Ethos Fund - Simon Shin
Ethos Fund: Pioneering the Future of Impactful Ventures
In the ever-evolving landscape of venture capital, where innovation and societal impact converge, Ethos Fund emerges as a trailblazer. At the helm of this visionary venture capital firm stands Simon Shin, the Co-Managing Partner, whose unwavering commitment to driving change has transformed the investment landscape. In this exclusive interview, we delve into Simon Shin's journey, motivations, and the “ethos” that drives Ethos Fund to the forefront of impact-driven investments. Join us as we uncover the compelling story of Ethos Fund and the visionary leader guiding its mission to shape a better future through strategic investments.
What inspired you to launch Ethos Fund, and what gap in the market did you aim to fill?
David and I have spent most of our lives in close proximity to entrepreneurs and operators. Our desire was to contribute significantly to the startup ecosystem, drawing from our extensive experience in building and operating companies. Therefore, establishing a venture capital firm, Ethos Fund, emerged as the most effective means to achieve this goal. The name "Ethos" underscores our core mission—to influence the world positively. Both of us are parents to young children, and this profound experience reframed our perspective on the world. Our motivation centers on supporting companies that strive to make the world a better place for future generations.
Our focus on addressing this gap materializes in our commitment to investing in Vietnam and the United States. Vietnam, from a macro perspective, stands out as a rapidly growing country—an emerging market boasting a youthful population with highly skilled human capital. As Asian Americans, we identified a unique and distinctive perspective we could bring to the table in Vietnam and in the U.S., where Vietnam, in particular, has been underrepresented on the American investment landscape.
How does your operational startup experience influence your approach as a VC investor?
Our operational backgrounds play a substantial role in various aspects of our venture capital approach. Our firsthand experience as founders and operators allows us to empathize profoundly with the challenges faced by entrepreneurs. We understand what they are going through and can provide invaluable support. Moreover, David and I each bring distinct skill sets to the table. My career has primarily revolved around product management and design, endowing me with concrete skills in product development and an acute understanding of the intricate details that culminate in the creation of a successful product.
David, on the other hand, possesses extensive expertise in business development and partnerships. His network and experience extend globally, particularly in the education sector. This network is immensely valuable to founders in our portfolio, as some of our companies are highly sales-driven. From relationship building to sales strategies and team management, our operational experience equips us to guide and mentor our portfolio companies comprehensively
What strategies did you employ for fundraising, and what advice would you offer to first-time VCs in managing relationships with LPs?
Our fundraising strategy for Ethos Fund was characterized by a precise focus on specific types of Limited Partners (LPs). We targeted family offices, high net worth individuals, and strategic corporations. The rationale behind this approach was the recognition that we had limited time and resources at our disposal. Therefore, we aimed to maximize the return on investment (ROI) by directing our efforts toward LPs who closely aligned with our vision.
While we did engage with institutional LPs such as fund-of-funds and endowments along the way, our primary objective was to build relationships early on, without an immediate expectation of their participation in Fund I. At the outset, we leveraged our closest networks—individuals with whom we had worked, those who had previously invested in us and achieved successful outcomes, and those who had expressed a desire to invest but lacked the opportunity. These initial connections served as the foundation for our fundraising efforts. Additionally, we specifically sought out individuals who shared our deep interest in fostering stronger ties between the U.S. and Vietnam, leading to the inclusion of notable Vietnamese or Vietnamese American partners as LPs.
A cornerstone of Ethos Fund's approach to fundraising is the cultivation of strong relationships with LPs who share their vision. By meticulously targeting our closest networks and strategically engaging partners who resonated with their mission, Ethos was able to successfully secure the funding necessary for the successful launch of their fund I.
Is there a particular achievement or project at Ethos that you are especially proud of?
An accomplishment that holds special significance for us is Saigon Fest, an event that we organized in February of this year. Saigon Fest served as a platform to bring together our LPs, potential LPs, and the burgeoning startup community in Vietnam. Despite the tight time frame for preparation, Saigon Fest proved to be a resounding success. The event facilitated the creation of numerous valuable relationships and friendships, leaving an indelible mark on the startup ecosystem in Vietnam. Additionally, it allowed visitors to Vietnam to gain insight into the vibrancy of the local startup scene
Could you describe the culture you aim to cultivate at Ethos, as well as your investment processes and the fund’s governance structure?
As Ethos Fund progresses, our focus now lies in the systematic organization of our operations and internal tools to enhance efficiency and transparency. We aspire to nurture a culture characterized by open communication, knowledge sharing, and unwavering transparency within our geographically dispersed team. Recognizing the significance of open discussions and the wealth of collective knowledge, we aim to foster an environment where team members—whether partners, associates, or interns—are encouraged to express their thoughts and advocate for their positions. In the information age, where access to knowledge is widespread, a culture that promotes open communication is indispensable.
Can you explain your due diligence process and the qualities you look for in founders?
Our due diligence process is a multifaceted endeavor that encompasses both informal and formal aspects. For the formal aspect, we review a checklist of documents to make sure they are set up correctly and to take a look at their legal and financial documents. Informally, we endeavor to understand the origin story of the founders—why they are pursuing their current venture—and evaluate the alignment of their previous experiences and skill sets with their present endeavor. A compelling and coherent narrative is crucial. Additionally, we assess the founders' ability to attract top talent, as this is indicative of their skill in understanding people and what motivates them.
We also scrutinize their execution capabilities. More importantly than whether they have built a good product is the speed at which they have executed it and secured their initial customers. Swift execution is a paramount criterion in our assessment. To further evaluate founders' capabilities, we often assign them relevant missions that align with their business challenges, allowing us to gauge their problem-solving abilities
Ethos places particular emphasis on the alignment and the background of founders with their ventures, their recruitment prowess, and their ability to execute swiftly. These qualities constitute key indicators of potential success.
Are there any red flags you watch out for during your due diligence process?
A critical aspect of our due diligence process is the examination of the cap table. I think that looking at the cap table is important because it tells you a story. It serves as a revealing narrative of the startup's fundraising history, the dynamics between founders, and potential issues that may arise. A notable red flag may include a significant ownership stake held by inactive founders or individuals who have left the team.
As an early-stage VC, how do you handle failed investments, and is there mental stress associated with it?
Each portfolio company under Ethos Fund's purview is viewed as an integral part of our Ethos family. We care deeply about the success of every venture. When the companies are struggling, I think obviously from an investor perspective, there's some concern. But more importantly when our companies encounter challenges, our primary focus is on empathizing with the founders and collaboratively finding solutions. The stress that arises is not so much related to the potential loss of the investment but rather a desire to problem-solve and support our portfolio companies throughout their journey.
At the end of the day, our attitude is that as long as the founder gave it their all, we can accept it. We do our best for our portfolio companies until the very end. I think in almost any or vast majority of venture portfolios, there's going to be winners and there's going to be losers. I don't like the word losers, but we can define them as companies that don't survive or become successful, at least financially. I think if you spend enough time with the founders, it's clear who truly gave it their all, so even if it didn't work out this time, we believe that they may potentially be onto something in their next endeavors.
If you could talk to your younger self, what piece of advice would you give? From a professional standpoint?
I would definitely say buy more bitcoin (laughs). I think the most important thing, or one of the most important things professionally, is relationships. And I would have been more intentional about the relationships I foster. I think I was a little more passive. Fortunately, throughout my career, I’ve just been blessed with meeting a lot of smart, intelligent, successful people. But I think if I were more proactive, I would have more aggressively sought out mentors. I think having a really good one early on in your career is so helpful.
In conclusion, Ethos Fund's distinctive approach to venture capital, grounded in a commitment to impact and relationship building, offers a valuable blueprint for aspiring venture capitalists. Their dedication to supporting founders and fostering meaningful connections within the startup ecosystem sets them apart as a venture capital firm poised for a bright and impactful future.
