Conversations with a Venture Capitalist: Arteen Arabshahi, Fika Ventures

Conversations with a Venture Capitalist: Arteen Arabshahi, Fika Ventures

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In this conversation, Marc Feder (Director of Strategy, Boundary) sits down with Arteen Arabshahi (General Partner, Fika Ventures) to discuss Arteen's journey into venture capital, the nuances of investing, and what it takes to pitch and build a successful startup. Arteen shares insights from his early days cold-emailing his way into the tech world all the way to his eventual return to Fika Ventures. The transcription below is AI-transcribed from a live conversation with Arteen.

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Marc:

So just to get started, let's set some context for any wisdom you share here—what’s your background? What were you doing before Fika?

Arteen:

Yeah, totally. I'll tell you quickly about me, and I'll tell you quickly about Fika for context, too. But on my end—born and raised in Tucson, Arizona. I’ve been in LA for about 12 years now. I'm a first-generation American and my parents immigrated from Iran.

As a kid, I always thought I wanted to be a doctor. My parents were small business owners, so I was entrepreneurial by nature, but I thought medicine was the route for me. During college, I was pre-med in biology. Then I decided to be pre-med in business. I ended college studying entrepreneurship, finance, and pre-med. I did a little bit of everything.

I spent a summer in New York after my sophomore year doing investment banking, and it really opened my eyes to the industry of tech and business outside of small business. Growing up, my mom and dad both separately owned two different retail stores, so I grew up in the business world. Being in New York was the first time I was like, "Oh wow, there’s a lot of cool stuff happening in tech." This was kind of in the Foursquare era of New York tech—Gilt Groupe and some of those other businesses.

As a junior in college, I cold-emailed like 150 people. I like to tell people I did it before tech was as popular as it is now, so cold emails actually got well responded to. That led to my first job in tech, which was at Techstars in Chicago. That was how I got my foot in the door in this ecosystem.

After that, I fell in love with the tech industry and knew I wanted to be a part of it. I also kind of fell in love with LA at that point—this was like 2012—and I looked for a way to move to LA. I felt like the tech ecosystem here was big enough that I could be a part of it but small enough that I could grow with it.

There was a Chicago-based company called Built In Chicago that wanted to launch their LA market. I ended up being the GM for launching what is now Built In LA. So I moved out here, launched Built In LA, did that for about a year, and then got recruited into VC.

I spent seven years in venture in my 20s. I was at a family office called Karlin Ventures. Then I left with my partner from Karlin, a guy named TX, to help start Fika [Ventures]. We started Fika in 2016. I was there until the end of 2018 and then went to work for Jeffrey Katzenberg at WndrCo, doing early-stage investing.

I was obsessed with the holding company model, so I went over there to learn about that. Then in 2020, I wanted to go build and operate at a more significant scale than I had ever done before. So I joined a company called Route in the e-commerce shipping and insurance space.

I spent four years at Route running strategy as well as a lot of other things. I was with the business until it hit over $100M in revenue and raised $290M for the company. Then, a little more than a year ago, I decided to come back to investing and rejoined Fika, which had been a homecoming for me in the first place.

Now, back at Fika—we're a B2B software-focused seed fund. We invest anywhere from $1M to $5M into $2M to $8M rounds. All B2B software. We’re a small team based in LA but invest across the country. The firm manages over $500M in capital now. Our most recent fund is $160M.

So that’s a mouthful on me and Fika, but it gives you a ton of context.

Marc:

That’s great backstory. This is probably a difficult question to answer, but what does a general day in the life look like as a General Partner at Fika?

Arteen:

Yeah, good question. I think being a GP at a mid-sized fund is a lot different than being a partner at a big fund or a solo GP. It's also different from being a Principal, VP, or Associate at a fund because your time is spread across different stakeholders—prospective investments, portfolio companies, board positions, other VCs in the community, and LPs (Limited Partners).

Every day is different, but within each day, it’s a balance of spending time with LPs and catching them up on how the fund is doing, spending time with VCs discussing opportunities, talking to prospective founders raising capital, and supporting portfolio companies.

A big unknown bucket in venture is that any conversation could lead to an opportunity—whether it’s investing, hiring, or follow-on investing.

I’ve gotten intentional about time blocking—setting aside hours for deep work instead of just meetings from 8 AM to 8 PM. Otherwise, I'd never have time for thoughtfulness.

Venture is a "choose your own adventure" role. At the end of the day, our job is to take capital from LPs and return more capital to them over 6-10 years. Each GP structures their approach differently, but the outcomes are what matter.

Marc:

You mentioned deal sourcing. How do you think about balancing investing in the founder versus the market? Especially when one might be stronger than the other?
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Arteen:

I think one of the things I learned really early on in my career is that the wrong team will never find the right idea, but the right team will probably course-correct from the wrong idea.

If my balance is between, "Hey, I really believe in this team, but I'm iffy on their idea," I think that’s actually a safer bet than, "I love this idea, but I’m iffy on the team."

I don’t want to say ideas are a dime a dozen, but it’s pretty well proven that an idea alone doesn’t beget success. Execution is what really matters.

So I definitely index more heavily on, "Is this the right team?" than on, "Is this the right idea?"

That said, there are definitely times when I absolutely love a team, but the idea just isn’t for us or I don’t believe in it. That happens.

For where we sit, we’re sometimes the first investor in, but most of the time, we’re the second institutional check in. That gives us the benefit of seeing how a team executes, whether it’s from the last 12–18 months of their existing business or from knowing them in a prior company.

Seeing how a team executes and having conviction in them goes a long way, but it doesn’t always supersede if we think it’s a terrible idea, a horrible market, or just not the right way to win.

We have to believe that the idea has legs and that the market has legs. But extreme belief in a team is much more important than extreme belief in an idea. You need to have both, but if I had to sacrifice one, I would sacrifice the idea before sacrificing the team.

Marc:

Yeah, I think that makes a lot of sense. I was recently listening to an episode of My First Million—not sure if you’re familiar with that podcast?

Arteen:

Oh yeah.

Marc

They were talking about the original seven angel investors who invested in Google. Ron Conway’s whole MO was definitely betting on people. His thesis was that even if this idea is wrong, the next thing they do could be a home run. He’s obviously proven that works.

Let’s switch to some more tactical questions. What’s one of your favorite questions to ask a founder in the first meeting?

Arteen:

It’s actually funny because when you guys did our website, one of the bio questions in our question bank was about this, and it’s on my profile.

I really want to understand why they’re working on this problem.

The reality of building a company is that sometimes it’s incredible, and other times it’s excruciating. So understanding the why behind the what is really important to me.

It’s a long journey to be a successful startup founder, and particularly now, it’s harder than ever.

I want to know their motive—what they’re looking for. And I actually don’t think there’s a wrong answer. Some people think, "Oh, does that mean they have to be fully mission-oriented?" No. I just want to know their why.

If their why maps well to what they’re building, that’s what I care about.

Someone could say, "I want to make $100 million." Okay, that’s not everyone’s why, but it’s good to know because then it’s a math problem—you figure out how much they need to exit for to make that accomplishment happen.

Other people say, "I want this thing to exist in the world and be used by as many people as possible." Then I wonder, "Okay, do they also have the mindset to build this into a monetized business?"

Understanding the why helps you understand how founders will make critical decisions in key moments. There’s no wrong answer—it’s just an important input.

Marc:

Totally. I think that’s a great answer.

Whether it’s in that first meeting or maybe in a follow-up meeting, what’s one of the biggest mistakes or pet peeves you have in how founders pitch to you?

Arteen:

There are a couple of tactical things, but also some more nuanced ones.

One of the tactical ones is that I’m a pretty conversational, inquisitive person. Sometimes, a founder will have a slide deck they want to go through, which is fine, but a mistake I see often is this:

I’ll ask a question, and the founder will say, "Oh, that’s actually on slide 11. I’ll get there in a few slides."

Maybe they’re on slide three or four at that point. I think it’s a huge mistake to punt a question like that.

Because now, all that happens is I’m sitting there thinking about my question for the next six or seven slides instead of engaging with their pitch.

I always tell founders—yes, have a polished pitch, but don’t be afraid to go off-book.

At the end of the day, I’m not investing in your pitch—I’m investing in you.

Another nuance I see is that I like founders who have a really strong opinion on what they’re building.

Sometimes, I’ll push back and debate a topic, saying, "That’s an interesting assumption, but what do you think about this?" And I’ve seen founders shift their own opinion based on mine. That’s a bad signal to me.

I don’t have all the answers. My opinion could be wrong. The founder should have a better position than me because they’re the domain expert.

So a mistake I see is when founders change their thesis based on what they think the investor wants to hear.

For me, that’s one of the worst things a founder can do.

The right approach is, "Here’s what we believe to be true, and if we’re wrong, we’ll adapt." That’s how great founders operate.

Some founders either change their mind too easily based on VC feedback, or they’re overly stubborn and defensive. You have to balance both—be open to feedback, but stand firm in your thesis.

Marc:

Yeah, I think that’s great advice. In fact, that kind of answers the next question I was going to ask, which is: what are things you look for that aren’t apparent in a deck or financials? That conviction piece is a big one.

Arteen:

Totally. 

One big thing is that I gravitate toward founders who know more and better than me.

My job isn’t to build companies. My job is to support people who are building companies with capital.

If I’m in a pitch and it feels like I’m teaching the founder more than they’re teaching me, that’s a yellow flag.

It’s harder than ever to succeed, and businesses today need to be more specialized than ever.

I like talking to subject matter experts—people who know their space not just 10% better than I do, but at least 2x better than I do.

Marc:

Totally. When it comes down to crunch time—deciding whether to allocate capital toward a company or a founder—how much of that decision is quantitative vs qualitative?

Arteen:

We’re pretty methodical with our process at Fika. We actually have a full team survey where, after we’ve spent time with a company, we all weigh in on different factors and variables—both quantitative and qualitative.

I’d say it’s probably 70% qualitative and 30% quantitative.

But that 30% quantitative piece is kind of threshold-based. Like, how big is this market? If the opportunity is only a $50M market, that’s just not the business model venture capital is suited for.

So even though the quantitative part is a smaller piece of the discussion, it can actually be a threshold issue—if the numbers don’t work, we won’t do the deal.

But once a company checks the necessary quantitative boxes—high-margin business, large market size, good growth, good retention—then the rest of the decision-making is almost entirely qualitative.

At the seed stage, you're more likely to make an investment based on qualitative factors, but you're also likely to pass on an investment based on quantitative factors.

So, numbers get you in the room. That’s what qualifies you for a multi-million dollar investment. But the X-factor that gets us excited and ready to invest? That’s all qualitative—things like the founder’s vision, market momentum, competitive advantage, and their technical defensibility.

Marc:

Yeah, that makes a lot of sense. How does timing play a role in your decision-making? I think last time we saw each other, we talked about how, in hindsight, you can look back and see how great or poor timing was. But in the moment, how do you factor in timing and trends?

Arteen:

Yeah, I think trends are important. Certain categories become more or less competitive depending on market conditions.

Venture capital is meant to be at the forefront of technology. We’re not going to be super excited about investing in technology that’s existed for 10 years.

So, on a macro level, we definitely consider timing. We ask, “What do the next 2–5 years of the world look like?”

On a micro level, timing matters less, but there are key inflection points in a business that do matter.

For example, we advise our portfolio companies: “Even if you don’t hit all the typical milestone metrics for a Series A, if you have two or three quarters of really strong growth, you should consider a preemptive Series A because of your momentum.”

Momentum is powerful.

If a company comes to us with slow, steady growth over two years, that looks very different than a company that’s had exponential growth in the last two quarters.

Even when I was at Route raising our Series B, we had a couple of massive deals close right during diligence. It wasn’t planned, but that momentum went a long way—it became extra validation for the business.

So, timing does play into the psychology of fundraising.

And then, of course, there are macro trends. AI is a great example. Right now, it’s the trend. But where are we in that cycle? Are founders jumping on AI because they think they should? Or is it genuinely a natural evolution of their work?

Marc:

Yeah, exactly. That goes back to the point you mentioned earlier about the why. If someone is jumping into AI just because it's the trend, that’s a red flag.

Arteen:

Exactly.

Our favorite types of founders are people who come from the domain they’re building for. Then, they learn the tech side.

We do a lot of industry-specific investments—contracting, construction, and real estate tech.

We love investing in deep domain expertise. Maybe it’s their first time building a tech company, but they deeply understand their customers’ pain points.

Marc:

Yeah, that reminds me of a call we were just on. The company has been around for 25 years, and the founders are building a business intelligence tool for their industry. When we asked them what makes it special, they said, "We’re the guys that used to get screwed over, and we learned the hard way. Now, our tool is going to help our clients avoid that pain."

Arteen:

That’s exactly it.

A lot of investors will look at the competitive landscape and say, “Here are the four trendy products everyone’s using.” But when you talk to someone who has lived in that space—someone who says, “I’ve used two of those four, demoed everything else, and it’s still broken. That’s why I’m building this”—that’s powerful.

Again, that ties back to my belief that I should always be learning from the founder.

Marc:

What’s a common misconception founders have about what VCs are looking for?

Arteen:

I think founders sometimes underestimate how important storytelling is in fundraising.

Yes, your metrics are important. And if your metrics are amazing, that may be all you need.

But VCs want to be brought along for the vision.

Your numbers prove traction, but storytelling paints the future.

You have to show investors the world you want to build and why your company will be a transformative part of it.

Marc:

I want to read something you wrote in your "homecoming" article when you returned to Fika. You said:

"Investors will never make your business, but they can occasionally break it. Many VCs are so caught up in trying to add value that they have the reverse effect."

Can you unpack that? And for founders who have multiple term sheets, what advice do you have when they’re deciding who to take capital from?

Arteen:

Yeah, absolutely.

The most important thing, if you have multiple term sheets, is to do your references on the VCs.

Any VC should be willing to share all of the founders they’ve worked with—not just cherry-picked references.

At Fika, we say, “Here are all 85 companies we’ve invested in. Talk to anyone.”

Investors are long-term partners. It’s actually harder to unwind an investment than a marriage. So, founders should be diligent about choosing their investors.

On the point about VCs trying too hard to “add value” and doing the opposite—every VC loves to ask, “How can we help?”

But sometimes, VCs waste a founder’s time by trying to help in ways that aren’t actually useful.

My advice to founders? Tell your investors exactly what you need.

If you need help with hiring, tell them. If you need intros to customers, tell them.

But if they try to “help” with something that’s not relevant, don’t be shy about saying, “Thanks, but that’s not what we need right now.”

Marc:

That’s great advice. Last question—what’s the craziest thing you’ve done to get a meeting or win a deal?

Arteen:

I don’t know if this is crazy, but we’re very intentional about showing up in person.

I was chasing a deal a couple of months ago, and I was talking to them at 4 PM on a Tuesday. I flew to San Francisco that night and had breakfast with them the next morning.

We also introduce founders to potential customers during diligence. Most VCs say, “We’ll help post-investment.” We say, “Here—let us prove it now.”

At the end of the day, venture should take cues from hospitality. It’s about making founders feel supported.

Marc:

Yeah, and I think that’s something Fika does really well. You guys don’t ask how you can help—you just do it.

Arteen:

Exactly. Everyone wants hiring help, customers, and funding. We just deliver.

Marc:

Well, I appreciate the time. I know you’ve got another meeting, so I’ll let you bounce. Let’s meet up again soon.

Arteen:

Let’s do it. Thanks for having me.

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We sincerely appreciate Arteen for sharing his time and valuable perspectives. Stay tuned for more conversations with leading investors, founders, and industry experts. To learn more about Arteen and Fika Ventures, please visit https://www.fika.vc/