By: Nate Bek
TX Zhuo’s path into venture capital began in the trenches of entrepreneurship. He built a company from scratch, scaled it to $10 million in revenue, and exited — all without a dime of VC funding.
“We made many mistakes along the way,” TX tells Ascend. This experience became the catalyst for his next chapter. “I told myself that if I ever were fortunate enough to sell my company, I would want to be a coach to other seed-stage entrepreneurs that might benefit from the lessons I learnt in my own journey.”
Today, TX is a General Partner at Fika Ventures, a Los Angeles-based seed-stage fund. Fika's focus spans financial technology, enterprise software, healthcare IT, applied AI, and marketplaces. Its sweet spot includes companies showing early market traction, just shy of product-market fit.
Fika raised more than $300 million across three flagship funds and one opportunity fund. Its portfolio includes Patrick Thompson, former co-founder and CEO of Iteratively, a Seattle startup co-invested with Ascend and later acquired by Amplitude.
TX and his team are selective about the startups it backs. “We try to be high conviction investors and limit ourselves to 8-10 investments so that we can dedicate enough time to each company,” he says.
This approach lets each portfolio company receive the attention it needs to thrive — that attention TX wishes he had while building his company.
Fika’s commitment to founder education extends beyond investments. The firm recently launched “Pour Over,” a podcast sharing insights and stories from founders and investors.
TX was kind enough to sit down with Ascend for our VC profile series, where we showcase early-stage investors from across the US. We talked in more depth about his journey into VC, Fika’s investment priorities and approach, and his cadence as an investor. Read to the end for carve-outs.
*We've edited this conversation for brevity. Enjoy! — Nate 👾
Nate: Thanks for chatting with us, TX. What made you decide to be a professional investor?
TX: I was a founder before and never managed to raise any venture capital. Although it was a moderately successful exit, we made many mistakes along the way (most could have been avoided if we had the right mentorship). And I told myself that if I ever were fortunate enough to sell my company, I would want to be a coach to other seed-stage entrepreneurs that might benefit from the lessons I learnt in my own journey.
What did you do before becoming an investor and how does that benefit your founders?
I took a break from college to start an online textbook marketplace and scaled it to more than $10 million in revenue and, after four years, got it to a successful exit. Thereafter, I spent a couple of years in management consulting (I know, many have said I took a step back in my career).
But I think the combination of experiencing the founder journey myself and benefitting from the structured thinking management consultant has provided me puts me in a good position to provide measured counsel to my companies (or at least that’s the hope!).
Why should founders want you on their cap table?
Speak to our other founders! Whenever we try to win a deal, we offer up the list of more than 80 companies we have backed, and prospective founders are more than welcome to speak to anyone of them.
What we promise is a very consistent, strong value-add approach where we are an extension of your management team instead of forcing our opinions on you. We make ourselves available whenever you need us but are not overbearing. And finally, we double down on the few things that really move the needle for you, namely customer introductions, talent referrals and problem solving leveraging our experience as founders before.
How many new pitches (actual calls/Zooms) do you take per month?
Two-to-three a day or 50 a month is probably a close estimate.
What’s your sweet spot(s) in terms of check size, valuation, and vertical?
$1-5 million pre-Series A investments, typically in the sub $20 million valuation range.
I would describe our ideal entry point as when companies show early market interest for their product (one stage before product market fit). Specifically, this is when a company has a product in market, a few early or beta customers that really love the product as it solves a high value, strategic problem for them.
As a firm, we focus on the following verticals – fintech, enterprise software, healthcare IT, applied AI and marketplace. I specifically lead our investing in fintech and vertical SaaS companies.
We try to be high conviction investors and limit ourselves to 8-10 investments so that we can dedicate enough time to each company. What this means is that the default is to lead every deal we invest in, but we are also conscious of being collaborative to make exceptions as the need arises.
How many new investments do you make per year?
8-10 as a firm
How do you stay informed about emerging markets and industries, particularly outside of Silicon Valley?
There is no replacement for time investment. We ensure that we visit geographies we care about outside of Los Angeles at least once a month so that we get assimilated into the local ecosystem and make a concerted effort to know the key stakeholders through dinners and events.
Like other members on my team, I spend at least 2-3 hours a week reading up and listening to podcasts that are relevant to the sectors I cover namely fintech and vertical SaaS so that we understand where the puck is moving and can provide well-informed advice/investment perspectives. I would say that this has been something that we have prioritized at Fika over the last 2-3 years such that at least 50% of our investing these days is thesis driven.
What factors influence your decision to invest in a new geographical area, like Seattle?
The supply-demand balance in terms of founders versus capital providers and whether there is a need for investors like us where we can actually add value. Seattle has all the ingredients to support a vibrant B2B startup ecosystem and that’s Fika’s direct focus. And even though there has been a birth of several amazing seed funds like Ascend in the last few years, there is still the lack of early-stage institutional capital in Seattle. We hope that Fika can play our part in filling that gap in the ecosystem.
What's your bull case for Seattle/PNW startups? On the flip side, what concerns should the region’s founders and investors keep in mind?
Huge amount of technical talent especially in the B2B space coming from successful companies like Amazon and Microsoft. More importantly, many of them have experienced scaling a company and that is vital when they become execs at fast-growing startups.
The irony of having successful startups in your backyard is that it always offers a compelling alternative for founders and talent in general. It is always easy for a founder to go back to work for one of these large companies or talent to stay in their cushy well-paying jobs. So I would say that community building such as joining a startup or starting a company is one of the top choices for everyone.
What’s your take on the key differences in the tech scenes of Silicon Valley and Seattle?
Seattle still feels extremely collegial in nature where investors are collaborating on deals and founders and rooting for one another. Not to say that Silicon Valley’s DNA is completely different, but Silicon Valley has gotten too large for these dynamics to exist.
What song is currently getting the most run on your Spotify/Apple Music?
Forever Young (all the different remixes) – seems to bring me back to my teenage days whenever I listen to the song.
Favorite shoes?
Jordan 1 Low Obsidian Ember Glow (and all Jordan 1 Lows for that matter).
What's your go-to ingredient in the kitchen, and do you think cooking and investing have anything in common?
I can’t cook! But I added spice to most of my meals so my kitchen is filled with all kinds of spicy sauces from red cut chili to Sriracha.
Patience and structure are key – I’m not a great cook (or a cook at all) as I’m impatient and don't follow instructions well. Guess that’s the same as running a company, you need to be patient and there are no shortcuts for success
Anything to add?
More co-investments with Ascend and other folks in the Seattle ecosystem, please!