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- [00:00]
Mark Yuday
And now they're probably one of my most valuable partners and I'm not invested with them, but we share deals all the time. And so, yeah, that's sort of a. It was another point of edification for me that you need to be able to make commitments of time acting like you're too cool as a venture capitalist and that, you know, everything is not going to get you far. Especially nowadays when, when venture capital is so saturated, everybody has money. There's. There's billions and billions of dollars pouring into biotech. I have not very much money compared to a lot of these big institutional VCs, but I'm also willing to travel and meet people and get in share deal flow. So I think that was a big differentiator for me right away.
- [00:41]
Joel Palo Thinkle
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, and how global markets are driving capital allocation. So join us on this journey as we explore these insights.
- [01:05]
Mark Yuday
Sounds good.
- [01:09]
Joel Palo Thinkle
Cool. So I think we are live. We're all set here. Looks like it's kicking off, but we have Mark Yuday from Hector Ventures. So excited to have you here. It's been great chatting with you the last couple days and learning more about your background and you have a really interesting career. There's a lot of parallels that I have, you know, working in big companies, trying to stimulate innovation at big companies, and also pivoting my career a few times too. So really excited to learn more. Mark, thanks for being generous with your time and offering up some mentorship. So why don't we kick it off and learn a little more about your background and your career. Where did you grow up, what did your parents do, and what did you think your career was going to be? And tell us the whole story of how it evolved. And I know you've got some VC travel stories as well. So excited. I feel like that's going to be part of the highlight of, of this discussion. And I know you got to be a little anonymous, but. But excited to hear a lot, all that stuff. Storytelling is really the heart of venture capital.
- [02:16]
Mark Yuday
Yeah, yeah, sounds good. And thanks for having me on. I'm pretty excited. This will be only my second podcast ever in my first live stream, so I'm pretty pumped.
- [02:24]
Joel Palo Thinkle
Nice.
- [02:25]
Mark Yuday
Yeah. So I grew up in D.C. just outside D.C. in College Park, Maryland. My parents, so my dad was an M and a lawyer and he's actually my Co managing partner now for Hector Ventures because he just retired from his law position, but he was an M and a lawyer in pharma for a long time. My mom is an activist, but also a stay at home mom in a lot of regards because my oldest brother is pretty severely autistic. And that informs a lot of what I ended up doing with this career choice as well. But we can get into that in a little bit. I really had no direction coming out of high school. I had friends who knew they wanted to be doctors, knew they wanted to be lawyers or economists. My brother and my dad are both trained economists. My brother's a PhD at UVA currently. But I didn't really have a lot of direction. I started taking biology classes and economics classes undergrad in my freshman year. But I pretty quickly fell in love with psychology and that translated quickly into me moving towards neuroscience. And that was really my first instance of getting acquainted with science as a practice. I got involved in some labs at the University of Rochester where I was doing my undergrad degree, and I just kept building from there. I worked on some genetics projects, some public health projects, but everything was ultimately oriented towards mental health and neuroscience and psychology. But towards the end of my career I was realizing that I still. Or sorry, my undergrad career, I was realizing I still didn't know what I wanted to do next. And I wasn't sold on doing the medical school route. I thought maybe I would do a PhD in cognitive neuroscience. But because I was still playing that choice, I decided to hedge my bets and also pick up a business degree. So that ended up being a really good decision. So I wrapped up a business degree in about a year and a half at the end of my career at.
- [04:14]
Joel Palo Thinkle
U of R. What did the friends in your community or family community do? Because I mean, when I grew up in Florida, venture and investing wasn't really talked about, you know, it was really either, you know, especially in Florida. Hospitality and healthcare is a, is a huge industry. So they were, you know, really like, hey, try to get a tech job or work in it or try to become a medical doctor. But you know, what were your parents trying to advise you to do? And then obviously just your, your, your family network and just kind of where you grew up. What were most of the typical industries in that area?
- [04:51]
Mark Yuday
Yeah, well, I think my family definitely had a very creative approach or different approach just because of our familial situation. And my brother and they were always open to me doing whatever I wanted. They wanted me to pursue my goals and figure out what I wanted to do. And they didn't really foist any goals upon me. For a lot of my high school career, I thought I was gonna be a professional athlete, which I think a lot of kids do when they're involved in high level high school athletics. So I didn't cultivate a lot of the intellectual interest that I had until later on in high school. But definitely growing up outside D.C. everybody was involved in government in some capacity. All of my dad's friends were obviously lawyers, but most of them were more involved with the Federal Trade Commission or the Department of Justice. And I would say probably 3/4 of my graduating class ended up doing internships at congressional offices. So everybody was really geared towards the political side. I think science was an interest of a lot of my friends, but nobody was really getting pushed in that direction, and I certainly wasn't either. I thought I would take the law route, and I think a lot of kids are just like, I'll do what my parents do. So I thought maybe I would end up getting a law degree, but really I wasn't sure.
- [06:03]
Joel Palo Thinkle
Yeah, yeah. And you got to do what makes you happy. So I'm assuming when you thought about the law degree, that probably wasn't something that got you really excited?
- [06:10]
Mark Yuday
I'm assuming no. Well, I don't know. Maybe back then it did. It's, you know, it's hard to say in retrospect, but I'm finding now that I actually am really interested in intellectual property. And I think that's something that comes from. From playing around in the biotech and the med tech space. You realize how important the legal process is in that, in innovating. And I think intellectual property has become really important. I've actually revisited the idea of maybe building on some education and law, but. But yeah, there.
- [06:40]
Joel Palo Thinkle
Yeah. I mean, I'm an investor in a couple healthcare companies. And one thing that I've learned from IP is, you know, you can create an IP portfolio. So if you build some type of technology, that unique casing and the unique packaging and the shape of it all comes together as like a portfolio. So all of those individual things could be assets that you would own the rights to. So that's been something that I've been learning. But what else have you learned with your deeper experience in healthcare? Just on the IP side, some trends to consider.
- [07:15]
Mark Yuday
Yeah, well, maybe we could. Yeah, I can touch on what we're trying to do in the space and then maybe that'll help color the IP landscape. So we, we formed Hector Ventures, basically to tap into what I was seeing in the psychedelic space. And I had had a lot of intellectual interest in psychedelics for a long time because of my work in neuroscience. And basically I didn't want to miss the bus. And I was, I was working in a job where I wasn't really happy at the time, doing corporate development. And also, I mean, there's, there's a million ways to think now about how what happened a year ago when I formed Hector Ventures. But I was also some trends in the crypto space that were supporting me leaving my job. But, but yeah, we initially started investing in psychedelics. We're invested across a few funds. But neuroscience, I mean, psychedelics is just one aspect of neuroscience or of neuropsychiatric innovation. There's medical technology and biotechnologies. And being in Boston right now, I'm exposed to a lot of those different technologies like cells and gene therapy. So there's a lot to do. There's tons of different ways to innovate in neuroscience, not to mention software. So intellectual property plays a huge part in that. And that's because biotech and med tech and mental health and medicine are very different venture capital arenas than something more traditional like software as a service or software in general marketplaces, etc. Because oftentimes you're not going to see revenue from a drug or see revenue from a medical device for 10 years because they have to go through the entire clinical regulatory process. And what that means is you have to look for value otherwise or otherware, other places within these companies. You have to understand the IP landscape in order to project outward and see where they might succeed. So when I look at companies, and I think when a lot of people look at companies, they're looking for platform technologies in the biotech space. And that means that you want to see a company with a patent estate, not just one IP item, one filed composition of matter patent around a drug, but they want to see a patent estate covering manufacturing processes, covering the composition of matter, covering trademarks, covering all sorts of different intellectual property items. So that's what I like to see. I like companies that have way more than one patent and especially across different areas. And I think in psychedelics in particular, there's a type of patent called a risk and mitigation strategy, and that it sounds like a weak area of IP because it's sort of just a strategic effort. It's not really a. It's not a composition of matter, it's not an item, it's not hard, it's not hardware. But in reality, that's really important to have a strategy for mitigating risk within some of these therapeutic contexts. So there's a lot of different ways to think about intellectual property, but I think it plays a more central role in biotech and med tech than it does in any of the other sort of consumer spaces or software spaces.
- [10:11]
Joel Palo Thinkle
Got it. And we're both buddies with Bram. I was fortunate to. And I hope I get to do this with you too. But I got to hang out with him in person. He visited me in New York, so that's kind of a new thing for me. You know, just whenever BCS come to New York, I try to show them around a little bit and hang out with them. So he unpacked the psychedelic space for me. And you started touching on this. Right. It's really one section of neurotechnologies. One thing that him and I did not talk about is Neuralink. So hardware, consumer products, do you see that evolving? You know, because what Elon Musk believes is, you know, there's things that he can do with neuralink where he can correct vision, he can get people to walk. So I'm not sure if those are things that you're looking at too kind of augmenting the body with hardware integrated in with software. And then obviously there's risks. What if it causes bleeding or if there's some head trauma from the hardware? So we'd love to hear, number one, your take on how to unpack the neurotechnology space, including psychedelics and then just hardware and software.
- [11:20]
Mark Yuday
Gotcha. Yeah. And honestly, I haven't dug into Neuralink too much, so I don't want to speak to that directly.
- [11:26]
Joel Palo Thinkle
Yep.
- [11:27]
Mark Yuday
But primarily I'm focused on medical intervention. So there. There's. I mean, I think neuralink is more poised for augmentation. How can we make people's thinking better or how can we augment reality to make it better for us? And I'm not. That isn't really my space of expertise. I really like medical because the problem is defined. I think a lot with tech companies and software companies in general, they always pitch themselves as solving some sort of problem, but in reality, they're creating an advantage that then becomes a problem for other people not to have. So they're creating the market like Uber. You can say Uber was solving a problem, but in reality, they were creating a new market. Whereas with medical innovation, the market is there, the patients are there, and they have a really strict need for. For healing. So I guess that was sort of a tangent And Bram touched on this really well in segmenting the psychedelic market and touching on where it's going to be valuable. But yeah, I'm looking at a few areas. So I think medical technology, what you're referring to, hardware, devices, are going to be really important. But I also think biologics, like cell therapies and gene therapies, when you hear about crispr, you're talking about biological therapies. And then psychedelics is more traditional thinking about pharmaceuticals. And people don't want to say that psychedelic fits in the pharmaceutical model, but it does, and it will have to in order for innovation actually to commercialize. So those are sort of the three areas I would say psychedelics and small molecules or pharmaceuticals, then biotechnology or biologics, and then medical technology, which could encompass hardware and software as a medical device, which is actually trending field right now. And I think those all have their own advantages. They all have risk benefit profiles that differ. And you have to always think about innovations in that space with relation to a specific disease. So you can't just say in general, psychedelics are going to cure everything. And right now that's something that people do say. They refer to psychedelics like they're a panacea, where they're going to cure schizophrenia, they're going to cure autism, they're going to cure anxiety, depression, ptsd. And I don't think that's the case, and I don't think that's where the science is pointing. I think psychedelics have a really clear path and they have tons of clinical and anecdotal evidence showing that they're going to help with certain mood disorders. That's the class that I would put them as having the most benefit. So mood disorders are things like anxiety, intractable depression. Sometimes people will characterize post traumatic stress disorder as a mood disorder. But I think medical technology hardware is going to have its own play. I think for neurodevelopmental disorders like autism, I think medical technology has a better risk benefit profile. And I think that has a lot to do with the fact that autism has poor diagnostic criteria. So certain drugs aren't amenable to the clinical pathway, but medical technology has a different regulatory pathway that perhaps makes it more amenable to neurodevelopmental disorders. And the same goes for biologics. I think neurodegeneration is going to be captured by biologics. So think things like Parkinson's and Alzheimer's, where the brain is actually deteriorating, those are going to be tapped into by biological therapies. And that's actually a space I worked on recently when I was doing some consulting for an academic neuroscience venture fund. So I'm really excited about the biologic space as well.
- [14:52]
Joel Palo Thinkle
Yeah, no, it's exciting. Do you see software also augmenting the psychedelic space? Because usually the medium is usually some type of medication. Right. But do you think. I don't know. I mean, this is crazy, but maybe there's some type of virtual reality or some type of software that could kind of get you to the same type of sensation that you would feel when you're on psychedelics. Do you think that would ever happen in the future?
- [15:18]
Mark Yuday
Yeah, that's a good question. I think so. There's a few ways to address it. I think virtual reality and augmented reality are going to play a big role in integration therapy for psychedelics. So I think augmenting drugs. And you can also think about drug device combination. This is an area I'm really, really keen on is, is how can you combine traditional medical technology with traditional drugs in order to augment both or to increase the efficacy of a therapy. But there's also this trend, which I'm sure you've heard of if you're in New York, called digital therapeutics. So this is a new class where people are actually seeking to get digital programs reimbursed by insurance for different indications like depression or obsessive compulsive disorder, in some cases obesity. And I think it's interesting from a commercial perspective, I really like the idea of applying software to the medical space because software is scalable in a way that manufacturing processes for drugs or medical devices are not. They're just software is a virtual space. So it's extremely scalable. It's easy to implement and it's easy to get higher patient compliance. But the case is, I don't think digital therapeutics will ever be as effective. And this is just an intuition. But anybody who's ever taken a drug, especially a psychedelic or some sort of benzodiazepine or an antidepressant, knows that the effect is noticeable. And that's pretty important. A digital therapeutic is going to be extremely safe because it's so low power. So I'm not super attracted to that space as a way to cure diseases. I think it has a lot of commercial potential, especially, like I'm saying, as an adjuvant to some of the traditional medical technologies or small molecules. But I'm not super attracted to digital therapeutics in and of themselves.
- [17:11]
Joel Palo Thinkle
It could just augment the real therapeutics, probably as if you're trying to wean off of something maybe. Yeah, I mean, I've seen people with post traumatic stress. I've seen this in the past where, you know, people in the military, they, they have like virtual reality headsets that have been proven to be more calming. So I think some of those digital experiences now, you know, heading into the metaverse, going into a virtual world where you can have maybe a support group or do something that's more relaxing, maybe that could help with post traumatic stress. Is that a sector as well of like the patients that are seeking psychedelics therapy, people who have like PTSD from the military? Or is that a different market?
- [17:52]
Mark Yuday
Yeah, no, that's a huge market. And it's actually a really interesting sort of cultural phenomenon as well. Because traditionally we think of military communities as highly conservative and not willing to go after these sort of woo woo drugs like psychedelics. But there's huge traction and a lot of these veteran support groups and big veteran lobby groups are leading the charge for legalization, especially decriminalization in states at the state level, but also legalization for different medical research institutes to start leveraging some of these drugs in their, in their clinics. So, yeah, that's a really interesting phenomenon. And I think there's a lot of veterans and active military who have these conditions who are keen on getting those drugs into the market for themselves and for their community at large. But yes, certainly ptsd. Right now, one of the most advanced clinical trials is MDMA for ptsd, which is being run by maps, which is a big multidisciplinary association for psychedelic studies. So they're one of the true leaders in this space and they led a lot of the initial legalization efforts. But yeah, that's one of the most advanced indications for treatment is PTSD with mdma.
- [19:04]
Joel Palo Thinkle
Yeah. I want to take a step back and go back to your career because I think we jumped into your thesis and the strategy that you're tackling with your investment approach. But I think there was a couple of details that you talked to me about as far as just your career journey. What was going on in your mind when you realized that you wanted to be a vc. I knew you worked at a couple large companies. I think you also transitioned a little bit into corporate strategies. So maybe tell us kind of that transitional point, because some of the people on this call are people who are looking to start their own fund. They're also looking to possibly just pivot their career into a full time investor role. Some of these people come from tech and product. So what was going on in your mind. And maybe while you're doing that, maybe kind of drop in a couple suggestions on how people can think about just their whole career journey as a whole.
- [20:00]
Mark Yuday
Yeah, yeah, that's a great point. And actually it's. I think it's a really important point because I struggled with this for a long time. And I think science in general is a place where people struggle with careers. And I experienced myself when I left the U of R. And that's part of the reason I picked up the business degree, because I started to realize that there weren't a lot of careers out there, or at least ways that I knew how to make a career out of my training. So I went to the NIH and I did a brief stint a fellowship in neurogenetics, where I ended up working with some pretty cool models, Optogenetics, where you shine light on a mouse brain that you've gene edited and you can light up different neurons. But in retrospect it's pretty sci fi crazy. But I wasn't happy in the lab because I feel that I'm really. I like to communicate, I like to communicate science, I like to think about science and the philosophy behind science, but I don't necessarily like doing the tasks, the repetitive tasks that lab work entails. So I ended up not wanting to pursue the PhD route that I was trending towards. And then I really didn't know what to do. So I started applying everywhere I saw on LinkedIn. And I felt, just based on some conversations with friends, that sales was the easiest way to break out of sort of a fixed career path and do something new. And if you can communicate, you can do sales in a lot of regards, especially if you have a technical background. So I moved and I went and I worked for a Canadian company that was leveraging some pretty awesome technologies to develop new in vitro models. And I was doing technical sales. And I ended up loving that. It was sort of the first time in my life I felt really competent doing what I was doing. And that was communicating science, talking with PhDs. And I also felt pretty hot on myself because most of the other salespeople at that company were PhDs. And I was coming out of it without a single advanced degree, not even a master's. So I felt pretty good about myself, I felt pretty smart. And I trended there and I was doing really well. And I got promoted and I was doing field sales. And then I think a little bit of blind ambition, but also just general ambition led me to go work at A startup where they were just going to pay me more and give me a management title. And the experience there was edifying in a lot of ways. And I won't get into too many ways. It was edifying in the negative sense, but it was enough for me to give me the impetus to finally leave and pursue what I'd want to do, which was think deeply about neuroscience. And I'd also had some experience in the public equity market where I'd been trading based on what I saw as biotech fundamentals. So how do the technologies work? Are they going to work? Are the drugs going to work? And I had been trading in the public markets based on what I saw as technical knowledge and failing, because in reality, the public equity markets are tied a lot to consumer sentiment and psychology, and nowadays especially tied to day trader sentiment. So that for me was another thing where I realized if I want to make money betting on neuroscience companies, it's going to have to be in the private markets, it's going to have to be in venture capital. And that also made me more differentiated because I was able to analyze companies before they were in the private market just based on some sort of technical knowledge in neuroscience and genetics. So all in all, that's how I got to the place where I was at. I formed my llc, sort of on a whim to invest in one fund that I was really attracted to. And then we got off to the races. I started to build some traction in a real big personal network within the psychedelic sphere. And I was loving it. I was loving every aspect. Looking at companies, talking to entrepreneurs, talking to other venture capitalists couldn't have been more intellectually and emotionally rewarding. And also within psychedelics, there's a particularly interesting crop of people. I mean, it's a confluence of, of hippies and neuroscientists and regulatory professionals. And I mean, there are a lot of gamers and crypto people as well who were just made their millions and then wanted to put into something that they saw as ethical. So I met a lot of crazy people, a lot. I met a lot of really smart people. I met a fair amount of charlatans and people who were just trying to make a quick buck in the space as well. But yeah, so yeah, I'd love to touch on that some more because I think personal networking, what I learned in sales, actually translated really well to what I ended up doing over the last year or so.
- [24:15]
Joel Palo Thinkle
You know, it's funny too, because the. The cat that I had with Bram, it's on YouTube. I mean, we started talking about happiness, you know, because he was working at a hedge fund. And look, I've sold out too, right? I mean, I. In the past, I've taken a job because of the pay. I'm like, look, you know what? I'll just get paid more. It's a big company. I'll. I'll save some money up. But the downstream impacts really just kind of make you not really happy with what you're doing. And you're also kind of wasting your time. So the money doesn't really make up for it. You end up maybe using, just kind of saving it up for whatever you need. But Bram was kind of talking about that and a lot of other people that kind of pivoted into vc. They were in very lucrative jobs that paid well, but they just didn't want to invest kind of their time into something that's not aligned with their purpose. So was that also kind of going on in your head? Because you did take some great roles. And you know what, what was like the trigger point that said, screw it, I'm going to get into venture. And I think you also started doing some syndicates as well, I guess to kind of build the community and the network. But, you know, do you remember that trigger point that said, hey, you know what? I. That's it. I'm gonna, I'm gonna turn around and, you know, launch this S Corp or holding company and kick things off?
- [25:36]
Mark Yuday
Yeah, for sure. And I think initially, like I said, the first company I was with couldn't have been better. I mean, it was. When you work in sales, especially coming out of a lab, it's exponential learning. And I was working at the perfect company. And this is what I. When I talk to undergrads now, this is the. Is get into sales because consulting, it's a crapshoot. If you're not the top of your class, you're not going to go work at Deloitte or Bain or whatever. And you're certainly not going to get a job at a venture capital group. You're not going to work for Bain Capital. And I knew that about myself. I was just realistic. I spent a lot of time in my frat kind of messing around, and I had great grades, but it was all trending towards the research route. So sales quickly taught me a lot of what I need to know about the business world. In sales, you interact with every aspect, every part of the organizational architecture within the company. So you work with manufacturing, you work with the supply chain guys, you have to work with finance in A lot of regards and accounting, then certainly you're always involved in operations as well. And then the sales, what people call soft skills from sales are. I mean, soft is just a misnomer. I mean, everybody who can communicate does better in whatever role they're working in. It doesn't matter if it's finance or accounting. Learned how to communicate. I learned how to make value propositions, which I think are. Are something that people just don't really key on when they're making pitches. They don't really understand the concept of value proposition. They think that they just have to sell a product which is their company. But in reality, you have to sell the relationship of a venture capitalist to that product. How do you create value for the venture capitalist? How do you make it a win win situation? How do you empathize with the people on the other side of the call? So all those things are really important for me to learn off the bat. And I think so. When I left and went to the other company, I wanted to get some experience working on licensing, corporate development, and I got that. More of those internal sort of technical roles. But I picked up on the symptoms pretty quickly of myself regressing to some of the tendencies I had when I was, I guess, a less motivated person. So all of a sudden I was getting home from work and playing video games again instead of reading, which I'm a really avid reader. So I was playing video games incessantly. And I was like, why am I doing this? I was having headaches all the time. I was staring at screens too much. And I just realized that, I mean, I could continue to do this because they were paying me really well, or I could chase a dream. As much as that sounds like a cliche, but so I did it. So I just left. I mean, I hedged my bets a little bit by starting the LLC before I left and making my first fund investment. But yeah, that's how it worked out. That's how it shaped up.
- [28:18]
Joel Palo Thinkle
So we've got a question here which could be a tactical piece of advice for one of the people here. So Manveer had a question. You know, how do you find deals? Do they come to you? So I. I normally get them through two channels where they're either inbound or outbound. But, you know, how are you sourcing and screening and. And what are some criteria that you look for when you find a quality deal? That's part of your thesis?
- [28:45]
Mark Yuday
Yeah, that's a good question. And yeah, I keep making these comparisons about how biotech and medtech is different from other investment sectors, but it really is central to the investing strategy here and it also relates to what sort of skills you need to get into VC for biotech and medtech. You don't need a finance background to do biotech and medtech investing. You don't need to have experience with financial forecasting because these companies aren't generating revenue. I haven't invested in a company yet that's generating any form of revenue. So you're not going to use annual recurring revenue as a metric to forecast where a company is trending. You can't rely on brand entrenchment or anything like that. So you have to really understand the technical fundamentals. You have to understand the total addressable market which speaks I guess to the big patient classes, like how many people have PTSD in the world? Is the FDA approving these for marketing and are they going to be reimbursed by the big payer insurance systems? So there's all sorts of factors in there. But like I mentioned before, I think intellectual property is central. So I'm not going to look at a company if they just have a brand and a consumer product and no ip, especially in psychedelics. I really like companies that have a good patent estate, a good IP portfolio, and that's not quantitative but you know, qualitative matters as well. So in terms of, that's just a point on like my initial first line due diligence. But in terms of deal sourcing, it's all about building a personal network. You can get on angel list and shop around and look for cool deals. But I think Bram touched on this in the Last call too where he talks about how in the public equities market you can buy data from Bloomberg, but if the data is there, it's already been created and everybody else can leverage it, you're losing your opportunity for arbitrage. I think the same goes for venture capital and the data is even scarcer so it creates a better opportunity for arbitrage. But so back to my initial point, it's all about building a personal network. You're going to get the best deals from people that you know really well, that you know intimately, that you trust and that want to work with you. And that's what I, I learned that from sales, but I translated it really quickly and that's where I wanted to touch on some of these VC travel stories is early on after I invested in. Well, another point is in order to get the fund off the ground, I invested in other funds and I made connections with those funds because I wanted to get access to their proprietary deal flow. I wanted to learn from them, I wanted to know about their due diligence process as well. And they'll open that up to you because cash is the name of the game. So if you're willing to pay them, you're willing to be a limited partner.
- [31:19]
Joel Palo Thinkle
Are they in the psychedelic space as well or were they just in different sectors?
- [31:23]
Mark Yuday
So initially we just invested in psychedelics. Right now we're playing around with you neuroscience software funds. But yeah, it was initially just psychedelics. And I'm not as a solo gp, you have to be realistic about how much you know as well. You can't think you're a genius. You're not going to make it very far if you're not willing to leverage the people around you and their expertise. And I'm not a PhD for example, but I want to invest in neuroscience. So I have a, I have a basic neuroscience understanding. Understanding. But what that means is not that I'm able to assess every deal, but I'm able to assess the people who are looking at these deals and assess their process for due diligence. Do they have a good understanding of pharmacology? Are they approaching the intellectual property in a way that makes sense? Do they understand the regulatory pathway for these drugs? So I was able to assess that pretty quickly when I was looking at the funds. I invested in a few blue chip keystone psychedelic funds. But then from there it was just building personal networks. So whenever anybody invited me to meet, if they even had any sort of value potential, I was meeting with them, whether virtually or in person. And I was willing to take the risks of my time early on because I mean, time is money. But I was willing to risk a lot of my time to meet the right people. So for example, one of the stories I wanted to touch on is I had connected through a sort of three degrees of separation, random connection through my dad to one of these early seed series a stage psychedelic funds. And they invited me to come and visit their, their farm which was out in the middle of New York. And they're, they ran a non profit as well. So they wanted me to visit and see their nonprofit and get a sense for what they're doing. And they gave me the directions. It was, it was like five hours away from my apartment in Boston. And up until the Friday when I was supposed to leave, I was like, why am I doing this? I don't even know these guys. They're inviting me to a farm with no cell service. They could just be major psychedelic hippies who don't even have a good portfolio. But after just thinking about it more, I was like, you have to take the risk like this. And I ended up going out there and spending a day with them. And it was one of the most rewarding experiences of my life. And it's also, and it's not like we're out there doing psychedelics or anything. We were just meeting, we were talking, we were discussing venture capital, we were discussing ethics and thinking about they have a really keen sense of what's happening in the veteran community. So we're talking about that. And now they're probably one of my most valuable partners and I'm not invested with them, but we share deals all the time. And so yeah, that's sort of. It was another point of edification for me that you need to be able to make commitments of time acting like you're too cool as a venture capitalist and that, you know, everything is not going to get you far. Especially nowadays when venture capital is so saturated, everybody has money. There's, there's billions and billions of dollars pouring into biotech. I have not very much money compared to a lot of these big institutional VCs. But I'm also willing to travel and meet people and get in share deal flow. So I think that was a big differentiator for me right away.
- [34:32]
Joel Palo Thinkle
Those founders that you back today could come into liquidity and possibly be your LP for Fund three, right? I mean, so I posted something yesterday saying, look, you know, being an LP is going to be as common as being an angel. So you know, LPs and angel investing, it's the same thing. But I totally agree. I've been harping on this for the last few months. I mean, people will invest in a fund just to get access because it's going to be much more streamlined to have that fund almost be your scout, right? They've already gone through investment committee, they've already sourced and screened the deal, they've written several memos, they probably have analysts that are doing the research. So they're surfacing up an index of the best psychedelics deals and you could try to do that on your own, but that's a lot of work and you're kind of shooting in the dark where those people, especially your emerging managers, they're judged on their performance. So they have to really outperform to get to fund too. So really that is augmenting your sourcing. And then what's great is, you know, if you want to get into Web3, you don't have to go on 20 different discords. Hopefully there's a really talented Web3 person that's plugged in that can also service up an index. So there are benefits to the fund investing. And then also if you can get access to the underlying co investments, that's a win, win as well because you've got kind of the research and the knowledge that's getting summarized to you within the reports or however much time they'll give you. But then you also kind of also have those deals that are sourced and that's a cost. I mean, if you try to do that yourself, you have to hire an analyst or an associate and try to do that on your own, which you know, obviously you should do when you, when you have an institutional firm. But I think I'm seeing a lot more funds have this hybrid strategy where they, and I'm one of them too, I mean, carving out a little bit of allocation to be able to get access to the fund structure.
- [36:35]
Mark Yuday
Yeah, yeah, I totally agree. And I think a lot of, just based on the messages I get on my inbox for people who want to start a career or want to invest or whatever, they miss the point of the value proposition that I was touching on earlier. They'll come in and they'll, I mean not if, not everyone begs, but they'll, they'll say things like I really need your support or whatever. But people don't respond to that, especially busy people. And I, I do respond typically because I'm still early stage, I'm trying to make connections. But yeah, people respond to value. So if you, if you're not able to invest in a fund cash and become an lp, you have to somehow generate your own proprietary, proprietary sense for deal flow, for deal sourcing. And a lot of that is just having more connections in the opposite direction. So right now I'm syndicating my first deal into a medtech company. But I have psychedelic LPs who want to start getting access to drug device combinations which are going to be a big trend I think in the psychedelic space. So they, they, they're poised to assess psychedelic molecules and clinical models, but they have no acquaintance with anybody in the medical technology space. So now the flow of power is in the opposite direction where they're asking me to come in, help them find deals. In some cases they're paying me for consulting. But yeah, I think it's really important just to remember value propositions, but also remember that value has to, to flow both ways. And I got a Pretty, I guess a rude awakening to that point when maybe I was getting a little bit too hot on myself like six months ago. And I was taking pitches from a couple of funds. And one of the funds, I was not particularly impressed with their due diligence process. I think they, I thought they had been piggybacking off other funds and not relying on technical analysis. So I just, during the call, I could tell that I was just kind of low energy. I wasn't smiling a lot. And, you know, I just, I don't think I came across as a happy or a nice guy. And then three months later, I realized I needed LPs for my first syndication and I would turn around and I was asking this guy to invest with me. So it's. You have to be flexible in the way you approach the deals and think about what could happen in the future. Like the value isn't always going to be cash flowing from your pocket to someone else's. The cash can turn around pretty quickly. Flow the opposite direction as well.
- [38:49]
Joel Palo Thinkle
Yeah, so I'm also, as I'm listening to you, I'm extracting some nuggets and I think some things that I'm extracting is, look, you know, everybody has a different superpower and skill set. I think yours is sales. And couple things that I can double click on from that is, you know, when you had that experience and you took that meeting, I think typical sales skill is, you know, you never know what you're going to get. You know, you could miss out on an opportunity if you don't have an open mind. So having an open mind, having that emotional intelligence, that's one piece and then the other piece is also what I heard from you is figuring out what the problem is and trying to find a solution for that problem. That's a typical sales skill as well. You're not trying to sell, you know, a steak to a vegetarian. You have to make sure that vegetarian, you know, you're offering a vegetarian opportunity to someone who only eats veggies and same thing, you know, you were mentioning a specific LP that had a specific interest. If you can repeatedly offer that solution to what that person is looking for, that type of exposure, repeatably do that, plus also provide some returns, that's a win win. And you can do something that your competitors won't do or can't do, which gives you an edge.
- [40:04]
Mark Yuday
Yeah, yeah, it's a great point. And that's if you're coming from a finance or a technical background, you should read sales books. You should try to Read, there's Miller Hyman training is something that I went through, which is sort of like the big sales training thing that everybody gets when they do inside sales, which is more like cold calling, emailing rather than field sales. But I learned that really quickly on my first cold call when my manager was monitoring me and I was just listing off the features of the product that we were selling. So I was selling organoids, which are actually pretty awesome. Everybody should look into organoids, but they're basically many organs that you can grow in a dish from a pluripotent stem cell. But I was selling organoids and I was just listing off the different features of this in vitro model and how it's better than an animal model. And obviously I didn't make the sale. But then the manager goes, you're not listing features, you're not trying to sell the product, you're trying to sell the relationship between the product and the customer. You have to understand what they're getting after. Like you, if you're talking to an operations manager, there's no point in selling on that, on the technical aspects of how a stem cell model works. You're selling on price. So you have to think differently on what you're pitching based on the customer's motivations. And that's something that seems intuitive, but honestly, most people miss it.
- [41:15]
Joel Palo Thinkle
Tell me more about sales. So I mean, I'm really passionate about this too, you know. Cause that's the lifeblood of any startup. So what are some other nuggets you know, thinking about? Maybe your best sales calls or maybe the worst ones. What are some of the other lessons that you learn?
- [41:30]
Mark Yuday
Yeah, well, there's a big, I think a dichotomy between like strategy and tactics. So strategy is more high level, how are you going to segment your market approach, different companies, etc. Etc. Tactics are the little nuggets you apply during an actual call or during an email correspondence or when you're out in the field doing a product demo. So I think the tactics, one of the most important tactics that's really important for venture capitalists or for entrepreneurs is using open ended questions. So not asking really formulated questions that have a yes or no answer, but asking questions like what are you hoping to do where they're not? They can't say yes or no, they have to outline the project for you. And that's a pretty simple one. But open ended questions can be hard to ask. And if you ask the questions, they're going to lead you in the direction of the value proposition. So they do the formulation work for you. If you just go through a list of yes or no questions, you can think about it like a fractal or like a decision tree where you're just going to lead down one route of the tree and you're not going to make it very far because if the last answer on that tree is no, then you're not going to sell the product, you're not going to sell the idea. But if you backtrack, you ask open end questions, the entire decision tree is open is your domain and they'll typically lead you down the branch that you, that you need to go in order to make the sale. So I think that's a big one that I still leverage is asking open ended questions.
- [42:54]
Joel Palo Thinkle
Yeah, I agree. I think you have to really listen to what they're looking for because to your point, if you have a script and you're just reading a bunch of stuff that they don't care about, then it's, they're gonna probably start, you know, you're probably gonna start losing their attention. What any other ones? What, what like didn't work? And I guess too, I think there's probably different, there's definitely different approaches for price points. Right. So if you have like an enterprise type of offering, like something that's like a healthcare Bloomberg type of term, right. Some analytics thing, that's going to be a longer life cycle, it's probably going to take six months to possibly close that client. And it might not even be because there is an intent. There's probably a lot of hierarchy at that organization as well. I don't know if you've seen that. So any other trends as far as the time to close that you've seen for like B2B versus B2C versus like just large institutional healthcare sales, Like I don't know if you, if you buy like psychedelics in bulk, you know how, you know how can that vary versus like a B2B SaaS platform? Because I'm sure there's just a lot of crazy compliance considerations and then just politics at the organization for like approval of the budget and stuff.
- [44:13]
Mark Yuday
Yeah, yeah. And that's what the big lesson is in sales is thinking about stakeholder engagement and how you can stratify the different people within an organization. And that's the. One of the few valuable things that I learned from my undergrad degree in business was thinking about organizational architecture because sadly like this is another challenge for scientifically oriented people is they simply don't know how an organization runs. They have no Exposure to the different functionalities. They don't know how different people operate within these roles. They just have the taglines, finance, accounting, operations. They don't really know what that entails. So getting acquainted with that is really important in order to make a sale because you're going to have to navigate those different people. But yeah, so my sales experience was very unique but also awesome in, in early career stage because I was selling, I think my portfolio comprised, the company was split down the middle between immunology and regenerative medicine cell therapy applications. I was on the cell therapy side, um, and I was selling over a thousand products. So I had this huge portfolio of extremely differentiated products that I was comparing to Thermo Fisher and some of these other big scientific suppliers. But what was really important for about that for me is I had to learn quickly, I had to learn breadth. And you're used to in science going for depth. You become an expert in one field, you push further and further in that field, generate more and more data. Maybe it leads to an innovation, maybe it just leads to data and findings or basic science or whatever. But in scientific sales you have to broaden out because you're going to be going after different scientific segments on a daily, if not like an hourly or a minute by minute basis. You're going to be selling to somebody who works in neurology or works in oncology, who's looking at cancer or psychiatric disorders. So you get exposed to a ton of different spaces. So not just functionalities, but also expertise or segments within that market.
- [46:07]
Joel Palo Thinkle
Do you also get grilled by medical doc? Because I'm assuming the typical customers are probably the distributors, I guess the people that are actually buying it in bulk. But dude, those people probably have a really heavy medical scientific background as well, right? I mean, maybe walk me through a typical sales process in that sector where you're trying to sell, you know, you're selling these little mini organs. How does that process go? And you know, how long does that take?
- [46:39]
Mark Yuday
Yeah, it's a, it's a really important point. And everybody I think in any field will experience imposter syndrome. And like I said, I was selling alongside PhDs and I was selling two PhDs, and PhDs, some of the most advanced degrees you could look up to within science. And I was coming with just a double bachelor's, so you learn pretty quickly. Well, you're definitely going to meet a lot of assholes first of all. So there's going to be people who look down upon you for your degree in any space. If you don't have a master's of finance finance, you can't do investment management or whatever the hell. But what I learned quickly is that humility is always the best choice. So if you go in, you prepare intellectually for the call, you know your product really well, you know the company and their application really well. That's just one step. The second step is going in and being humble and asking open ended questions, not telling the customer what they need because they're the expert. So that was really important and I think that that translated, like I said, to due diligence and deal sourcing is you have to be humble about what you know and what you don't know and you have to leave the space open for the people to tell you what they know. So yeah, I think humility was, was pretty important there. And I think that happens when you don't have an advanced degree and you're, you're working with people who do.
- [47:54]
Joel Palo Thinkle
Yeah. Well, we got a few more minutes. Any other travel stories that you have, Any, any, any other ones that you want to share with us that maybe shaped your career?
- [48:04]
Mark Yuday
Yeah, well, we, we talked about Braun a few times, but I met Braum in Miami for the first psychedelic investor conference Wonderland Miami conference. Which is pretty insane. Like I said, you meet charlatans, you meet smart people, you meet amazing ethically oriented impact investors. But yeah, I shouldn't, I would get sidetracked if I just start talking about Miami because it was one of, it was another thing where I took a risk. I was, I spent a little bit of money that I don't necessarily have just to go down there and start meeting people and building connections. But I would say in terms of, related to what we were just talking about on humility, credibility is a really important thing to think about. So credibility isn't an intrinsic feature of your character. It has to do with the people you're relating to. Do you seem credible within a segment of the population? Do different people see you as credible because of your own experiences, because of your intellect or whatever? And like I said, intellect can only get you so far or access to deals. What I did is I looked at the spaces where I had credibility. And I initially, when we were forming our investment thesis, I thought maybe we'll play around the blockchain space a little bit, maybe we'll look at crypto and how it could relate to biopharma data, maybe we'll look at gene editing. But those quickly I realized those were not my spaces of expertise. I have credibility in the neuroscience Community because of my degree and because of some of the work I did at the nih. So we just decided to just focus on that. We try. We. Specialization, I think, in venture capital has become increasingly important because it's so saturated. And I think you're going to see less and less firms like Andreessen Horowitz who invest across all different areas because you need to have some sort of differentiator to give you arbitrage. So, yeah, so I thought about where I could establish credibility, and one of those is neuroscience, so I could start working within the neuroscience community, building connections. And then the other one was autism, which I mentioned. I have the familial connection. So that's actually what I realized is, like me, there's. There's hundreds. I mean, I'm not a parent, but there's millions of parents around the world who have an autistic child. And just statistically, a lot of those people are going to be really wealthy, and that means they're going to want to put their capital behind something that they feel is impactful and they feel is ethical. So I didn't realize that right away, but then when I started to realize that this is a community where I have credibility, I started to dig in and meet the right people. So I guess the lesson there is just find out where your credibility lies. And usually it's not going to lie in how smart you are, because there's lots of smart people, but it's going to lie in the experience you have within different communities and your specific intellectual capacities, which in my case was neuroscience and psychology.
- [50:46]
Joel Palo Thinkle
That's just something. A big thing too is the cultures are completely different. Talking to a couple other buddies, I mean, the culture is completely different. The psychedelic community, specifically in New York versus Miami is just night and day, right? So it's much more healthcare oriented, it's much more institutional as far as, like, if you go to conferences and stuff, you know, it's just a different vibe in Miami. Right. I mean, it's probably less crypto people when you go to these conferences in New York. So definitely, like understanding the audience and reading the room is really big too.
- [51:22]
Mark Yuday
Yeah.
- [51:24]
Joel Palo Thinkle
So it looks. Yeah, it looks like we got a couple questions. If you got a couple minutes here, Anu, it looks like you had a question.
- [51:31]
C
Thanks, Joel. Yes, Mark. Just amazing to hear you today. You know, the depth, the maturity, and, you know, how you pulled your experiences together. Thank you so much for sharing that. My background, you know, I have worked in tech and consulting, and a special interest, of course, are Companies that are disruptive. So future tech, fintech are some of the areas I really enjoy. So it was great to hear about psychedelics and the neuro space. My question is what are some of the companies in your portfolio and can you share, because you're such a good storyteller, which of these is your personal favorite or your favorite investment? And can you share that story behind that?
- [52:17]
Mark Yuday
Yeah, well, I can tell you one thing is that I've only been investing for a year, so my portfolio is pretty limited. But the other thing I'll tell you is that the deal I'm working on right now is my favorite deal and it's also the one deal I cannot talk about. But it's my first foray outside investing, outside of psychedelics. So like I mentioned, I think drug device combination. So how can you think about convergence points between different industries and platforms that won't necessarily produce one drug, but that every single drug within an industry can produce? And that's a good way to think about it. So where, where is there going to be a lot of value that's more abstracted from a single company? And I really like the idea of drug delivery because every single psychedelic compound needs to be delivered in some fashion. So there's patches, there's oral delivery, there's intravenous. So is there a company out there that's innovating on drug delivery that are producing devices that they can out license to every single company that's producing a psychedelic drug. So there's a few companies that I really like in my portfolio that do that. But like I said, the deal I'm working on right now is a drug device company, combo company that is developing. I'm trying to figure out how far I can go in without revealing any proprietary. But they have a huge patent portfolio, massive IP defensibility. They are already generating revenue, which is pretty rare for a medical technology company because they're leveraging a clinical model and they have a pretty clear path to market in terms of regulation. They're already in phase three for one indication and they have a pipeline of different drug device combinations below that that are looking at other indications. So I think I really like the companies that have a platform for development, not just a single idea, but a platform that they can leverage to look at other models. And sorry, I can't dig into this single company that I'm looking at right now, but it's one of my first deals and I'm holding it pretty tight to the chest.
- [54:14]
C
Awesome. Thank you for sharing. No, this is, this is great and I'd love to connect, but this is, this is wonderful. Thanks for sharing.
- [54:21]
Mark Yuday
Thank you.
- [54:23]
Joel Palo Thinkle
This is great. So we had another question from nvir. Do you plan on growing your internal team down the road? I guess another thing is like, what do you look for when you, you know, eventually, when you grow your team, what would you look for in an analyst or an associate?
- [54:37]
Mark Yuday
Yeah, good question. So right now we're invested in as LPs and a bunch of funds. We have a few direct investments in different medtech and psychedelic companies. My aim is to syndicate a few more deals and build a track record and then hopefully start a close end fund with a more traditional fund with an emphasis on the things that I know well like neurodevelopment and autism. So in terms of what I'm looking for, and I'm actually actively trying to find a co founder right now because my dad is my partner, but he's also retired and he doesn't necessarily want to dig into all the work here. But I'm looking for a co founder who compliments me by being almost the direct opposite of me. So I want somebody, I'm on the East Coast, I work in the biotech community, I know people really well over here, but I don't have a strong financial forecasting background or private equity background. So I'm looking somebody who can touch on the scientific aspects, but who has a lot of the compliments that I don't have. So a network on the west coast or the Midwest or the south for fundraising. Somebody who has some technical knowledge in science but is way better at building spreadsheets and building financial forecasts for these companies. Maybe somebody who has more of a depth and intellectual property practice. So it's not just about having everything, it's about having one thing and thinking, once again thinking about the other party. So for me, I'm more scientifically oriented. So how could you complement me by being the opposite of me? So yeah, I think that's the way I'm thinking about it when I'm looking for my co founder. I don't think if we'll be in the next two years, I doubt we'll be in a place to be hiring associates or analysts. But I'm looking for a co founder for now.
- [56:18]
Joel Palo Thinkle
Yeah, that's great. And you know, I did not actually know that you were an active LP as well. So I got to talk to you offline and plug you into the funding accelerator in one of the sessions. But you know, what's your advice for people that want to be an lp. And what have you looked at in funds? Because we don't, I don't think there's enough content out there that really unpacks that.
- [56:40]
Mark Yuday
So.
- [56:41]
Joel Palo Thinkle
And I know we're at time, but maybe real quick, qualitative and quantitative of like what you look at for funds and what are some ways for people that you would advise for them to dip their toes into being an lp?
- [56:52]
Mark Yuday
Yeah, good question. Yeah. And I rely heavily on qualitative aspects of funds because like I said, there's not going to be a lot of quantitative figures to rely on in biotech or pre commercial companies.
- [57:03]
Joel Palo Thinkle
Yeah.
- [57:04]
Mark Yuday
But for the funds, it's, it's a breadth of knowledge. So I like companies that have somebody who has a really strong technical background but is, like I said, complemented by another person who has a private equity background. And that's something I found in droves in biotech especially. And I hope to see that a little bit more in psychedelic spaces because right now the psychedelic community is, is comprised a lot by people, people with their personal experiences, but not a strong acquaintance with, I guess, the underlying science. And I think that that leads to a lot of misconceptions that will be corrected over the next few years. Sorry, I think I lost track of the question. But yeah, I look heavily at qualitative aspects. Do these people have a strong grasp of what a regulatory pathway looks like? Do they understand how intellectual property works in the pharmaceutical space? And are they able to read a paper? Like that's, that's the really basic one. Most people don't read scientific papers and I think that leads to a lot of misconceptions as well. If you can't read just basic data, basic tables on the efficacy of a drug or the safety of a drug, I think perhaps it's not the segment that you want to pursue.
- [58:13]
Joel Palo Thinkle
Yeah, no, it's really helpful. Well, I know we're at time Mark. This is awesome. I'll circle back with you because I want to, you know, hopefully catch up with you at some point and go much, much deeper on psychedelics. And thanks for the time. I know you're super busy, so really appreciate you coming out and doing some community building with me.
- [58:30]
Mark Yuday
Yeah, thanks a lot. I'm really happy to be here. And I would say, yeah, check out Hector Ventures. I hope you follow us on LinkedIn, but we're also general partners with Tabula Rasa Ventures, which is a New York based psychedelic accelerator, the first of its kind. So I would say if you're looking for a job in New York, maybe get in touch with Tabula Rasa. I know they're going to be hiring some people to support due diligence.
- [58:50]
Joel Palo Thinkle
That's great. Yeah. I think accelerators are great because you really have access to all of the VCs that come in. So you build networking there, but then you're also supporting the company, so you're really building that tactical skill set and really building those skills. So I will circle back with you on that as well. When is there. How often do they do demo days? When's the next demo day?
- [59:12]
Mark Yuday
I don't think they've done a demo day yet because they're still in the fundraising mode. They're. They're pretty cool, but, yeah, they're all. Yeah.
- [59:20]
Joel Palo Thinkle
So I just said they're working on. Working on getting things set up and hopefully having their first class, I'm assuming. Exactly.
- [59:27]
Mark Yuday
Yeah.
- [59:27]
Joel Palo Thinkle
Great. Well, excited to hear that. I mean, it's. It's really cool to just be plugged in with, like, the experts in the space, because it's a new space. Right. So it's pretty early and exciting to get involved because Psychedelics was not where it was just a few years ago. And I think based on what Bram was saying, the market size has just exponentially increased. So thanks for all the work that you guys are doing to kind of be a catalyst for this.
- [59:51]
Mark Yuday
Thanks.
- [59:52]
Joel Palo Thinkle
Yeah.
- [59:52]
Mark Yuday
And I would say just get out there and look for connections. Personal networking is key. You're not going to make it on your own, so.
- [59:58]
Joel Palo Thinkle
Yeah.
- [59:58]
Mark Yuday
Yeah. Good luck.
- [60:05]
Joel Palo Thinkle
Sam.