Winning investments with affinity

Eric Feng
6 min readDec 15, 2023

It’s common to think that investors have the leverage in the relationship between startup entrepreneur and venture capital investor because the investors are choosing which companies to fund. In reality, it’s the entrepreneurs who are the ones doing the picking. Entrepreneurs choose which investors can buy shares of their private company because those shares aren’t available to purchase without their permission. Structurally, the entrepreneur’s get to pick their investors, and the best companies often have more interested investors than available equity.

Startup investing isn’t a right, it’s a privilege and VCs are perpetually competing with each other for the privilege of backing great founders. I remember when I first began investing at Kleiner Perkins in 2010, my partner Ted Schlein told me “We are salespeople and the product we are selling is money”. Since that day, the VC sales job has only gotten more competitive.

According to Pitchbook, there have been 9,711 venture capital funds raised in the US since 2006, including 2,906 first time funds. In 18 years, that’s nearly 10 thousand VC funds totaling nearly $1 trillion in capital all hustling to meet with entrepreneurs, evaluate investment opportunities, and fight for allocation into deals. And half those funds (4,794) have been raised in just the last 5 years. In fact, there were more funds raised during the 3 year period of Covid-19 (2020–2022) than the eleven year period from 2006–2016.

Yes, there are more startups to invest in now than 18 years ago. Averaging investing activity is up 3.3x in the past five full years compared to the five year period between 2006–2010. But the number of VC funds raised has grown 5.7x when comparing those same periods. Even with the funding slowdown so far in 2023, there are still more VC funds than ever before, and they are growing faster in numbers than the startups they are trying to invest in.

Not only is it more competitive than ever for investors because of the proliferation of VC funds, the way investors compete has also changed. In previous decades, investors competed to find startups because there was less information about companies. Awareness about which startups were fundraising was a key challenge for investors. Deal flow could be proprietary for a fund. But now, information about startups is broadly shared on social media in real time, funding rumors and activity are covered by mainstream news publications, and fundraises are marketed far and wide by savvy entrepreneurs. Deal flow is now ubiquitous for the entire industry. Investor awareness is now largely solved.

Instead, the new challenge for today’s investor is access to investment opportunities. When startup fundraises are now openly shared and discussed, investors are all aware of the same deals but awareness of deals is not sufficient. Access is how today’s investors compete. Which investor can convince the entrepreneur to choose them. Which investor can successfully sell their money and earn the privilege of investing in the company?

Investing with affinity

There are many strategies VC funds employ to win access to investment opportunities. The most straightforward one is to overpay for access by offering startups the most money at the highest valuation. So make your capital the cheapest source of funding for a startup because they have to sell the least amount of equity for it. While that strategy is likely to win deals for a fund in the short term, it’ll also likely to lose out on returns for a fund in the long term as it’s hard to outperform other investors when you’re consistently paying more for your investments (and getting less equity in return).

A better strategy is to win access to investment opportunities based on reputation. At Kleiner Perkins, our goal was never to be the cheapest capital but rather the most valuable and useful capital for a startup. Kleiner’s reputation of supporting founders, built over 50 years of investing, allowed us to win investment access. Y Combinator similarly is not the cheapest capital — founders are initially giving YC 7% of their company for a mere $125k. But YC’s reputation of helping founders grow their company and raise follow-on funding, built over 37 accelerator batches, keeps attracting great entrepreneurs to their program. In both cases, reputation is winning investment access but it requires decades of proven results to build that reputation in the first place.

But my favorite strategy is when you can access investment opportunities through affinity. As with many experiences in life, entrepreneurship is more fun when shared with like minded people united by common interests. Affinity makes the collaboration become bigger than just the investment — there’s a higher connection bringing everyone together.

Take for example the Stanford Engineering Venture Fund (SEVF), founded in 1985. It’s been run for nearly four decades by a rotating group of volunteer investors from top VC firms who share not only their time with SEVF, but also their hard earned deal access. These volunteer investors give an allocation in their startup investment deals (which they in turn won perhaps on the strength of their reputation) to SEVF. And they do this not for profits, but because they have affinity for the Stanford Engineering School. Celebrity led funds like Sound Ventures, Mantis VC, or Marcy Venture Partners have a similar dynamic. They win access to investment opportunities in standout companies like Nest, Uber, Alchemy, Underdog, StockX, and more because those founders have affinity for Ashton Kutcher, The Chainsmokers, and Jay-Z.

If access to deals is the greatest challenge for today’s investor, there’s no better solution than affinity. Investing has always been about purpose, but affinity investing also makes it about passion. Affinity takes a financial relationship between investor and entrepreneur and turns it into a personal relationship. It makes startup investing not just financially rewarding but also emotionally rewarding. And in the end, that’s just more fun.

The Gold House Ventures affinity

At Gold House Ventures (GHV), our affinity is a commitment to striving for unity, representation, and success for Asian and Pacific Islanders (APIs) and we are fortunate to share that affinity with many of the best API entrepreneurs in the world. In the past year, we’ve had over 1k talented API founders apply to join our GHV Accelerator, leading to 28 investments, because of that affinity and desire to build alongside other Asian entrepreneurs with similar cultural backgrounds and experiences. We’ve also been fortunate to have over 100 API investors at top VC firms including A16Z, General Catalyst, GGV, Headline, Initialized, Juxtapose, NEA, SV Angel, XFund, YC and more refer to us over 600 deals they had access to, which has led to GHV making 46 co-investments in their portfolio companies. Just like the Stanford Engineering Venture Fund, these world class investors generously helped GHV not for personal gain, but because we both had affinity for championing APIs.

And deal access has only been the beginning for how API investors have supported GHV. In addition to sharing their network, our investing partners have also shared their knowledge with us. We were thrilled to form our inaugural Advisory Council this summer from a group of nine industry leading investors that have helped guide, inform, and elevate the future of GHV. To get to work with any one person in the following group is exciting. To get to work with all of them is an honor that we have affinity to thank:

  • Aileen Lee (Cowboy Ventures)
  • Anjula Acharia (A-Series Investments)
  • Eric Kim (Goodwater Capital)
  • Eurie Kim (Forerunner Ventures)
  • Garry Tan (Y Combinator)
  • Hans Tung (GGV Capital)
  • Hemant Taneja (General Catalyst)
  • Lynne Chou O’Keefe (Define Ventures)
  • Ramneek Gupta (Pruven Capital)

For any other entrepreneur, investor, and builder with an interest and passion for the API community, you can always reach the Gold House Ventures team at We hope to meet you soon and see where our shared affinity takes us.



Eric Feng

Current: Co-founder of @cymbalxyz, Co-founder of @GoldHouseCo Ventures. Past: @Meta (via Packagd), GP at @KleinerPerkins, and CTO of @Hulu and @Flipboard.