Founder Spotlight: Daniel Darling of Darling Ventures
Daniel Darling
Investment philosophy as told by seed investor, Daniel Darling: Invest
on “quality”, not on brand name.
Darling Ventures is a venture-fund based in San Francisco and was founded by
Daniel Darling in 2013. It invests on early-stage startup geared on mobile
applications. Until now, it is involved in highly-competitive deals including
Weave and Sendhub, both of which originated from Y-Combinator.
investment must not
be decided only by “name value”.
Q1. Could you tell us about your career?
Before becoming an investor, I used to work in marketing department for 7
years. Moreover, I experienced working in Tokyo, Los Angeles and San Francisco
within those years.
To be more specific about my job, for
example, I was in charge of marketing strategywhere we researched and analyzed
what kind of field would become a trend, and think what kind of strategy we
should take as a corporation.
Also, while I was doing this job on marketing strategy in Velti, I got a chance
to meet different startups in Francisco. From that, I realized that the idea of
becoming an investor who has an opportunity to be involved on numerous
start-ups, is more appealing to me more
than becoming an entrepreneur, and with that, I ended up founding
Darling Ventures.
Q2. How do you make use of your marketing
background in your career as investor?
My experience as marketer gave me the opportunity to understand both technology
and business. Actually, since I became an investor, I noticed that a lot of
startups are having a hard time unifying/reconciling both technology and
business.
For example, even if the project is completed
at an early stage, it is meaningless if technology part is not properly
integrated into the business model. Similar to that idea, understanding of both
market and the user must be integrated. It is important for start-up to unify
technology and business like this. Well, I have to credit my career for
creating this piece of advice.
Q3. What are the circumstances that led you to become an investor?
There are 2 circumstances that led me to become an investor. As mentioned a
while ago, I got a chance to meet several startup companies in San Francisco
while working as a marketer, and from that, I came to understand that the world
needs “revolution” more than“evolution”.
The second one is the startup’s pitch
contest. Velti, my previous employer, had thousands of employees at that time
when I represented them in pitch contest. However, a startup with just eight
employees won the pitch contest. Seeing that, I experienced and felt that “power” that drives/launches revolution and
speed of growth of a startup company.
Q4. What kind of difficulties did you
encounter when you moved to San Francisco?
I had a great difficulty on two things. First,
when I moved to San Francisco, building network was difficult for me. Since
time is extremely necessary in building network with entrepreneurs and
investors to get investments, I worked hard on it. If you do not have this kind
of network, you would lose chance getting the investment especially on seed
round.
Whenever a Japanese investor comes, he/she will usually go to a well-known
accelerator on demo day. After getting information from companies such as Angelist
via internet, he/she will get involved in the investment. However, the problem
with this approach is that everything in this site is open to everybody. In
short, all the items in that site are extremely competitive projects. That is
why it is important to use one’s network and be involved in the investment
while there is no competitor.
Second, if you do not have a firm reason to
invest, you cannot arrive to actual investing. For extremely competitive
investment, they will ask until they understand the reason why you invest, even
if you are on the entrepreneur’s side. With that, in my
case, I will pitch the reason why I will invest to entrepreneurs with firm
reasons.
In that respect, Japanese investors would probably think that they can get the investment
only by saying that it is published or shown in the media, or because they attended
demo day as their reasons. It would be impossible to win an investment with
this kind of reasoning. With this, they need to provide a firm reason, the kind
of skills they possess and the value they can provide based on those set of
skills.
Did you feel any inconvenience while you are doing
your work as investor?
As for my case, I did not experience anything like that. However, I guess, if a
foreigner invests on startups, a lot of
those startups probably would see their fund as “dam money”. In other words, if
you are just to invest, there is a possibility that you are being seen by the
startup as a person who will just return to his country without providing any
kind of support to them.
Q5. What would Japanese investors do to win over their trust?
First one is the investor’s background. In other words, what kind of career
does he/she embark on up to now, and what kind of skills does he/she have. To
say it on a Japanese perspective,“even unique and humble
position is probably being
evaluated”.
Second one is the evaluation of person around him. Is the person able to keep
his promise up to now? Did he a lie about something? These are the things that
are being brought up.
Q6. What is the first step in establishing network?
You must have flexibility, and above all,
speed. For example, as for my case, I usually talk about my personality to the
people I met in the elevator, do some pitching and establish relationship with
them. Also, in case of Japanese entrepreneurs/investors coming to San Francisco,
it is better if I would try to get their contact number and communicate with
them. Such small deeds matter.
Q7. What are the things you value when
investing?
The first thing is the “future prospect/promise”. Darling Ventures invests mainly on mobile application start-up. Because of that, we are always looking at the mobile market 5 years later, so the first thing we consider is whether or notthe product we invested in is able to deliver the expected value even 5 years later.
Second one is enthusiasm. We can see whether or not a person actually has the
drive to accomplish things like vision and mission.
Q8. Have you ever met Japanese investors? What kind of impression do you have
about them that time?
Yes. However, most of them are employees from venture investment department in
their company. Only few work as independent investors. I have two impressions
about them. First, even if they find a startup with a great technology, I often
observe that they complain that the
internal procedures in their company are so slow to the point that they almost
miss the investment opportunity. Because of that, as a personal opinion, I
think that it is better to partner with local investors and investment funds
that can move with a sense of speed, rather that to look for startups and
invest on them.
My second impression about them is that they
are so attracted to brands. Many Japanese investors focus on startups
originating/coming from high-value brands such as Y-Combinator and 500Startups.There
was a Japanese investor who told me that he accumulated 12 investments in 6-months
time, and most of them are startups originating/coming from 500Startups. I do
not think that being influenced by brand name is a correct investment strategy.
I think investors must take risks the same way as startups do and they must try
to invest on unknown or upcoming startups. Actually, Uber, for example, has
grown without the help from a well-known accelerator.
Q9. This is the last question. You have been
living in San Francisco for a long time. What is the most attractive thing
about San Francisco for you?
I think what makes San Francisco extremely attractive is that not only the “quantity” of startups is high, but so its “quality”. About 50% of technology startups around the world started from the United States, and 50% of them started in San Francisco. As you can see from this figure, San Francisco gave birth to a lot of startups. Moreover, San Francisco leads with the number of startups, also known as “Unicorn”, which are established in the US from 2003 with 1 billion dollars or more valuation. So with that, we can say that it not only the “quantity” but also the “quality” is high.
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This article and picture is provided by TechWatch. Article is translated in English by TechShake with approval from TechWatch.
You can refer to the original below Here.
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