Investing in Innovation: Timothy Chen’s Approach to Finding the ‘Right Deals
I had the pleasure of interviewing Timothy Chen, the General Partner of Essence VC, which is an early stage developer + infrastructure focused fund. Essence started in 2019 and backed amazing companies like Motherduck, Modal, Warp.dev, Sardine.ai and Jasper.ai.
Tim was previously the CEO / founder of Hyperpilot, which is a startup backed by top funds like NEA and Bessemer aiming to run Kubernetes on autopilot that achieves 5–10x cost and performance benefits. The company was later acquired by Cloudera in 2018.
Tim has also been an engineering leader in various infrastructure and open source companies, including being SVP of engineering at Cosmos, early engineer at Mesosphere, Lightning.ai, Cloudfoundry, etc.
How did you break into tech investing?
After exiting Hyperpilot to Cloudera, like many other exited founders I started to angel invest into other founders I already know or met during my own founder journey. After angel investing in a few companies, I started to realize how much joy it is to work with founders and be able to make a difference in their journey, and also received very positive feedback from founders on how helpful I was.
Therefore, I decided to continue investing in more startups by raising a VC fund in 2019 with a small fund size, and was able to continue to evolve from there.
What is it that excites you about investing?
What gets me most excited about investing is the opportunity to:
1) Meet and build meaningful relationships with awesome founders
2) See that I made meaningful impact to the startups I invested
3) See companies that I invested that’s not popular / hot (aka non-consensus) end up making great progress
What has been your biggest challenge when it comes to finding the “right deals”?
This has changed over time especially when my check size increased with newer fund sizes. As the check size increase, the way to source and invest changes to be able to find the “right deals”
The challenge is to be able to iterate and grow on each new increment, and see the long term game by investing in various areas to increase the opportunity to find and win “right deals”.
What major trends do you expect to see in technology innovation over the next 5 years that excites you?
I see infrastructure to continue to change, like it has in the last 10–20 years. AI is looking to change a lot of the enterprise and consumer landscape, and I do believe new developer and data paradigms will exist to continue to make more unique value possible and enable new developer workflows that isn’t possible before.
If you had to share, “words of wisdom,” with a Founder who’s about to start their own startup, what would they be?
Building a startup is quite nerve wrecking (at least for me back in 2016!), as there is a ton of unknown and it requires a lot of belief into the future.
My biggest words of advice to founders often is to be able to build a circle of trust, while you want to lean on your instincts, you also need to find valuable strategic partners to help navigate blindspots, as the goal of a startup isn’t just to build what we want, but ultimately is to build what your customers want.
How can our readers follow you on social media?
Follow twitter on @tnachen!
This was very insightful. Thank you so much for joining us!
