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A Q&A with Eight Roads investor & Diversity VC cofounder, Lillian Li | Career

A Q&A with Eight Roads investor & Diversity VC cofounder, Lillian Li | Career

Lillian Li has only been in venture capital for four years now, but she has already achieved a huge amount as an investor at both Salesforce Ventures and now Eight Roads, as well as helping last week’s interviewee Check Warner set up Diversity VC in an attempt to change the industry mindset around diversity and

Lillian Li has only been in venture capital for four years now, but she has already achieved a huge amount as an investor at both Salesforce Ventures and now Eight Roads, as well as helping last week’s interviewee Check Warner set up Diversity VC in an attempt to change the industry mindset around diversity and inclusion.

Li hasn’t been shy about her experiences as an Asian woman in the venture capital industry either, telling the FT last year: “It was never explicit whether ethnicity was going to be a handicap, but I never saw it as an asset because the [industry’s] mindset has been of having a culture where people come from similar backgrounds.”


Last month Li came into the office to talk about how she got into VC, how she is helping it change from a diversity and inclusion perspective and what she looks for in a good investment.

Below is a lightly edited transcript from the video above.

Scott Carey, editor at Techworld: How did you end up in VC?

Lillian Li, investor at Eight Roads and cofounder at Diversity VC:

I think like most VCs, I kind of fell into VC. I know everyone says that, and I feel like if you say you didn’t fall into VC I am a bit suspicious. So I’ll sort of jump you three years into management consulting. At that point, I had done a bunch of private equity cases and was semi-convinced that I actually had no skill set. I liked private equity and at least knew how to do it, so went to try and get a job in private equity.

Then, like any good consultant, I tried to get into a role repeatedly and ended up going to seven or eight interviews at various PE funds and they all very wisely said no to me. I think that was actually a great decision on their part. Back at that point, I thought ‘oh my God, I don’t think this is going to work out’.

Before I quit I tried this one last thing the headhunter put me up for. I went in and the experience was completely different to all the other interviews, they just wanted to get to know me, get my thoughts on technology and then after two weeks, I got an offer. At that point, I was like: ‘this is great, they have no idea what they got themselves into’. I very happily rocked up on my first day and sat in the management meeting, the Monday morning meeting where everyone sits down and sort of discuss the deals. Then I heard all these terms like ‘liquidation preferences’ and ‘cap table’. At that point I heard all these terms I have never heard before, and I has a sneaking suspicion that I’m not actually in private equity. That was the day I discovered that I actually landed in VC instead.

How did you end up at Eight Roads Ventures and what is your focus at that fund?

I ended up at Eight Roads as part of an evolution of having had a really great SaaS, enterprise focus when I was at Salesforce [Ventures], doing just that across Europe. I wanted, potentially, to widen my scope of investment expertise a bit more. After being in the industry and talking to a few more VC funds, I felt like there was a really great connection with the Eight Roads team and this is a bit more about the Eight Roads mentality. They are very thoughtful, very analytical, which sounds a bit different to the general VC type and I think that’s what I very much appreciated about the team. They think very deeply and they’re very humble.

They would invest at the Series B level, but across every single sector, as long as they think there is a defensibility and proven product market fit, and also the ability to scale from a sales and marketing perspective. Then we get very excited. I also just very much love the people there, life is short, so spend it with people that you like working with. After talking with everyone, I just felt like it was a place that I could really learn a lot from.

How did you get involved with Diversity VC and what work have done there in the last two years?

So this started off quite organically. I don’t want to make my life sound haphazard but again, it was something I fell in to. My approach to life is to usually just say yes when when people along with something interesting.

It started off when I took over organising these Ladies in VC dinners. At one of these dinners I met my cofounder Check. The dinner format was these small, 10 to 12 women having a very informal chat and the topic wasn’t about deal flow, it was about connecting as people. Afterwards Check came to me and we had a discussion about what we felt was missing in the industry.

We kept going to all these industry events and standing around, sipping wine, and then discussing how busy we all were, and how the deal flow was these days and felt that there was actually a lack of diversity in the VC market and it would be great if some organisation can do more to promote that in a more holistic way, rather than just doing these dinners.

At the time, the vision was kind of born haphazardly from a few of us just spitballing. The more we reiterated this message with the market and our peers, the more it resonated and people joined and put their hands up and asked if we had thought about internships, or thinking about entrepreneurs or all these other components that we had never thought about before.

So currently the focus has evolved and shifted, but very much focuses on building up the VC community, connecting entrepreneurs with diverse backgrounds to the VC network, and also encouraging students to hear about VC and join VC as a potential career option.

As well as actually fundamentally providing data on what is happening. That wasn’t a key focus for us at the beginning, but has actually become a very big focal point and where I have been slightly involved, from a distance and more so this year, which is the data gathering for what the VC landscape looks like in the UK.

Initially, we came out with a report about two years ago on what is the gender makeup of male to female VCs in the UK. This year, we’re going to release a follow-up report which will be looking at not just the gender ratio, but also split across additional factors such as educational background, employment, ethnicity, to sort of really think holistically about the issue of diversity.

That’s something I’ve been working quite a lot on, as well as my fellow co-founder Travis [Winstanley] as well. So giving Travis a big shout out for the great work he’s done there.

VC has traditionally been a very opaque business, people don’t  know what the inner workings are. I think there is always been that kind of gut feel that it’s not the most diverse industry. The reason I came across Diversity VC is because of this data gathering, we now have some insight into the actual numbers behind what we felt was the makeup of the industry. I think that really helps increase the transparency of the industry, which again, will help boost that diversity and inclusion piece there.

In terms of the work that you do in your day job over at Eight Roads, how do you as a fund think about diversity there, and not just your internal makeup and how you watch each other’s blind spots and things like that, but also who you invest in and maybe diversifying your portfolio as well, because we’ve seen that is a good business practice, as well as a good thing to do.

I think there’s many different ways to think about diversity. As I’ve kind of alluded to in our follow-up reports, we think that needs to be considered holistically in the portfolio. Often, it’s a bit constrained by the stage we’re investing in, with Series B being slightly later stage, so unfortunately we’re a bit more capped with the company that’s already coming through the funnel. But for sure, it is something that we definitely look for, we are very encouraging of, and we have found that the best-performing companies in our portfolio tend to have very diverse teams. It is something that we would actively try to be helpful with, especially when the topic of recruitment comes up is where we can as VCs be very helpful.

I think it’s really about thinking about the whole issue in a bit more of a holistic and nuanced way. And what does that mean? It’s not just looking for potential external markers of diversity but really kind of going through that person’s background and thinking what this person has gone through in their life that gives a good indication that they could be a really great fit for the job, regardless of what they might not look like on paper.

I remember talking to one of our really great ex-venture partners who is one of the cofounders of ServiceNow and I asked him what do you look for when you hire for sales leads, firstly, for our portfolio companies, and for yourself and he said he looks for this hunger to prove yourself, and that is not tethered to any benchmarks. This open-mindedness is what we talk about when we’re talking about diversity, not getting stuck at the certain signifiers, but really looking at the intrinsic value underneath and trying to get to that. We definitely try to bring that into all of our conversations and even in the way we look at companies.

I think a lot of these macro ideas are great. And it’s great that we’re talking about this a lot more now. Having the data, having the transparency, opening up those networks, having the dinners but also what comes from those dinners is you start building out this network of women in VC. I know that there’s a big Whatsapp group here in London and things like that.

What do you think more on the kind of operational level, I know that Ophelia over at Blossom, who we spoke to earlier for this series, they’re very keen on focusing more on their cold intros and opening out the ability to pitch them, because that means you get more people in the door that you wouldn’t traditionally get from the old boys’ club networks.

So what do you think about these kind of smaller, more operational aspects of trying to broaden out diversity and inclusion in the industry?

For sure. I think for us we often have a very outbound approach when we get access to companies. We will actively be reaching out to interesting companies. They don’t need to be referred to by a network for us to have a conversation with them.

So you have themes, your expertise and you’re reaching out?

Exactly, and a lot of the companies that I’m talking to I don’t even know what the management team looks like when we reach out to them. That does bring a really diverse field of people.

How has the industry changed in your four years doing VC?

I think that there’s really been, both on the startups side and on the VC side, huge changes. I think there’s been a lot of new VCs coming through and the micro-VC space, new funds are being launched every day with people from way more diverse backgrounds, now, moreso than ever. More female VCs setting up their own funds, like Ophelia as we have mentioned, and funds really making a very proactive effort to hire more diverse intakes. We like to think we contributed to that at Diversity VC.

But it’s just so encouraging to see that this is a topic that everyone is thinking about and talking about and people are taking notice to think about how to make my team and my portfolio companies more diverse because actually, that is a formula for winning in the long term, and also is just the right thing to do fundamentally.

On the startup side, I continue just to be incredibly impressed by the quality of company that’s finally coming. I was having a chat yesterday with someone else who’s been doing it for a while and we were discussing that now you finally get the ecosystem going.

You have these founders who have had a great exit, they have the expertise, and the team have now started building the second generation or third generation of winners. Now they’re just doing everything so much faster. They have a lot of learnings from before. They are much more likely to take risky bets with what they’re doing. That’s so encouraging to see.

The level of knowledge is just getting higher and higher every every single day when I talk to founders, you really see that they understand what is possible, and they really want to go after it. They don’t, always, want to go to the US, they want to build a local business here in Europe. They want to think about expansion and not just to the US but also in Asia. That global mindset is also really, really encouraging to see. 

Your background is in enterprise software, software as a service. That’s an industry that traditionally has lacked female founder figures. A lot of the companies that I cover on a day to day basis are Salesforce, Microsofts, the only ones I can think of are Safra Catz at Oracle and Diane Greene, formerly of Google Cloud. Do you see more at the early stage now of that enterprise SaaS market, some female founders coming through now?

I definitely think so. I think this is again due to the growing ecosystem of the big tech players coming over to Europe, training up these fantastic enterprise leaders who then want to do something of their own. That’s definitely something I’m seeing as well, so it’s incredibly encouraging.

Two years back I would always spend 90 percent of my week being the only female in the room and now it’s so great that whenever I pick up the phone there is a female founder at the end. I mean at the end of the day, still judging them on the quality of their work, but it’s just nice to sort of see that, you know, traditionally female founders seemingly to have been much more limited in enterprise, more focusing on the consumer, and that’s changing now and I think that’s the knowledge coming through.

I think that’s a perfect note to finish on. So thank you very much for joining us today Lillian.

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Susan E. Lopez

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