3 investment insights from an 'Alpha Girl' venture capitalist

In person and on paper, Sonja Perkins doesn’t look like your typical venture capitalist, considering just under 10% of decision-makers in VC are women. She is a mother, a breast cancer survivor, a veteran of Menlo Ventures, and most recently the founder of investment firm The Perkins Fund and all-female angel investment group Broadway Angels.

Perkins was recently profiled in a new book from journalist Julian Guthrie entitled “Alpha Girls: The Women Upstarts Who Took On Silicon Valley's Male Culture and Made the Deals of a Lifetime.” The pair recently spoke at MIT Sloan and Perkins offered three insights she’s gathered in her investment career.

When it comes to investing, market matters most

The number one thing Perkins said she looks at when considering a company is the market.

Perkins said when a new company is inevitably behind on plans, she asks whether it’s a market, implementation, or product problem.

“If it’s an implementation problem, which means the management team may or may not be working well together, you can possibly change the management team if needed, or sometimes it just takes longer. Or if it’s a product problem, you can fix the product, but always focus on market,” Perkins said. “If it’s a market problem, you might as well shut the company down immediately.” 

If you want answers, talk to the customer

When Perkins is considering an investment in an early-stage B2B company, she goes to the customer for answers.

“I ask them do you have a problem this company is trying to solve, and if you do have the problem, what are you doing to try to solve the problem today,” Perkins said, adding she also wants to know what other solutions those customers have looked at.

After a half-dozen customer calls, she feels able to determine whether the company is going to be number one in its space, and if the problem is big enough that people are willing to pay money for a solution.

Be strategic when choosing entrepreneurs

For angel investing, Perkins said she looks to the entrepreneur themselves to help her decide whether or not to invest.

“Is it somebody that I like, do I think they have the ability to build a team and build a product?” Perkins asked. “It’s possible that I really like the person and I’m not so sure about the idea, and I’ll invest anyway, because I want to invest in their next company. It’s strategic.”

Perkins said she tends to find entrepreneurs in unexpected places. For example, she invested in Jeff Hussey and his company F5 Networks  — now worth close to $10 billion.

“‘He started out as an investment banker, and he loved to play multiplayer games, but the big problem was latency (lag) in these games, so he decided to build a load balancer,” Perkins said. “Nobody would fund him, except for me, because I called six customers and I [asked] ‘Did you have the problem?’ … and it turned out it was a big problem.”