry Stebbings?

  Mattermark Daily?

• 18:49Speaker 02

  Mattermark Daily. I read it probably two to three times a week. They collect the best articles and blog posts across venture from founders and VCs.

• 18:58Harry Stebbings?

  Yes, good answer. I told you guys it was awesome.

• 19:00Speaker 02

  Yeah.

• 19:01Harry Stebbings?

  And then what VC do you most respect and admire?

• 19:04Speaker 02

  You know, one of the guys, um, earliest I met who took time to give me some advice was Brad Feld. Um, and this was back when I was a nothing angel, but Brad gave me tremendous advice on portfolio theory and bet sizing and how to work as a investor. And I respect the fact that he lives a sort of pay it forward life, um, and takes care of people who are, you know, levels and levels below him. And I, I, I try to practice that. I really respect someone who can take time out of their day to help others.

• 19:37Harry Stebbings?

  Absolutely. No, Brad was amazing. We had him on the show and he was absolutely fantastic.

• 19:41Speaker 02

  Oh, that's awesome. He's such a great guy.

• 19:43Harry Stebbings?

  And then what's the next industry to be disrupted?

• 19:46Speaker 02

  The next, man, uh, the whole world, but, uh, man, let me pick one. I think government is absolutely horrible and screwed up and, and it's hard to imagine how a for-profit company can go disrupt it. But I'm very open to founders who are disrupting government. I have no idea what to disrupt, but maybe go fix, uh, maybe a text bait, maybe magic or like service but for government, a text in your face to our local government. The other area I'm interested in are nonprofits, taking activities that nonprofits have traditionally done, but doing them in a for-profit way. An example of that is we invested in a company called Andela, which is changing education in Africa right now.

• 20:29Speaker 02

  And they took on a traditional nonprofit mission of education. They made an incredible for-profit model that is changing how we educate kids in Africa right now. So, those are two off the top of my head.

• 20:41Harry Stebbings?

  And then what is the most recent investment you've made and why did you say yes?

• 20:46Speaker 02

  Closing right now, so I can't tell you the name of the lady, but it is a woman we met via a company I founded years ago in LA. And we decided to do the deal after talking for a couple hours. She spoke to one of my associates in our EIR, and they felt that she was the right personal fit for the company. And I met her and I was just struck by her brilliance, her focus, her passion for her business, the intensity, and there's all these personal qualities. And after two hours of meeting with her, I called my partner Jeff and said, this is the kind of lady that we invest in. And that just happened, and we're getting that done right now.

• 21:31Harry Stebbings?

  Paige, thank you so much for joining us. It's been absolutely awesome having you on the show and hearing your journey.

• 21:37Speaker 02

  Thank you, Harry.

• 21:38Harry Stebbings?

  What a fantastic guest Paige was. And again, I'm so grateful, Tim, for giving up the time today to be on the show. And I want to highlight again the two product recommendations from the beginning of the show. Blinkist, that's B-L-I-N-K-I-S-T, where you can read business books in 15 minutes all through incredible summarized content. And then we also have the official SaaS to podcast, brought to you by myself and Jason Lampkin, taking you inside the world of SaaS, speaking to the world's best operators and VCs in the industry. And if you're loving the show, then I would be so grateful if you would sign up for our newsletter, which you can find on the 20minutevc.com, or you can follow us on Twitter at 20minutevc. And as always, I'm so grateful for you tuning in today.

• 22:23Harry Stebbings?

  And if you'd like to follow me on Snapchat, you can do that by following H. Stebbings. Thank you so much for listening, and we look forward to bringing you a very special Founders Friday.