Opportunistic Investing: An Interview with Sriram Krishnan

Even by Silicon Valley standards, Sriram Krishnan keeps a full plate. He’s a full-time operator at HeadSpin and recently launched his own fund on AngelList Venture after several years leading syndicates.

Krishnan, who previously helped scale Tinder and Spotify, said his fund reflects his generalist background — he’s equally comfortable in consumer and enterprise tech. That also allows him to be opportunistic.

Krishnan said he learned about angel investing on AngelList and became a syndicate lead at the suggestion of AngelList Partner Sunil Pai, at a conference four years ago. He manages his fund with AngelList and keeps up with his LPs on the AngelList Platform.

“If it wasn’t for AngelList, I wouldn’t have started my fund,” he said. “AngelList makes it easy for me to communicate to my LPs. The infrastructure is clean and easy to use, and the team is responsive. We can close deals very quickly.”

He sat down with AngelList Venture’s Seif Salama to discuss:

• How he got started in startups and investing;
• Being a ‘generalist’ fund manager;
• What fires him up about his job; and
• His advice for investors starting out.

Seif Salama: What got you interested in tech in the first place?

Sriram Krishnan: I was interested in business and technology from a young age growing up in Malaysia. My dad always had business magazines lying around the house. I’d read about Fortune 500 companies and wonder what it would be like to work for one of them.

During college I worked for a biotech startup in Stockholm and got to know the startup community there—including the founders of Spotify, which was just getting started. The experience lit a fire in me about the impact an individual can have in a small organization, versus being a cog in a wheel at a larger one.

A few years later, I joined Spotify. I was a big fan of the company and their product, so to me it was a no-brainer. That experience paved the way for everything else I’ve done in the past decade.

SS: What was it about that experience that set you up for success as an investor later?

SK: I joined Spotify’s new market/growth team in 2011. We were a very small team and worked all over the world launching the product. We had to be very entrepreneurial and I was on my own a lot—which is reflective of an early-stage startup environment. It was a unique experience because I also got exposed to the larger organization as it scaled from 150 employees to more than 1,500 in a few years. I got plugged into the broader ecosystem of how big companies work, how they scale, and what problems they face.

SS: How did you get started with investing?

SK: My first few companies were referred to me by my Spotify colleagues. The founders and senior execs invested in a company and invited me to join them. I said “yes” because I thought it would be a fun thing to do with a bunch of people I respected. I also thought it sounded cool to be an “angel investor,” so there was a bit of ego involved, too.

As I did more investing, I learned how fun it really is: not only do you get to help companies financially in a small way, but you also get to be involved in the process of building products and companies.

I found that working with founders to solve problems expanded my knowledge base and gave me an appreciation for problems that startups face. It also expanded my startup network over time.

SS: Before the fund, you launched a syndicate on AngelList. How did that come about?

SK: I met Sunil Pai at a conference about four years ago. He told me AngelList had great LPs and was worth a try. I didn’t understand the concept of leverage at the time; I didn’t know what an SPV was; and I didn’t even understand what angels did. But I got on AngelList and started to learn about the world of raising capital from LPs. At that point I had invested in one startup, Akash Systems. I spoke with Sunil about setting up a syndicate on AngelList and figured it was worth a try.

Within a day, I tripled my allocation from LPs. It was a great feeling to have an oversubscribed SPV (special purpose vehicle) with the blessing of the founder I was backing. I’ve used AngelList ever since.

That was in late 2017. Fast forward to 2020, and I’ve now done $20M+ worth of investment in great companies.

SS: Why did you decide to launch a fund?

SK: If it wasn’t for AngelList, I wouldn’t have started my fund. It would have never occurred to me to do it. The platform makes it so easy to do that it felt like a natural next step after I’d been investing personal capital and running SPVs.

Raising a fund felt like a natural next step after leading syndicates. It allows me to close deals faster—hot deals close very fast—and it provides me with a dedicated pool of capital to deploy without having to wait to raise more money. That allows me to increase my dealflow.

SS: Tell me about your fund.

SK: It’s a $3.6M early-stage fund that invests across all sectors, whether consumer or enterprise. One thing that makes me a bit unique is that I’m a full-time operator and fund manager. I think that’s a benefit, because founders know that I’m on my own entrepreneurial journey. Issues they face resonate with me because we’re trying to build companies at the same time.

There aren’t that many generalist fund managers. I’ve worked in consumer and enterprise, and I’m very comfortable investing in both sectors—and open to different business models.

My fund strategy reflects my background as a generalist. I’ve worked in gaming, consumer, and enterprise SaaS. In a market like we have today, it’s important to be opportunistic—and that’s how I’ve structured the fund. Especially in light of the current pandemic, I think it’s important to take a generalist approach and remain open to companies with different types of business models.

SS: How have you used AngelList to grow your investing? Something that felt insurmountable before suddenly became very accessible when AngelList arrived.

SK: For example, whenever I need perspective on a company, I can message my backers and get their input on it. That's been very useful.

AngelList is a site that I’ve always got up on my browser. I check to see which LPs are active, what deals are happening, and which companies I can invest in. It’s a very busy marketplace. I’ve met LPs through AngelList who eventually backed my fund.

SS: What do you enjoy most about managing a fund?

SK: I derive a lot of energy and enthusiasm from the founders who I work with—their unbridled optimism and unique worldview. Getting connected with entrepreneurs fighting their battles on a regular basis feeds me with the energy and enthusiasm to help them. It’s like an addiction I can’t shrug off; it feeds my desire to help other founders scale their companies.

SS: What types of things do you look for in an investment?

SK: The things I look for in an investment have evolved as I’ve transitioned from being an operator/angel to an operator/fund manager. I look for entrepreneurs who have a unique insight and spend a lot of time thinking about a specific problem—talking to customers, figuring out what the right solution is.

When you look at Spotify, Daniel EK and Martin Lorentzon were repeat entrepreneurs doing what they loved doing and had done for a long time, which is building products to solve problems. Those are the types of founders I look for.

One thing I spend a lot of time thinking about as a fund manager that I didn’t think much about as an angel investor is the nature of markets: how big can they get; how competitive they are; their unique sales cycles; and who the influencers, decision-makers, and users are.

SS: What’s different about being a GP vs an LP?

SK: As a fund manager, things are much different. I get the same joy from doing the things I’ve been doing for the past seven years, only on a bigger scale. But now I have this responsibility to be accountable to my LPs and provide a financial return to them. That is front and center of everything I do and every decision that I make.

AngelList makes it easy for me to communicate for my LPs and get feedback on deals, which is very important. The infrastructure is clean and easy to use, and the team is responsive. We can close deals very quickly.

Being a GP makes you more disciplined. I focus much more on process and on frameworks of decision-making that can make me a better investor.

SS: Do you have advice for people starting their own fund or starting angel investing?

SK: First, only angel invest if you have money to lose. Second, use the same check size every time—whether it’s $25k or $100k. Keep the same amount in every company that you invest in. That saves you the decision of whether to invest more or less; it removes one obstacle.