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- [00:00]
A
No, you hit some great ones. I would just add a few more those that is genomics, really adding the prediction and prevention and really going proactive from that standpoint. I think kind of with longevity is prevention, wellness, self care. So, you know, this next generation, my kids will live to 120, you know, so, you know, so what are we going to be? Are we going to be a mix of bionics and human? Are we going to be able to self ustain? We have 3D printers that can print out organs now. So I mean, you can imagine kind of for the future what that will be like.
- [00:42]
B
Welcome to the Investor, a podcast where I, Joel Palo Thinkle, your host, dives deep into the minds of the world's most influential institutional investors. In each episode, we sit down with an investor to hear about their journeys and how global markets are driving capital allocation. So join us on this journey as we explore these insights. We'll just run with it. So we've got Faye Sahai from Vinaj Ventures and I know you've got, you know, a couple other really exciting investment management platforms that you're managing. So excited to kind of learn about those platforms and your evolution as a VC investor. And I know you have a healthcare and life sciences background. So excited to go through all of it. So why don't we kick this off. Faye, welcome to the show. I do this a couple times a week with other emerging managers and also experienced managers. So why don't we kick it off, talk about where you are, where you started and how you got to where you are now in venture.
- [01:52]
A
So I'm actually calling from the Bay Area. I kind of started in health care early in the sense that both my parents were doctors and you know how you work to help your parents. I was working in the medical offices putting files, doing, helping with billing and from that from a young age. But after school I said, okay, you know, that's my parents stuff. So I went into kind of financial institutions, trading investments from that. But then I kind of missed the impact of having an impact on positive on people. So then I basically, you know, what I found is health care was a way, so I did healthcare insurance from that standpoint of like you're still impacting people but you're still using the analytics skills. So I led and ran Kaiser Permanente's innovation lab and fund where we were looking at thousands of startups and seeing which ones that we were going to invest in, test and adopt. And then I also led AIG's initial global innovation and digital Business center as well, so it really kind of took. Touched me on the corporate venture capital side of it. So now I had an opportunity with Pivotal Ventures executive office of Melinda Gates to really submit a proposal of how can we make an impact on behavioral health and mental health? Because now we know that one out of every five young people have a mental health issue. And it's even increased and accentuated with COVID and the amount of depression, anxiety, suicide, suicidal thoughts that increase 63%. We know it usually takes an average of 10 years for them to find care. What if we disrupted it? Because we know half of the issues come at the age of 14. What if we disrupted it and we can change the trajectory of someone's life? We know the demand is just ever increasing. There's a real opportunity and innovation in this area. So that's kind of our mission with the Talasi Fund is really tackle digital wellness prevention, behavioral health, mental health, to kind of make a difference in young people's lives.
- [04:11]
B
Sure. Yeah. And that's an interesting pathway, right. There's a couple different pathways to get into investment management. You know, one is the traditional banking route. It sounds like you kind of went through the corporate VC route. So tell us some of the differences that you've seen. Number one, from working in a corporate VC versus some of your colleagues and school friends that have just gone straight into early stage VC or even just growth equity. And then how can we engage with other institutions like Melinda Gates's and figure out what problems they're trying to solve and then really just make sure that you're solving the solutions that they need? I guess. What are some frameworks do you. Do they have like an open like proposal where people come in and come up with their strategies and then there's like kind of like the government where there's like a source selection process or is. And just so you know, I've worked for the DoD in the past, so there's. So I'm familiar with like that process. But is that is very similar to that where you, you know, there's, there's kind of some type of, you know, request for proposals and then different, you know, bodies of solution providers come in and try to solve it. Would love to learn, you know, more about that and then, and then how to approach even those kind of institutions.
- [05:30]
A
Yeah. So there are so many different ways and it all depends on how they're kind of tackling it. I. I'll kind of address first question you had about coming in out of like I also had worked at Deloitte Management Consulting, so some financial institution background, management consulting, but corporate venture capital. So corporate venture capital I find is kind of like you're more doing strategic investing, seeing what startups can actually be adopted into the organization and align with your strategy. So then you're, you're kind of looking at it not only for growth and return, but possibly M and A acquisition. So you're kind of looking with a different mindset and adding a few other criteria. And also because you're in this corporate structure, corporate venture capital is trying to actually figure out the compensation plan with carry and whatnot. So how can they take the CVC model and compensate it in corporate structure and compensation structure? So there's some really interesting ways that they're kind of doing that. And there's this wonderful Thielander compensation survey for VCs too. It kind of also says what the tiering of the levels are corporate venture versus venture capital. But I found that there is increasing number of corporate venture capital firms, it's continuing to grow in that area. Before they were just investing for return. Now they're going into strategics. And both we've definitely seen, especially in healthcare, a lot of merger and acquisition. So I find it's helpful for me because I can kind of help our startups get adopted by those large companies and large corporations as well as look at acquisition targets. Kind of the perspective on the other side as well. So it's been helpful from my standpoint as far as kind of approaching kind of a large organizations. I know, I know you have many contacts in that area as well. But there are some kind of open calls. I was an advisor for quality can't wait. Which you might have seen Melinda Gates, she launched that out and it's like $40 million and people are submitting in proposals and we were judging all those proposals and they just announced the 10 finalists from that standpoint. So wonderful cause to really accelerate equality.
- [08:02]
B
So yeah, that's really interesting. And you know the framework that we're always taught is, you know, corporate vc, it's not always looking after financial return. Right. You know, you're Google, your Google Ventures and there's an interesting type of sensor that Google just didn't build in house and it's easier to buy versus build. Right. So they just buy that team and then that team now becomes the Google Sensor team. Right. And are you seeing, you talked about M and A activities, you know, that could possibly provide financial return. Right. Because you're going to be acquiring a company and hopefully, you know, delisting it or you Know it's undervalued and you change the management team and now you sell it for 5x. So that provides some financial return. So are you starting to see a lot of these hybrid models where there's like social impact, there's strategic and then there's a mandate for financial return? Because I'm starting to see that on the impact side and also on kind of like the Clean Tech 2.0 where you need to have venture style returns but also have impact. So I was just curious if that's kind of an evolution that you're seeing is like a 2.0 version.
- [09:13]
A
Yeah, no, it's a great point. And we are seeing it especially in health. Right. We want evidence based solutions that are actually have a positive impact on people. And so we're definitely seeing that as well. And to your point, we see CBCs, you know, literally buy a team as you're saying, for the people. We also see it for the technology, also the intellectual property, patents. So you know, their motivations for M and A, you know, are kind of varied. From that one is kind of expansion to different markets. It's also been another one too is they're trying to go in a different product line market. We see them investing initially and then acquiring or just downright acquiring. But the market is so hot in healthcare. It's just been kind of record breaking years this past two years. Covid has just accelerated that from that standpoint. So I mean if you would have asked health investments or record time was 73 billion last year for 2020 and it's increasing more and more kind of this year and we think it's going to exceed that here. So I think it's a real opportunity.
- [10:29]
B
Yeah. And these larger institutions, what are some of the bigger themes? Can you unpack that a little bit as far as healthcare? Like when you look at healthcare, can you go a little deeper as far as like what are the, the critical sectors to focus on? Is it drug discovery? Is it, you know, rapid COVID testing? I guess what are kind of the short term initiatives and then you know, kind of long term. When you look at like deep tech and life science, are there, are there kind of longer breakthroughs? I know longevity is a big thing when it comes to, you know, deep tech and you know, just life extension. But just curious if that is part of what their mission is and if there's other areas that are important.
- [11:15]
A
No, you hit some great ones. I would just add a few more of those. That is genomics, really adding the prediction and prevention and really going proactive from that standpoint. I think kind of with longevity is prevention, wellness, self care. So this next generation, my kids will live to 120, you know, so, you know, so what are we going to be? Are we going to be a mix of bionics and human? Are we going to be able to self ustain? We have 3D printers that can print out organs now. So I mean you can imagine kind of for the future what that will be like. I think it's really interesting for the kind of like in the near term what we see is chronic conditions just impacting millions, the cost of millions. How can we tackle that? You know, diabetes, heart obesity, cancer, you know, like so there's these disease states that are really affecting, you know, millions of people. Can we kind of address that from that standpoint? So definitely on that. What we see is also a lot of emerging technology, a lot of AI coming in, Internet of things. So now you can think of hospital at home that was really being tested during COVID about being able to remote monitor. And we have an interesting demographic shift that's happening that we're seeing an aging population. More people are getting old than being born. So it's starting to flip. And so we know that your kind of last years of life is when you spend the most on healthcare, especially the very last year. It's the phenomenon.
- [12:56]
B
There's two things to branch off of that, right? There's more wealth accumulated at that age, so there's. There should hopefully be more income. And then that income is being spent on just being able to have the support that you need, whether it's long term care. So I think some of that in my personal experiences still has some challenges. A lot of us are going to be eventually in the sandwich generation. We've got kids that we're worried about and then we're also worried about our parents. We're kind of like crunched in between, so we get impacted. And then the parents, if they didn't get the right financial advisors to kind of really plan for it. What I've already been seeing is people are kind of just getting hit by surprise. They don't really know what Medicare covers or what Medicaid covers. So are there any solutions to kind of help tackle that as far as just like what you're supposed to do and how you do it more effectively? Because I feel like that's almost like fintech longevity as well, because we're living longer. Are we actually planning properly for getting old and not like putting our kids under stress when we're like 80 years old now.
- [14:13]
A
You raise a really important point. One of the top reasons for personal bankruptcy in the US is a healthcare incident. What we see is the average of people really just saving only like $180,000 as a retirement. And we know given Medicare costs, the donut and the drug cost of prices going up, most people do not have long term care insurance and there's only, you know, the fewer provide that as well to really kind of guard against some of those costs and help reimburse. We also know that the senior care market also kind of needs to be reevaluated and what services it provides. Provides that has gotten hit a lot by Covid and kind of shown some of the cracks in that as well. So I think there are some real opportunities. We've definitely seen some happening in the senior tech space as well.
- [15:07]
B
So yeah, there's a couple funds that I'm friends with that have a focus on silver tech. So I've seen some interesting things in mobility and I think I've seen some stuff on the fintech side as far as kind of how to manage that. But the challenge too is that population is not tech savvy. So if you have a really slick app, I don't think that's going to do anything if you can find some type of user experience that anybody can use. And the funny analogy was people's grandparents are on Facebook scrolling that UI is really easy to just see videos and photos of their friends and family. So how do you have that kind of experience to kind of support their healthcare needs and also like their healthcare wishes. Right. Like as far as just generational things that are happening with their family.
- [15:59]
A
Yeah.
- [16:00]
B
So I think there's some interesting opportunities there. And then just unpacking Telocity from Vinaj, I guess. Is Telocity a separate fund or is that part of the vinodgen Ventures is.
- [16:13]
A
Yeah, the umbrella. Velocity is our first fund so we named it Telosity from that. So the telos of the mind and Velocity of just trying to accelerate it from that standpoint. So we started that fund in 2019 and from that standpoint really investing in early stage companies. We've invested in eight in North America and one has already exited. So we've been happy kind of with the results so far given 2020 was a very critical year. Our startups impacted 2 million lives. So we were happy that, you know, their, their reach is getting quite far from that standpoint and, and they're beginning to raise their next round. So.
- [16:59]
B
Sure. No, that's Exciting. And is there kind of like a specific mandate that you're trying to stay within it? You talked about impacting lives. So you know, are there a couple different themes on the tech side that you focus on and you know, would love to learn a little more about your team as well. Like kind of how your teams complement your team members complement each other.
- [17:20]
A
Oh yeah. Well, so we are focused on eight different categories all the way from wellness self care to an improved online experience. Kind of as you were mentioning, everything is online, so how can you not get cyber bullied, social comparison kind of that, you know, death scrolling as they call it, or doom scrolling from that standpoint to access to care. So really anything things in emerging technology, but also engagement adherence because we know that engagement is so important on your health. So those are kind of like the various eight categories we're looking at. We're also looking at investing in diverse founders, both from gender and ethnicity and location. So we're looking at that from. From multiple standpoints as well. Kind of hitting the triple bottom line of trying to go from that. So.
- [18:13]
B
No, that's great. And then. Yep, go ahead.
- [18:18]
A
I was going to answer your second question about the team. So. So Anisha Bastava is kind of the executive and kind of founder our team. His background has been he's been an entrepreneur half his life as well as being in the venture capital investment side for half of his life. So he's been wonderful to kind of look at it from that, the pure financial demographics data operator mode. Seeing that both perspectives, we really try and coach and advise our startups on how to go and kind of support them going forward. So he's been wonderful in that Allison was coming in from Village Capital, has been focusing in kind of both an accelerator kind of investment and also the research side in health coming out of the lab. So she's been a great complement. We have Janet coming in from kind of the venture analyst side with kind of a diverse perspective coming in from university research as well as several other accelerators as well. And then I'm bringing in kind of the health and insurance tech investments and innovation side. So it's been a nice kind of team and compliment going forward.
- [19:36]
B
Yeah. And an interesting pattern that I'm seeing as well is, you know, there's a lot of funds that have complementary, complementary platforms and communities. Right. So Vinage Ventures, you know, kind of doing a little bit of research on your platform. It looks like you guys do some innovation and services to different organizations as well. Right. So I think that also can probably complement your proprietary deal flow because you're working with these subject matter experts and then kind of solving these problems probably turn you into exciting other opportunities for possible investment opportunities, I'm assuming.
- [20:12]
A
Yes, yes. So we worked with like Fortune 500 when they wanted to start a CVC fund or if they're looking for M and A targets and from that standpoint, how they're kind of looking at their strategic. So to your point, really understanding their priorities, strategies and going from there and then we can help push and advise them forward. So I think it helps both sides of the equation in understanding what they need to kind of adopt a startup and what they're looking for as well.
- [20:43]
B
Yeah, and that's a unique niche too because, you know, when you typically call on McKinsey or you know, Deloitte, they don't have the VC experience and they may not necessarily know how to actually have a, have a discipline of having a CVC. But because you guys are VCs and you got, and you personally have been, you know, in CVC before, that's kind of a unique offering that you can provide to them. It's almost like CVC as a service where you can come in and be like, hey guys, again, I know you got. I know IBM does do some corporate vc, but here's kind of a framework and a formula to do it effectively and, and maybe replicate it across different sectors, I'm assuming, right?
- [21:28]
A
Yes, exactly. And we can kind of customize it to what they want and need. I also chair the Innovation Executive Forum that has about 300 different innovation leaders, kind of tech scouts, CBC leaders as well. And so it's kind of a peer to peer group where we're kind of sharing trends, lessons learned cross industry. So that's been a great group to kind of connect with as well.
- [21:53]
B
Yeah. And then you talk about UX and UI design. So I'm a product person, so I always love building apps and websites and trying to find the requirements. So maybe we can talk about that a little bit as far as just how to build good UX and UI for different companies and organizations. And where are the biggest pitfalls when you're trying to solve a problem? Is it really in the requirements not being bad, or is the UI just not aligned with what the customer thought it would do? I don't know if you've ever seen that graphic. There's this one of my favorite graphics. It says what the customer wanted and then what the engineer thought it was and the customer wanted a swing on a tree and then the engineer thought it was a roller coaster and then the way it was sold it was like a lazy boy. So it's kind of like all three people just pictured the product to be completely different and same thing with the user experience. Maybe you can talk through some of the examples of UX and UI and then maybe just where it could fall apart if it's not done right.
- [23:00]
A
Yeah, I did want to put a shout out to the rest of the NAJ team because we actually have ui, ux, Azalea and Raven kind of doing the whole user experience and then we have kind of our kind of developers teams led by Mike and Harin. So it's really kind of a deep dive and really understanding the customer. So kind of. And the kind of customer experience, being able to talk internally as well as externally and seeing that experience and then really kind of mocking it up and designing and iterating from that standpoint. Sometimes to your point, they don't know what they don't know from that and you know, it's like someone, you know, creating a Ferrari but having, you know, the Volkswagen requirements and budget. Right. And then in their head and so it's kind of that kind of alignment. So we definitely do the co development with our clients and kind of the iteration from that so that we're looking through that. So we turn designs around very quickly and kind of iterate and pile and get feedback from that. But it really does start with that kind of customer journey, the mood board that you're trying to create, the objectives you're trying to go, go for the kind of product and market that you're trying to fit into. So.
- [24:18]
B
Yeah, no, that's interesting. And then you know, going a little further, you know, now I'm kind of going into the, the fund thesis. You know, walk me through the, the, the beginning stages of how you guys decided to start the fund. And, and really just the, the initial steps and kind of the initial discussions that you guys had and, and then you know, after that really when it, when it comes to making an impact, what are some of the tech opportunities that you see evolving to kind of support impact? I see kind of like the mental health prevention really just children, especially at the adolescent age. There's challenges with just all things at school and with their parents and social impacts as well. So maybe you can talk a little bit about how you thought about coming up with the fund, why you guys did start the fund and then just kind of a little more on like just the impact side.
- [25:20]
A
Great. Yeah, so it was kind of Based on the premises of this ever increasing need and a gap. So when we looked at the landscape of the market, we definitely saw a lot of money coming into digital health, digital therapeutics, where it's going. But we did see kind of a gap in the mental behavioral health. Right. Like we almost kind of divorce our mental state from our physical state. Right. Because you can't see it naturally. But we know with all these chronic diseases I mentioned before, heart, diabetes, it usually comes with depression. Right. Like it comes with anxiety, it comes with stress. So we really need. And we also know that if you have a positive mental health and a good mental health, you heal faster. Right. So as we were looking at the market, we definitely saw that there was kind of a gap in opportunity and a growing need that kind of being addressed there. So we kind of assess kind of the market, who's playing in this space. So far we've looked over like over 600 startups in this area. So it's growing from that standpoint and the investment is growing because what we're trying to do is shine a light on it. Covid has been helping very much on that as well. And also the stigma. So now we're also seeing like reimbursement charges, telepsych visits and real openness. Our thesis though has not only been kind of that digital wellness mental health, but it's how can it enable and scale through technology? Yeah, we know kids, you know, they're the digital natives, you know, if it's not with them and that you want it to be kind of seamless and part of their life, not this, like go to this app when I'm feeling sad. Yeah, it's like it's more preventative maintenance and you know, to prevent a kind of crisis from that standpoint. So we kind of looked at all those opportunities from that, but we are looking ones that are evidence based and what we're finding is if you look at healthcare evidence, it's, you know, it's can be many years, right. FDA clinical studies and we're like, how can we accelerate it in a technology standpoint to kind of get some evidence based on that comparison lit reviews, research from that. So that's been helping us accelerate as well.
- [27:44]
B
Yeah. And then as far as some other techniques, you know, you mentioned it, right. Like there's an app that tells, you know, you, you log into the app if you're happy or sad. But what are some other things that you're seeing that are novel approaches to tackle that I'm assuming maybe like community so maybe you can have a community of people that are there to support you as a support system. But what are some other things that you've been excited about that you've kind of seen that are like, wow, this is something that's really out of the box. I'm assuming, like with maybe AI, there's some predictive patterns that they can detect based on what you've been doing. Or I mean, I wonder if there's even just patterns from demographics. Like, you know, this, this, this group of people that lived in LA for some reason, we've seen like a population density of mental health issues. So maybe there's something that they can do like within that community to, to help the morale of that community. I'm not sure if that's something they can do like geographically as well.
- [28:47]
A
Yeah. So what we've been seeing is like for your standpoint is like schools being able to look at the school climate, the class climate, the different grades. Is there an incident from that? Especially like if a student's committed suicide, the whole class feels it right from that standpoint. So we've definitely seen ones that are actually kind of looking at kind of that dynamic and the classroom climate and also then offering skills, social emotional learning and resilience training to that area. Interesting1, Maslow AI has created an empathetic digital advisor. So it's understanding your tone, your voice, the text, being able to read that and then being able to kind of. It's almost like it's kind of like the her movie, right? Like, so it's like just saying a message like, hey, how are you today? You know, I've noticed you've been kind of quiet, you know, from that standpoint. And then, you know, I might say, well, I'm kind of feeling blue because, you know, Covid still is ravaging the world here. And then it might then say, well, you know, you know, why don't you try this or this? It will understand your preferences and kind of increasingly learn to offer our personalized resources from that. But they've been helping foster kids stay in touch with their case managers because they get lost through the system. Right. So they kind of in a way is kind of connected them and give them resources and really kind of leveraging all the content. So that has been really kind of novel on the AI. And to your point, with kind of seniors before, we see voice technology really taking off because seniors can use their voice kind of voice commands versus trying to figure out screens and, you know, pivoting from that. So we think Kind of with our smart homes and technology that for the future. Some other interesting ones that we have is Casana Health is our recent investment. And that is actually looking at, to your point, they've been doing it in universities and populations, on universities and how you're using your phone. So rather, and really kind of looking at the assessment process in a collapse standpoint. So rather than these standardized long psychological assessments, really kind of collapsing that predicting based on your, you know, what you want, your goals, your behavior on your phone, they actually can give you a whole personalized kind of care plan and action plan as well. Neolith is based on neuroscience. That's another great one coming out as well that we've invested in as well. Yeah.
- [31:28]
B
And then there's probably just impacts. There's, there's probably areas where they blend into other sectors. Right. So when you get into edtech and when you also get into just the future of work, people just are more engaged to learn interactively. And then also just employee retention obviously has a direct impact. Right. There's a loss of ROI if your employees are all facing some type of mental health issues because of the conditions. Right. I mean, people are feeling disconnected. There's a whole great resignation. Right. So a lot of people have just been, they've been disconnected for the last three years. And it's really just the pandemic that's triggered it. But there's been issues, I think, for several years. It's just now it's starting to kind of come out more with all that's happening. Right. And I think to your point, having more pathways to get reimbursed for it and actually treat it like a real issue that needs to be handled, I think that that opens up a lot of opportunities from the, the tech capital standpoint as well.
- [32:37]
A
So, yeah, I know to your point, the great resignations, anticipating like a quarter of the pop, you know, a quarter of the workforce is going to resign, right?
- [32:46]
B
Yeah.
- [32:47]
A
Because, you know, they didn't resign during COVID and now it's kind of opportunity. And then people haven't had a chance to reflect. Right. Like, what do they want out of their life? And so I do think there's going to be. And if you look at aging demographics as well, you know, we know that, you know, this is the first time we've had five generations in the workforce. Right. Because the seniors couldn't retire because they didn't have enough funding. You know, but now they're starting to, you know, it kind of, it might kind of flip. Right. So we need to be wary of where, where we're going as well. And I just think it's a real opportunity that we see employer groups now doing, putting these on as employee benefits, kind of for mental health. We see schools requiring social, emotional learning. And so I think we're going. And to your point, community coming in, community, caring adults, family connections. One of the interesting facts is you kind of think about longevity studies. The top, you know, you know that some of the top reasons why you live longer is, you know, not because you're not smoking or because you've lost weight. It's actually your social connections is a number one way to kind of. So I always think about that when I'm eating chocolate because I'm like, okay, I still am doing it with friends. I'm still good longer from that standpoint. But it is that social connection.
- [34:18]
B
Yeah. Having a tribe, like having a tribe of people that you have a support system. That way, if there is challenging times, at least you have someone to talk to. Because a lot of times we don't feel it's okay to talk about our problems. We don't want to, like, burden somebody else. But I think if you have a tribe, it's maybe a safe space where you can talk about those things. Right. I mean, look at our emerging manager program. You know, we can vent about. We can vent about issues with SPVs and, you know, the issues that we're dealing with, fund admin and all that. And, you know, nobody has to know.
- [34:50]
A
Yeah. Well, I was just gonna say you've been amazing, Joel, in creating those tribes. You know, I think you're a natural at it, and I think it's such a powerful, like, superpower that you have. So I'm excited and honored to be part of the cohort. Yeah, I know it's a few questions here. I don't know if.
- [35:09]
B
Yeah, we did. Let's take those real quick. So I guess, Jarlene, you had a question about accelerators, because what stands out in accelerators?
- [35:22]
A
Yes. So I was just curious as to what Faye and her firm. What is it that they look for? How is it that they kind of determine whether or not they're worth the effort in terms of the next steps and investment? Yeah, that's such a great question. Because there are hundreds of accelerators out there, so it's really kind of dependent on what phase you are in of your startup. Right. How you can leverage it and then the accelerator itself. So we've definitely seen some great. You know, we have. Our startups have been through several Accelerators as well. So really looking at what accelerator offers, like are they offering programs, introductions, are they helping you refine your pitch, are they giving you mentoring, are they coaching you? It's been interesting to see kind of, in a sense some of the big technology companies have these incubators as well. So then like Microsoft, Google, all of them now even give you additional resources and people and experts. So I know with Google they actually have AI people that can come help and look at it. So I do think these accelerators, especially if you're an early, early startup, can really kind of help jump start you and you know, kind of get your deck down your data room and get you connected. So, you know, we, we do connect with quite a few accelerators and look at their alumni classes and who's graduating and all that.
- [36:56]
B
Yeah, and I think a power tip too is building a relationship with those accelerators and getting to know those companies before the demo day. Because a lot of times when if you wait too long, you know you're just going to get boxed out. And the deals, especially the great companies that get over subscribed. So if you can kind of like have a, just a really good relationship with them, you can kind of check in with them and if you do your timing right, you might be able to catch them maybe a quarter before they even start the selection process or maybe they've already selected the selection. But it's super early so you get kind of like first dibs and you know you can, you can get some financial upside if you get in at the right valuation before all the, all the FOMO happens.
- [37:40]
A
Yes, exactly. All the frenzy. So we, we tend to kind of go in as mentoring coaches. So like we'll help with their pitch days or we'll give talks on you know, like kind of what trends we're seeing because we want to get a chance to know them and for them to know us and the kind of fun. So exactly to your point, you know, kind of the relationships I think are important too.
- [38:02]
B
Yeah, that's more. And then, you know, one thing I think that's super sensitive with healthcare is just knowing all the HIPAA compliances. So you know when you're building some type of healthcare product. Right. So I've actually talked to a few medical doctors that have wanted to build something and I had a lot of questions about hipaa. So are there consultants that you can contact to just make sure that whatever you do is HIPAA compliant? So it's good to have some type of advisor that makes sure that you're not, you know, like, because even though you're storing data and it's, you know, encrypted on Amazon Web Services, there's probably still some standard they have to follow to be HIPAA compliant. Right?
- [38:40]
A
Exactly. Definitely from that. So we have kind of an advisor network and then a luminary network of kind of subject matter expertise, industry reimbursement, health plan, you know, insurance provider. So depending on your startup we can kind of, you know, pair you up, meet you have introductions and kind of do deep dives on that. We're also kind of, you know, doing some sessions to of kind kind of review, you know, some, especially in healthcare, very complicated from that standpoint regularly.
- [39:15]
B
That's really helpful. So Farooq had a question about just due diligence process. Any advice on just performing great due diligence when you're looking at companies? And then I guess Farouk, feel free to expand on that. Yeah, basically what Joel said. Hi Faye, thank you for very much for coming and speaking to us. I really appreciate your time. So I was just wondering, your process of due diligence, when you're evaluating startups, how does that work? Does that start with the analyst or does that start with the CEO or the managing director? Like how does it usually flow?
- [39:50]
A
It usually flows with the CEO or the founder really and kind of understanding kind of their objectives, their product roadmap, their traction, how much traction they got, evidence based to know that, you know, it's a valid product market fit from that standpoint and you know, the financial, what their run rate is. Have they raised something before their cap table? You know, like definitely all the financial rigor, their projections, their pipeline about how they're going with as far as their potential growth, how are they going to go meet it, how are you, how was it? It's good.
- [40:31]
B
Yeah. When it comes to due diligence, I guess. Are there any looks. Can you guys go on mute please? So when you, when you're looking at like you know, just return analysis, you know, I guess some good things to look at is probably like the, you know, comparable companies in the past, like what the day, you know, what, what did they exit at and what was like the revenue that they had and then what the valuation was when they exited. Right. So that's kind of something that I look at any other, any other frameworks that you guys have kind of picked up or learned as far as just kind of exit return analysis, like saying, hey, you know, what is this going to be a 10x or 20x, you know, based on comps. Any other formulas that you think are helpful?
- [41:17]
A
I don't know. I don't think there's just like a recipe formula because it really depends because we look at eight categories and they're all a little bit different from that. So there's not one kind of recipe. One thing though, especially with early stage startups that we're investing in, you're really investing in the team. Right. And you know, very early stages of the product. So we actually meet other members of the team. So we make sure we meet, you know, if there are multiple co founders, we also talk to their other investors about why and then we also like to talk to at least, you know, one client. So I think we tend to kind of, you know, get a little bit kind of background reference on that person because kind of, as I was saying, like you, when you're investing with someone, it's kind of like a marriage you can't get divorced in. Right. So it. And it has to go to both ways. You know, it has to be for the startup that is aligned, the VC and the vc, vice versa. Because you're kind of working together because, you know, you've seen some sticky situations, right. Where, you know, and it's not a fun place to be.
- [42:24]
B
Sure. Yeah. I've seen some situations where founders did take money and then they regretted it and then they had to figure out a way to actually transfer those shares because the investor they were working with was just not a good fit. Like the investor style was not a good fit because they were kind of really trying to tell the company what to do. And I think one of my favorite expressions that I've heard previously is sometimes you're like a grandparent. You're giving them capital and you're coaching them, but you're not spanking them or disciplining them aggressively like you do as a parent or not aggressively worried. But you're giving them the guidance. But they are the founding team. So you're hoping that they can go off and, and build the company and get to the metrics that they're setting up for themselves. I would say yeah.
- [43:20]
A
And we encourage our startups to do due diligence on us as well. Right. Like, you know, so that they know it's a right fit and kind of expectation setting.
- [43:30]
B
Yeah, no, it's really helpful. Any other questions, guys? Feel free to ping some questions. I guess another, you know, good thing that maybe go a little deeper on is just, just learnings that you've learned as you're building the fund you know, as far as maybe portfolio construction, as far as building LPs, building like an LP pipeline, some of the people in this group are, you know, aspiring VCs, or also possibly thinking about building their fund at some point. You know, they want to get some experience and then maybe eventually start, start their own fund and have their own mission. So any, any piece of advice as far as maybe kind of ideating the mission of the fund and then kind of like, hey, how do you decide between a $20 million fund versus a $10 million fund? You know, and sometimes what I hear is it's the same amount of work to raise, you know, a $30 million fund that it is a $15 million fund. So, you know, so any of your thoughts on that as far as just fund size and those kind of decisions? Because that's what's essentially going to be inked on the lpa, right, when you're putting together your fund and working with the attorneys, you know, so those decisions, I guess, you know, doesn't have to be specific to your decisions, but just any advice on how can, how people can start navigating those, those decisions?
- [44:52]
A
No, I think that, you know, as we're starting to think about our second fund, we're going through a lot of those kind of decisions. Again, from that standpoint to your point, it's, it is a lot of work and you have to build those relationships. So for all of you thinking about that, start building those relationships now. I mean, Joel's a wonderful connector and kind of this group as well as you start building those relationships. What I've seen interesting for, you know, as he's mentioning, some of you are just thinking about it or kind of start is I've seen some people doing angel investing and showing that as part of their track record to build a venture fund, because it's showing that you have the due diligence to pick a winner from that standpoint and getting following funding. So I thought that was a really interesting way for new emerging managers to kind of demonstrate their skill set was doing angel funding. And there's a lot of angel cohorts that, you know, you can do it without as big of a lift, right. That you can actually kind of co invest in. But I thought that was an interesting way to demonstrate early also, I think you have to kind of look at the fund you're wanting raise and who you're going to approach. So some Luna Partners are not going to go into any smaller fund under, you know, 50 million. Right. Like some are, you know, so it's also like how you're going to do your target list, kind of your industry group in that area. Like for example, digital therapeutics takes millions and millions of dollars, right? Like so you got to have a big fund to make an impact, right. You know, versus maybe consumer tech, not as high or, you know, so it all depends where you're at and also what you're comfortable with. And also look at the longevity of the fund, right? Like if you're the ten year fund, think about it personally from you, how much you want to manage how many portfolio companies. Another interesting point someone is saying too is do you want to commit that you have to be on every board. And some, some funds are like, I don't need to be on the board, I'll be a board observer or I won't, you know, we'll do it a separate way, you know, so that's also another one like how do you want your style and your culture? What do you want to be known for as your, you know, so it's almost like you're, you have to think of what your digital brand will be in your differentiation in the market. How do you want to be known and what is your superpower?
- [47:16]
B
So sure, yeah, it's really helpful. And you know, couple crazy things is the power of Twitter. I mean I've seen if you go deep enough into the rabbit hole, you can find strings where there's LPs asking for like interesting funds to invest in. I've seen that a few times. A lot of times you got to go a little more creative than versus just googling, hey top LPs and in San Francisco or New York or family office, New York City on Google, you'll be surprised if you find the right type of hashtags. There are some interesting LPs on Twitter that just are not on LinkedIn or they're probably on LinkedIn but they're not responding to DMs the same way they are on Twitter. So just be open to different channels. I would say one thing that I learned too because I get a lot of these nuggets through the program. So some of like the next gen family offices are responding on Instagram versus Twitter. So try to figure out to Faye's point, if it's like a super old school family office, they're probably not going to be on Instagram. They probably have a formal process. So really trying to get integrated into that process. And I guess maybe you can give some insights on relationship building as a whole. You talked about building relationships so what are some tips that you'd give as far as trying to build relationships and find the right communities to be part of when you're maybe raising a fund?
- [48:55]
A
Yeah, no, I think relationships is so key and to build them early, not just right before your fund. From that standpoint, if you can get a warm intro. That's the part I liked about LinkedIn is, you know, there's a particular venture fund you're tackling and out of all the, and I'll show you all the employees working there, out of any of those employees, do you have a connection, even if it's, you know, first, second, third. Right. That you can connect to them in some way or somehow. So I think getting that referral, that connection, the warm introduction is great. I've also found I do quite a bit of speaking as well and kind of conferences and where we're going. And you, you also find interesting people as you're kind of speaking kind of your thesis, where you're investing and kind of trends you're going from that and kind of build a relationship. Once you have that contact, though, it's not like one and done, you know, like, check they're on this nice little Excel spreadsheet and you just put it away in a binder. I would, you know, and what I've seen is like, give them quarterly updates. Just a quick email saying, and remember, like a key thing about them, you know, this family office is really interested in health care, but it's globally. Right? Like, so I say, hey, I saw this interesting article on global investments in healthcare. Really skyrocketing in Japan because of the elderly population. I thought of you. Our fund is doing this right now. We're getting ready to prepare for our raise. Then be happy to talk. So keep those connections warm. Even though you might, you know, you're trying to build it for the future. You're trying to build trust and credibility. You might be saying, hey, I just did an angel investment in this great startup, exited at this amount. Because you're trying to build that relationship. They're not always going to respond because they get quite a few investor updates from that standpoint. But they're going to remember you the next time you call. Right. Like, oh, yeah, she, you know, I've kind of been watching your progress from that standpoint. So.
- [51:04]
B
Yeah, and I always, I always believe that if you can stack favors, that can also just compound goodwill. Right. So if there's a family office that you just want to add to your tribe, you know, you, maybe you don't Ask for funding right now. You know, at some point you want to work with them, but you just try to figure out what they need and what they're looking for. And you know, maybe they want to get connected with a certain foundation and you happen to be connected to them and you just kind of connect with them, give them like five, six other favors and then over time it just compounds. And then they're like, wait a minute, like Faye, how can we help you? You know, and yeah, and then you say, hey, you know, let me, do you want me to send you the docs or exactly?
- [51:45]
A
No, I, I think that's a really important one. I know with some, I, I, I thought networking and that, you know, in the beginning was like, oh, I felt like it was so, you know, like you have this intention when I flipped it around of like, how can I help you? Like, it's so much because then you're building a relationship, you're starting to build trust. So that's why I, I do quite a bit of volunteering and mentoring, advising with quite a few startups and foundations.
- [52:19]
B
So that's another great hack. I think some of the founders have done this hack where they just volunteer at demo days and a lot of times those demo days, all the VCs are hanging out there. So I think if you can find, I've seen some of these bigger family office events like Opal, they always need volunteers. So if you can just show up as a volunteer and help out, that at least gives you a free ticket. And just by default you're in that conference where all those people are. So that trying to, again, trying to find creative ways to get plugged in always helps.
- [52:55]
A
Right? Same with all the accelerators, incubators, demo days.
- [53:03]
B
Those are some, yeah, that's helpful. Well, we got a couple minutes left. I always leave the discussion with just one question. Any piece of advice that you have from maybe a mentor or one of your co founders that could be recent or just kind of that's traveled with you that you want to share with us and maybe we can wrap up with that.
- [53:28]
A
I think, you know, when it comes down to, is a people business, so you know the team you're investing in, the team you work. So as you're thinking about building your own team, it's important to kind of look at that skill set, have that honesty, kind of transparency and visibility to that. So I think for me, like as I go through my experiences, it really is about the people, whether it's what you call as your network, your team, the startups you invest in, your co investors, your partners that adopt the startups. Right. Because we're always doing introductions. So we think about it as like an ecosystem. Right. So how can you set up these startups for success and support them in multiple ways?
- [54:20]
B
Yeah, that's really helpful advice. Well, Faye, thanks for coming and popping in and excited to have you in our ecosystem and just super valuable to have your expertise and network and support. So excited to work closely with you in the next couple months.
- [54:39]
A
Sam.