May 7th, 2019

From Entrepreneur to Venture Partner – a conversation with Toan Huynh

Toan’s first angel investment, nearly 15 years ago, was the result of an introduction from her sister, Ann. During her MBA program, Ann came across a company that provided white glove banking services for Mexican immigrants to the United States.

At first, Toan had doubts: “I thought this was a very niche product.” But after reflecting on her past experiences in financial services, she became intrigued by the opportunity. “ I realized – this is relationship banking. You want to go to someone you know, someone who speaks your language.”

She invested a small amount in the company. Years later, that investment paid off: “I’m happy to say that’s one of those that actually provided a nice return when it went public.”

From Founder to Angel: The Journey

In 2008, Toan co-founded her own company, a cloud computing advisory and consultancy rebranded as Cloud Sherpas. As the team built the company and raised funding, Toan began spending more time with other founders building early-stage companies, many of whom were also raising capital. “I was part of the community, so for me, a lot of opportunities just came through naturally.” Toan decided to invest in an enterprise software company, then a data migration company, all the while leaning on her knowledge of operations working with enterprise technology.

While Cloud Sherpas continued to grow, and perhaps itching to feed her creative spirit,  Toan began to spend her time outside work on what she calls “jobbies”: job/hobby hybrids. Together with her brother, she launched a “passion project” in the form of a Vietnamese sauce company on the side. Working long hours a week at their day jobs, they spent weekends at markets, selling their sauce. “I was going to do it, whether I got paid or not. It was just really fun.”

This new experience brought a new industry network – and new investment opportunities. Toan’s food venture ultimately led her to invest in a few up and coming startups, including one by former founder of Brooklyn Brewery and a fast-growing beverage company.

Teamwork Makes the Dream Work

While Toan’s early angel investments were largely opportunistic, later on she and her husband Jonathan used a method not unlike professional investors:

“We treat it like any part of our portfolio and we take a long view.   We decide how much we want to invest each year. If other parts of our portfolio aren’t doing so great, we write fewer or smaller checks. If they're doing well, we invest more.”

Many of their investments are sourced through Toan’s connections to the NYC technology community, angel groups like 37 Angels and Plum Alley, as well as informal networks. “There are some amazing angel investors who are women. Through friends, networks, we share deals as a community!”

The couple discuss deals together, leveraging their different perspectives and expertise to drive investment decisions. “I’m always the one thinking about the operations and go-to-market, the technology itself, and the market.  Jonathan has the the risk-focused, legal angle to balance it out. “

Their investment decisions often ultimately hinge on her perspectives as a founder and technologist. “At the end of the day, if you don’t understand the technology you're investing in or what it takes to scale a company, it’s tough to make a good decision. As a former operator, I can put myself in the founders’ shoes, and look beyond just the financials.

From Angel to Venture Partner: The Journey Continues

Last October, Toan joined the  Toronto-based venture capital firm Information Venture Partners. As a venture partner, she sources deals, performs due diligence, makes investments and supports portfolio companies.  She currently focuses on Insuretech and AI-enabled enterprise SaaS for financial services and is excited to see innovation sweeping the back office of core bank and insurance firms!   Based in New York City, she is also working to increase the firm’s presence and access to the New York City ecosystem.

Toan says investing at later stages builds on her past experience, while posing new and exciting challenges.  “In the past I was looking at earlier-stage investments, because that was where the opportunity was for me to help companies scale. But it was also much more high risk. With later stage companies, you have more data points to go on – financials, customers, revenue, market traction.  Coupled that with operation support and advisory support from our team ensures that we can best support our companies as they move along the various growth stages. “

The different skill sets and experiences that each of the investment team brings to the table has been another change: “Instead of making decisions with a party of two, I am now a part of a professional, collaborative team."

“At the end of the day, venture investing is a team sport, just like scaling a company is. The more diverse talent we can bring to the table, the better.”

Hope for a Changing Venture Capital Landscape

When CloudSherpas was raising funds, no one was talking about diversity in venture capital. “We just went where the money was – which was typically male, white, mostly from a finance background.”  

Today, while the conversation has shifted, the landscape remains imbalanced for funders and founders alike. Women founders, particularly Black and Latinx women, still raise only a small fraction of overall venture investment. Women represent only 13.5% of all partners at Venture Capital firms in Canada and the United States.

”As someone who always did what I had to do, maybe I was a  little unfazed by the lack of diversity until I paused and really looked around.  All of a sudden, I was asking myself “ Why do I still not see people like me where I am? Why do I not see women and other under-represented groups?  

As more women and other under-represented groups become successful founders and then funders themselves, it creates a virtuous cycle for a more robust and inclusive tech and venture ecosystem.  That’s really exciting to see and be a part of! “

Indeed, both investors and LPs alike are beginning to recognize the business imperative of thinking with diversity of thought.  Toan observes now “Diversity of thought, more debate, discourse, and viewpoints to make better-informed decisions – that’s just good business sense.”

For a full look at the current state of gender diversity in venture capital, read the 2019 Women in Venture Report