Villi Iltchev

Founder and Managing Partner at Category Ventures, specializing in enterprise software.

Claims

As speaker

Mentioned in

Key positions and views

Specialized, seed-dedicated funds are structurally superior partners for early-stage founders compared to large, multi-stage firms due to better alignment and support during difficult periods.

The market for developer tools is expanding exponentially because software has become the primary competitive layer across all industries, not just technology.

Incumbent technology companies often fail by prioritizing short-term financial optimization over long-term R&D investment, leading to an inability to adapt to market shifts like the cloud.

Radical transparency, even in moments of catastrophic failure, can be a powerful tool for building customer trust and a strong brand, as demonstrated by GitLab.

In M&A, a proactive seller is in a weak negotiating position; acquisitions are most successful when the buyer initiates with a strong strategic rationale, as companies are 'bought, not sold'.

Podcast consensus on Iltchev

Points of consensus

▶The Software-as-a-Service (SaaS) model fundamentally expanded the total addressable market for software by making it accessible to small and medium-sized businesses, not just large enterprises.Apr 2026

▶The market for developer tools has grown dramatically because software has become the primary competitive layer across all industries, shifting competition to the software level.Apr 2026

▶Short-term cost-cutting at the expense of R&D is a critical strategic error for technology companies, as exemplified by HP's decline under CEO Mark Hurd.Apr 2026

▶The venture capital landscape has shifted in favor of founders, increasing the importance of investor alignment and dedicated support, which specialized funds are better positioned to provide.Apr 2026

Points of debate

▶Iltchev argues that seed-dedicated funds are 10 to 100 times more likely to provide follow-on support to struggling companies than large, multi-stage funds, which he claims view seed investments as disposable options.Apr 2026

▶He contends that the SaaS business model is not inherently superior for vendors compared to traditional software, as value is recouped over time and requires continuous investment to prevent customer churn.Apr 2026

▶Iltchev's proposal to acquire GitHub while at Salesforce was rejected, indicating an internal debate at the time over the strategic value of owning a comprehensive developer platform.Apr 2026

▶He asserts that HP's leadership consciously rejected a cloud services strategy due to fears it would cannibalize the existing hardware business, a decision that sealed the company's inability to compete with rising cloud providers.Apr 2026

Key themes

▶Venture Capital Structural MisalignmentApr 2026

Iltchev's core thesis is that a structural conflict exists between seed-stage founders and large, multi-stage VC firms. He argues these large funds treat seed investments as options, lacking the incentive to support struggling companies, which contrasts with the aligned, hands-on approach of a dedicated seed fund.

This theme highlights a growing specialization within venture capital, where thesis-driven, stage-specific funds can create a competitive advantage by offering deeper alignment and support than generalist, asset-gathering firms.

▶Corporate Innovation vs. Incumbent InertiaApr 2026

He frequently contrasts the innovative, forward-looking culture at Salesforce with the strategic decline of HP. He attributes HP's failure to short-sighted cost-cutting that gutted R&D and a leadership team that feared cannibalizing its legacy hardware business with a modern cloud services model.

This narrative serves as a practical case study of the 'Innovator's Dilemma,' demonstrating how a company's past success and existing business models can become the primary obstacles to future relevance and survival.

▶The Rise of Developer-Centric PlatformsApr 2026

Iltchev chronicles the explosion of the developer tools market, driven by the insight that every company is becoming a software company. He details the strategic missteps of early leaders like GitHub, whose slow enterprise adoption and mismanagement created a massive market opportunity for competitors like GitLab.

The battle for developer loyalty is a key proxy for future platform dominance, and a failure to adequately serve the enterprise market can create openings for more focused and strategically nimble competitors.

▶The Power of Radical TransparencyApr 2026

Using GitLab as a prime example, Iltchev champions the strategic value of extreme transparency. He recounts how GitLab's CEO live-streamed the recovery from a catastrophic database failure, a move that turned a potentially company-ending event into a moment that built immense customer trust and loyalty.

This suggests that in an era of constant connectivity, attempting to hide failures is a losing strategy; instead, transparently owning and resolving crises can be a powerful and unconventional brand-building tool.

Source episodes

Sentiment over time

Not enough data for timeline

Changes over time

~2009

While at HP, observed the company's R&D organization being 'gutted' under CEO Mark Hurd, a move he believes crippled its ability to compete with emerging cloud services.

2009

Joined Salesforce when it was a ~$1 billion revenue company, beginning his tenure in corporate development during a period of intense growth.

Early 2010s

Led acquisitions for Salesforce, including Heroku. Unsuccessfully proposed acquiring GitHub, which he believed could be combined with Heroku to create a dominant developer platform.

Post-Salesforce

Joined August Capital, where he observed the firm's internal struggles with strategic alignment, which ultimately hampered its ability to raise a subsequent fund.

Pre-Category Ventures

Worked at Two Sigma Ventures, where he successfully negotiated the right to his investment track record, a step he considers critical for a VC's career mobility.

Present

Founded Category Ventures, a $160m fund built on the thesis that specialized, seed-dedicated funds are better partners for founders than large, multi-stage firms.

Suggested prompts

How does Villi Iltchev's experience at declining incumbent HP and high-growth Salesforce inform his investment thesis at Category Ventures? &nearr;Analyze Iltchev's argument that seed-dedicated funds are structurally superior to multi-stage funds for early-stage founders. What are the counterarguments? &nearr;Based on Iltchev's account of GitLab vs. GitHub, what are the key factors that enable a challenger to disrupt an established market leader in developer tools? &nearr;Evaluate Iltchev's claim that SaaS companies are harder to consolidate through M&A than traditional software companies. What are the implications for private equity firms? &nearr;

Key concepts

Venture Capital Strategy 1 ep SaaS Business Model 1 ep Salesforce 1 ep HP (Hewlett-Packard) 1 ep GitLab 1 ep GitHub 1 ep M&A (Mergers & Acquisitions) 1 ep Developer Tools Market 1 ep Corporate Strategy 1 ep Founder Psychology 1 ep

Notable quotes

“i actually think seed dedicated funds are 10 times a hundred times more likely to continue to work with you and support you and try to find a way for you to achieve that next milestone product market fit next round whatever it is then a large multi-stage firms”

Villi Iltchev · Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures

“he completely gutted the r d organization and basically hp which was the what you thought about silicon valley in terms of innovation and engineering and they had the labs completely gutted it”

Villi Iltchev · Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures

“and so sid decided to broadcast on YouTube how they were dealing with the recovery.”

Villi Iltchev · Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures

“all industry kind of my thesis was that the market for dev tools is going to expand 10x 20x 50x over the next decade”

Villi Iltchev · Illegal Immigrant to $160m Fund 1: Inside Villi Iltchev’s Journey Building Category Ventures

Report last updated: Apr 21, 2026

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