I admire and respect the new wave of Seattle/Pacific Northwest venture capitalists, and thought it would be fun to profile some of our region’s up and coming VC talents in these pages. —KW
Isaac Kato has had a heck of a career. From guiding two startups to exits as an entrepreneur, to stints at blue chip VC investment firms, to founding and raising >$200M for one of the world’s largest green data centers (in Iceland!), he’s never been satisfied to stay in his lane. And yet even with his impressive experience, Isaac brings humility, curiosity, and empathy to every discussion. So it figures he’s the perfect leader for Techstars Seattle, especially during a year like 2020. Our ecosystem is lucky to have Isaac as a mainstay, and I’m lucky to call him a friend and mentor.
What made you decide to be a professional investor?
I knew in college that I wanted to be an investor. At the time, most business oriented friends of mine were going into investment banking or consulting. I'd read "Barbarians at the Gate" (I know - terrible source of inspiration), and I decided I wanted to be a principal investor. I've hopefully been a more benevolent one than the raiders of the 80s.
What did you do before becoming an investor and how does that benefit your founders?
My first job out of college was, in fact, working for the Roy Disney family as a growth equity investor. But, since then, I've gone back and forth between being an investor and an entrepreneur (I've founded two companies and run three of them - two exited, and one is a growing, profitable company that I raised $200M for over ten years). I have little doubt that having walked in founders' heavy boots has given me a lot of useful experiences to share and definitely made me a more empathetic and effective investor. In my current role as MD of Techstars, which is a blend of investor and educator, having been on the investor side for a long while also improves my ability to help the Techstars Seattle companies raise capital and understand investor processes and psychology (and I've built up a terrific global network of early stage investors over the years).
What are your most successful investments so far?
I led the Series B at earliest revenue for Postini, which was one of the first application service providers (ASP = SaaS in the early 2000s). Postini was subsequently acquired by Google for $800M. I was among the earliest institutional investors in CCP Games, an Icelandic MMORPG company that was acquired by Pearl Abyss, a Korean games publisher for $425M.
Why should founders want you on their cap table?
1) I've got a ton of relevant experience, both as a successful investor and a successful founder, 2) I've got a huge network, and 3) I'm incredibly easy to work with and view my sole role as an investor as doing whatever I can to help increase my founders' chances of success. I've seen and worked with my fair share of mediocre (and sometimes just plain bad) investors, and I strive to be the diametric opposite of them.
How many new pitches (actual calls/zooms) do you take per month?
Techstars is a funny job, in that we take the normal early stage investing process, chop it up, and then repackage it in a non-traditional way, such that the vast majority of our recruiting/screening takes place during a concentrated few months. Last year, I took about 200 zooms over a five month period.
How many new investments do you make per year?
We pick ten companies per year for Techstars Seattle, and I make 3-4 angel investments per year personally.
What's your sweet spot(s) in terms of check size, valuation, and vertical?
Techstars Seattle will invest $120K per company, usually into pre-seed and seed stage companies across a wide range of tech verticals. I myself typically write $25K - $50K angel checks into pre-seed, seed, and the occasional Series A.
What one portfolio company do you want to hype for us here?
I love all my children, but you can see the awesome members of the 2021 Techstars Seattle cohort here: https://www.techstars.com/newsroom/2021-techstars-seattle-accelerator-companies. (Did someone say, "cop-out!?!" Ahem.)
What do you think the next ten years looks like for Seattle/Pacific Northwest startups?
My magic 8-ball says, "Outlook good!" I do worry about how frothy the market for tech funding in general has gotten, but then again I felt that way last year, and the year before, and the year before that, so… Regardless, in the long run, the increasing presence of big tech cos here can only be beneficial for the startup ecosystem. Sooner or later, a percentage of folks working at those places will inevitably get the startup itch, and once they take the dive, it's hard to go back. The flywheel is spinning.
What song is currently getting the most run on your Spotify/Apple Music?
Parklife, the 1994 Blur classic. I've also been wearing a lot of tracksuits recently. Sergio Tacchini 4ever.
Favorite shoes?
It's a tossup between my Dunlop insulated wellies (because my backyard is a wet, muddy mess), my ten-year old Sorel Manawan house slippers, and my Scarpa TX Comp Telemark ski boots. I haven't worn anything stylish on my feet since we went into lockdown. Kirby, forgive me for my sins...
Favorite cooking ingredient?
Does dry-aged ribeye count? I keep it simple with an Adobo rub.
Anything else to say?
In all seriousness, as a relative newcomer who has worked in the Bay Area, London, and Boston, one of the things I love about the Seattle/PNW tech ecosystem is how mutually supportive a community it is. I hope we can preserve that spirit for years to come - I certainly intend to do my part. Oh, and Kirby, I have some really nice bourbon arriving next week. We need to do that backyard hang.