Linus Liang is Co-founder and Managing Partner at Kyber Knight Capital, a venture capital firm focused on pre-seed and seed-stage investments. Born and raised in Silicon Valley, Linus caught the tech bug from an early age. He naturally gravitated to computer science for his studies, matriculating into UC Berkeley for his undergraduate degree and then to Stanford for grad school. At Stanford, Linus was part of the lab team that invented the technology for scaling across servers efficiently. This was in a time before the modern adoption of cloud technologies had taken root and social e-gaming was just beginning to take off, propelled by the launch of the first iPhone. Linus decided to take a leave of absence from his MA program and spin out the tech from the lab into a startup called CLZ Concepts. It was a bet that paid off handsomely. Less than two years later, the social gaming company Zynga acquired the fledgling startup. That left a twenty-something-year-old Linus, pockets full of what he then considered a lot of cash, with his first early career win. He did not stop there. After returning to Stanford to complete his M.A. in computer science, he co-founded the medical device startup Embrace, which developed low-cost incubators to help improve the life trajectories of the millions of babies born prematurely in developing countries. He would move to India for the next five years to commercialize the tech in the company’s target market before he could no longer bear the drain of running a medical device company, with its long iteration cycles and regulatory hurdles. He decided to return to the U.S. and enroll in Stanford’s MBA program. Before the start of school, with six months to kill, he worked as a summer associate at Andreessen Horowitz. That experience ignited his life-long passion for venture capital. After graduation, Linus joined the seed-focused firm Signia Ventures, starting as a Senior Associate and quickly rising to partner. Earlier this year, Linus launched Kyber Knight Capital, a $120M debut VC fund focused on pre-seed and seed-stage startups, backed by tech luminaries like Alphabet Chairman John Hennessey and the former Disney CEO Michael Eisner.
Linus grew up as the quintessential nineties kid, a son of two techies whose influence was palpable in all the nerdy things he loved, like getting lost in comic books and playing video games, like building computers with his bare hands and writing code until his mind got blasted into oblivion. He loved movies too. He watched a lot of them. When a movie theater opened up from down the street, and he was at last sixteen years old and legally allowed to drive a car, Linus engineered what would be his first job at that very establishment. He recalls learning lessons in empathy and the value of money during his breaks, when he would buy his lunch and the total would come out to ten dollars, the equivalent of two hours of work when you were earning minimum wage. Nowadays, while busy running his fund, Linus finds himself drawn to the simple joys of life, like taking his two kids to the park and seeing them develop and grow. Fun for him is being around good people, conversing and exchanging ideas. When asked where he saw himself in the future, Linus said that he hopes to oversee the expansion of Kyber Knight Capital across venture capital and potentially new asset classes. Witnessing the rapid evolutions of technological development since the rise of the internet age, Linus foretells a similar transformation of the venture capital model and wants to stay “ahead of that curve.”
Sam: What is your origin story? Could you share some background about your early career?
Linus: I grew up in the Bay Area. Both of my parents worked in the technology industry. I was very fortunate, in that I was born and raised in Silicon Valley, witnessing its evolution over the last forty years. Naturally, I loved technology from a very young age and ended up going to UC Berkeley to study computer science and then to Stanford for grad school. I had an early notion that I would go into academia, invent some technology, then spin out a company. When I was at Stanford, I was working in a lab where we invented the technology to allow systems to scale very quickly and rapidly. This was before AWS and Microsoft Azure, before the whole cloud ecosystem existed. We had developed a great technology for scaling up servers quickly and reliably, though didn’t really know what precisely to use it for. We experimented with different use cases but then ended up landing on a social gaming use case. We started a company called CLZ Concepts, and I decided to take a leave of absence from my graduate program. At the time, back in 2007, Facebook had just opened up a new platform for developing games, making it easy for certain games to essentially go viral overnight. We found that developing a game on Facebook’s platform was the ideal use case for our tech, since many of the other gaming companies--our competitors--couldn’t scale to support user growth. Zynga, a big mobile and social games developer, saw the value of our technology and bought our company within a year of us founding the company. At that point, with what I thought back then was a lot of money from the acquisition, I asked myself what I should do next.
I decided to start a mobile gaming company. This was during the time when Apple had just launched its App Store. The company was successful and making money, but I didn’t see myself dedicated to making mobile games for my entire career. It wasn’t challenging enough. I ended up going back to Stanford to finish my Master’s degree in Computer Science. At the same time, I decided to start a medical device company called Embrace. We were focused on developing low-cost baby incubators for developing countries. We sought to improve the health outcomes of the millions of premature babies who suffer from health problems over time and are developmentally stunted because they do not have access to proper healthcare. Our incubator was 1% the cost of a traditional incubator and could work without electricity. We raised money from a lot of great investors like Marc Benioff, the Salesforce founder, and Jeff Skoll, the eBay founder. I also moved to India, where our target market was. I worked at Embrace for five years, overseeing the launch of the product to market.
Sam: How did you ultimately transition from founding two startups to entering the world of venture capital?
Linus: After five years at Embrace and living in India, I realized that I didn’t see myself dedicated to developing a medical device company for the long haul. It just took too long. I was a software guy and wanted to return to my roots. So I returned to the U.S., back to the Bay Area. I decided to enroll in business school at Stanford. Before the start of school, I had about a six-month period to kill and ended up working at Andreesen Horowitz for the summer. That sparked my interest in venture capital. During my MBA program, I took just about every venture class I could. I wanted to learn everything I could and really just network my way into the industry. After graduation, I joined an early-stage firm called Signia Ventures that had been started by Ed Cluss and Rick Thompson, both well-known angel investors and operators. At Signia, I got my early training as a venture investor, working there for nearly a decade. A couple of years ago, at the start of the pandemic, Sunny Dhillon, another partner at Signia Ventures, and I decided to raise our own fund. Earlier this year, we launched Kyber Knight Capital with a $120M fund focused on pre-seed and seed-stage investments.
Sam: What motivated you to start your own fund, Kyber Knight Capital? Could you share some insights into the process about fundraising from Limited Partners (LPs)?
Linus: Before my partner and I launched Kyber Knight Capital, we had been working in venture capital for ten years. We had a good track record and were extremely hard workers. We thought we were in a good place to set up the fund. Of course the process of raising a fund is always hard, involving talking to a lot of different LPs. We also started raising during the pandemic, which introduced a host of complexity into our fundraising process. Even though capital was cheap during that time, many of the LPs weren’t traveling due to the pandemic, so they weren’t meeting new fund managers. Instead, they were investing more capital into well-known firms, which were based on relationships that they had cultivated for decades. I remember talking to one potential LP in the beginning of the year, for example, and he said he had already allocated all his investment for the year. With many institutional LPs investing in the more well-known firms, it was a hard time for many new fund managers to raise.
On the positive side, the pandemic also allowed us to do all our meetings via Zoom for the first time. This meant that we could meet a lot of LPs and move a lot faster with our conversations. We were probably talking to a hundred different LPs per week, and raising the fund ultimately came down to a pure numbers game. For our current fund, we have over a hundred different LPs, including some pension funds and institutional firms. About half of our LPs are individuals who are very successful, smart people, whose backgrounds add a lot of value to our portfolio companies. They genuinely want to help the fund and our portfolio companies, and we also leverage them for our diligence and to help find customers for our portfolio company. So while it was difficult to compete for institutional LP money with the bigger, well-known funds, it turned out to be a blessing in disguise, as we were able to cultivate this long tail of really awesome LPs who are so helpful and supportive of our fund.
Sam: What do you view as your favorite part of being a VC?
Linus: I love the job of venture capital, so it’s hard for me to pick just one aspect. That said, I would say the best part of the role is the opportunity to build things. I’m an engineer by background and a former entrepreneur. I love when we make an investment into a founder, and we try to prove out a new business idea. At pre-seed and seed-stage, many of the companies we invest in don’t have any traction. They’re just an idea or early prototype, perhaps coupled with some positive signals. This somewhat ties into one of the other reasons why I love the role, which is I like helping founders prove something when everyone else says it can’t work. One of the reasons why I think I became an entrepreneur very early in my career was because I was very self-conscious about my abilities. I always felt like I had a chip on my shoulder, like I had something to prove. That’s what drove me, and, for better or worse, got me where I am today. I really enjoy working one-on-one with founders who have something to prove. Helping them prove out an idea and turning it into a scalable business is one of the most exhilarating things of the job.
Sam: What lessons have you learned from your career that you would like to impart to the next generation of VCs?
Linus: In venture capital, where capital is commoditized, you need to figure out a way to differentiate yourself from the competition. There are different levers that you can pull to differentiate yourself. Perhaps you can focus on a particular sector or a particular geography or stage. However, at the end of the day, competition is stiff. You have to be good at marketing yourself or your firm, at creating a voice and image that sets you apart from the crowd. You need to be out there Tweeting or posting on your LinkedIn feed. You need to hold things like dinners and attend events. All of this is critical to build out your network and increase your deal flow. Marketing is not the hardest part of the role, but it’s the piece that will help you stand out and win, especially in a competitive market.
Sam: Where do you see yourself in a decade or even two decades from now?
Linus: A decade from now, I hope that we’re still running the fund and that we’ve grown our AUM. I would also like to see the firm expand across new asset classes. Perhaps I’m going into a whole different topic, but I think venture as an asset class is getting saturated, and I’d like to explore new ways to think about venture capital. I would like to explore development of a new asset class that might challenge traditional venture models. This could take the form of an incubation model, or perhaps some hybrid of venture and private equity. The pace of technology development is happening so quickly that it’s going to change our business of venture capital, and I want to be ahead of that curve.