NuFund Venture Group is a new wave of angel investors with a new fund model that invests in new technology leaders. Pulse 2.0 interviewed NuFund Venture Group President Serhat Pala to learn more about the firm.
Serhat Pala’s Background
NuFund – Serhat Pala
What is Pala’s background? Pala said:
“I am the newly elected president of NuFund, and I couldn’t be more proud and humbled by this opportunity. Being part of this remarkable investor group, with 350 dedicated members, each bringing their expertise and passion for fostering early-stage innovation, is truly inspiring.”
“My passion for a founder-fair investment approach and commitment to positive impact mirrors our community’s ethos, driving me to contribute my expertise towards fostering visionary entrepreneurs.”
“My 25-year serial startup founder journey in diagnostics, digital health, SaaS, and AI, marked by successful exits and invaluable lessons from failures has prepared me for this role. I am eager to contribute to our shared mission of supporting visionary entrepreneurs who are on a mission to make a positive impact.”
“I am also a general partner at Cross Ocean Ventures, which invests and helps seed-stage tech firms with European origins expand to the U.S. market, offering them not just capital, but also strategic direction and access to vital resources.”
What Is The NuFund Venture Group?
Tell us more about NuFund Venture Group and how you got involved. Pala explained:
“NuFund Venture Group represents a new wave of angel investors, pioneering a novel fund model focused on emerging technology leaders. NuFund was formerly known as Tech Coast Angels – San Diego (TCA-SD), and the organization is one of the largest, most active and most successful early-stage investor groups over the past 20+ years. We continually strive to foster a culture that is friendly, innovative, engaging, rewarding, and fun for all stakeholders.”
“I was initially drawn to NuFund because of its strong track record, collaborative culture, and diversity of its investors in terms of expertise and background. I was impressed by the quality of the discussion after the pitching session by the founders. The group’s process of analyzing these deals after the pitch was very educational and stimulating.”
“But then, when I joined my first Due Diligence call, where we did a deeper dive with a smaller group of NuFund members to evaluate the risk and opportunity of the startup with the founding team of the startup, I was blown away. There were so many experts in the very same area where the startup was operating. Not only I realized so many things I did not see before in that deal with all that in-depth knowledge and expertise of the NuFund Members, but decided at that point that I would never invest a deal with my own analysis alone. With that first due diligence, we decided not to invest in the startup given the challenges of the commercialization path of the solution (even though the solution was an answer to the pain described by the founder). The founder also benefited from the process despite not getting funded, he determined later to change his go-to-market strategy.”
“At that point, I decided that I would like to be active in the group, and in less than a year led two deals where we were able to invest in companies that were not easy to understand and analyze for other Venture Capital Funds and angel investor groups.”
“Over the past five years, NuFund has invested in more than 90 companies, typically allocating about $10M annually through its innovative Annual Fund. Oftentimes, individual members that participate in the deal evaluation process add more direct investments to these Annual Fund-invested companies.”
“This impressive portfolio and investment strategy have not only catalyzed significant economic growth but also positioned NuFund as a leader in the angel investing community since the institutional, professional investment decision and execution process brings the best of both worlds of Angel Investor Groups and Venture Capital Funds.”
Inspiration Behind Nonprofit Setup
What inspired the creation of NuFund as a stand-alone nonprofit association? Pala noted:
“NuFund was born from a collective realization that early-stage startups were navigating the funding landscape without the necessary guidance and support. By harnessing the power and insights of experienced investors, we aim to bridge this gap, fostering innovation and driving growth within the startup ecosystem.”
Membership
How many members does NuFund have? Pala pointed out:
“NuFund has about 350 active accredited investors from diverse backgrounds and industries. This wide range of expertise allows us to provide comprehensive support and guidance to the companies we invest in.”
“Our members bring unparalleled expertise, a history of success, and expansive networks to enhance our collective offering. This includes privileged access to promising deals, joint due diligence efforts, opportunities for learning and mentorship for both the new Angel Investor members and the founders that take part in our process. We prioritize creating an inclusive space that fosters belonging, mentorship for startups, and community support, recognizing the critical role of diversity in driving innovation and broadening our impact within the startup ecosystem.”
Deal Lead Process
How do you invest in deals, tell us about your deal lead process? Pala replied:
“We source deals through various channels, including our member network, partner Angel Investor Groups and Venture Capital Funds that we share deal flow with, startup events, and direct outreach. Once we identify a promising company, we conduct a thorough due diligence process, which includes evaluating the team, and market opportunity, understanding the risk and business model in terms of growth potential and scalability.”
“Our members make investment decisions collaboratively, and each deal has a lead investor member or two for managing the due diligence and recommendation decision. Once a company makes it to our due diligence stage, an expert smaller number of investor members (usually 8-12 of them) that know that particular industry and technology analyze the risk and opportunity , and make an invest or do not investment recommendation with their analysis on a deal memo. Then our membership base will vote within 48 hours of that recommendation. Even though the process is detailed and thorough, given that almost half of our member base have been either CEO or operator at one point in their career, we understand the importance of time and resources for the founders and target to finish the process within 30 days of the founders pitching to our group.”
Recent Deals
What deals have you invested in the last few months and who were they led by? Pala revealed:
“We have started the year with some pretty great investments already. I want to credit our investments to the hard work of our deal leads, who are our members who play a critical role in evaluating and guiding investment decisions for each of our deals.”
“One of them is ALT Sports Data, a San Diego-based company that is at the forefront of transforming sports analytics through advanced data analysis techniques. They redefine the athletic landscape by enhancing performance metrics and fan engagement with cutting-edge technology. This deal was led by our member Bryan Bennett.”
“And Kneevoice, from Santa Monica, is introducing a revolutionary non-invasive diagnostic device that leverages machine learning and artificial intelligence to transform knee joint health assessment. This investment underscores our commitment to supporting healthcare innovations that offer significant benefits to both patients and practitioners. This deal was led by Bryan Barnard and Sami Shihabi.”
“The expertise of deal leads like Bryan Bennett, Sami Shihabi and Bryan Barnard is crucial, aligning perfectly with our investment philosophy that values deep industry insights and visionary leadership. Their roles underscore our commitment to nurturing startups that are set to revolutionize their fields, emphasizing the importance of selecting the right leaders to guide our investments toward success.”
Significant Investments
What have been some of your significant investments at NuFund? Pala cited:
“Over the last five years, NuFund has dynamically supported over 90 companies by investing around $10 million yearly through our Annual Fund, achieving nine exits since the inception of our first annual fund.”
“At almost a billion dollar mark DTx Pharma’s acquisition by Novartis in late 2023 represents a great example of how our expert investor member base was able to identify opportunity before other institutional investors and provide support for growth. Some other notable exits include Discover Echo, known for its innovative hybrid microscopes Revolve and Rebel; Insight Medical Systems, with its AR technology for surgeries; and HabitU8, a Cybersecurity SaaS leveraging neuroscience for habit formation in security training.”
“I want to note that over the years our investments have catalyzed a vibrant entrepreneurial ecosystem nationwide, but particularly across Southern California, generating thousands of jobs and extending its influence to various startup ecosystems nationwide.”
Industry Focus
What are some of the industries that NuFund is focused on? Pala noted:
“NuFund is primarily focused on investing in technology companies across various sectors, SaaS, Medtech / Pharma / Digital Health, IoT/Chip, consumer products, and deep tech.”
“We look for companies with disruptive technologies, strong leadership teams, and the potential to create significant social or economic impact.”
Differentiation From Other Angel And Investing Groups
What differentiates NuFund from other angel and investing groups? Pala affirmed:
“Our NuFund community is enriched by a diverse membership, including current and retired executives, founders, and operators, as well as scientists, engineers, MDs, and academicians. This blend extends to professional investors, family offices, VCs, and specialists in commercialization, legal matters, regulatory affairs, marketing, finance, channel development, and sales.”
“Our strength lies in this diversity, allowing us to leverage a wealth of knowledge and experience across various domains, enhancing our investment strategy and support for startups with a wide array of perspectives and expertise.”
Future Goals
What are the future goals of NuFund? Pala emphasized:
“Despite what is happening around us in the early stage investment communities with decreased investments and increased challenges startups are facing, as NuFund, we just left a great year behind and going into a promising year.”
“Looking ahead, NuFund aims to extend our influence beyond Southern California, targeting vibrant startup ecosystems in Austin, Seattle, Chicago, and South Florida. Our goal is to replicate our unique angel investor and venture capital fusion model nationwide, fostering connections, nurturing growth, and creating meaningful impacts. This expansion strategy reflects our commitment to driving innovation and supporting entrepreneurial success across the U.S.”
Closing Thoughts
What would you recommend to startup Founders looking to get funding from early stage investors groups like NuFund in these down times of early stage investing? Pala concluded:
“This is a big question but at minimum, I would recommend Startup Founders to keep these three important things in mind:
1.) Just like not every product is not designed and meant to be targeted to all, not all the investment opportunities are the best target for all investors. Many of the founders think of fundraising as a sheer numbers game and try to reach out to as many investors as possible, and then try to convince them of the investment opportunity. It would be a much better use of founders’ time to first research and identify the investor(s) that understands their market and technology, have industry expertise and will have a much higher chance to identify the risks and opportunities of their value proposition. As a company and its products mature, it will be easier for investors to understand so the best place to start when you are early is going and finding the best investors that will “get it” and help them find their next circle of investors. Even when you are targeting an investor group like NuFund, it will be better for you to go and find the members that know your industry and technology the best, and try to get your pitch in front of the entire group with that connection.
2.) A common misconception by the founders when dealing with early stage investors is the assumption that investors are unfairly trying to nullify or minimize risk when giving investment decisions so founders take the approach of underemphasizing risk or try to convince the investors that for their deal there is no risk. However, experienced early investors do not try to nullify risk in their investment decisions, they merely try to understand and then ‘price’ the risk when giving investment decisions. So more clear founders are about the risk, and making it easier for investors to see and evaluate them will be better. If founders don’t , it will be so much easier for investors to just say “No” and move to the next opportunity that might be less “noisy” and easier to understand the risk and opportunity.
3.) Finally, seek and prioritize investors that can create value beyond the check amount they can write. Before a founder can build a successful company that they can exit from oftentimes you are looking at a minimum of 7-8 years and 4-5 rounds of funding. I resemble this process to building a town on a green field. Better decisions you give earlier, more experienced people you could surround yourself with that care about what the problem you are solving and your team to be successful, better your chance of success. Each set of investors you get takes you to the next group of investors that will follow them. So in essence better investors you have early , better investors you will have later and vice versa. As founders your time and resources are very valuable, and the time and effort you spend to find the best investors early will pay dividends along the long path to a successful exit.”
