Wei-Chun Tai speaks candidly about her entrepreneurial failures, especially during her time at her special occasion fashion startup. After some early success, including two of her dresses being worn on the Emmy’s red carpet, the now-investor is upfront about the fact that she scaled her business too quickly during the client transition from high-end boutiques to large department stores.
“I made many of the classic premature scaling mistakes,” says Tai. “While I was able to course correct several of them, my business eventually succumbed to a particular difficult one. We made the mistake of not recognizing that these large companies demand extended payment terms and a bias return policy from their vendors. We hurt the business by neglecting our core business of high margin, small-line production due to our resource constraints.”
Following a successful startup exit and chance meeting with prolific Southeast investor Sig Mosley, the two-time entrepreneur is now a partner at Mosley Ventures where she invests in early-stage companies in the Southeast with disruptive technologies. Her background and real-life learning give her a unique eye for selecting the startups with untapped potential and help those emerging founders learn from her mistakes as they look to scale their startups.
Here, Tai talks to Hype about her transition from entrepreneur to investor, what factors she looks for in prospective startups, and her thoughts on the Southeast’s investor community.
How did you transition from being an entrepreneur into the investor field?
My first startup was a fashion label for special occasion dresses and gowns. I had early success in both revenue and brand recognition within the first year. We built a loyal customer base of high-end boutiques, then we attracted the attention of luxury department stores. However, soon after fulfilling those department store orders, we found ourselves in a cashflow crunch. I met with the CEO of a digital bank and the conversation turned from getting an accounts receivable loan from them to building a digital mortgage platform for them. That resulted in me co-founding a software company while I was still running the fashion business. I had two startups overlap for roughly 16 months.
Our digital mortgage company pitched at the TAG business launch competition and that’s how I met Sig Mosley. Sig gave us a term sheet, but we didn’t proceed with the investment. We were all overjoyed when we had a successful sale of the software company eight months later. The exit allowed me time and financial freedom to explore other opportunities including working alongside Sig as an associate. One year later, Sig decided to start Mosley Ventures with repeat entrepreneurs as partners, a model he believed was compelling when investing in early stage startups. I was fortunate to be selected as one of his partners and we recruited John Vecchio to join us. 2017 marks the fifth year of Mosley Ventures with 20 portfolio companies. In 2015, we had our first exit in ClearLeap to IBM for a sizable amount. We continue to actively evaluate new companies to invest. I am on the board of six of our portfolio companies with interest in adding more to my team of promising CEOs.
Since you were new to the investor world, how did you gain your knowledge?
I practiced a can-do attitude to the max. I immersed myself in environments where I was surrounded with lots of smart people. I read constantly and asked tons of questions. I revisited scenarios from my own two startups to extrapolate multiple lessons. Sig Mosley was definitely a mentor to me as he has also been to so many other people. I am lucky that I get to collaborate with my wonderful partners, Sig and John Vecchio. I also continually gain knowledge interacting with all the entrepreneurs as well as my co-investors and other board members.
How is an anchor client essential to a business? You mentioned it can make it or break it. How are they good allies as you scale your business?
An anchor client can be an excellent partner to a startup in many ways. They provide a collection of active users to feature proof your product, they can contribute to a significant portion of your revenue and can be viewed as validation of your product by potential clients. All these benefits give you a boost in growth. However, all partnerships need to be managed diligently. I always caution the negative impacts that occur when scaling is not under control. When we take incremental rollouts, we will have the chance to make adjustments as we closely monitor end users’ adoption. After taking a disciplined scaling process, most startups can build a playbook to use as a baseline for growing their sales.
What kind of startups and/or entrepreneurs catch your attention?
It is essential they have experience in the market they are tackling. I gravitate toward entrepreneurs who have authentic stories where their passion drove them to create their startup. When the vision of your startup is drawn from your personal experience, the investors get the chance to have a deeper connection with you. I have a good working relationship with all my CEOs so I expect the entrepreneurs pitching to me to be genuine about who they are. I believe that taking our investment is less about the money, but more about partnering with us to create value.
What factors do you look for before investing?
We have a detailed due diligence process that can take between 30 days to four months. For the most part, we evaluate skills of the founding team, addressable market size, and underlying technology. It is not necessary that you have revenue today, but your business plan has to show a path to meaningful revenue in the foreseeable future.
Women investors are rare. What kind of challenges have you encountered and how did you overcome them?
I remember when I first started working as an investor, there were several incidents when my comments in meetings would get ignored. Yet, soon afterwards, an almost identical idea would get praised when it was mentioned by another person. I was frustrated until I isolated the issue to the delivery of my message and worked on identifying ways to make my voice heard. I would evaluate the vocabulary chosen or the timing of my input, but I never attributed any of the challenges to being gender-driven.
What are your thoughts on the Atlanta tech scene and how do you see it evolving, especially in terms of attracting more investment dollars?
I believe we have a healthy investment environment in Atlanta — in the entire Southeast as a matter of fact. All of the investors in the area work well together. We either co-invest or we are interested in different deals. I am also seeing Atlanta entrepreneurs not being too hung up on valuations. Keeping the seed and early-stage valuations realistic adds to your company’s appeal when dealing with investors. It is also beneficial to the company because you are giving yourself more room to make progress and show a growth trend. We may not be eccentric enough to envision the likes of Uber (yet), but we do well in the cybersecurity and digital media technology sectors, just to name a few. We are not chasing billion-dollar deals, but we are good at producing multi-million-dollar exits.
Anything else you would like to add about investment advice for founders, lessons, or initiatives you have coming up?
My one good piece of practical advice is learn when to stop talking. If you got what you need out of the meeting, start winding down the conversation. Nothing good can come out of continued dialogue. On that note, I should go ahead and end my sentence now.