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20VC: Sahil Lavingia on Rolling Funds and Their Impact on The Future of Venture, How To Evaluate Market, Team and Product, The Value of Party Rounds & The Pros and Cons of Multi-Stage Funds Investing at Seed

Aug 24, 2020

Sahil Lavingia, Founder and CEO of Gumroad, shares insights from his journey in the startup world and his role at Pinterest. He dives into the revolutionary concept of rolling funds, discussing how they create greater accessibility in venture capital. Sahil highlights the importance of evaluating market conditions, team dynamics, and product quality. He advocates for transparency in funding and addresses the emotional toll of declining investments. Additionally, he emphasizes the value of community support for seed founders navigating challenging environments.

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ANECDOTE

Levchin's Investment and Risk Taking

Max Levchin invested in Gumroad after successfully selling an MP3 on the platform, highlighting the importance of a functional product.
Lavingia left Pinterest without vested stock to start Gumroad, prioritizing interesting work over immediate financial gain.

INSIGHT

Why Rolling Funds?

Rolling funds lower the barrier to entry for new investors by removing friction and enabling public discussion.
Lavingia chose a rolling fund for its ease of use and alignment with his transparent approach.

INSIGHT

Democratizing Venture

Rolling funds democratize early-stage investing, enabling more diverse founders to access capital.
This increased competition benefits founders, LPs, and the broader venture ecosystem.

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Sahil Lavingia is the Founder and CEO @ Gumroad, the company that helps creators do more of what they love. With Gumroad, Sahil has raised funding from an all-star list of investors including Accel, Kleiner Perkins, First Round and then Max Levchin, Chris Sacca, Ron Conway and Naval Ravikant on the individual side. However, most recently Sahil has made waves launching one of the first rolling funds on AngelList with his being $6M per year. In the past, Sahil has backed the likes of Lambda School, Figma, HelloSign and Haus to name a few.

In Today's Episode You Will Learn:

1.) How did Sahil make his way into the world of startups and angel investing? What were his biggest takeaways from being employee #2 at Pinterest? How did that experience impact his mindset?

2.) Why did Sahil decide to make his new fund an AngelList rolling fund? How is it structured? Does Sahil think this will represent a seismic shift in early stage investing? Is this a game of the 1%? Why does Sahil think early-stage remains so undervalued? How will this impact Series A pricing?

3.) How does Sahil assess his own price sensitivity today? How does Sahil think about the right way to turn down a founder? Where do many go wrong? How does Sahil feel about the rise of pre-empted rounds? How does Sahil advise seed founders with offers from multi-stage firms?

4.) What does Sahil believe founders care most about today in their investors base? How does Sahil think about investor brand and distribution? How does Sahil analyse the pros and cons of party rounds? How does Sahil advise founders on constructing their early cap table?

5.) How does Sahil think about his relationship to risk and to money? How did Sahil deal with it when his investors wrote off his company? How did Sahil feel about the weight of expectation placed on his shoulders at such a young age? How did he deal with this?

Items Mentioned In Today's Show:

Sahil's Fave Book: How to Win Friends and Influence People

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