Profiles in Venture: 2048 Ventures' Zann Ali

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Zann is an Investor at 2048 Ventures.  Before 2048, Ali was at Putnam Investments, where he collaborated closely with the Chief Investment and Operating Officers on strategic initiatives and special projects.  Before Putnam, he spent four years at Fidelity Investments, first with the company’s internal strategy team and then with Fidelity Health, a Fidelity-funded InsurTech startup that he helped launch. 

Ali holds a B.S. in Statistics & Finance with Honors from Babson College and an MBA from the MIT Sloan School of Management.  At MIT, he was a pre-seed investor with Dorm Room Fund, where he was fortunate to support and invest in 20+ student-founded startups.  He also served on the teaching team for MIT’s Entrepreneurial Finance & Venture Capital course. You can email Zann at zann@2048.vc, see Zann's connections on Linkedin, and follow him on Twitter @thisiszann.

Frederick Daso: What are some unique opportunities you've gotten working at 2048 Ventures?

Zann Ali: Helping to start a new venture fund is a dynamic and multi-dimensional role. I was lucky enough to join 2048 Ventures right before we officially closed and announced our first fund, so I've been here since the earliest innings.  

One of the areas I focused on last year was building out the infrastructure needed to support a high-velocity, geo- and sector-agnostic pre-seed fund. I laid the foundation for how we ingest deal flow, fine-tuning our portfolio construction strategy, and building out our sourcing playbooks. I was lucky to define critical pieces of our plans that will be here for years to come.  

Another unique opportunity working at 2048 Ventures has been my ability to see deals all the way through, from first meeting to final docs to ongoing portfolio support. We're an extremely flat team, so as a non-GP investor, I've been fortunate to have a meaningful voice in the room.  

Most people think venture is just about writing checks. Helping to run a new fund is much more than that, and I'm thankful for the experience so far. 

Daso: Traditionally, VC associates are seen as gatekeepers for founders in meeting the firm's partners. Would you say you operate in this manner, or do you play a different role in facilitating interactions between partners and founders?

Ali: You're right. Traditionally, this has been the dynamic in the industry. However, early on, we decided that we wouldn't follow this model. Put, we think it's inefficient, both for the founders we serve and for us. For us, taking first meetings as a collective helps us process information better: we bring together our diverse backgrounds, viewpoints, and mental models to triangulate to better (and faster) decisions. For founders, it's just not a great UX. There's more friction in the process when you have to relay the same information multiple times and don't have access to the ultimate decision-maker along the way.   

Daso: You mentioned you joined the firm before it had even raised its first fund. Can you describe what that time was like building the infrastructure of the firm? 

Ali: I started to touch on this earlier. Running a first-time fund is very akin to running a startup. In a way, we are a startup that also happens to invest in other startups. We are constantly testing new things, reprioritizing our work, and ensuring that we're ultimately serving our customers -- the entrepreneurs -- in the best way we can. 

The entire team here is product- and process-driven, so we spent a lot of time upfront productizing our workflows and crafting scalable processes. The goal is to have infrastructure that scales as we grow the fund. This includes everything from interfacing with LPs and founders, sourcing startups, diligencing companies and markets, and ongoing support for our portfolio companies.  

Building all of this is incredibly gratifying. I'm now on the other side of the proverbial table. Still, I get to continue to build and execute -- things I've always loved doing. Plus, I'm also now a self-proclaimed productivity buff. I have tried just about every personal productivity hack under the sun. 

Daso: How did your firm go about selecting LPs? What competitive advantage does that give you in helping founders build and scale their companies?

Ali: We are incredibly fortunate to be backed by an epic group of LPs, and it's certainly a competitive advantage for us. We have two main types of LPs. First are founders and execs of some of the most successful tech companies -- some names you might have heard of are MongoDB, GitHub, OpenTable, StubHub, and Twitter. The list goes on. We're lucky to have them, and our portfolio companies are fortunate to receive their ongoing support, guidance, and mentorship. Our second type of LP is top venture capital funds (and occasionally GPs at those funds), many of which invest at the later stage. We're thankful for their support and hope that as our companies grow, they can forge meaningful partnerships together.  

Daso: How do you downselect which companies are worth taking the first meeting with when sorting through your deal flow? 

Ali: We recently crunched our year-end 2019 statistics. We looked at over 2,200 startups across North America and only invested in 15. As a team of 3 people, it's nearly impossible to meet with all of these companies. When we're evaluating companies to meet with, we do a few things. First, we look for companies that are differentiated through technology. In other words, technology plays a fundamental role in the business. It broadly creates an unfair advantage (versus financial arbitrage or race-to-the-bottom companies). Second, we love founders with a strong founder-market fit, either through previous work or academic experiences. Third, we overlay our understanding of various markets and dynamics and prioritize those we believe have enormous potential to become category-defining businesses. 

This is all part art and part science. But over time, you do begin to see patterns emerge, and your ability to spot the needle in the haystack improves.  

Daso: Would you say that LP selection is or can be a vital strategy of a fund? 

Ali: Absolutely. Venture as an asset class has grown considerably over the past decade, and there is a demand for the product. If you look at some of the top funds, they are incredibly selective about who they let in as investors. 

I touched upon this earlier, but we're grateful for a fantastic group of LPs. When Alex and Paul started the fund, they wanted to ensure the startups we ultimately invested in had the highest likelihood of succeeding. To make that a reality, we prioritized those that could influence the trajectory of our companies, whether through strategic guidance, helpful introductions, or follow on capital. 

Daso: What's one piece of advice you would share with someone going to work at a pre-seed fund?

Ali: Working at pre-seed, at the infancy stages of startups -- often pre-product or pre-revenue -- requires a different view of the world. To succeed in this environment, you have to be extremely comfortable with ambiguity and possess an unrelenting sense of optimism about the future. It's certainly not for everyone, but it's incredibly rewarding. 

More tactically, time is your most precious commodity. Craft and commit to a system to manage your million-and-one to-dos, and learn how to reprioritize and adjust your calendar often. And importantly, venture can be all-consuming, so make sure you carve out some time for your family, your health, and the things you love doing. 

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