William Leonard
On this episode of the Atlanta Startup Podcast, we sit down with Gabby Fong, who is an investor at First In. First In is a DC-based VC firm focused on cybersecurity and data startups at the early stage. Gabby shares her background as a former United States Navy officer and intelligence professional, and she highlights her journey of breaking into VC from the military. Gabby also goes deep on First In’s mission and overall investment thesis, which includes cybersecurity defense in dual-use technologies. And we talk about the firm’s goal of leading seed stage rounds and how they provide operational expertise to their portfolio companies. As we round out the conversation, Gabby also discusses emerging trends that get their team excited, such as use cases for operational technology and critical infrastructure security, and vendor consolidation, and we also break down some of the challenges that AI poses for enterprises and how cybersecurity can mitigate some of these risks. Gabby, thanks for joining me today.
Gabby Fong
Thanks so much for having me, William. Great to be here.
William Leonard
I’m really excited for you to dive in and talk about your background. Really fascinating story and for you to give us context on First In. So let’s start with your background, Gabby, and who you are, and then we’ll dive into First In, what you all invest in, and your outlook for 2023, and we’ll go much deeper.
Gabby Fong
That sounds great. Starting with the easy parts first. I’m Gabby Fong, a senior associate at First In. I come to VC from a rather untraditional background, which is I spent the first seven years of my career serving in the United States Navy on active duty. That journey was a really great place to kick off my early career. For the first part of my career, I was a surface warfare officer, which basically means that I drove warships, which was pretty cool being a history major, and had the opportunity to lead teams of sailors ranging anywhere from 20 to 30 at a time. So it was really exciting. I was stationed abroad in Japan and really gave me the opportunity to kind of hone my early leadership style as I graduated college and started in the early parts of my career. And then from there, I decided to make the transition into intelligence. So the second part of my career was in Naval Intelligence, first at the Office of Naval Intelligence and then at the Navy Cyber and Space Headquarters, which is co-located with NSA up in Fort Meade, Maryland. And that’s where I was able to dig in a bit deeper into cyber and pique my interest there on the potential risks and opportunities that cyber as a whole represents. From there, how I end up in the venture is kind of a long, unwinding story. I decided that it was time for me to transition out of the military, and maybe it wasn’t what I wanted to do long-term. As I began to do what folks often refer to as cups of coffee or informational interviews, I was chatting with [someone and asked], what do you do all day? And he said, oh, well, I get to interview founders and entrepreneurs who are trying to grow their businesses, and then I spend some part of the day doing research and diligence. I get to write investment memos and other parts. I’m just like, wow, this sounds really fun. What is it that you do? And he’s like, I’m in VC. And so that was my initial introduction to what VC is. Funnily enough, I love it.
William Leonard
I love it. And first of all, thank you for your service. I think you’re still in the reserves today, is that right?
Gabby Fong
Yes, that’s right. I’m serving the reserves part-time at the Pentagon, so haven’t totally taken the uniform off yet. I couldn’t give it fully up.
William Leonard
That’s awesome, Gabby. Now, I would love to understand the foray and connecting with First In, right? What led you to join the team? What got you excited about First In and who introduced you to that opportunity?
Gabby Fong
I think this is a great example of this concept of creating your own luck that I’ve really latched onto over the last year, 18 months or so, as I’ve transitioned out of the Navy into VC. I was in a program called the Aspen Strategy Group (ASG) Rising Leaders Program. It’s a program that’s designed for people who are early, mid-career, and really interested in national security and foreign policy. Fantastic program. Highly recommend anyone who has those interests. One of the folks in my cohort is my now coworker, Brian Mongeau. And when we first spoke, he’s also a veteran, and he was like, hey, I’m investing in cybersecurity startups, doing this thing called VC. And I was like, wow, that’s so cool. I just learned about VC, and I think it sounds really awesome. As he shared more with me about First In, and what we’re building at the firm, it was a really hard opportunity to not be interested in. And that opportunity specifically was the ability to spend the last three months on active duty, interning there through a program that helps to transition service members to make a successful pivot to the private sector. Originally did not come with any sort of guaranteed job offer, but was lucky enough to be able to work my way into one and I’ve been with the team ever since.
William Leonard
I love it. That’s such a fascinating story. And so you meet your coworker, future coworker, through the Aspen program and now you’ve been with First In for some time now. Tell us more about First In. I think the firm was founded back in 2020. What is the general firm thesis? What types of investments are you all looking to support?
Gabby Fong
You hit the nail on the head. We were founded in 2020, so relatively new or emerging. First In is an early-stage security technology venture capital firm. The way we look at security technology is loosely in these buckets of cybersecurity and defense, or what we call dual-use technology. So technology can be used both for government and commercial purposes. What is so exciting about First In is that our mission is Performance first, mission always. This means that we’re obviously committed, as any investors must be, to creating top-tier results for our investors. However, we’re also really mission-driven, and that comes from our roots as a team. Our team is almost entirely composed of DoD or intelligence community veterans. We all have that shared background at some point in our careers of having served in the military. I think that’s why all of us feel so passionately about security technology in particular because we are intimately familiar with what opportunities exist there and what the gaps are from the perspective of the people who have kind of been on the ground, so to speak.
William Leonard
You’ve got this unique composition of team members that come from the world of DoD defense. You’ve got some veterans mixed in really complementary experiences that you all have. Tell us more about the firm and the types of check you all are writing. What stage is most appropriate for you all, any geography bounds that exist, those types of things?
Gabby Fong
Absolutely. So we are in the middle of fundraising our Fund Two and our thesis there is still the same with regard to security technology focused on cyber and defense tech. We’re looking to lead seed-stage rounds with $1-2 million checks and are very excited to move forward in leading these rounds in the years to come. One of the reasons why we’re really excited about leading seed stage rounds is because of the team, the extended team that we have as part of First In. So we have part-time folks, operating partners who have expertise in sales, go-to-market strategies, et cetera, that we’re really able to bring their expertise to our seed stage, and early-stage portfolio companies and help them prepare for series A and beyond. We’re very excited. Also very open to co-leading with investors who are like-minded in this thesis area.
William Leonard
Congrats on Fund Two. That’s awesome that you all are looking to be a leader in rounds. It’s oftentimes we meet founders and they’re like, well, I’m looking for a lead. I’ve got a bunch of follow on capital but looking for a lead. So it’s great that there are smaller emerging firms stepping up to take that leadership position, similar to what we do at Valor as well. I can 100% understand why cybersecurity, broadly speaking, as a category is pretty interesting for VCs. You kind of factor in the heightened geopolitical tensions that exist today and then you factor in new frontiers like AI in the tools that we’re seeing that are so dynamic yet sort of scary in the implications that we just don’t know are going to come from AI tools and deployment. How do you all as a team sort of dissect what makes a cyber defense or dual-use company interesting or differentiated from the First In perspective?
Gabby Fong
Absolutely. I think the founders that we’ve invested in so far fall into two general buckets, with some exceptions, but the first is just actually DoD service members or intelligence community veterans, especially in cybersecurity, because they often were at the forefront of cybersecurity development within the DoD while they were serving in uniform. They got some really great training and insight into what are the problems that are facing the government when it comes to cybersecurity. Certainly, that profile is one that we have seen have lots of success. The second is someone who has a real appreciation for the problem as an entrepreneur. They’ve lived it, they’ve seen it firsthand, and they don’t just have a solution that they’re trying to search for a problem for. We also believe that those founders, especially in cyber, are technologists. They know this problem set, they understand the technology really well, and they have either the complementary skill set of being CEOs who can do founder-led sales, who can build that vision of growth and scalability, or have had enough self-awareness to bring in a co-founder who complements their skill set really well. So those are the types of folks that we’re looking for and certainly agreed on both the opportunity and risk that comes with investing in these spaces and security technology in particular. I think where we see First In a position to be in this environment is that we have this expertise and knowledge of cybersecurity and defense that’s required to be able to distinguish the real opportunity from those that might be riskier or maybe just not even have the real chops behind it to make a lot of sense.
William Leonard
Right. And you just touched on where I was taking this conversation, which is that you all have such unparalleled expertise as a team collectively. That gives you all truly unique insight into understanding where the proverbial puck is today in terms of innovation within cybersecurity, defense, and dual-use technologies and also where it’s going to be moving to over the next 3, 5, 10 years or so. And so how do you all as a team kind of think about some of the emerging trends and technologies that you all are most excited about? Are there any subtrends that you all find interesting in today’s market or particular focus areas for the team?
Gabby Fong
I think you hit the nail on the head as far as us being really excited about segments where the addressable market today might not be huge, but we believe we’ll be able to grow rapidly in the next couple of years. For us on the cybersecurity side, there are a couple of themes that are of interest. The first is around operational technology and critical infrastructure cybersecurity. OT critical infrastructure cybersecurity has often lagged in industries because they rely on really legacy and old equipment that can be hard to update and to really implement cybersecurity solutions that allow the equipment to function properly and also do the role of cybersecurity. But with the latest policies passed by the administration over the last couple of years and where funding is going both in defense and for other government agencies, we really believe in the opportunity OT Cybersecurity presents right now and I think it’s critically important because it has the literal impact to hurt or cause severe damage to our economy, to people as a whole.
William Leonard
Would you all factor in the electrical grid situation that we’re seeing across Texas, California, and a lot of western states? Is that factored into the critical infrastructure thesis that you all have? Because I’ve been watching the news this week and you see power outages happening in Texas and California, because of these severe heat waves. It’s not necessarily national security related, but it could have national security implications because of climate issues as well. So does that factor into the thesis?
Gabby Fong
Absolutely. I think this comes from a broader lens of security writ large, which is that our collective security is dependent on the ability to address these issues. Part of the opportunity that comes with OT Cybersecurity is also the opportunity to collect and analyze the data on these systems such that we’re able to be more preventative and proactive in preventing things like you mentioned and other effects from climate cyberattacks, what have you? Having access to that data over time I think is really going to be huge for these industries like the electrical grid, water, you name it.
William Leonard
That’s interesting. Are there any other areas that are interesting for you all, or is it kind of concentrated there?
Gabby Fong
I think two others come to mind. One is that a lot of enterprises right now, especially with the current economy, are focused on seeing where they can decrease their cybersecurity budgets and really get the most bang for their buck if you will. And so what we’re seeing is a consolidation of vendors and enterprises, looking for solutions that can help consolidate all of these different cybersecurity tools that they have in a way that’s a cohesive one-stop shop for them to be able to take all of that information and data in and action it appropriately to keep their enterprises safe. There’s a lot of opportunity here for platforms that are able to really be part of the process of creating cohesion among vendors and creating a solution that helps just give that full vision at the enterprise level. And then the last one, of course, as it is for many, is around AI and its uses and implications. There’s no shortage of thoughts on all of the different ways in which AI or generative AI can be used in cybersecurity. I think we’re, in particular, focused on and interested in what security looks like for these AI models and how we might ensure that the data that is being used is in fact what the users think it is and hasn’t been injected with something incorrect that skews it. And then also just being sure that we’re utilizing AI for the things that it was intended for and that it’s capable of, instead of maybe trying to overreach with the endless possibilities of AI. There are limitations and so being aware of those and how AI might be most smartly used and integrated into.
William Leonard
It sounds like critical infrastructure, vendor consolidation, and then just overall general security around AI. It’s just such a new undiscovered frontier of technology. It’s hard to govern and regulate. And you hear the talks around do we need a governing body to regulate AI models that are going to be deployed commercially. I think there’s a lot of opportunity and innovation for software solutions to be built within this space here. It’s good that you’re calling that out.
Gabby Fong
Absolutely, William. And I think too, we as early-stage investors in particular bear responsibility in that it is unlikely that regulation and policy will be able to keep up with all of AI and its ever-growing implications and capabilities. Really grateful that we have some true technologists on our team who are able to vet that technology and help us think about how we are smartly and responsibly investing in it.
William Leonard
Gabby, as we sort of round out this conversation here, I want to get advice from your perspective on a twofold front here. One, for other people who are in maybe other private sector jobs, the military, university, whatever it may be, some of the tips, advice, and insights that you have for breaking into VC. And then on the other side of that, we are junior team members at a VC fund. You touch a lot of the business. So diving into your day-to-day and giving advice to founders when pitching you or someone on your team, what does a successful pitch look like? How can they make the best impression and continue to have their deal moving forward as well?
Gabby Fong
Absolutely. Exciting and fun stuff to talk about. I chat with a lot of young professionals about how to break into VC and I’m sure it’s similar for you. I think what comes to mind is really having conviction around why it is that you want to be in VC and what draws you to it. What I didn’t mention in my brief intro was that in doing a lot of introspection, going through some coaching and things as I was prepping to get out of the Navy, I started to reflect on what my values were and then what I really liked about the different jobs that I’d had in the Navy. What were the things that I thought were really my strengths that I enjoyed doing? How could I really put some tangible things around that so that in the job search I could find something that was a good fit? And in that process, I kind of come up with a couple of generic things. One, I wanted to be on a small team to enable me to drive change and be innovative. I wanted to still contribute to the mission in some way. An alignment of my values. I wanted the opportunity to continue to be a lifelong learner, and being steeped in any technology gives you that opportunity every day because there’s always something new, there’s always something changing. And then the last piece is that I wanted to be part of something that was really relational. A community that valued meaningful relationships. And as I was talking with different folks and learning about different things, VC actually met all of those in a really unexpected way. When I was thinking through and interviewing and looking to join teams, I could show that it wasn’t just that I wanted to get in VC for VC’s sake, but that I felt like it was a good fit for me overall. I think just remaining open for anyone who’s in a transition period to the possibilities that may come their way, unexpected or not, is a good way to approach seeking a job, for sure.
William Leonard
That’s excellent advice. I would say for people looking to break into VC, from my perspective, three things that you can do is to add value to the founders. I think a lot of people want to go directly to the VCs, but founders have such great relationships, oftentimes with their investors, where they’re sharing, hey, are you hiring soon? I’ve been talking with this young guy or a young lady. She’s been a tremendous value add to me through referring talent, whatever it may be, building relationships with founders, I would say sort of a unique way in that not a lot of people take. Sharpen your sales and people skills. VC, no matter how you want to label it, is a sales job at the end of the day. As a junior VC, you’re selling a founder on why they should take your capital. You’re doing the same thing as a partner. You’re selling people on why they should join your team. You’re selling LPs on why they should invest in you. At the end of the day, VC is a sales job. Sharpen, refine, and hone your people and sales skills. And then lastly, I would say understand that VC is not the sexiest industry that it is portrayed to be. I think a lot of people watch Shark Tank, they watch the great pitch competitions, they see the amazing funding announcements on TechCrunch in Bloomberg, whatever it may be. But there is a lot of work that goes in behind the scenes to make a firm run. And especially if you’re a small team of 5, 7, 10 people, or even less, you’re touching every part of the business. And so read up, study up, and understand what the mechanics of a venture fund look like. I think that will really increase your success rate and chances of breaking into VC overall. I think very parallel advice that we both have.
Gabby Fong
Absolutely. No, that’s really spot on, William. I think also helps pivot to the second part of your question around what are the things that I do day to day and maybe what’s some advice for founders on successful pitches. Let me see if I can do this in the right order here. On my day-to-day, as you mentioned, being part of a small team means that you get touch every part of the business. And that’s why I’m really excited to be part of First In as a junior VC because getting that exposure is just invaluable as I start my career in venture. So what that day-to-day looks like for me varies wildly but revolves around the different functions of a VC firm. I do get to take a lot of calls with founders, which is the most fun, honestly, just being there and hearing people what they’re building and what they’re passionate about and excited about. So that’s a big part of what I do along with what that entails. Follow diligence, writing, investment memos, the whole nine. I also spent a lot of time building the internal operations for our firm, which definitely is probably the less sexy part of VC. But I think really critical to having a high-performing team. If everyone knows and is empowered to do exactly what they’re supposed to be doing, then it really maximizes our ability to be effective with a small team. So some of the things that have resulted in me is just working through how we best capture all of the data that we encounter and are creating ourselves on a day to day making sure that the LP experience is really streamlined. Great customer service and assisting where necessary with other kinds of internal functions, helping facilitate meetings, and things like that. Really enjoy that piece as well. I think that kind of pivots well into VCs. I sometimes think founders and VCs don’t realize some of the shared struggles that they have when it comes to fundraising. And as you know, William, and as I’m sure folks are aware of, but maybe don’t always internalize, both VCs and founders got to fundraise. And core skill, as you mentioned, is being a good salesperson, being a people person. Being able to tell us why your business is the next IPOed company or company that had a major acquisition is solving a really big pain point for the customer that is just really key in the pitch. And then being able to convince us that you have the vision to go big. Venture funding isn’t for your business, right? Understanding what the incentives are for venture investors, understanding what your personal goals are, and how those may or may not align I think is really key. So if you’re going to go out and seek venture funding but come in with a really conservative plan and raise, it’s probably not a great fit. Those are just some of my thoughts. I don’t know if your experience has been similar or not.
William Leonard
Those are great nuggets of wisdom there. I think the advice of tailoring your pitch, going big, and understanding the incentives for VCs is really important. Nine times out of ten, a VC isn’t going to be able to fund a food truck or sometimes a brick-and-mortar company. I think understanding the business models that VCs have funded historically, and I would say successfully funded, is critical as a founder. And I think you hit the nail on the head with everything else from just really leaning into sales, understanding the mechanics of the industry, tailoring your message, and nailing your messaging is so critical because when you’re pitching, you’re telling a story. I wouldn’t say you’re necessarily pitching a company. You’re telling a story and a vision of your business, of where it is today and where it can be with some of the venture funding that you’re seeking from that investor. All great points, Gabby. Such a fascinating, dynamic conversation that we’ve had today. How can founders listening get in touch with you or someone on your team regarding potential investment?
Gabby Fong
That’s great, William. Our website, https://wearefirstin.com/, and folks can just email me directly if they’re interested in pitching us. gabby@wearefirstin.com.
William Leonard
I love it. Gabby, appreciate you joining me today and look forward to hopefully doing a deal together here soon.
Gabby Fong
Yes, absolutely, William. Thanks so much for having me and really appreciate the time.
William Leonard
Thanks, Gabby. Take care.
Lisa Calhoun
We’re thrilled to have you as an Atlanta Startup Podcast listener to help you get the most out of the experience. Let me invite you to three insider opportunities from our host Valor Ventures. First, want to be a guest on this amazing show. Reach out to our booking team at atlantastartuppodcast.com. Click on booking, It’s a no-brainer from there. Are you raising a seed round? Valor definitely wants to hear from you. Share your startup story at valor.vc/pitch. Are you a woman or minority-led startup valor sister program? The Startup Runway Foundation gives away grants to promising startups led by underrepresented founders. The mission of the Startup Runway Foundation is connecting underrepresented founders to their first investors. Startup runway finalists have raised over $40 million. See if you qualify for one of these amazing grants at startuprunway.org. You can also sign up for our next showcase for free there. Let me let you go today with a shout-out to Startup Runway presenting sponsor Cox Enterprises and to our founding partners, American Family Institute, Truist, Georgia Power, Avanta Ventures, and Innovators Legal. These great organizations make Startup Runway possible. Thanks for listening today and see you back next week.
