Interview with James Wu, Principal of M12- Microsoft’s Venture Fund

1. How did you get into Venture Capital?

I took more of a traditional route into venture capital starting as an Investment Banking analyst to growth equity to venture capital. Breaking into finance was a circuitous route, I was pre-med for three years and it took me 10,000+ hours of research and studying to realize the medical school was not for me. I was lucky to have met my mentor who finished an internship at J.P. Morgan and he helped me talk the talk and walk the walk to land an internship in banking. At Jefferies, I covered software broadly and had an unique role of building out Jefferies’ security coverage with a Managing Director. Security was the new buzzword in 2014 so there was a lot to learn and lot of hype around the industry. As part of my project, I had the pleasure of talking to CEOs at RSA and security conferences to learn about their business. That experience was really the aha moment where I knew I’d want to be in venture and work with transformational technology companies. After banking, I did two years at FTV Capital as an Associate where learned the fundamentals to investing, such as sourcing, financial modelling and portfolio management. My end goal was always to invest in early stage and transformational products, so I transitioned into venture after my stint in growth equity.

2. What intrigued in you about M12 which made you want to work there?

I joined M12 as the first junior hire so I had a lot of exposure to the partnership and deal experience. It was refreshing to be part of a team that was in its infancy, building its brand, establishing a track record and reimagining how corporate venture funds operated. It was important for me to join a fund that had a “blank slate” where I could grow with the fund but also to have the capability and infrastructure to empower entrepreneurs. One thing I learned early on is that capital is commoditized and entrepreneurs are looking for investors that can help them unlock their next leg of growth. M12 has connectivity to not only the business leaders at Microsoft but also F500 companies that do business with Microsoft. M12 also has unique access to product groups and industry pundits that we can call on for our portfolio companies. M12 was an easy choice for personal growth and also a platform that truly added value.  

3. How is M12 different to other Venture Capital firms?

We’re a financially driven corporate venture fund that has unparalleled access to one of the largest tech conglomerates in the world. We have a dedicated business development team that enables our portfolio companies to work with Microsoft, ranging from product partnerships to customer introductions. We’re focused on investing in good companies but also equally motivated to help our portfolio companies succeed. M12 is able to do that with our experience working with large enterprises and help portfolio companies get what they want. Unlike some corporate venture funds, we are not strategic and do not ask for strategic rights so that we’re always aligned with our entrepreneurs.

4. What is the most exciting sector in the startup space at the moment?

Looks like personalized medicine and drug discovery is in the zeitgeist. I personally appreciate compliance, privacy, and developer tools but I doubt many find that exciting.

James Wu, M12 Principal

5. What is your investment strategy when investing in startups? (How do you choose the good from the bad)

Having a thesis has helps me parse through noise and has enabled me to build conviction when others don’t. Creating market maps and industry research instills confidence and enables investors to have a comprehensive view of a market, the competitive dynamics and the merits and risks of an investment. Unfortunately, venture has extremely long feedback loops so it’s hard to tell which companies succeed or fail but, at the very least, the upfront work will undoubtfully give you a competitive edge.

6. What is the most common issue startups have when they pitch for funding and how can they resolve it?Not knowing the details of the business, whether it’s not being able to articulate how and why their product or “secret sauce” is game changing, not knowing the financials (historical and future projections), or not having solid data to back up their claims. I appreciate when startups come with a coherent story with detail answers to all the tough questions we ask. It shows that the Company has thought through, or lived through, the pain point they’re addressing and will be methodical in investing in growth.

7. What advice would you give to those who want to go into Venture Capital?

Start building a brand and industry knowledge early. Stay on top of tech trends and not only have a pulse on the market but also have a network of industry experts, business leaders and / or entrepreneurs that you can leverage. Networking takes time and it’s a critical part of venture capital so I’d encourage young investors to start building their pattern matching muscles early.

We would like to thank James for taking the time to speak with us.


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