Key points
- Goodwater Capital has over $3.3bn in committed capital and backs more than 700 seed companies across nearly 50 countries.
- Eric Kim's early Korean bets on Coupang and Kakao, both Series A-stage, returned 100x to 300x at venture scale.
- Goodwater devotes two-thirds of its roughly 65-person team to data science and engineering, spending six days a week understanding founders.
Why Goodwater bets only on consumer technology
Goodwater Capital is a venture firm built on one conviction, that consumer technology changes the world and that whoever owns the end customer can expand backward into the enterprise. It launched in 2014 into a field already crowded with Sequoia, Benchmark and Accel, and raised over $3.3bn by staying consumer-only while rivals moved into enterprise software, security, hardware and biotech. Kim runs it as an art and a science, with a team that is mostly engineers and data scientists screening millions of companies so the partners can spend nearly all their time with founders.
Takeaways
- Goodwater invests only in consumer technology. Founded in 2014, the firm has over $3.3bn in committed capital, a Genesis portfolio of more than 700 seed companies across close to 50 countries, and a core early and growth portfolio of about 80 companies in 20 countries.
- Investing runs on art and science. Two thirds of Goodwater's 65 to 66 person team are data scientists, product managers and engineers, tracking over 10m companies in real time. Kim reversed the old process so science takes one day a week and six days go to understanding the entrepreneur.
- Consumer research found the Korea winners. Coupang was the 28th social commerce company in Korea when Kim invested in March 2011, and surveys showed women in their twenties and thirties loved its customer service. Kakao's Series A followed, with returns of the 100x to 300x type.
- Kim backs founders who put the company first. He looks for people who do what is best for the company even when it costs them, are open to feedback and survive deep reference checks. If you want to be famous, he says, Goodwater is not the place for you.
- Consumer tech is the biggest prize. Six of the eight largest companies in the world are consumer tech, and owning the end customer relationship lets a company innovate and backward-integrate into the enterprise. Many other firms diversified into enterprise SaaS, security, hardware, climate tech and biotech.
- Goodwater was built around a mission. The name comes from capital and technology needing stewardship like water. Kim started the firm in 2014 even though Sequoia, Benchmark and Accel already existed, and he says it shifted venture's mindset from celebrating individual investors' money toward positive impact.
- Venture investing rewards daily craft. Kim compares it to being an athlete, investing in your craft day in and day out and improving each week. He admires Sequoia's belief that they were just one away, meaning one missed deal could make them mediocre, and flies over 200,000 miles a year to visit entrepreneurs.
Kim's investor mindset