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Meet the Venture Capitalist Whose Childhood in Communist Bulgaria Led Her to Embrace Silicon Valley

Dafina Toncheva’s journey to Silicon Valley has been anything but ordinary.
She grew up in Bulgaria (like me!) during a turbulent time of change when the country was struggling to emerge from communism. Although her parents were doctors, they each earned only $150 a month.
Toncheva spent summers with her grandparents on their tobacco farm where they would pick tobacco leaves and work the land. “As you can imagine, it was just very manual, labor-intensive, and unpleasant work,” she said.
But it was on that farm where her grandmother gave her advice that Toncheva would carry with her as she immigrated to the United States, graduated from both Harvard and Stanford, and entered the cutthroat world of venture investing. Her grandmother said, “If you don’t want to make a living with your hands, you need to invest in your brain.”
“Her advice ultimately help me grow into an independent, self-sufficient, and self-reliant adult,” Toncheva said. “And those are also the qualities I look for in the founders I back.”
Toncheva moved from Bulgaria to the United States in 1998 on a full scholarship to Harvard University. From there, she worked at Microsoft as a software engineer, went on to get an MBA from Stanford, and joined Venrock for her first job in venture capital. She became the first institutional investor in Cloudflare, a San Francisco-based network performance and cybersecurity firm that just went public.
Toncheva has spent the last seven years investing in cybersecurity and enterprise software companies at early-stage investment firm U.S. Venture Partners. Last week, she was promoted to general partner. I recently caught up with Toncheva about all of this and more.
Below is our conversation.
TERM SHEET: When you were 15 years old, you created a peanut business that generated more revenue than the combined income of your parents. Tell me about that.
TONCHEVA: I was born in a communist country, but my formative years were spent in a country that was trying to define itself, embrace capitalism, and open up to the world. It was a very turbulent time after [communism fell in] 1989 socially, politically, and economically.
There were entrepreneurial-minded people who tried to take advantage of the change by starting businesses. Many people around us were opening small mom-and-pop shops — except for my parents. They were doctors and they felt very limited by their careers. So I remember thinking, “It’s kind of unfair that my parents spent so much of their lives studying, investing in their careers, and being good at what they do, yet we’re still barely making ends meet.” I wanted to help, so I decided to try and start something on my own. What entrepreneurship started to mean to me was courage, expression of freedom, creativity, and growth. It had this very noble, very positive connotation in my mind.
So I started buying raw peanuts from local farms, and I began roasting them, packaging them, and selling them through wholesale retailers to restaurant chains. I created a real operation that was powered by me and my younger brother. With that very basic business, I made more money than my parents combined. That was the beginning of my self-sufficiency and independence that my grandmother always talked about. It was both exciting, but also disillusioning in some ways to know that I can make more money than my parents with a lot less education and experience.
Why did you decide to immigrate to the United States?
One of the things that was so defining for me in my childhood was that my parents valued education, ethics, persistence, and commitment to personal growth. My mother was an ENT (ears, nose, and throat) surgeon, and my father was a neurologist, yet they still barely made ends meet as a family. That was the reality of communism — where everyone was supposed to be equal — that made no sense to me. I knew I didn’t want my life to end up like that.
During that time of change in post-communist Bulgaria, many people of my generation saw the U.S. as the symbol of meritocracy and the victory of capitalism. It was a very natural place for me as a teenager who wanted to build a better life to end up, but getting to the U.S. was very difficult.
The person who opened my eyes to studying in the States was a young American volunteer who was teaching English in my hometown. Through him, I learned that I could apply to schools in the States, that they give financial aid to foreigners, and that it’s a real possibility. It was a long process, but I ended up contacting over 100 schools. I asked all of them to waive the application fee, and I applied for financial aid at every single school. I was very lucky to get into 12 schools on full scholarship.
So I moved here in 1998, started at Harvard, and studied computer science even though I had never owned a computer and was very clearly behind all of my classmates. I thought technology was a growing market, and there was a real need for software engineers. I worked the whole time while I was at Harvard as a teaching assistant, later did internships with Microsoft during the summers, and ultimately, ended up working for Microsoft as a software engineer in 2002.
You mentioned capitalism. There’s increasingbacklash against capitalismwith critics saying it needs a major overhaul to better serve society. Given your experience growing up in a country where you witnessed the effects of communism, do you think capitalism needs to be reformed?
I firmly believe that we live in the best place in the world, and I say that unapologetically. That being said, I also realize that we have some challenges we need to work through.
I love capitalism. It might not be perfect, but it’s the best out there. Having lived through communism and some forms of post-communist socialism, I just can’t imagine that system being a great alternative. Just the thought of communism and socialism depresses me. I envision it as this bleak world devoid of creativity and self-expression with no pursuit of self-improvement. It’s a dead end, it really is. I get scared hearing about people’s fascination with socialism because those are typically people who have never experienced it first-hand. It’s very theoretical for them.
It’s just a different feeling for people who have lived through it and experienced it first-hand. I’m sure your parents also have some strong opinions about communism.
My dad, especially. He recently told me a story about getting in trouble at school because he wrote “USA” on his bookbag when Bulgaria was still under communism.
I’m not surprised at all. In Bulgaria, “USA” stood as a symbol for capitalism and a better life for many, many years.
On the other hand, capitalism has left many people disillusioned. The equality gap is wide and widening, and it’s become a vicious, reinforcing cycle. I have to say I do appreciate the discussions going on especially by capitalists like Ray Dalio and Jamie Dimon who talk about ways to create more upward mobility. I think these are good discussions to be had, and it’s a way to evolve capitalism with the times.
How did you end up in venture capital?
I spent four years at Microsoft as an engineer and a product manager. There, I worked on security products and then decided to go to business school. I attended Stanford, and that’s how I ultimately ended up in venture capital. Toward the end of my second year, I was introduced to Venrock, where I was focused on helping the team source investment opportunities in enterprise software and cybersecurity.
While you were at Venrock, you led the first institutional investment round in Cloudflare,which just went public. What did you see in the company and the team that gave you the confidence to back them so early?
I invested in Cloudflare exactly 10 years ago. There were three things that stood out to me. They were going after a really painful problem, which was that 50% of traffic is not authentic. It could be malicious. They were going after a customer group which was completely ignored, which was the long tail of the web. They said they would build a service that cleans up traffic to web properties from the long tail of the web — and they would do it for free and find other ways to monetize the business. That was very counterintuitive to how most security companies think. Most security companies would build a product or service and try to sell it to the biggest customers — the ones that have the biggest budgets. It was very contrarian what they were trying to do, but at the same time, it made a lot of sense.
The team was thoughtful, persistent, and they had a clear vision around what they wanted to build. I just had a lot of faith in them that they would execute, and I’m really happy with how far they’ve come on this journey. Seeing them go public made me feel validated in my belief in them from Day 1 when they didn’t have anything — they didn’t have a single line of code.
For me, it starts with the founders and how clear and persistent they are in their vision. It really is a character judgment that’s very difficult to explain, but it’s one of the most important aspects of early-stage investing.
How do you tell if an entrepreneur is a true visionary or just completely delusional?
It’s really hard. I think the same person can be both, and probably many of them are both, so it’s very difficult to distinguish between the two. I think the ability to execute is so important, and that’s where the distinction lies. Successful founders stand out in their ability to perform and execute.
I also value transparency, honesty, respect for the facts, and self-awareness. I think a grasp for reality and pragmatism has to be there. If those things aren’t there, it’s almost impossible to work collaboratively with the team.
What sector or company are you most excited about right now?
I work on several areas at USVP focused on the enterprise tech space, but the one I feel most excited about is cybersecurity. I think security problems and security threats evolve faster than issues in almost any other industry. Security threats are aggressive, they evolve really fast, and their mutations are almost infinite. Because of those dynamics, cybersecurity is a very challenging problem to solve.
Technologies become obsolete very quickly, and innovation cycles have to be very rapid. Even in the worst of times when budgets get cut for everything else, cybersecurity budgets continue to grow 10% year over year. That makes it a very attractive market for me to continue investing in.
What do you think about emerging assets like Bitcoin and other cryptocurrencies? Have you invested in any blockchain companies?
We have not made any investments in Bitcoin or blockchain technology. It’s an area I’m following closely and studying, but I don’t feel prepared to make investments in it just yet. There are definitely opportunities in the infrastructure building in that ecosystem to make investments. But I also think as an industry, it’s still in Version 1. There will be more iterations and more opportunities for investors to play in that space in the future.
Do you think blockchain technology could have implications for cybersecurity?
For sure. I think blockchain as a technology could be quite interesting when applied to security, and also the other way around: Security is a very important consideration for the existence and acceptance for the growth of those assets. Security is a foundational layer and it has to be figured out before [crypto assets] become broadly adopted by the mainstream.
It’s been a little more than 10 years since you started in venture capital. How has the ecosystem changed since 2008 and 2009, and how important do you think capital efficiency is in a world of seemingly unlimited funding?
It’s incredible how much things have changed in 10 years. When I started, there were only a handful of seed funds, and now, there are hundreds of seed funds on one end of the spectrum. On the other end of the spectrum, the large funds have become even larger. The abundance of capital on the late-stage is just enormous. As a result, we’re seeing inflating late-stage company valuations, companies staying private longer, and massive IPOs by the time they go public.
In a time of abundant capital, capital efficiency has become even more important. I think capital efficiency is ultimately freedom. It gives you choices. It gives you options. It gives entrepreneurs the freedom to operate and not be imprisoned by their burn rate. Bigger funds talk a lot about growth at all costs and very rarely mention capital efficiency. I think efficient and responsible growth is way more important in the long-term. We’re starting to see some of that with companies going public that are wildly unprofitable. Public investors don’t seem to agree that the growth at all costs is the most important factor in determining whether a business is successful.
Speaking of going public, Snap CEO Evan Spiegelrecentlysaid that going public was a very challenging experience. One specific thing he said that’s made a big difference is being more transparent with investors by providing quarterly guidance. How do you see some of these private companies that are used to keeping things quiet adapt to the more transparent nature of the public markets?
Different companies have different boards with different expectations. It’s not as strict or clear cut as it is in the public markets. I have noticed that when a company is doing well and growing rapidly, private investors tend to forgive more. They tend to become less vigilant, while public investors are a lot more strict and much less forgiving.
It’s a different mindset, so it really depends on what type of private board a company has been accustomed to. There are private boards that are just as demanding and detail-oriented as public investors. But for some, being public may come as a complete shock when the CEO realizes there’s a whole new way of doing things now.
* More Details Here
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Mountain of Gold

Don't mind me I'm just a regular guy babbling who doesn't even know all the jargons and proper use of shillings. I love bitcoin. It is art, it is music, it is inevitable. It has the power to change a person's perspective of life and shake some of his fundamental believes. You see we as humans we have always resisted change. We burnt scientists on stakes, we built towers of heads if any dared to bring change. Change is like entropy though it always increases, change has repeatedly come in the faces of men who opposed change men who heavily benefited from keeping things as they are. No matter how much the men in power tried to stop it but things changed so much that the rulers now have to call themselves servant of the people. No matter in reality they rule not serve but they cannot wear it with pride, they are not as powerful as men of past. No man can now kill a thousand men and a make a tower or their heads. If change f&%ed them up then who are you some president of some company working on a salary.
People like Jamie Dimon think they influence everyone. Every investor would hold their word as the word of bible. They think kids dont have money and cant make money. Kids have been making money for quite a while now. They turn their eyes blind to facts like these
Financial institutions once took power significantly from the people who would slit throats in the broad daylight. Now it is happening to them. How many times do the wise have to repeat "History repeats itself". And boy do we love change in 2017. We are hungry for it because creating and adapting to change as humans is our natural behavior. Forgive me for saying that it almost reflects evolution.
In a certain religion there are many signs for the world's end. One of them is the emergence of a mountain of Gold. Now imagine a mountain of gold constructed with the network of bitcoin somehow made to look in a form of a mountain and sparkle gold and you could actually see the simulation of gold being mined and mountain getting smaller as the 21 million approaches. This landmark of the future stands in front of a building slightly higher than 118.87 meters named Cryptocurrency exchange. The building lies somewhere on the blockchain road. In the cryptocurrency exchange in a small corner office which is rather dark sits bitcoin. It doesn't want the light forever. Creation reflects creator. Bitcoin doesn't want to be the brightest star but it wants to build a galaxy and be one of the stars in it. Satoshi is an introvert. He doesn't want us stupid people asking him questions like how much is bitcoin gonna be worth this much or than much. He is a genius who changed the world from behind closed doors in a dark room just like in the movies.
He made a mountain of gold and placed them in front of us all and said go mine it. He played the human instinct in which we like to keep things in our control. I believed previously that nothing could change money. Money could change was too out of the box thought for me it never occurred until I was blinded by the sheer returns of the damn thing. It has become my opening line "If you had put $1 in bitcoin in 2010 you are just shy of a million now". It's like a line from wolf of wall street without going through all the bullshit. It is too good to be true but it is over $200 billion market cap true - the overall crypto cap.
Things like bitcoin paint a good more humane picture of the future. They give value to words like "of the people, by the people, for the people". Well if you look closely its not even as big a change its just giving a way for a concept - Democracy to be consistent in action and theory.
Geniuses are often recognized late but they are recognized none the less if they present their work to the people. You believe in gallelio today not the king of his time. I am glad that the huge crypto community at least honors its genius and we make him smile in his dark room.
This huge mountain has already taken blows from leaders of the biggest economies in the world. Men of note in the financial world. A civil war. Anything that can go wrong is going wrong and still the net result is growing like change like entropy like a fukcnig law of nature.
Cash and Core I love you both. This is a man in a moment in which he would not lie. I love bitcoin.
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Earlier this week, Jamie Dimon, the C.E.O. of JPMorgan Chase, went on a notable, vociferous tirade against Bitcoin, the cryptocurrency that has been associated over the years, fairly or not, with the Silk Road drug ring, the Winklevoss twins, and, more recently, mind-blowing returns. Over the years, Bitcoin has become a preferred Dimon nemesis. In 2015, when it was worth around $400 apiece ... Read Books The Case for Bitcoin: Why JPMorgan CEO Jamie Dimon Is Dead Wrong - And Why Bitcoin Is. NellyBalke. 0:22 [Read PDF] The Case For Bitcoin: Why JP Morgan CEO Jamie Dimon Is Dead Wrong - And Why Bitcoin Is . Heather. 0:34. JPMorgan CEO Jamie Dimon Does NOT Care About Bitcoin. Wochit Business. 0:34. JPMorgan CEO Jamie Dimon Does NOT Care About Bitcoin. Entertainment (now) 1:42. Syracuse ... JPMorgan Chase Chairman and CEO Jamie Dimon revealed he has been diagnosed with throat cancer in an internal memo to employees Tuesday evening. According to Dimon’s e-mail, the cancer is curable and “the prognosis from doctors is excellent” after multiple tests confirmed the cancer is confined in the lymph nodes on the right side of his neck. Jamie Dimon is the famed CEO of JPMorgan whose net worth is $1.1 Billion and previously underwent chemotherapy for throat cancer. In a memo to his employees, he announced he was getting ready to undergo eight weeks of intense chemo for cancer that was thankfully caught early and reportedly curable according to Dimon’s doctors. Earlier this week, Jamie Dimon, the C.E.O. of JPMorgan Chase, went on a notable, vociferous tirade against Bitcoin, the cryptocurrency that has been associated over the years, fairly or not, with the Silk Road drug ring, the Winklevoss twins, and, more recently, mind-blowing returns. Over the years, Bitcoin has become a preferred Dimon nemesis. In 2015, when it was worth around $400 apiece ...

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Jamie Dimon rips bitcoin as fraud that will "blow up" Jamie Dimon has the audacity and nerve to rip bitcoin as a... Jamie Dimon shares his thoughts on Bitcoin JPMorgan CEO Jamie Dimon breaks down his view on bitcoin while speaking Friday at the Institute of International Finance. » Subscribe to CNBC: This video is unavailable. Watch Queue Queue. Watch Queue Queue Jamie Dimon bezeichnet Bitcoin als Betrug. Danach, als Bitcoin abstürzt und günstiger zu haben ist, taucht JPMorgan auf der schwedischen Börse Nordnet als Großinvestor von Bitcoin auf.