Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures
The Peel with Turner Novak
Turner Novak
4.6 • 11 Ratings
🗓️ 6 February 2025
⏱️ 109 minutes
🧾️ Download transcript
Summary
Villi Iltchev is the founder of Category Ventures, where he invests early in enterprise software startups. And he’s done it longer than almost anyone, building Salesforce’s corporate venture arm and investing early in companies like Airtable, Zapier, GitLab, Remote, Hubspot, Gusto, and Box.
Fresh off raising his $160m Fund 1, we get into the opportunity he saw to start Category, and how San Francisco and Silicon Valley have changed over the past 30 years.
He also shares his story growing up as an illegal immigrant in Greece, moving to the US by himself in high school, the biggest mistake of his career, advice for founders selling their company, why unit economics and profitability always matters, how developer tools went from terrible to amazing businesses, the mistake that almost killed GitLab after he invested, and why you should raise your seed round from a seed fund.
Timestamps:
(00:00) Intro
(03:22) Illegally immigrating from Bulgaria to Greece
(05:14) Moving to the US by himself in high school
(13:15) Moving to SF in the Dot Com Bubble
(15:49) How SF changed over the last 25 years
(22:27) Why HP fell from the top of Silicon Valley
(25:36) Building Salesforce’s corporate VC arm
(30:29) Why SaaS was so transformative
(34:35) Angel investing in Airtable
(39:52) The biggest mistake of his career
(42:13) Why unit economics always matter
(47:20) Biggest mistake when selling a tech company
(49:00) Almost starting a software PE firm and landing in VC
(55:45) Lessons from August Capital + Evolution of venture
(59:22) Early days of dev tools + Investing in GitLab
(1:09:50) Why being contrarian is dumb
(1:11:45) How GitLab almost died and emerged stronger
(1:16:48) Villi’s journey to starting Category
(1:25:22) Category’s thesis
(1:30:48) Why startups always come in batches
(1:31:57) The importance of track record in venture
(1:35:32) Deciding a $160m fund size
(1:39:26) Why you should raise seed rounds from seed firms
(1:43:40) What Villi looks for in a startup
Referenced
Category VC: https://www.categoryvc.com/
Category’s $160m Fund 1: https://www.forbes.com/sites/alexkonrad/2024/12/17/villi-iltchev-raises-160-million-debut-fund-category/
Aaron Levie (Box) on The Peel: https://youtu.be/cLn_tqPvNf4
GitLab’s Recovery Stream: https://www.youtube.com/watch?v=v0TRHLvYGE0
Guy Podjarny (Snyk) on The Peel: https://youtu.be/BzKlZ_v4uCw
Why SaaS won’t consolidate: https://medium.com/@villispeaks/why-saas-consolidation-is-not-happening-2b9b722e0250
Follow Villi
Twitter: https://x.com/villi
LinkedIn: https://www.linkedin.com/in/villi04/
Follow Turner
Twitter: https://twitter.com/TurnerNovak
LinkedIn: https://www.linkedin.com/in/turnernovak
Subscribe to my newsletter to get every episode + the transcript in your inbox every week: https://www.thespl.it/
Transcript
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| 0:00.0 | Founders don't realize the impact of this and what it means to raise capital from a large |
| 0:06.6 | multi-stage firms at Seed versus a seed-focused fund. |
| 0:12.4 | And the assumption is what you articulated, well, they have a lot of money. |
| 0:16.4 | Therefore, if I hit a bump, and I need another one, two, five million dollars. |
| 0:20.4 | It's a small check. It's a small check. |
| 0:21.6 | It's a small check, no big deal. |
| 0:23.6 | They're going to support me. |
| 0:24.6 | And it's actually exactly the opposite. |
| 0:27.6 | The large firms, more or less, they're buying an option on your company, right? |
| 0:32.6 | If it works and it works quickly, they can deploy more capital behind it. If it's like hard, then it takes |
| 0:39.7 | a long time, they want to move on to the next thing. I actually think seed dedicated funds are 10 times, |
| 0:49.2 | 100 times more likely to continue to work with you and support you and try to find a way for you to |
| 0:56.4 | achieve that next milestone product market fit, next round, whatever it is, then a large multi-stage |
| 1:02.4 | firms. |
| 1:03.4 | And really that is a part of my thesis are that smart founders who realize that trying to raise these rounds from the large funds |
| 1:13.5 | is not the right place for them to be raising capital at seed. |
| 1:17.4 | They're in the business of deploying capital. |
| 1:19.3 | They're in the business of managing funds. |
| 1:22.0 | A good way to think about it is the smartest founders want investors where their business |
| 1:27.4 | is also a material percentage of that |
| 1:29.4 | investor's business as well. Welcome to the Peel. I'm your host, Turner Novak, founder of Banana Capital. |
| 1:35.3 | Today's guest is Vili Ilchev, founder of Category Ventures. Billy invests early in enterprise software |
... |
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