Can AI revolutionize consumer tech, and what does it take to build a standout company in today’s market? Laura Chau, Partner at Canaan, has spent the last decade investing in category-defining consumer and commerce tech companies. From AI-driven platforms to innovative marketplaces, Laura has a front-row seat to the evolution of consumer investing.
In this episode of Driving Alpha, host Steve Brotman sits down with Laura to explore the latest trends in consumer tech and AI. Laura shares her journey into venture capital, her investment philosophy, and what she looks for in founders. They discuss the role of storytelling in fundraising, the importance of go-to-market expertise, and why AI is reshaping consumer startups at an unprecedented pace.
With a portfolio that includes Clutch, Ollie, Mischief, Solvely, and Nagish, Laura has a deep understanding of what makes consumer startups thrive. Whether you’re an entrepreneur or investor, this episode is packed with valuable insights on how to navigate the fast-changing consumer tech landscape.
Transcription
Steve Brotman: Welcome to Driving Alpha, the podcast where we dive deep into the world of venture capital. I’m your host, Steve Brotman, Managing Partner of Alpha Partners. On this show, we explore the personal histories and unique investment strategies of some of the most influential VCs in the industry. We uncover their journey, discuss their investment philosophy, and learn about the deals that have shaped their careers today.
I’m thrilled to welcome Laura Chau, a partner at Canaan, to our show. Laura leads the consumer technology investment practice at Canaan, one of the oldest and most respected early-stage venture capital firms in the industry. With over a decade of experience in venture capital, Laura has established herself as a prominent investor in the consumer tech space since joining Canaan in 2014.
Laura’s impressive background includes an undergraduate degree in Management Science and Engineering from Stanford and an MBA from Stanford Graduate School of Business. Before her venture capital career, she gained valuable experience as a management consultant at Deloitte and was one of the first employees at Kabam, which was later acquired by Netmarble.
As I mentioned, Laura has made her mark with notable consumer tech investments in companies such as Clutch, Ollie, Mischief, Solvely, and Nagish. Her expertise in consumer tech has been instrumental in shaping Canaan’s portfolio. Speaking of Canaan, the firm has been a powerhouse in the VC world for over 38 years, managing over $7 billion in assets and achieving more than 190 exits to date.
I’m excited to delve into Laura’s journey, her investment philosophy, and the experiences that have shaped her successful career in venture capital. So without further ado, let’s welcome Laura Chau to Driving Alpha.
Laura Chau: Steve, it’s great to be here. It’s always fun to chat, and thank you also for everything you do across the ecosystem.
Steve Brotman: Thank you so much. This is one of the fun parts of my job—getting to chat with folks like you. Part of what inspired us to do Driving Alpha is that we do about 40 to 50 venture calls per person per month, and I just thought, you know what? A lot of the stuff we talk about on these calls is so cool. Let’s share this with our audience.
Well, let’s start with your backstory. Where did you grow up, and how did you ultimately get into venture capital?
Laura Chau: Well, I can tell you, I definitely didn’t grow up hoping to become a VC. I had absolutely no idea about venture capital. I didn’t really know what a startup was. I grew up in northern Florida as the daughter of refugees from Vietnam, and so all growing up, it was like, You’re going to be a doctor or an engineer. Maybe a biomedical engineer.Like, those were the only options.
So when I ended up at Stanford for undergrad, it was really my first foray into the entrepreneurial ecosystem, and I really fell in love. I found Silicon Valley to be really intoxicating in such a fun way, where you saw all these entrepreneurs just building and dreaming and making things happen.
I thought that I would go off and join a startup, but that kind of immigrant mentality from my parents led me to go somewhere very safe. I did the engineering degree, decided I didn’t want to be a doctor, and so the risk-averse path was to go to a management consulting firm—one that was a big four consulting firm or an audit firm that my parents understood.
So I went to Deloitte. I did that for a couple of years. It was a great experience but ultimately knew that’s not where I wanted to be or where my heart lay. I thought I was going to go back to a startup or find a startup that I was excited about, and in that path, I kind of fell into venture.
When I was in college, I had worked at a bunch of startups. One of those was at the time a startup called Watercooler. It was like 15 people above a dim sum restaurant on Castro Street in Mountain View, and they were building affinity groups on Facebook. This was Web 2.0 before apps were even a thing.
I worked there and thought it was the coolest thing. As I was starting to think about my next steps after Deloitte, I was talking to the CEO there, Kevin, and he introduced me to Canaan. Canaan had actually incubated Kabam back in 2006, so I ended up chatting with the team at Canaan. They were looking for someone, it was a great fit, and I haven’t looked back.
I didn’t expect to be here 10+ years later, but it’s been an awesome ride, and a lot has happened in between.
Steve Brotman: So, are your parents disappointed?
Laura Chau: Every now and then, my mom still doesn’t understand venture fully, and she’s like, You could still go and do a post-bac and go to med school. And I was like, That sounds nice, but that’s definitely passed at this point.
Steve Brotman: That’s funny. I’ve heard lots and lots of stories like that.
Laura Chau: Yeah, I’m sure.
Steve Brotman: So you’ve been at Canaan for over a decade. Want to share one or two companies or something you’ve done recently that you’re excited about?
Laura Chau: Yeah. So just as quick background, Canaan is a large early-stage venture fund. We primarily do seed and Series A, a little bit of Series B, all leading those investments. Across the fund, we’re pretty generalist, but individually, we all specialize.
I have partners who do a lot within FinTech, PropTech, enterprise SaaS, infrastructure, security, frontier tech, and then I lead our consumer tech and commerce tech practice. That’s really anything that touches an end consumer or is enabled by consumers.
I look at a lot of marketplace businesses, true consumer internet, e-commerce—more on the enablement or platform side—and certainly a lot of consumer AI over the last year and a half, two years. Almost all of the deals that I did last year have some element of consumer AI.
I can certainly get into why and what we like about those things and differentiation, but I’ll share a couple of the companies. All of them are tackling different verticals but leveraging AI in unique ways.
One is a company called Nagish, and it’s an accessibility app for the deaf and hard-of-hearing community. They provide a true platform for transcription and communication. The cool thing about this business is it’s one of the only AI-enabled ones in a very regulated industry where it takes years to get certified. The FCC manages that fund. It’s free for users but managed through the government, and it’s a 20x better service.
All the other services are basically managed by humans in a call center. If you’re deaf, you get a dedicated phone number. I would call you if I’m deaf, and there’s a person sitting in between our call, typing out what you’re saying. So it takes like 10 seconds to pop up on my end, it’s 60 percent accurate, and that’s how I have to take a phone call.
So this company, Nagish, is making communication possible—democratic for everyone. It’s accessible, it’s universal, and it’s just an amazing team.
Steve Brotman: That’s an incredible use case for AI. What’s another example of a company you’re excited about?
Laura Chau: Another company I invested in is Solvely, which is in the AI edtech space.
We’ve looked at edtech a lot in the past, and you and I were actually talking about edtech at the end of last year. One of the things I’ve been thinking about in this category for a long time is that edtech has been a little bit—not out of vogue, but harder to invest in for a lot of traditional tech investors.
Either the public markets haven’t been kind to edtech companies, or the go-to-market strategies—whether selling through school districts or direct-to-parent—have been challenging.
But AI has changed the game. The traditional problem was that creating high-quality educational content was expensive. But now, AI allows for content creation at scale, making it both cheaper and more effective.
With Solvely, they’re starting by helping college students with their coursework. Initially, they were focused on homework assistance, but they’re now evolving into a more personalized learning platform.
Another investment I made recently—though it’s still in stealth mode—is in the e-commerce space. Imagine an AI-powered Etsy. It uses AI-generated designs, coupled with a full-stack supply chain and commerce experience. It’s a fascinating take on AI’s role in mass customization.
Steve Brotman: That’s exciting. With so many new AI-native startups, do you worry about your more established portfolio companies? Are they keeping up with AI, or are they at risk of being left behind?
Laura Chau: Every company that wasn’t built in the age of AI needs to be thinking about AI right now. If they aren’t, that’s a huge problem.
Some companies won’t need to rebuild their entire product around AI, but they should at least be using AI to improve efficiency, automate processes, or enhance customer experiences.
What’s more interesting is that we’re already seeing AI-native startups scaling at an incredible pace. Traditionally, SaaS companies took six years to hit $20M in revenue. But some AI-driven vertical SaaS companies are hitting those numbers in just two years.
Steve Brotman: That’s wild. I saw a similar stat recently, and it’s mind-blowing.
Laura Chau: I have two AI-native companies in my portfolio that hit $6M to $10M in revenue in under 18 months—and some even closer to 12 months. It’s unprecedented growth.
Steve Brotman: That’s amazing. You mentioned earlier that go-to-market strategy is a key differentiator now. What do you mean by that?
Laura Chau: The rate of AI development is insane. A lot of what we used to think of as “moats” are being eroded very quickly.
So what’s left? Distribution, marketing, and go-to-market expertise are becoming the biggest sources of alpha.
Think about it—if a company is built around a proprietary AI model, that model might not stay proprietary for long. Many companies are already hot-swapping AI models in and out, depending on what’s most efficient.
So the real differentiator is who can get to customers first and who can build the strongest network effects.
A great example is Fireflies, the AI-powered meeting note-taker. They had an early-mover advantage in AI meeting transcription, and since then, dozens of competitors have popped up.
But Fireflies is still winning because:
- They were first to market.
- They nailed their product-led growth strategy.
- They’ve built strong user retention and network effects.
Steve Brotman: That’s a great point. It reminds me of the old Hotmail strategy—every email sent via Hotmail had a little “Get your free Hotmail account” tagline at the bottom. It was a self-perpetuating growth engine.
Laura Chau: Exactly! And we’re seeing similar product-led marketing strategies today.
Think about Fireflies again. The first time you see it in a Zoom meeting, you might think, “Huh, what’s that?” The second time, you might be curious enough to check it out. By the fourth or fifth time, you start wondering, “Should I be using this too?”
And at that point, you haven’t been marketed to—you’ve been exposed to it naturally. That’s why great go-to-market execution is everything right now.
Steve Brotman: So, in your opinion, does every startup need a viral product-led growth engine, or are there still other ways to succeed?
Laura Chau: There are definitely other ways to win. Not every company can rely on viral loops like Fireflies.
For example, one of my investments—Clutch—is an auto e-commerce platform similar to Carvana, but for the Canadian market.
Unlike SaaS tools, buying a car is a one-time transaction. So they aren’t going to grow through repeat purchases or viral exposure.
Instead, they’ve leaned heavily on word-of-mouth marketing. Buying a car is one of the biggest consumer decisions people make. If Clutch delivers a great experience, customers tell their friends, and that word-of-mouth becomes their competitive advantage.
So product-led growth isn’t the only strategy—but it’s a very powerful one when it works.
Steve Brotman: That makes sense. You’ve backed some incredible founders. What do you look for when investing in a startup?
Laura Chau: Across my portfolio, founders all have different strengths. But if I had to pick two common traits, they would be:
- Great storytelling
- A strong community of advocates
Storytelling is crucial because founders need to sell a vision before it even exists.
Whether it’s fundraising, hiring, or customer acquisition, the ability to articulate a compelling story can make or break a startup.
And then there’s community-building. The best founders don’t just rely on their investors for advice—they build networks of other founders, operators, and mentors.
I’ve seen that founders who surround themselves with a strong support system tend to navigate challenges much better than those who try to figure everything out alone.
Steve Brotman: That’s a great insight. Do you see any geographic trends in venture capital? Are there new tech hubs emerging, or is Silicon Valley still king?
Laura Chau: I invest all over the place—but AI has definitely brought Silicon Valley back in a big way.
I used to live in SF, but after moving to New York, I started spending less time in the Bay Area. That changed when AI exploded. Now, I’m traveling to SF more often again because so much AI talent is there.
That said, we’re seeing major innovation in other regions too. New York, Tel Aviv, and Toronto all have thriving AI ecosystems.
And I think we’ll continue to see AI democratize access to technology, making it easier for startups to succeed anywhere.
Steve Brotman: That’s great to hear. This has been an incredible conversation—thank you for joining us, Laura!
Laura Chau: Thanks so much for having me!