Interview with Cindy Padnos, an ‘operating’ VC
May 16, 2022
Cindy Padnos (SV2000) is an ‘operating’ VC with a long lineage of business ownership. After exiting her company (Vivant), she founded and is Managing Partner of Illuminate Ventures, comprised of 3 funds (Spotlight, Illuminate I and II). She launched a movement with a White Paper: High Performance Entrepreneurs-Women In High Tech. Cindy participated in the first Springboard program in Silicon Valley and she’s still blazing trails. We caught up with her recently.
Illuminate Ventures focuses on enterprise cloud and mobile software companies which seek to “re-invent the enterprise”. What specifically in the enterprise SaaS space interests you?
I’ve been a fan of the Enterprise software category since long before it became “fashionable”. The reasons are pretty fundamental and they provided the impetus for launching our firm, Illuminate Ventures, in 2009:
- Business buyers continuously seek to harness the benefits of new technologies – not for technology’s sake – but in order to deliver better, faster, less costly solutions to their customers and users and to beat their competition.
- The results of what Enterprise software companies do are measurable – with demonstrable ROIs that lead to rapid market adoption
- The pace of change is constantly accelerating – meaning that stodgy incumbents do not necessarily have an advantage.
- The public cloud and new sales and marketing strategies enable enterprise software startups to launch with much smaller amounts of capital than in the past.
- Overall, there is less risk of outright failure and just as much upside as startups in other spaces, like consumer technologies or life sciences
Some of the areas that we’re currently pretty excited about are in the application of AI to large data streams to deliver actionable insights. Our portfolio companies BrightEdge and Allocadia are two examples of exciting solutions in this area. One of our most recent investments in Litbit, a pioneer in the Industrial Internet of Things (IIoT) category, represents another area that we feel has tremendous potential for both impact and growth. Imagine being able to aggregate data across a myriad of devices at remote locations and merge that with business rules and best practices to do everything from anomaly detection to real-time reallocation of resources. It’s a super exciting space that is still really in its infancy.
Prior to becoming an investor, you were a CEO and entrepreneur yourself. What inspired you to make the switch to the investing side of business?
I actually think of myself as being in my 4th career – not just my second – and in one that actually leverages all three of the prior ones.
Right out of grad school I leapt into the high tech business world, but originally on the large corporate side of things where I learned the importance of gaining support for my ideas by earning respect versus having authority. From there I moved into management consulting where I had the opportunity to expand awareness of alternative business models by seeing how many different companies operated rather than just one. As a consultant I also learned the art of multitasking and the skills that enable me to access new markets/business problems quickly. After a few years, however, I felt too distanced from the “action”. I realized that I loved building relationships and seeing things through to completion –and learning from the success or the failure of your ideas and actions.
I was happy and felt I learned a lot in my prior roles, but found my passion when I moved into the entrepreneurial world. A series of sales and marketing management roles in early stage enterprise software companies gave me exposure to several M&A transactions, my first IPO and my first stint as a CEO before I made the leap to found my own venture-backed startup. It was only after selling that company that I moved into venture capital – first with an existing firm and now with one I founded.
I share all of this background because I see my move into venture capital as a natural evolution, not a major shift for me. To be honest, I never planned to be a VC, but now I can’t imagine doing anything else! As the founder of a VC firm I think I have the best of all worlds:
- I am still constantly learning, but I have the longstanding relationships that I missed as a consultant. (I’ve served on some boards for 8-10 years!)
- I have the opportunity to leverage a broad set of relationships that that have been built over 25 years in enterprise tech.
- I am feeding my entrepreneurial spirit both by building a new, sustainable brand in venture capital for our firm and via our successful investment portfolio and the role we play with those teams.
How do you feel that your background as an entrepreneur has changed your perspective as an investor and board member to numerous companies?
I believe fundamentally that entrepreneurship is one of the hardest and most rewarding roles anyone can choose. Having been a founder/CEO myself, I have deep empathy and respect for startup founders and the risks they are taking. I have lived their fears – their successes and their failures. As a result, I bring a combination of experience and humility to the role that I play as an investor and board member.
You are a board member to several companies, ranging in size, location, and customer audience including: BrightEdge, Xactly, Hoopla and others. What about being a board member is interesting to you?
I know our firm adds the most value at the earliest stages of a company where we frequently help with the important early decisions about go to market strategy, optimizing product-market fit and helping to identify the first customers and business partners. I love applying the skills I have learned across a myriad of early stage companies and the resources we have access to as a firm to help founders accelerate their vision. As an early board member there is an opportunity to create a structure built on a relationship of trust and mutual respect that can actually influence the trajectory of a company in a positive way.
How to do you plan to use your role as a board member in these organizations to change the future of technology? What are you working on now?
Frankly, investors don’t change the future of technology – great entrepreneurs do that. What a terrific board can do, however, is help to enable a company to challenge its own thinking – to disrupt itself in productive ways. As an example, at one of our recent Illuminate Ventures Business Advisory Council meetings we invited all of our portfolio execs to join us for a discussion about how startups can increase diversity and why they might choose to at the earliest stages of their business. We all learned best practices from one another that I have no doubt will end up changing the face of the technology industry.
