Talking Seed Stages With Amir Banifatemi Of K5 Ventures

If you have been bootstrapping and think you are ready for investors, you need to learn how investors think. First, please study our free Bootstrapping course and Investor Introductions page. Then start looking for entrepreneur — investor fit. Today I introduce you to Amir Banifatemi.

Amir Banifatemi is the Founder and Managing Partner of K5 Ventures, a fund focused on pre-seed, seed, post-seed, and early-stage investments from Southern California. Amir is also a Board Member and former President of Tech Coast Angels, a group of 340 angel investors from Southern California. You can listen to the podcast interview here.

Sramana Mitra: Tell us about K5 as well as your seed investing activities at Tech Coast Angels.

Amir Banifatemi: With pleasure. K5 Ventures is an early-stage venture firm. We call it venture capital, because it’s the easiest way to qualify it but, in fact, we are extremely hands-on investors. There are 12 partners and we have operations of different businesses, large companies, successful at exits. We love the opportunity to work with new startups as well. It is our own fund and we are investing with passion in entrepreneurs, and we are working with them on a continuous basis.

Sramana Mitra: How big is the K5 fund?

Amir Banifatemi: We have been slow so far. It is at about $12 million. We keep adding to it as we go.

Sramana Mitra: And what size investments do you like to make?

Amir Banifatemi: We invest anywhere between $10,000 on a napkin idea to $250,000 for first investments. For the companies that we follow and who show signs of success or progress, we keep adding, so we go up to series B with them. So always, we keep our pro rata. The largest investment we’ve made was about a million and a half dollars, but we still go step by step.

Sramana Mitra: What is the focus? What kinds of businesses do you like to invest in?

Amir Banifatemi: We initially started with businesses that were more about employing certain type of technologies such as machine learning, data science, and robotics. Gradually, by working with entrepreneurs, we understood that our focus should be shifted more to real problems and be more than just a technology focus.

While we like to invest in companies that do employ technologies, such as machine learning, data science, and maybe predictive analysis, we are trying to identify teams and startups focusing on very immediate, real problems that have an impact, and that can be pragmatic and practical in their outputs. Sometimes, they don’t go and become unicorns but we’re not investing for that purpose anymore.

We’re trying to basically be domain-focused on health, education, gender equality, environment, and so forth. This becomes our new angle of evaluation, if you will, but we have to have strong technology understanding and capabilities to build applications and to deploy them somehow.

Sramana Mitra: What about geography?

Amir Banifatemi: We started in California. Because our partners are distributed globally, we invest in China, Israel, India, Europe, and Canada. Of course, New York as well. But we did it because our partners were located somewhere and we would need to have feet on the ground to have an understanding of the ecosystem in which startups were developing and growing. There is no way you can help just with money. Throwing money at the company, which is somewhere else, could be interesting if you’re part of a syndicate or if there is an interesting deal going on, but usually we don’t do that.

Since we try to be involved in the development of the company, we try to have knowledge of the ecosystem; understanding who can be their support, who can be their client, or how much money they can raise. These building blocks take time, so we organically started investing beyond California as we added partners.

Sramana Mitra: And your 12 partners are spread out in all these different geographies that you mentioned?

Amir Banifatemi: Yes, they are.

Sramana Mitra: Okay, So what trends are you seeing in your deals right now? What’s worth discussing?

Amir Banifatemi: We see a lot of chat bots and CRM. There are few big ideas. I think all the ideas have been spoken for already. There’s always these new variations of existing ideas or new approaches.

Obviously with new technology capabilities, you can tackle problems that were not easy to tackle before. Maybe because of better distribution of networks and access to information, or better payment capabilities, or the work becoming more open, there are some ideas that could be triggered to come back to life and be visible. You were mentioning this in one of your podcasts. I don’t think we have new ideas coming up all the time. That is very rare.

Of course, we see a lot of blockchains. We hear a lot of ICO right now and that worries us a little bit because it’s not that they’re not good. I think there are definitely merits in all of the above. We hear less and less ideas focusing on making humanity better and wealth distribution wider. It is a bit worrisome sometimes when we see entrepreneurship becoming a global sport. Everybody has access to tools and with little money can do a lot of things. I would hope to hear more original ideas.

Our conversation continues here.