TCT Exclusive: Nikhil Basu Trivedi, Venture Capitalist

We are thrilled to announce this week’s exclusive with Nikhil Basu Trivedi, esteemed Venture Capitalist! After spending 7+ at Shasta Ventures (most recently as Managing Director), Nikhil ventured off in July as an independent investor and has since invested in companies like Canva, neo.tax, and Roam Research, to name a few. His newsletter, next big thing, is a weekly essay of, well… the next big thing! With experience as a founder (Artsy), investor, board member, and advisor, we sat down to talk all things cap table related, including:

TCT: Thanks for sitting down with us, Nikhil. Let’s jump in.

How did you start out with regards to your career?

I was born in the U.K., grew up there until age 13, moved to the San Francisco Bay Area, and got inspired by everything happening in Silicon Valley — the center of technology and entrepreneurship — during high school. I started working on startups during college at Princeton, one of those became a real company (Artsy), and then the lightbulb went off for me that I'd love to try my hand at investing. I joined Insight Partners in New York as an intern, then full-time after graduation, and a year later moved back to the Bay Area to join Shasta Ventures.

You spent 7+ years at Shasta Ventures in a variety of roles before leaving earlier this year. In what ways did Shasta help shape your career in venture? What were a few of the most memorable moments? 

I loved my time at Shasta. I joined, at age 23 in 2012, as an associate, but the Insight (Partners) experience gave me a leg up coming in. From day one, I had some sense for how to source new companies, and some judgment for what was interesting as a potential investment. I was lucky to have a partnership that supported my growth, and gave me more and more responsibility over the years, including becoming a general partner in 2018.

The most memorable moments involve the companies that I got excited about that we ended up investing in, and the ones we didn’t invest in that went on to great success. A few in the first bucket include Canva (now worth $6B - we invested at the seed stage!), ClassDojo, Imperfect Foods, Lattice, Literati, Pill Club, Tally, and The Farmer’s Dog. A few in the second bucket include Plaid and Robinhood. 

You launched “next big thing”, a weekly essay on the search for the next big thing earlier this year. What was the inspiration behind this? What has surprised you the most since launching?

I’ve enjoyed publishing essays in the past, but never got into the rhythm of doing so frequently. I decided to make use of the shelter-in-place time during this pandemic to try to make writing a daily habit. The inspiration behind next big thing was really to force myself to try to write something every week, and get many of the ideas I’ve had in my head for a while out there for others to learn from and give me feedback on.

There have been many surprises in the six months since issue #1. I think the most important one is that I find myself thinking more clearly, and with a tighter community of people around me to share ideas. I’m very grateful to the 1000s of people who subscribe to my writing, who respond and comment, who share such that each piece has 10s of 1000s of reads. I’m most proud that the average open rate of the essays is above 55%, which is certainly much better than the industry average even amongst the highest quality newsletter writers. So it seems that something is resonating and it’s worth all the effort that goes into writing. 

“The Rise of Solo Capitalists” has been your most popular essay at the time of publishing this article. What trends do you think we’ll see from solo capitalists in 2021? How will this change the dynamic of having more individuals vs. venture capital firms on the cap table?

First and foremost, I think we’ll see more people go down the route of becoming solo capitalists in 2021. There are a lot of investors who are better off solo than in partnerships that are not aligned on principles and values, and where the whole isn’t greater than the sum of its parts. Angel investors are professionalizing with funds, and larger funds to enable them to be solo capitalists under the definitions I laid out. I think the biggest question is for venture capital partnerships — how will they evolve to compete with solo capitalists to lead rounds? 

Since July 1st, 2020, you’ve invested in companies like Canva, neo.tax, and Roam Research (amongst countless others), with a focus on consumer technology companies, as well as enterprise companies that are building consumer-like products. How would you compare investing in companies as a solo capitalist compared to a traditional VC firm? What are the advantages and disadvantages of this?

I wouldn’t call myself a solo capitalist right now — I’m just experimenting as an individual investor, and I’m enjoying the freedom that comes with it. The advantages are that I can invest in anything that I want to invest in. But the disadvantage is that it can be challenging to remain disciplined. When you have a fund and a portfolio construction model, you must stay disciplined to stick to the strategy. I prefer having that disciplined lens. 

In terms of investors supporting their portfolio companies, how do you see the role of a board member (within privately held companies) evolving over the coming years? How are you looking to develop your craft as a board member?

I’ve seen a lot of founders worry about adding board members, and spending time against managing the board dynamic. I hope that changes over the next several decades, and that the quality of investors as board members rises, such that founders realize the many advantages to having a board sooner rather than later, and seeing a board not as an overhead but as a strategic asset.

I’ve evolved already, I think, as a board member over the past five years. I try to focus on one or two key priorities at a time with each company that I serve on the board of - sometimes that’s a game-changing hire, or a key strategic decision, or a fundraise. I think helping founders prioritize well is one of the core competencies of a board member. 

What trends are you watching around enterprise companies that are building consumer-like products?

I’m very excited about the intersection of creation and collaboration software. I think it’s a much richer area than people realize, and I’ve already made a number of investments within it — such as Canva, Frame.io, Grain, Kapwing, and Roam Research.

Another trend that excites me is the consumerization of infrastructure software. A lot of developer tools companies are being built by consumer-oriented founders, and of course, we’ve already seen the scale to which API-first companies such as Stripe and Twilio can reach. I think we’re still in the early innings of these trends in the consumerization of enterprise technology. 

As an independent investor, how do you stay organized? What are your favorite tools you use on a daily basis to maintain deal flow, communication, and so forth?

I’m doing more and more of my organizing in Roam Research. As an investor, I realize this is going to just sound like a pitch, but I’ve gone from using a combination of email, calendar, Affinity, Evernote when I was at Shasta to using Roam and Notion, as well as email and calendar of course, as the primary places where my work gets done and gets organized. I also keep closely in touch with the founders I work with via text, since that’s the quickest way to reach one another. 

A genie says “I will grant you one wish. You can join any cap table you’d like for free”. What cap table would you join and why?

I’m sure others have answered the same way, but I do believe Stripe is the private technology company with the most talent inside it today. Joining the cap table to get to see the Collison brothers in action, and to have more access to the talent spinning out of Stripe, would be very rewarding beyond just the growth I think the company itself has ahead of it. 

Speaking of cap tables, what’s your secret for getting on the cap table?

I don’t think it’s much of a secret, but I think the combination of asking good questions, providing insight to founders on key questions they’re wrestling with, building an authentic relationship based on mutual trust and respect, and showing founders that I’m someone they want to have in their corner for many years, is how I’ve won the right to invest in company after company. 

On the flip, what’s your biggest cap table “mistake”?

While there are a few companies I’ve been a part of where we have lost or will lose money, the mistakes that keep me up are the errors of omission. The chances to have invested in Plaid and Robinhood that I got wrong. Those are the ones that keep me up the most. 

What are you passionate about outside of work?

I love spending time outside — running, hiking, walking, playing tennis. I’m also a sports fanatic — in particular, of soccer (Manchester United), basketball (Warriors), cricket, and tennis. And I genuinely enjoy spending time with my wife, my family, and my friends.

The year is 2030. What’s the state of Venture Capital?

I expect that there’ll be a handful of current brands in venture capital that are still “top tier” in 2030. But I think the majority of the top 20 will be firms that aren’t there right now, and that we’ll see a changing of the guard in the venture capital industry over the next decade. A younger, more diverse, more founder empathetic group of individuals and teams will rise to the top. I hope to play a part in this evolution! 

Thank you for your time and thoughts, Nikhil! We look forward to the continued success of the various companies you’re involved with!

Follow Nikhil on Twitter (@nbt) for more insights into venture capital, consumer technology, startups, and more!