Maha Ibrahim on Venture Capital and Startups in 2023

MahaIbrahim-Maha Ibrahim is a General Partner with Canaan Partners, an early-stage venture capital firm and an investor of Komprise. Canaan just closed on $850 million across two new funds. We caught up with Maha to get her take on working in VC in 2023 and which sectors in tech are rising to the top.

How and why did you get into venture capital?

I joined Canaan Venture 23 years ago. I originally wanted to be an academic after getting my PhD in Economics, but I decided that academics was too isolating for me. In early 1998 I joined a startup telecommunications company Qwest Communications, which is now CenturyLink, and they gave me a big job. I was only 26 then, so the job was probably a little much. My role was to interface with the startups in Silicon Valley, bringing their venture-backed technologies to our network. I was interfacing a lot with the VCs and I started talking to them about moving over and decided that Canaan was the right place for me.

How has the job of being a VC investor and board member changed over the years in the tech sector?

The job hasn’t changed once we’re invested in a company, but all the work leading up to that is changing. The VC industry used to be much smaller and more collaborative. There were often multiple VCs in a series A board meeting and many more generalists. These days everything is more competitive, so to win a deal and add value, you need to be more of a subject matter expert. The generalist VC is aging out. We see many more people concentrated in areas like cybersecurity and AI.

How has your focus changed?

My focus has been more of a generalist. Over the last 23 years, I’ve amassed expertise in a variety of areas so I can bop back and forth. When I joined, because I came from a startup telecommunications company, the bulk of what I was doing was infrastructure, software and some hardware related deals. About five or six years in, I was getting a lot of inbound consumer deals. I stiff armed them because if I start doing consumer deals, I’m never going to stop because I’m a woman and that’s all I’ll see. I didn’t want to be labeled with that expertise and let go of the infrastructure software piece that I loved. About five years later, I decided to bite the bullet and do one because I really liked this one deal that we were evaluating. From then on, I decided that I’m going be a generalist and there you go!

Which sectors in tech will be in a strong position by the end of this year?

Roughly 15 years ago, the VC industry was buoyed by the wave of mobile, social and cloud all converging at the same time, which spawned a ton of companies. Many of these are public companies that we all know and love today. Over the last few years we’ve been saying, gosh, I don’t know what is the next wave. And then, lo and behold, a year ago, all this conversation around ChatGPT and AI springs up; now we are seeing that left and right. Most of the companies that we’re seeing on the enterprise side are using AI to better support the decisions that the software solutions are making.

AI technologies are gaining a ton of steam in certain use cases like document review and speech to text. Those companies are getting funded. Cybersecurity is very hot, along with digital health and robotics.

Why did AI take off now, since AI and ML technologies have been around for decades?

The technology has evolved to be mainstream. ChatGPT and OpenAI transform processing capabilities in such a way that we can find answers based on a much larger set of data and therefore get better answers than ever before. The bearishness that we’ve seen in the venture market over the last six months will turn around as people get excited about this new wave of AI. On the other hand, next-gen cloud cost management companies are  popping up. How that converges or conflicts with the AI conversation is going to be fascinating in the next couple of years because we are seeing budgets contract.

We want to take advantage of these new technologies, but then many companies are holding tight on making big bets right now.

There are sectors that are doing super well and there are companies within flat sectors that are doing super well. It’s a tricky market to navigate. Understanding your customers and how well they’re doing has become an increasingly important component of the sales process. In retail, you have large brands like JCPenney and Kohl’s that are struggling and they might not have dollars to spend. On the other hand, there’s Lululemon and Vuori, which are hitting the ball out of the park. You would love to be able to sell in to them.

In this market, it feels like there’s a bigger delta between the haves and the have nots.

How do you see the challenges and opportunities for the space that Komprise lives in – unstructured data management and storage?

NetApp is doing well because of all the software solutions which they are putting around their hardware. Some of the big legacy storage companies haven’t transitioned. The winners will need to augment their solutions with more intelligence and offer cost rationalization. Consolidation is a when not if question in this space as companies need to present broader solutions to their customer base. It’s just a matter of who has the broadest customer base, who has the most capability in their platform and when the timing is right. If there’s one thing I have learned in this business, it’s that timing is almost everything.

If you didn’t go into this career, what would’ve been your next choice?

I am on the board of one public company and a few non-profits, but I like the private side. I can go fluidly between all these roles, so it’s hard to think about this job as not being the best job I could have. I really love what I do. Working in venture is a tougher job than it seems from the outside: it is so much more than just investing.

How do you recharge?

I play tennis, fly fish and I love word games. I am religious about crossword puzzles.

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