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- [00:02]
A
Welcome to the Investor, a podcast where I, Joel Palathinkel, 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. All right, I think we are live. There's a bunch of people popping in, so I'll just let them in as we come in. So, Matt, good to talk to you again. I know it's been a couple weeks since the holiday, since we chatted. How was the. How was the holiday? Where'd you go?
- [01:01]
B
Yeah, went nowhere, as I think most people will say the same, but no, it's. It's good. And things definitely picking up this January. Definitely. You know, feels like a lot of lots happening now on the deal front.
- [01:15]
A
Well, great. Well, you know, glad that we were able to still meet. I know it's been a few weeks and hope everybody was able to get refreshed. Like I said, there's still people popping in, but let's kick this off. So thanks for popping in tonight. I do this two to three times a week. You know, building new friendships, hearing new stories. I think what we're all excited about is hearing people's journeys of how they got into venture.
- [01:41]
B
Right.
- [01:41]
A
It's not, as you and I have discussed, it's not an easy way to get in. And we all have gotten in through different ways. All the people that I've spoken to have come from all different walks of life. So what I'm excited about is just hearing your story today a little more about your career, your journey, and, you know, how you broke into venture capital, because as we know, it's a unique path. It's an opaque industry. So love to hear a little more, and I'll just walk with you and guide the discussion as we go. Awesome.
- [02:15]
B
Yeah. So I don't know if there's a specific area you want me to start, or I can go into my background or what do you think's best?
- [02:23]
A
Yeah, maybe you can just kick it off. Go through your background, where you grew up, and then how you navigated into your career, and maybe just a quick intro on yourself and Mass Ventures, and then maybe we can go deeper on your journey of how you broke in.
- [02:39]
B
Sure thing. Yeah. So I'll just start with the firm. So, Mass Ventures, legal name is Massachusetts Technology Development Corporation, or MTDC. It was actually one of the first 20 venture funds in the country. There's a book called VC in American History, which kind of goes through a lot of this, and I think it's mentioned in the book. But basically the Commonwealth of Massachusetts, along with the Economic Development Administration, both kind of seeded the fund in 1978 to assist with the development of technology and startups in the Massachusetts ecosystem. And it's an evergreen fund. So for the most part there have been additional infusions over the years, but for the most part the fund is here because good investments have been made in the past, I think Firm wide, there's a 14% IRR across all investments since 1978. For a quasi public firm, that is unheard of. The firm has always been on the cutting edge of technology. At each new wave. We just recently rebranded into Deep Tech specifically. So everything you would think is being Deep Tech, aiml, ar, VR, blockchain, quantum computing, synthetic biology, edge computing, all of that. The firm basically has a great track record in history and a unique story. And recently a lot of programs have gotten rolled in at the same time. So we now have two venture funds, two grant programs, and a bunch of accelerator programs and have grown in staff, grown in, you know, number of investments being made, and just kind of everything is, you know, looking positive on that side of things in terms of my background. And I just started in this role a couple months ago, but, you know, I grew up on the Worcester, Worcester area, went to school at Elon University in North Carolina, near Duke, and actually was going to do Poli sci is what I wanted to do when I got to school. Um, but I got into a scholarship program where I had to have a business major. So I was like, you know, I thought I would double major across schools, and that ended up being kind of challenging. So I was like, all right, I'll. I'll stick in the business school. You kind of, you know, two years in, you can figure out which exact major you're going to go forward with. And yeah, I solely just picked finance because I was like, well, that'll probably open the most doors for like, internships and stuff. Like, I didn't have a ton of thought into it at the moment, but over time it definitely appeared to be a good move. And then I met a lot of students who were entrepreneurial when I was at school. So right around the time that I was kind of shifting my interest out of Poli sci, I was kind of shifting more interest into entrepreneurship. And I met students that were on their second or third business by their first year of school, which is crazy. And I got involved in a program called the University innovation fellows run out of the D school in Stanford that kind of taught us all about design thinking, brought us out there. So we actually got to go to Stanford and Google's campus and then through a number of other classes and programs I did at Elon, we actually would travel back out there and I just totally got hooked on just Silicon Valley, big tech and venture and startups. And once you get a taste for the entrepreneurial bug, it doesn't tend to go away. So kind of never ending from there. And one of the unique things I did is I, I did a research project on venture and that was kind of an excuse to get on the phone with GPS and they would actually say, yes, I'll take a call with you.
- [06:06]
A
They probably thought they're getting some free research. They probably thought they're getting a memo out of it or something like that.
- [06:11]
B
Yeah. But you know, it was a nice, a nice hack to convince people to be willing to talk. And you know, when I got into time that I was graduating, I was looking at full time jobs. You know, there's really not a lot of firms that will hire out of school. But I started working in a group called Greenspring and it's a large venture fund of funds. And so kind of a unique path in that way. We can dive more into that. But I spent a few years there and that's kind of what ultimately led to where I am now.
- [06:41]
A
Sure. You know, one thing that would be good to get context on is really the, you know, cause you broke in after business school. A lot of times people say that's one of the options of how you can break in. Right. You either go to business school, you know, you retired from playing basketball and you have $30 million laying around to start a fund or you knew somebody that kind of connected you in. So the business school route. Walk us through the odds of like how many venture funds actually show up to the career fairs. And you know, I mean everybody's qualified too, right? Because everybody's super smart because they went to the top schools. So how did you differentiate yourself from the other candidates that probably were competing for that one role at Mass Ventures? Right. I mean I'm thinking there's probably just maybe one or two roles possibly after graduating.
- [07:33]
B
So, so the first, you know, when I graduated in 2018, when I was going after, I saw an opening at Green Spring and kind of jumped on it right away. I actually had got, you know, I was going after an internship with them. They were at the job fair multiple years, was going after and did not get it. But you know, if you're really persistent about this stuff, just don't take no for an answer. I remember being at a networking event in 2016 or 2017 and I won't name the VC, but I spent like two hours in line waiting to ask my one question to this, this VC and I just was like, how can I break in? And they were like, they're like, oh, you shouldn't do that right out of school. Like, you need to go get experience first. I was like, what did I just wait two hours in line for? So that was always fun. But you know, you just got to be persistent. And you know, I had, like I said, I had gone after the internship multiple times and I didn't work, but then when I went after the full time role with Green Spring and it just kind of lined up that way and it's just persistence and networking and hacking your way into convincing people to get on the phone with you. Really?
- [08:36]
A
Yeah. And it sounds like if you're really adamant about being a vc, you know, don't listen to people that tell you to not do it. Right. I mean, if they tell you, hey, you know what, that's a dumb idea. Just, you know, go join a startup. And if you're really. What I think I'm hearing is if you really truly still want to be in vc, don't let the nose turn you away. I'm guessing, right?
- [08:57]
B
Yeah, yeah. Just use it to motivate you because, you know, if you're, if you're persistent in networking, you'll find that a lot of people will be willing to talk to you. Some people will say no and some people won't answer. You'll be surprised how many people will be willing to talk and will help.
- [09:11]
A
Sure. And when you interviewed at Green. So actually one of the people in my program got a job at Green Spring over the summer, you know, and he gave us a bunch of tips. But when you were interviewing and you got the role, you know, what were some things that you think gave you that edge? Because I'm sure, you know, you told me you applied a couple times and you know, what was different this time? That made you convert and actually essentially get the role.
- [09:36]
B
Yeah, I spent a lot of time, I spent a lot of time preparing pre interview, so going through everything on the website, like really getting to understand their strategy, going to crunchbase, looking at the investments, preparing, like memorizing facts about some of the companies they had invested in.
- [09:53]
A
Yeah.
- [09:54]
B
And I just was kind of like, I Have to, like, once I like, found out I was getting the interview, I was like, I have to do this. I have to make this work. So it was one of those kind of, kind of like do or die moments, you know, And I think if you're, you know, for anyone here, if you, if you get those opportunities. Look, I'll be honest. There's other times where I got an opportunity to interview for something and I, you know, didn't adequately prepare. And that's not the feeling that you want to have. If it happens, don't, you know, don't beat yourself up over it too hard. But definitely put the effort in ahead of time to really prepare and understand what are all these companies that people have invested in? Know some context, know some history. And if you come in and you've done your homework and you're passionate, I think, you know, people will see that.
- [10:35]
A
Sure. And what made you, you know, leave Green Spring and, and join Mass Ventures?
- [10:42]
B
Yeah, you know, it was an amazing, amazing program. Like I said, there's, there's very few funds that can hire more than one analyst. There's very few that can hire Right. At a school. For them, it's a matter of AUM because they're a layer of abstraction at the fund to fund level. You know, they have 10 billion in AUM or more right now.
- [10:59]
A
Yeah.
- [11:00]
B
So that allows them to have kind of more staff and to be able to hire kind of fresh grads. But yeah, I think it, you know, it's, it's really a matter of, you know, I just kind of knew that long term direct investing is where I'd kind of want to be. And so, you know, was figuring out my shift there. And it's funny because my original vision, when I started to figure out what do you want to do? I was like, oh, I kind of want to do deep tech seed investing. And you didn't think, like, I didn't think I was going to actually get exactly that. But that's, that's just how things ended up playing out.
- [11:29]
A
That's great. And you know, the fund, is it backed by an institution? Mass, I guess, the, the fund that you're at, I guess Mass Ventures, are they. Is it a larger institutional entity that's part of Massachusetts or is it just a separate private fund that's just called Mass Ventures?
- [11:49]
B
So, yeah, it's really just the, you know, Evergreen reinvested profits from prior investments and like I said, the initial, initial funding from the state and from the eda and then, you know, over time, occasionally additional Infusions of capital come in. Like we did actually just get additional money from the EDA recently. But for the most part, the majority of the capital is just, you know, a big exit happened for one of the companies, and that's kind of back into the pile of cash.
- [12:12]
A
And the EDA is the Economic Development Association. Yeah, okay, got it. Lucky guess. And that's the. Is that the association of Boston or is that just the Federal.
- [12:24]
B
Actually, Federal.
- [12:25]
A
Okay, got it. So it's a federal. Oh, that's interesting. So it's a federal institution of capital that they kind of reinvest into companies. And it's kind of an evergreen fund. Pretty much.
- [12:38]
B
Yeah. And there are a couple similar venture funds like this. Probably the most similar being that I know is probably Maryland Venture Fund and tedco. But I think a number of the states have these funds to varying levels of capital commitments. I think some states where there are kind of more budding innovation ecosystems where they're really trying to attract the startups. I think there are some states that might commit 10 to 20 million per year to some of these funds. Whereas in our case, we might go a couple of years without getting any additional money sent our way because we kind of know what we're doing. We have capital that we can reinvest from the old profits.
- [13:14]
A
Yeah. And then when it goes to Deep Tech, are there certain subsectors that you guys have a mandate on? Do you guys focus on specific areas in Deep Tech, and if so, which ones are more appropriate for your fund's mandate?
- [13:30]
B
Yeah, you know, Deep Tech is kind of broad, but there are focus areas that do come up. So we have two funds. The main fund is now kind of branded as the Deep Tech Fund. The other fund is the Massachusetts Life Science Center MLSC Seed Fund. And so that is, you know, that has a specific mandated bio companies also outside of Route 128. So kind of like developing the entire state, not just a single area, you know, out of manufacturing, is an area of priority. And I think the state, and the governor in particular, has kind of a specific mandate around getting more of that back. And, you know, I think we're also wanting to make sure that we don't lose steam with, you know, the AI ML and the AR VR. So I know that's kind of a broad answer, but there are focus areas. And I think being in Massachusetts, the most obvious one is bio. And you do get a lot of the development there because we kind of leave the nation for that.
- [14:23]
A
Yeah, that makes sense. And are you guys mostly Pre seed to series A or do you guys go cross cross border to all different stages or is it mostly you know.
- [14:36]
B
Like seed seed from one company to the next can kind of differ. These terms can be. But like basically our initial checks are at the seed stage, like 1 to 300k, usually a 300k initial check and we'll follow on through an A and maybe a B round. We're probably not going to go much later than that.
- [14:54]
A
Sure. No, that makes sense. And as far as just your deal flow process, what are some frameworks that you guys use as far as, you know, taking in deal flow? Do you guys normally have like a Monday partners meeting and then the Monday partners meeting, does that flow into like an investment committee pretty much as you guys did investment decisions?
- [15:17]
B
Yeah. So we have, we have a Monday meeting. Monday kind of investment team. You can call it the partner meeting.
- [15:23]
A
Yeah.
- [15:23]
B
And then we also have board meetings on a monthly period. So there's kind of a first level of diligence is like, all right, someone on the team had a call with the company, let's talk about it on the next Monday call. And then after, on that Monday call, if it's like, okay, let's actually look more into the company. You have a first level diligence document which may be three to five, three to six page range. And then if it's. That would be presented at the board. And then if the board wants to go forward into doing more, we'll do an official deep dive. And so that will include the investment team plus two board, at least two board members with the founders of the company, like really grilling on specific questions and then a much, much longer memo. And then that would be presented in addition to the founder coming to speak at the next board meeting. And then kind of a formal vote on whether to invest.
- [16:12]
A
Sure. And what are you excited about when it comes to deep tech? What are some specific areas that you're looking at? I'm looking at space a lot. I'm looking at, I've been doing a lot of food tech recently. More of the lab grown meats using a bioreactor. So the same technology that used to be used for cancer research now I'm seeing being used in food tech. So those are two areas that I've been looking at specifically for deep tech. But what are some new things that you're looking at or excited about?
- [16:47]
B
Yeah, I mean look, it's kind of, it's kind of all of the above. I'm really personally interested, like I'm really interested in 3D printing. We've been looking at a couple companies in that space. You know, I've read some of the books by Peter Diamandis, and he runs Abundance360, and I would definitely recommend people check that out. And I think a lot of people in the deep tech space and then just in technology generally right now kind of have this. Maybe it's a little utopian, but there's kind of like a singularity view of you. Look at all the amazing advancements that are happening all at the same time in all these different areas. Synthetic bio, advanced manufacturing, space longevity. And really the convergence of these technologies is something I think is fascinating too. So what happens as AI and cryptocurrency start to merge or synthetic bio starts to merge, merge with another one of these deep tech sectors. Longevity applied to space. Right. Like, these are really interesting. You know, the world, I think it's pretty clear right now is in a state of flux, but the world in 2030 is probably going to look way more different versus 2020 than 2020 did.
- [17:54]
A
Versus 20.
- [17:55]
B
And we're on the cusp of a lot of big, big developments here.
- [17:57]
A
Sure, I agree. I mean, I think when you look at manufacturing, there is benefits to manufacturing in space when there's no gravity. So from what I learned, like fiber optics, if you develop fiber optics in zero gravity, you can get better quality. And then the joke is if we go to Mars because we invested in a space company and you have to eat a steak, if you can grow it in the lab, then that's the intersection there of sustainability. Because cows aren't going to live on, on Mars. Right. So if you can find a way to kind of get that protein source, then that could be another intersection. What about quantum computing? Have you seen, have you got. You know, I've done some research on it and I know that we're still far away. We're in the NISQ state. So the noisy, I forgot what NISQ stands for, but it's pretty much unstable and very noisy. But that's just what I learned. I'm not sure if you guys have been looking at that as well and any trends you guys have been seeing with that.
- [19:00]
B
Yeah, no, it is one of the areas kind of listed in the blockchain mandate. I haven't seen a lot of companies of that specific sector come through as of late, but it is definitely something we're keeping our eyes on. I think you have a good point there. On. For a lot of these deep tech companies, part of the question is like Is the timing still right? Is this going to take 20, 30 years to commercialize? But on the flip side, we talk about this a lot where I think according to the pitchbook and the Engines report, it's like half a percent of all venture dollars annually go into Deep Tech. And compared to what potential these technologies have for advancing humanity, that is a drastic underinvestment. So it's a balancing act. This area as a whole needs way more capital, but you don't want to invest in something that's going to take 30 years to commercialize.
- [19:52]
A
And how do you guys evaluate the risk? Because I mean, Deep Tech is one of the specific areas where obviously there's no, you know, for me, especially the ones deals that I look at, there's no revenue in the beginning, which I'm okay with. I'm betting on the science and the technology and the team. So what are some factors that you guys look at when you guys are evaluating the companies and you know, maybe what are some patterns that you're seeing as they pass the partners meeting and they end up becoming an investment?
- [20:24]
B
Yeah, I think one of the really interesting things is a lot of these companies are getting sbir sttr funding just by the nature of the sector. And so seeing who actually has the ability to be dual use from the get go rather than only being able to work on kind of the Federal or the DoD side of things. So who actually, if there's some revenue but not a ton of revenue, are they able to get some on the commercial side as well? Or do they have plans to actually be able to pull that off in the future? Or does it look like something that really can only pull in federal revenue? I think that's one of the important things that we look at the deep dive process, the way the process is built. I think the track record and the success of the firm throughout history represents the fact that there's a good set process for running the due diligence and actually kind of verifying things. I think there potentially might be a tendency in times when there's a lot of froth or a lot of capital being thrown around to kind of rush deals in a two week period and for more of that to be normalized as a lot of groups feel the pressure to close stuff. And I think we'll move as fast as we can for an amazing opportunity. We will expedite, you know, a special meeting if we have to. You know, for a company that we really need to move fast on. But you know, the process is there for a reason. Because it works. So you know, I think when you're evaluating the companies, I think, you know, process does everything and actually sticking to that is, you know, what's going to kind of differentiate, you know, people that, you know, can build a system that works versus, you know, rushing it. Sure.
- [22:02]
A
And you know, let's switch gears a little bit. What are your thoughts on just the future of the fund vehicle? You know, we've got SPVs, we've got multi series SPVs, we've got SPACs now we've got rolling funds. So what do you think? Here's a fun question. What do you think is next? What do you think is going to be the next new thing that we're going to find out this quarter for funds?
- [22:27]
B
Okay, this is, that's really interesting.
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A
So.
- [22:32]
B
I think one of the.
- [22:36]
A
I.
- [22:36]
B
Don'T know if it'll be okay. It's probably not going to be this, this quarter, but I would say within a few years here will be using your 401ks to commit to like a rolling fund or you know, getting kind of broad venture access. And I think at some point the best, one of the best ways of that, like one you want to have people investing in individual companies. But I think eventually it might be easy to take. Even if you're with a really traditional group like a Fidelity or a T. Rowe, you still might be able to put some of your money into kind of some name brand venture funds or even like a diversified portfolio of funds, even the secondaries.
- [23:14]
A
Right. So that'd be cool if you could have like an index of UiPath and Coinbase and Robinhood. As far as just secondaries that could be like an etf. And I think there's infrastructure now with platforms like Carta and all these other secondaries, platforms to kind of eventually securitize them. But you know, another one that I just thought of is like, what if there was like a rolling fund of funds? Maybe they already have that. Maybe Angellist already has like a portfolio of funds. But that would be kind of cool too if you can just allocate to multiple funds at a time and look at the aggregate performance.
- [23:53]
B
I would say to everyone here, you guys don't have to wait to become investors. Just go do it. Fine. Obviously do your homework. This is not investment advice, yada yada. But look at Republic, look at we funder go through everything. There's got to be a couple solid opportunities there and you can start doing these crowdfunding rounds now. And that's kind of a way to build your mini track record and actually have some upside and get directly involved and what, what's going on here. And it's amazing what's happening with the reg CF and the rolling funds all at the same time. The reg A limits, the reg D limits. Everything is trending towards regulation being lax so that more people can take part in the ecosystem. And I think it's just going to continue to get better because you have people in government that understand that they need to allow more people to have access to this upside and really bullish on all the new modes that are going to evolve. And I think, you know, some traditional investors might look down on it, but I think the quality, the quantity and the quality, specifically the quality of companies that are using crowdfunding and other alternative methods like you're mentioning. I mean, the rolling fund product is amazing. You know, Angellist, I remember looking at like Axiom Space was the first time I saw an Angellist company where I was like, oh man, wow. Like, like this is actually cutting into what big name VCs are doing. You know, that's for anyone who hasn't seen that company, they are, it's attaching onto the ISS and allowing private companies to build R and D labs attached to the International Space Station. This thing went through Angelus, this didn't go through Benchmark or Excel. So those are two of the most amazing funds in the world. But the point being the Internet's kind of democratizing the access field here.
- [25:28]
A
Sure, yeah. And I mean, I think you answered one of the questions here. What's a way to hack into a venture job? I mean, I, I would say one of the students that got the job at Green Spring, what he did was after our program, he just rattled off like 12 companies that he actively looked at. So really playing the role of a vc, there is a lot of free content out there. We try to put out content every week, but like you said, we funder, you can get into a deal for like 100 bucks. And I think the deal actually has the whole investment thesis and a whole investment memo written up. So I think, you know, I think with just a couple hundred dollars, you could invest in like five to six companies. Because some of those companies, last time I checked, it's like 150, 200, $300 minimum to get in. And then I think another thing for this quarter which could be interesting is maybe just newer rules for accredited investors. I think they think they passed the rule for the series 63 to be accredited. So if you, you know, I think that now, you know, you can take a test and be accredited. So that also, you know, reduces the barrier of having to have a specific income to be able to be involved and do angel investments. So with that being lowered, you could essentially, you know, reach out to founders yourself and do small checks and, you know, build a little angel list portfolio or just a personal website, I'm thinking.
- [26:53]
B
Right, yeah. And on that note, so it's. I think it's 63, 7 and 65. And I specifically took advantage of that. So the second that I saw that that update was coming through because, you know, I'm, I'm not just sitting on $5 million or so, but I studied pretty hard and didn't. Honestly didn't know if I'd be able to pass the first time, but was able.
- [27:13]
A
So it's all three of them in 63, 65 and 7. You gotta, you gotta pass all of them.
- [27:17]
B
Oh, no, no, no. Any. Any one of the three.
- [27:19]
A
Okay. Yeah. Because the seven, you have to be sponsored by trading firm, I think. Right. But the 63, you don't.
- [27:27]
B
Yeah. And the 60, you may need to. For 63, I'm not really sure, but I did 65 because you didn't need to be sponsored by anyone. Oh, great one. So, you know, I think it's like a couple hundred bucks for the test and then. Yeah, just small, small amount for the textbook and whatever study guys you're using.
- [27:44]
A
Sure.
- [27:44]
B
I mean, that is now the quickest. Probably quickest, easiest, cheapest.
- [27:47]
A
That's good. So there's your hack right there. That was one of the, one of the questions here. Let me see if we get any other questions. So, okay, so what signals do you look for when investing in deep tech or similar spaces, especially when there isn't traction or R and D? So I guess, Matt, if you want to take one, take that. And then I can chime in too.
- [28:06]
B
Yeah, you know, I think there's not like a single, like key answer I can give. I would say that there's got to be alignment around the market. I guess intellectual property could be a good signal. So one thing we focus on is like, is there ip? Like, if there's not ip, then for a lot of deep tech companies, we would see that as kind of a red flag. We'd want there to be ip. We'd want to know that it's been protected and that it's been protected in the proper patent filing form, whether we think that should be a method patent or something more specific. And then, yeah, I think getting your Head around the market size and the opportunity. And if you actually think, you know, it's viable and you know there's some sense of timing there. And I think part of that can.
- [28:49]
A
Be.
- [28:51]
B
One, just the planning and then two, if there's actual specific, you know, like I said, dual use revenue. If there's both, revenue from federal government, because a lot of time that's where a lot of this stuff is seeded. But if they're also being able to get some small amount of revenue from commercial side or even just commercial pilots at the same time, I think I see that as a big positive.
- [29:10]
A
Yeah, I think with deep tech, it's tough because there isn't revenue early on. So I think at least seeing some pipeline of customers and knowing that people do want to pay for this technology is an interesting signal. For me, it's a bad signal when you see a bunch of pilots and then they never convert to full customers and maybe like maybe nine to ten months has passed by and they're just doing pilots. So that for me, I've had some issues with. And then really what you have in my, in my experience is really just the tech barrier. So if you have a huge tech barrier, it's very difficult to replicate because there's maybe some unique expertise that's been a helpful differentiator. It's going to be, you know, like, like you said, right. It's not going to be easy to build a space station, but it might be easier to build like an Uber for old people. Right. So I think the higher barrier there is to technology, it's going to be a bigger moat. And I think to your point. Right. The intellectual property is another one. Okay, so do you find there's selection bias on we Funder and Republic? So, Zach, can you clarify?
- [30:28]
B
Yeah, sure. So I guess like the people who need, the companies that need to use crowdfunding, is it because they haven't had traction pitching to traditional VCs and does that then like make it less likely that they are to be successful? I would say that you might be, you may be right there. Not necessarily on all of them, but on a certain segment. You know, part of the reason some of these companies are doing that is. Yeah, because they probably aren't having the traction with traditional VCs. On the flip side, you do have some kind of smart, scrappy founders who understand that they are really an opportunity to take advantage of this new model of raising and that for them, they're actually interested in raising from kind of the public at large and want people to share in the upside with them. And there are obviously, as you've seen from each of these websites, they each one has a couple case studies of just an amazing company that's come through. So I think there potentially is some of that selection bias. I don't know if it's 30%, 3%, 50%, but it's definitely there. But I definitely wouldn't write off as a whole because I think there are some amazing companies coming through.
- [31:40]
A
Yeah, I think sometimes there is a stigma and I'm not sure which one has a bigger stigma, whether it's Republic or we funder. I feel like Republic has been doing really well with PR and they've been doing a lot of community building around angel investing and education. So I feel like Republic is a more well known brand. I've seen some decent, interesting companies on there. I haven't personally invested, but I think it's a great way to get access to a memo. So a lot of, you know, there is pretty good research and memos and information that people have put together for each of the deals. So that could be a good framework to look at as you're structuring your own style and your own portfolio. But I would agree with Matt. I think there is sometimes a stigma with these companies because if they were investable companies, you'd assume that they wouldn't have issues getting funding from VCs. But it could be just a really quick way to crowdsource because it's just a really novel idea and sometimes I think I'm not really sure how the structure is. But it's probably not as dilutive as venture equity investments are. It's probably just more of a. It's probably just like a convertible note or a safe that was structured through Republic. And I'm not really 100% sure because I haven't done one of those deals. But yeah, I think that's where I would probably land as well. Cool. Yeah, so that was helpful. So we talked about funds, we talked about opportunities for more angel investors. Any other resources that you would recommend for for people that are maybe pivoting from a different industry, whether it's product management or engineering, they're starting fresh. Any helpful blogs or podcasts that you read that you recommend people for transitioning?
- [33:46]
B
Yeah, I think the 20 minute VC podcast. I mean some of these are going to be obvious to this Crowd, but the 20 minute VC podcast, Technology Equity, Fred Wilson's ABC blog. Love all of that. I would say try to be as active as you can on Twitter. Same With Medium. I think Medium is an amazing place for the thought leadership here. Twitter, for the networking, you know, utilize the Slack group that I know you guys are all in, you know, set up. You know, I guess this is more on the networking side. But just as you know, as a side note, you should try and aim to set up, you know, one to three unique like networking calls per week because those random interactions are really what leads to long term success. You just never know, you know, like when Joel was kind enough to take the time to talk with me, like you just never know where you know what meeting someone is going to lead you to down the road.
- [34:35]
A
Yeah, yeah. I would say, you know, part of, part of what's helped me is really just focus on building new friendships and don't be afraid to meet a stranger. You know, funny enough, Matt, he was on our Slack channel and I just messaged him. I'm like, hey Matt, let's hop on a call. And I think you have to be okay with just putting yourself out there. And had I not done that, I would not have been able to probably get into some of the deals that I was in and then just the new friendships that I built. So I think I would say half of the credit goes to talking to somebody like Matt and just learning about what he's been doing with his career and what his thesis is at is fun. And then you just talk to so many VCs, they all share different insights and sometimes you can learn from that. I would say also for just writing an investment thesis, I know Lira Hippo, they're hiring and their past associates wrote like really good, I think investment memos or investment theses on I think the future of transportation and the future of food. So a lot of those Medium posts and blogs, there's people that just write really long memos. And I think if you can follow those frameworks, those are really helpful because those are the people that got hired.
- [35:57]
B
Another thought on that line too is just two specific examples. Tribe Capital put out a piece on Carta. I think it's called Carta 1 trillion in equity would definitely recommend people check that out. And then I just really love the obvious ventures blog that they do on Medium. They have some really unique kind of insights.
- [36:16]
A
That's a good one. Let's talk about emerging managers. So what do you think is, you know, I'm seeing a lot of trends now for just new people starting funds. It's one thing trying to get a job in venture, right? What are some of the patterns that you're seeing with, with the rolling fund now of just the next generation of fund managers. And I'm going to ask another fun question. What do you, where do you think that's going to head in like the next quarter for first time fund managers?
- [36:46]
B
This is, I think it's exploding already and I think it was, I don't want to say his name or is it Austin Allred at Lambda School who tweeted that thing out tonight where he, he was saying oh, fill out this form if you'd be interested in being an LP for you know, any of these various rolling funds. I'm going to work with all of them. And he was like oh, 30 minutes and I have 20 million of interest, like 60 minutes and I have 40 million of interest like whatever it was.
- [37:10]
A
So.
- [37:12]
B
Yeah, this is exploding both. So that the very, very micro level is like the rolling fund or someone who's doing the like one to $5 million first time fund and or people that are doing kind of like a unique, you know, maybe like a $500,000 pre seed fund. So these are like the very small options and then at the bigger level you have you know, someone who's doing a 10 to 50 million to $75 million venture fund. Although it sounds, it is a lot of money but in the context of most of these funds, you know, being 100 million, 200 million plus, it's not that much. So both of them are growing. I think the ability of people to kind of spin out of the Lightspeeds and the Excels and do their own fund is just getting kind of easier over time for the best players. It's kind of like an unbundling of venture. Although I think you still have some staying power of kind of the name brand. You know, firms like Excel and Benchmark, you know, they're not going to go away. So yeah, they'll continue to succeed in Lightspeed but like you know, those spin out managers also are going to have an easier time kind of breaking out and creating their own funds. I think it's the most interesting space in the whole ecosystem is these various.
- [38:25]
A
Yeah, and you and I talked about some of the holidays. I mean I think there's an, there's going to be accelerators for fund managers and it makes sense. And I think the people that should run it are LPs. So I think institutions, they should be supporting underrepresented female new fund managers and really transform the dynamic to make it available to everybody. But yeah, I mean I think there's education that needs to go around it, there's mentoring in terms of how do you raise capital, how do you meet LPs and a lot of that just like venture is still opaque. So I feel that this year there will be probably a handful of accelerators. There are some, from what I've heard, there are possibly some SPV providers that are going to be doing that as well. So it's pretty interesting. I'm trying to think. So there's also just all the tools that you need, I think, to be able to model out a fundamental. There's a lot of really great tools. I have. I found a really good fund model calculator. I think Eniac Ventures put it together. I think I posted it on Slack, but if you guys want it, let me know. And I have that. But they just did a really good job and you can download the model and there's a whole blog. So I think the education is there. It just needs to be kind of like organized in a curriculum in the right way. But yeah, I'm super excited about that. Let me see here. When you guys look at Deep tech, it probably has a B2B component as well, right? Because a lot of the technology, it's still being sold to businesses as well. Right. So do you still use the B2B components and is it a combination of mostly hardware and software or is it mostly, you know, tied to the life sciences where there's a lot of, you know, machinery and equipment that's involved?
- [40:21]
B
Yeah, it's, it's both. I think there is, there are a lot of them where when I'm talking about dual use tech, so selling to the federal government, also selling the enterprises, that enterprise component is kind of a B2B business model and Sorry, the second part of that question was.
- [40:37]
A
Well, I was just gonna, I was just asking if it's mainly, you know, if it's mainly hardware or if it's like a little bit of a combination. So it sounds. Yeah, yeah.
- [40:46]
B
So yeah, definitely a combination. You know, we do see a lot of bio, but we're also seeing a lot of like, we've seen a lot of additive manufacturing companies for example, in the past couple months. So definitely like healthy amount of both sides, you know, have seen VR companies that were targeting and you know, VR and AR targeting both, both the federal government and commercial applications. And the commercial side was actually more kind of B2C for those. So it's kind of a wide gamut. I think maybe if it was like there's a fund like Bolt that specifically does kind of tough tech Hardware only, that would be kind of like more of your narrowed investment case. But when you're just saying, okay, we're going to do all deep tech within the state, you're still fairly broad even though you are constrained.
- [41:35]
A
What are some of the biggest differences? This could be really broad, but selling to governments and selling to businesses, when you deal with your portfolio companies, what are some of the biggest differences that you see?
- [41:49]
B
I think that if you succeed well on the federal side, it can become a crutch because you can have a company that does really well on that side of things and they kind of hit their cap on how much revenue they can get there. And if they haven't thought and planned out how to do it on the commercial side, you kind of flatline where it's like, now I have this much federal revenue and this is kind of like all I'm doing and I'm not breaking through. And the way to get these companies to really explode, you know, sometimes you can just totally, totally crush it on one side of the house. But, you know, often you want to be able to graduate, so to say, from only being a federal technology to being kind of widely used commercially. And I think it was maybe Anduril, the company that put out a piece on Medium that was like making it past the quote, unquote, DOD valley of death. So making it out of initial federal funding land, that's just more on the funding side than on the revenue side. But graduating from only being able to succeed in that one ecosystem to the entire ecosystem as a whole, sure, that's helpful.
- [42:57]
A
Cool. So we got a few more minutes. One thing that I always ask every speaker is, you know, kind of towards the end, is any kind of life advice that you receive from a mentor or just a past boss that you'd like to share with the audience.
- [43:13]
B
Yeah. I think one of the biggest pieces of advice I've received is to one, constantly be networking, but two, always remain grateful to everyone that's helped you along the way and to always say, like, small things. Just like, always say thank you. You know, I think a lot of people just forget some of these, like, small things, you know, look, there's a lot of people that will be willing to take time to connect with you, but like, go the extra mile and show them that you appreciate it and keep them in mind and think of them and don't, you know, don't have all the effort coming from one side because that's not how a true relationship is going to be formed. It's, you know, when, when both sides are equally contributing, that there's kind of long term value created. And that's the name of the game here. It's a lot more longer term and natural human instincts aren't kind of built for that. So you have to kind of trick your mind into playing the game the right way.
- [44:08]
A
Yeah, that's good advice. What are some tips that you have for networking? Obviously, we've got slack now, we've got LinkedIn. Any other successful methods to meet new friends and, and build relationships with VCs?
- [44:25]
B
Yeah, I mean, I definitely feel, I think everyone feels this, but just I feel a missing hole from the live events.
- [44:31]
A
Yeah.
- [44:33]
B
And the one thing I've kind of felt lately that can sort of plug that gap maybe is clubhouse to an extent and then also just attending. Even though it can be like, like everyone who made it here tonight, like, I know you might have zoom fatigue from the last year that you made it here, because I think these are, these types of events are where you'll find people. Like, there was one event where I think I signed up and I wasn't even able to make it. And then someone found me on the mailing list and reached out and we had a call and ended up being one of the most important contacts I've met in the past year. So it's like, oh, that's great. That just goes back to that random exposure thing. Like if you give yourself the repeated random exposure, you never know who you're going to connect yourself with. And okay, that a piece of advice that I should have said earlier, that I did hear from a mentor was to never be complacent, like no matter where you are, because there will be ups and downs in your journey, like no matter what you're going through. And when you're feeling good, that's not when you need to take it back. You need to step on the gas. Like when you're feeling good, do you feeling good. Like keep crushing it and do six networking calls a week and like just keep, keep pushing that because things can go up and down, tables can turn, and keep having that exposure to the people that you can work together with for common goals.
- [45:49]
A
Yeah, I think I forgot who told me this yesterday, but the quote from yesterday that somebody gave me was, if you're not juggling, you're struggling. So that was a pretty good one. But I think it's true. I think you don't want to get too comfortable, you don't want to get complacent. And I think if you do that Then you're. Then I think it should be a red flag. So it's a good point. Cool. So we got a couple other, you know, couple more minutes. Sorry, any other questions you guys have.
- [46:19]
B
Hey, Joel and Matt. Joel, thanks for setting us up.
- [46:22]
A
Sure.
- [46:23]
B
I touched on this on the, the chat section. I thought I'd just bring it up again.
- [46:30]
A
It was.
- [46:30]
B
I can't even pronounce the name of it. It's Kubernetes.
- [46:35]
A
Maybe.
- [46:35]
B
I just learned about it on Crunchbase today in the daily newsletter and I was like, why have I not heard of this yet? And I just thought I'd, you know, throw it to either. To you. If anyone else in here is well versed in, in the sector, please chime in and happy to learn more about it. Thanks again. So I think it's Kubernetes. And I haven't gone crazy deep into this, I'll be honest, but I think the one kind of little anecdote I can throw in here is that I know there is kind of a Kubernetes versus Docker kind of opinion flowing out there. And Docker was a company that Green Spring had exposure to. And I think one of the interesting things there, I don't know if this applies to the whole Kubernetes ecosystem as well, but Docker was pretty much open sourced and raised a lot of money and succeeded and had like a great product, but there was not kind of revenue generation there to match it. And so that's kind of an interesting little tech antidote of at the end of the day, I guess you can go a long way and have a lot of progress and not have a ton of revenue and someone could buy it out. But for most companies, you're going to have to have the revenue at some point if you actually want to have the successful exit. And you can have a problem if you have great, great user growth, but your users are paying you $0 like that. That can typically only work for so long.
- [47:56]
A
Yeah. And I can speak as an operator. So I ran product in fintech for a long time and a lot of times I had to figure out what was the most impactful for the user, for the customer. So the customer needed to open up the screen, they needed to pull down a refresh and see how their portfolio was doing. Whether they use Docker or Kubernetes. I would hear a lot of that in the background because I hear developers physically arguing. They would talk about Kubernetes and Docker and they would be going back and forth because the way that they build the technology, it needs to be consistent with the architecture that the other technology is at the company. So there's a whole like architecture review board that needed to review it. So when you're taking applications and you're containerizing it and you're packaging it and then you're sending it from maybe one location to another, it needs to be orchestrated elegantly. And a lot of that like is important. But you know me as a product person, I was always thinking about the customer. So I was all about like the what, like what do we need to deliver what is important? And then the engineers, what we agreed to is like the engineers supposed to focus on the how. So I always bring that perspective in with me as I look at companies and I look at teams, like who is the CEO and what is his role? And then how does that synergize with the dev teams and the infrastructure? But yeah, that's my limited knowledge. Similar to, as Matt mentioned, is really moving different applications and packets of applications from one place to another and making it easy to ship. But I always focused on really the customer and the customer experience. And I think one thing I'll say is everybody comes from different walks of life, so everybody has a different superpower. So if you were a lawyer in your past life, you're probably really great with term sheets. And if you're a product person like myself, you're probably somebody that downloads the app and plays with the app and gives feedback. If you're a consultant, you're probably really looking at the problems and trying to figure out solutions for them. So I think you're going to have a different lens depending on who you are. But yeah, good question, good technical thing to go deeper on. Looks like there's one more question here. Any advice for a college student? So I guess, darsh, you know, you're in college, so you're looking for advice for a college student with no full time experience looking to join. Yeah.
- [50:41]
B
So I think you got to be a hustler. It's going to take a lot. It's going to take a lot of hustle, a lot of networking. I think one of the interesting routes here is to, you know, if like the first networking call goes good with someone and it may be easier even though things are remote, if it's someone in your local area. So kind of generally like within the state or city that you're in, find one of the smaller funds that looks really scrappy and try and convince them to bring you on as an unpaid intern and just to get that first internship. You know, I helped a friend with this recently. I won't like drop his name, but I was able to find him an internship, a deep tech fund this past summer in Boston. And he did it unpaid and it took a lot of hustle to kind of get him in front of them. But once you have that first one on your resume, it kind of starts a snowball effect and, and it makes, you know, it makes everything else a lot easier. And you can do this during the school year too. I would say the same thing for, you know, if you can do kind of a part time gig with a startup while you're kind of handling your classes. Operating experience is really important and it's looked on very highly. So especially if you start kind of raking up, you know, startup internship here, startup internship there while you're completing your studies, I think it's just making you more and more compelling. So I mean just, just a follow up question that I had was, I mean I've spoken to a lot of people in the industry and it almost seems like everyone that I've spoken to was in another industry before and then you know, happen to transition to vc. So for a student because of the limited availability with the lack of experience, would you suggest like trying to get into VC or would you suggest doing another full time role maybe for like a few years and then trying again? Because there's a much higher likelihood at that time. I don't know because I broke the rules. So like, you know, I think that both sides have a valid point. I would say like if you really want to do it, just keep hustling and make it, make it work. Like, like I said, if you can convince a fund to give, bring you on as an unpaid intern if that's something you can handle for a little bit. Like that's going to make you pretty compelling. I think getting like just get involved in the ecosystem as many ways as possible. So like get active on Twitter, get active on medium, keep active with this group here. Be super active in the slack Sutton. Like go to, you know, go to these live networking events and then do some small investments maybe on Republic or we Funder. If you find something that's good that builds up your mini portfolio, I don't know, you can do some cryptocurrency. I would kind of bucket that in this general sector as well. And then yeah, just kind of keep going after those experiences. And I would say that a lot of people like they have an end goal of being in VC but like don't forget that, like, the name of the game is startups. So, like, being in the startups and working in them full time, like, while you're doing all this hustling and learning and making some crowdfunding investments, like, you're truly in the ecosystem at that point. And if you keep hustling and keep networking, it's just. It'll.
- [53:49]
A
It'll.
- [53:49]
B
It will happen over time. I truly believe it.
- [53:53]
A
That's good advice. Thank you. Super helpful. Any other questions? We got about five minutes left. All right. Awkward silence. All right, if nobody has any questions, I. We'll give you guys five minutes back. And Matt, you know, thanks for popping in. Good to get some face time with you and hope. Hope we get to get a beer or something in real life when things calm down.
- [54:27]
B
Yeah, that'd be awesome. Well, yeah, thank you so much for having me, Joel. Thanks everyone in the audience who attended. Hopefully there was some practical advice here, and best of luck to all of you on your journey.
- [54:38]
A
Yeah, thanks. Thanks, Matt. It was super helpful. Appreciate it.