Tell me about who you are and what you do at Point72 Private Investments.
Sure. I’m Eddie Kang, and I joined the Firm at the beginning of 2022 to launch our first growth equity stage investing business to invest in later-stage startups. Our initial investment focus is on technology companies, primarily in Series B, C, and D rounds.
For some context, this is the latest strategy to be introduced under Point72 Private Investments (P72PI), the Firm’s institutional private investments business. P72PI also includes Point72 Ventures, which is focused on early-stage startups, and Point72 Hyperscale, a private equity strategy that uses applied AI to scale and modernize companies in data-heavy industries. Expanding into growth is really a natural next step as the Firm’s institutional private investing business continues to evolve.
How did you start your career?
I went to West Point for undergrad, then I was commissioned as an intelligence officer in the military in Korea and then on the Afghanistan – Pakistan border. I focused on what they call ISR – Intelligence, Surveillance, and Reconnaissance. After about five years in the military, I returned home.
At the time, Instagram had just been sold to Facebook and everyone was making these cool iPhone apps, so I thought I’d give it a try. I did a coding boot camp and watched YouTube videos to teach myself how to be a developer, but I didn’t really reach any great outcomes. Through this experience, I did decide that I wanted to build a career working in the technology industry. So, I went home to Chicago for business school, then joined Merrill Lynch to do investment banking for enterprise software companies in Palo Alto.
How did you make the transition from banking to investing?
While I was grinding it out as a junior investment banker, I happened to meet a Sequoia Capital investor who was looking to launch his own fund. After a three- or four-month period where I was working both as an investment banker and moonlighting as an apprentice under him, we launched Telescope. That’s where I really cut my teeth as an investor, getting to learn from a Sequoia alum. I learned from him just how high the bar was, both on how to operate as a firm and what to look for in the founders and companies that you invest in.
After Telescope, I led investments at two different funds – Next47 and Tola Capital – as a principal investor. That was a time when I had the chance to really build relationships with private company CEOs and to be the trusted partner that they could turn to, both when they wanted to whiteboard an idea or when they were seeking to do something ambitious. It also was my opportunity to apply the very disciplined investing style that I had learned and to really hone my own process.
What drew you to Point72 Private Investments?
Several things. First, I had gotten to know Dan Gwak and Sri Chandrasekar while I was at Telescope, because at one point, they and I were working out of the same WeWork building. At the time, I was figuring out how to create an algorithm to help me collect reams of data overnight, which just wasn’t humanly possible to do on my own. Since I already knew how to program, it wasn’t that hard for me to pick up Python. It’s like learning French if you already know German and English. So, I started building Python scripts, and I essentially created an automated program replacing the need for an additional employee that would work at nighttime for me.
It would take all the data from various sources and put it in an Excel file that I could look at in the morning. While I was building that, I would talk with Dan and Sri because we were in the same workspace, so that’s how I got to know them. I could tell at that time that they were building something special, and I’m beyond thrilled to find myself working with them today.
Second, Point72 has an amazing data function and culture of innovation. I’m so excited to be able to tap into all the resources that the Firm has to offer. There are a lot of things that I wish that I could have done in the past to utilize compliant data, data automation, software development, and algorithms, that we didn’t have available to take us to the next level. Point72 does.
Being able to operate and invest at scale because we can build a larger team is also hugely exciting. It’s providing me an opportunity to build and train a team to be disciplined, to be very thoughtful about diligence processes, how to source, and how to provide the very best level of service to our portfolio companies possible. We have an amazing opportunity to create an enduring part of this investing platform, and I’m so excited by that.
What kinds of companies are you looking for?
We believe that there are a lot of very large software markets out there that are in transition, as newer software is overtaking some of the older legacy software programs. But we also believe that there are tons of new markets out there that haven’t been touched by software yet.
People have come to expect more from tech platforms due to the acceleration of information flow and the noticeable improvements technology has made in how we live and work. Covid-19 was a catalyst, but we expect enterprise tech to remain a focus even post-pandemic, as companies adopt hybrid models and people continue to work remotely.
We’re also excited by new software categories, like the creator and influencer economies, continued advancements in infrastructure technology, and the digitization of legacy processes. What we really love about software is that it’s transforming every industry out there and when done right, has the opportunity to be one of the best business models out there in terms of margins and scalability.
What do you look for in founders?
It’s that healthy balance between having a super ambitious vision and conviction in that vision, as well as the self-awareness of knowing they have a lot of work to do to build that company.
These people want to change the world and they believe they’re going to build $5-10-plus billion companies, otherwise they wouldn’t have given up everything they had and, in some ways, put their livelihoods and their family’s livelihoods at risk in order to build these companies. But what the great founders do really well is have a firm grasp of where they are and where they need to be. And in some ways, that understanding is a very grounding or humbling realization that drives their every day.
You have to think that you’re going to be the next Steve Jobs but also you have to be very honest with yourself that you are years of execution, team building, and perseverance from accomplishing your goals.
Why do you think now is a good time to be involved in growth stage investing, especially when so many other investors are starting to pull back?
We felt that it was the right time to launch a dedicated growth investing strategy to identify new investment opportunities in later-stage startups and lead funding rounds. The last years of this decade-plus-long bull run has created an environment where private valuations have become unhinged from long term public market multiples. Late-stage growth funds have become less partners and advisors to founders and more just sources of capital. By leveraging both our world-class early-stage venture capital practice and our industry leading hedge fund, we are creating a Growth platform that can truly be the best partner to founders as they scale between product market fit and IPO.
The fact that some of our peers have decided to move away from growth investing doesn’t change anything for us, in fact it emboldens us in thinking it’s an opportune time for us to lean into supporting founders of high-growth, market-leading technology companies.