- Mike Walsh was one of the first investors in Uber and Salesforce.
- Now he’s using his earnings — and his eye for hits — to he thinks could be as big as Uber.
- He shared with Business Insider his technique for sourcing deals that blow up. The biggest thing: Does this seem like something people will actually want to use?
In 1999, Mike Walsh cut his first check as a hobby venture capitalist to a little-known cloud startup called Salesforce.com. He used the company’s product as a customer first and liked it enough to invest.
Almost two decades later, Salesforce has over and a market cap of $94 billion. Walsh gave half his stock to his dad, a plumber, as a birthday present and sold the other half after the company went public in 2004. He continued to write angel-investment checks while running a software company that provides social-networking services to enterprises.
Lightning struck twice when Walsh, still a startup CEO, signed on as one of the first investors in Uber in 2010 and saw massive returns, which encouraged him to focus full time on venture.
“I was two-for-two,” Walsh told Business Insider.
Today, Walsh helps run Structure Capital, an early-stage venture fund that he started in 2013 with some of the earnings from his Uber deal. The fund invests almost exclusively in sharing-economy companies whose goal is to reduce waste by putting to work underutilized assets such as people, spaces, and vehicles. He manages the firm alongside Jillian Manus and Jacob Shea.
Structure Capital has invested in roughly 140 companies, including Wag, an “Uber for dog-walking” app, and Honk, a company that provides on-demand roadside assistance as fast as Uber hails a car.
Walsh shared with Business Insider his technique for sourcing deals that blow up.
How to pick a winner
Walsh had built a reputation for spotting billion-dollar-plus “unicorns.” In the early days of Structure Capital, he was already receiving about 100 pitches per month. At first, he took meetings with only sharing-economy companies simply as a way to “filter” his inbox, Walsh said.
One of the first things he asks himself when he’s evaluating a startup is: “Do we think we know 1,000 people, socially, who will use this thing?”
Later, Walsh and his partners settled on 10 criteria for deciding whether to invest in a company, including market size, differentiation, and what he perceives as founders’ grit: “What will it take for the founders to give up? When will they quit?”
Ultimately, Walsh said, as much as 75% of the decision comes down to a gut check.
He says he asks himself whether the founders are “people we want to hang out with” and, most importantly, who “treat people the way we think people should be treated.”
He said that if there were a “gigantic opportunity and we just don’t like the founders,” Structure Capital wouldn’t make a deal. The opposite is also true — it’ll invest if the opportunity is marginal but the founder shows enthusiasm, strong values, and a commitment to giving back to the community.
NOW WATCH: This could be the future of ride-hailing