In 2017 another investor told Ivy Nguyen that artificial intelligence was too small a niche to dedicate a fund to.
More than ten thousand AI pitches later, every pitch deck says AI. Single funding rounds have grown larger than entire venture funds, and from the outside the companies that will matter look exactly like the ones a fast follower overtakes within three years.
Ivy Nguyen is a Partner at GFT Ventures in Palo Alto, the early-stage firm founded by former NVIDIA and Samsung executives to invest in AI and frontier technology. Before GFT she held investment roles at Zetta Venture Partners, Point72 Ventures and Autotech Ventures. She studied chemical engineering at Stanford and was named to Forbes 30 Under 30.
In part one she explains why Silicon Valley money backs the vision before the plan, how a first company that ran out of cash led her into venture capital, why she passed on Coinbase twice, the test every AI company has to pass at her firm, and why the early AI businesses that passed it still ran on 30 to 40 percent margins.
Part two continues in EP 185.
WHAT YOU WILL LEARN
- Why Silicon Valley investors fund the size of the vision before the plan to reach it
- Why a strong business from another market can lose a Silicon Valley pitch in the first thirty minutes
- How passing on Coinbase twice led her to specialise in AI
- The billion-dollar test, and why proprietary data is the one advantage money cannot buy
- Why AI products that work in the lab lose accuracy and margin in the field
BEST QUOTES
- (00:08:35) “The number one most common cause of death for every startup is cash flow.”
- (00:23:03) “In a two to three ton piece of metal on the highway, I don’t want it figured out along the way.”
- (00:33:56) “I actually passed on Coinbase two times, because I didn’t know what I was looking at.”
- (00:39:53) “Niche implies that it’s small. I’d like to use the word obscure.”
- (00:44:54) “Even $100 billion would not allow a copycat to brute force that level of performance.”
TIMESTAMPS
HOW AN AI INVESTOR IS MADE
- (00:00:00) Opening, the investor who called AI too small a niche
- (00:03:35) Chemical engineering, a first company and no plan B
- (00:08:35) The number one cause of death for every startup
SILICON VALLEY AND EVERYWHERE ELSE
- (00:09:48) Why Stanford money backs the vision before the plan
- (00:15:54) Gold, defence research and the roots of Silicon Valley
- (00:22:35) Why a car at highway speed needs more proof than a grocery app
- (00:25:35) Seven years per car model, one weekend per software release
- (00:28:35) Growing up in Vietnam, where failure is shared
BUILDING CONVICTION IN AI
- (00:33:41) Why Ivy Nguyen passed on Coinbase twice
- (00:35:43) A crypto fund or an AI fund, the 2017 coin flip
- (00:38:33) Ten thousand AI pitches and the empress of obscure
THE INVESTMENT TEST
- (00:43:20) The billion dollar test and the proprietary data flywheel
- (00:46:32) Why ten years is the real deadline in venture capital
- (00:51:25) Why AI companies once ran on 30 percent margins
Ivy Nguyen at GFT Ventures: https://www.gft.vc/ivy-nguyen
Ivy Nguyen on LinkedIn: https://www.linkedin.com/in/ivyknguyen/
Newsletter: https://lsg2g.substack.com/
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