VC Spotlight: Latif Peracha, Partner, M13
For Latif Peracha, Partner at early stage venture capital firm M13 (AUM: $1.4 billion), investment decisions often come down to “gut feelings.” But what fuels that gut feeling?
As Latif notes:
“For me, that gut feel comes down to my perspective on a particular market, and a founder’s ability to build an exceptional, enduring business in that market.”
Latif is a generalist investor that has spent time in fintech, healthcare, and “really wherever my curiosity takes me,” he says. He’s invested in a range of NYC startups like CareNostics (healthtech), Koodos (social), Lightning Labs (crypto), Polimorphic (GovTech), Rho (fintech), and more.
We caught up with Latif to discuss his career, the most common mistake founders make when pitching to VCs, his gut feelings, and much more.
Where did your career start?
I started as an analyst at Bear Stearns. Rest assured I was not on the mortgage desk. I worked as a generalist in investment banking. After some time at IAC, I spent the majority of my career working at Virgin Group where I first started making VC investments.
You joined M13 in 2019 — what was the catalyst for doing so?
I had a great run working for Sir Richard and Virgin but it was time for a new challenge. The cofounders of M13 Carter and Courtney Reum had a great track record including investing in the seed round in Ring, and I later led the Series B while at Virgin. We had success as coinvestors in that company and I was drawn to their ambitions for the firm. They were outsiders to VC and I was also drawn to that. In fact no one at our firm has really worked at a VC before, but we had either done VC as angels or via unique platforms like I had at Virgin. Almost everyone has a significant operating background. We are squarely in the arena and just getting started.
What stage do you invest at and what's your average check size?
We invest at “early stage.” That is purposely vague because we will write initial checks as small as $3 million and as big as $15 million. Typically late seed and Series A. We typically look for 15%+ ownership but in this world I don’t think you can be too dogmatic. We are simply looking for the most outlier people and we provide them with capital commensurate with their needs and where they are on the risk curve.
What’s the most common mistake you see founders make when pitching to investors?
They don’t ask enough questions of the investors to figure out their thesis and mutual fit. The best founders turn a pitch into a two-way conversation. This is certainly easier said than done. Time is often limited but spending more time on the why — why did you start the company, why does it need to exist in the world, and why now? Instead founders typically jump too quickly to traction and proof points.
What's an investment from the last 12 months that you're especially excited by? Why?
AvatarOS. It is a seed investment in an avatar company uniquely enabled by AI.
Founder Isaac Bratzel designed Amelia 2.0 (9 million followers, 1,000 integrations, speaks 100+ languages) and Lil Miquela (8 million followers, 2.4 million Instagram followers, 273,000 YouTube subscribers, named Time’s 25 Most Influential People on the Internet in 2018).
Isaac was clearly several steps ahead of the market. And If you look at Miquela’s popularity it is clear the timing was right from a demand standpoint but it was not there from a technical and cost standpoint. AI has brought down the cost of inference making it possible to create rich avatars at scale with robust fidelity.
Unlocking volumetric capture and 4D is going to open up a whole new set of behaviors and engagement between artists, creators and their communities that we can't actually predict today. We are excited to see where this goes.
At M13, you manage the overall investing strategy with a focus on fintech and Crypto. What motivated this emphasis, and how do you identify promising opportunities within these sectors?
The management of our investing strategy is certainly a group effort but I obsess over our portfolio construction including initial investments, reserves, and our digital asset strategy. Thematically, the vast majority of our investments are either AI or crypto-enabled.
It is often the expansion of these technologies in sectors like fintech that I find most interesting. Stablecoins continue to be a very interesting area at the intersection of finance and crypto. There is both top down institutional adoption of stablecoins via cross border trade and treasury management and bottoms up consumer adoption as a savings tool in emerging markets and for building communities. Stablecoin-backed community tokens is an area that we are paying attention to.
How do you usually decide if a company in fintech or Web3 is worth betting on? Is there a gut-check moment for you?
It always comes down to the gut. I don’t think that is specific to any one sector but to investing overall. And for me, that gut feel comes down to my perspective on a particular market, and a founder’s ability to build an exceptional, enduring business in that market. I like taking market risk. Partners can always serve as a great check on your gut!
What are some of the top resources you recommend for founders who are beginning their startup journeys?
I would read the archives of Fred Wilson’s blog AVC. Especially if you are planning on raising venture capital. Timeless lessons going back over two decades.
I would also read “Amp It Up” by Frank Slootman that outlines the intensity it takes to win as a CEO.
What’s your favorite/most frequently used AI tool?
I love Perplexity and its deep research capabilities.
You have a founder or LP in from out of town… where are you taking them?Knicks game at MSG. Even if you are not a basketball fan, the energy in the arena is special.
Choose one: power breakfast, power lunch, or work dinner. Where?
I keep it simple. Either breakfast or lunch at Grey Dog.
And, because we always ask our founders… what's the best slice of pizza in NYC?
Joe’s Pizza
