200. University-Affiliated Funds & Angel Networks (Jason Whitney)

200. University-Affiliated Funds & Angel Networks (Jason Whitney)
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Nick Moran Angel List

Jason Whitney of IU Ventures joins Nick to discuss University-Affiliated Funds & Angel Networks. In this episode, we cover:

  • Backstory/path to venture
  • At IU you have 3 core initiatives – The Quarry, IU Venture Fund and the IU Angel Network. What’s the focus of each?
  • Talk about the investment focus for the IU Philanthropic Fund. What’re the criteria to be eligible for funding?
  • How does IU Ventures support the University’s mission? How does it affect or benefit current students?  
  • As a broader goal, I know the organization ultimately hopes to entice investors and entrepreneurs from around the country to return to Indiana as a result of participating in the network. Are you measuring this and are your efforts working thus far?
  • So, a criticism of both university venture funds and angel groups is speed — traditional angel groups and academia move slowly with investment decisions.  How do you combat that issue for founders raising on a tight timeline, trying to close a round?
  • I was speaking with a university-affiliated investor just last week and he was saying, there’s just not enough deal flow when you restrict investments to companies that have a specific university affiliation… do you agree/disagree?
  • I’ve heard from a number of the Alumni Ventures Groups in recent years  — there are folks leading funds and angel groups with alumni from a particular university… are you a part of this effort and what’s your impression of the Alumni Ventures Groups?
  • Let’s talk more about the IU Angel Network. How do you go about becoming a member? What do you gain access to as a member?
  • Aside from the university affiliation, which is appealing to many, what advantages and points of differentiation does IU Angels have vs. other angel groups?
  • For the founders out there… why should they fight to get IU Ventures and/or IU Angels on their cap table — how specifically are you driving success beyond that of other investors?
  • Advice for investors?

Guest Links:

Key Takeaways:

  1. The philanthropy to the university is at the heart of what they do, which is how the IU Philanthropic Fund got its name.
  2. The fund started with $15M in March of 2018 and has given IU Ventures an opportunity to engage with companies that are either founded by their faculty, by alumni, by entrepreneurs that have been through The Quarry program or are based on IU intellectual property. 
  3. With their program The Quarry, their core focus is on creating sustainable companies and making sure the right ones get formed instead of everyone getting formed. 
  4. In addition to the business modeling process they provide through The Quarry, it’s also given startups greater exposure to statewide opportunities that they weren’t previously aware of such as, mentorship programs, accelerators, incubators, pitch competitions, and commercialization partners.
  5. In order to be eligible for funding through the Philanthropic Fund, you must be an IU student, a faculty member and entrepreneur commercializing intellectual property or a company that is either founded by an IU alumni or has an alumni in the C suite. 
  6. They primarily focus on early-stage investing and prefer to stay vertical agnostic. This gives them an opportunity to help accelerate a startups path to their next benchmark. Also, by remaining open to various verticals it helps their deal flow. 
  7. The University is entering it’s bicentennial year in 2020 and their strategic plan is to create a prosperous and innovative Indiana by translating their new research and discoveries into products, services and companies. 
  8. Being able to present deals remotely through the IU Angel Network is going to be a big differentiator for them.
  9. The angel network plans on offering monthly presentations of 8-10 deals per year that their team has personally vetted out. These deals will be presented virtually with the ability for members to go back and watch them later.  
  10. Jason shares that it is difficult to move fast at all times with regards to investment decisions, however being that they sit outside the university, they can make quicker decisions, which ultimately helps to mitigate any backlog.
  11. The burden of sticking to a tight timeline often unfairly gets put back on to the investor. It’s important to set realistic timelines as an entrepreneur, that way additional due diligence can be done on the firm you’re “getting married” to as well. 
  12. The IU Angel Network is open to accredited investors who have a genuine interest in supporting companies and that are able to provide additional value to their team, students and their startups.
  13. With regards to the startups they invest in and founders that join the IU Angel Network, the IU team is diligent about getting to know them and their needs on a personal level. This enables them to use their network of not only personal and business contacts but also alumni and university resources to help combat any obstacles. 

Transcribed with AI:

0:03
welcome to the podcast about investing in startups, where existing investors can learn how to get the best deal possible. And those that have never before invested in startups can learn the keys to success from the venture experts. Your host is Nick Moran and this is the full ratchet.

0:23
Jason Whitney joins us today from Bloomington Indiana. Jason is the associate vice president at IU ventures and Executive Director at the IU Angel Network. You Ventures is an affiliate of Indiana University focused on assisting IU students, faculty, staff and alums with advancing high potential venture opportunities. The quarry, IU philanthropic Venture Fund and the IU Angel Network are the key programs supporting the focus previous to IU Jason served as vice president for launch Indiana at launch fishers. Jason, great to chat again and welcome to the program. Yeah,

0:59
thanks for having me. Good to be here today.

1:01
So you got a good, interesting story and background. Can you give us can you give us a you know, the short version of sort of your path through startups and venture and and where you’re at now? Yeah,

1:13
I have a really strange path to get to venture originally started out doing corporate finance somehow and a freak occurrence ended up buying a pizza place in a small town in Indiana. And so I ran that pizza place for seven years at a screen printing shop, bought a semi truck repair facility in Dayton, Ohio with my dad and ran that for a couple years. And after I sold all that I did a favor for the mayor at the time. And she said, Hey, I got a co working space. But there’s nobody working there. Can you come and fix that. So I kind of got involved in the co working startup world for her just as a favor. And by chance got connected to some folks in Indianapolis and I got to join the launch fishers and launch Indiana team and start working in larger scale startup community and from that had the opportunity to go to IU and return to my roots and join that team and work on accelerating faculty startups. And then we got into the fund management side of it as well. And so kind of an odd line through retail and co working to get to venture but excited to be here today and do good things for Indiana. Love it. Love it. So

2:14
how long have you now been with with Indiana?

2:16
So I’ve been there for two years, actually next week and excited to keep growing this program and launched the Angel Network and continue to make new offerings in our in our Holdings Company.

2:26
And give us a sense for you know, volume of deals that you’ve you guys have completed over the past couple of years across, you know, the philanthropic fund and your other efforts.

2:38
Yeah, so started in March of 2018 is when we launched the philanthropic fund, and we’ve executed 15 deals. So we’ve been really aggressive getting out into the market. But we’re trying to get our names out there, prove that we could execute deals and prove that we could support our startup companies in a manner that was going to make us a good partner down the road.

2:55
So me and in you and some of your colleagues were discussing the IU philanthropic venture fund and what that really is, can you explain why it’s called philanthropic?

3:06
Yeah, I mean, it does. It causes some problems from time to time when folks think it’s free money because we have the word philanthropic in there. And it’s grants, which we’ve had to explain. But it really is philanthropy to the university is really the heart of what it comes to. And we were working with folks who were wanting to donate to the university, but wanted to do something fun and something that they thought could expand to their money. So by dedicating their money to the philanthropic funds through the IE Foundation, who have been amazing partners for us in this process, it gives them the opportunity for have us work with faculty, entrepreneurs, or alumni entrepreneurs and have the potential to double or triple or 10x their money and create an additional return back to the university in this evergreen fund that we’re managing. It’s just created another opportunity for us to engage with alumni who maybe weren’t donating to the university because they didn’t want to build a new bathroom or put a park bench outside of a building. But they’re really interested in startups and supporting entrepreneurship.

4:01
Got it. So it’s the it’s the LP capital. That’s grant based or or donated, but your investments, you guys take equity, and you operate as if you’re a standard institutional VC. Yeah.

4:15
Yeah, for sure. Yeah, for sure. So that people that donate to our funds still get their tax credits for donating to the university, just as they normally would. But we take equity stakes in companies and expect to get returns the same as you guys would.

4:27
Good, good. So you know, I’m glad you reached out about this. I’m always fascinated about sort of the university involvement in venture. So I’m glad we have you here today. But give us a sense for these three initiatives. Right. So I use got something called the quarry. They’ve got the IU venture funds, and now you’re spinning up this IU Angel Network, you know, at a high level, can you talk about sort of the mission for each and what each?

4:51
Yeah, sure. So the core is a great program. We had a previous program that was just spinning out companies, and what we found was anytime somebody raised their hand And in wanting to be an entrepreneur, we automatically started a company and got them off roll and we do a lot of the work for them. But then, you know, that faculty member might migrate to another university, they might lose focus on it, you know, the research funding that was coming in to help fund that company has dried up. And four or five years later, you had all these zombie companies walking around, and you couldn’t even figure out how to kill them. Because the faculty members weren’t even around. So we decided to take a different approach. And we work with those faculty members early on to go through some business model canvas exercises and try and figure out is this a real company? And is there a commercial potential? Is there a licensing opportunity for us and we should run that down? Or is it just really cool research, which is okay, if it is, but maybe we can find some additional research funding to help bring that to fruition? So it’s been a fun process. We don’t chase the total number of startups as the metric for success there. We’re really just focused on creating sustainable companies and making sure that the right ones get formed and not everyone gets formed. That’s really fun, fun project to work on the philanthropic Master flummery. Right? Yeah, that’s the quarry program. Yeah, we were probably engaged with 35 faculty entrepreneurs right now, and an active role with those folks. And wow, say what we’ve what we’ve been able to provide to those folks, in addition to the kind of business modeling process has been exposure to some statewide opportunity. So mentorship programs, accelerators, incubators, pitch competitions, commercialization partners that they weren’t currently aware of, because they’re so focused on the research and on campus, that I get to be the megaphone for all the great work that they do around the state, and help bring focus to that. And actually, that’s what I’m going to do later today. It’s an amazing job to be able to be that megaphone for those folks. And I mean, honestly, there’s some stuff they’re doing that I don’t understand what it is, but I get just enough knowledge on it from talking to him that I can go out and tell people, there’s cool stuff happening. So

6:48
Jason is connected to the tech transfer office. Yeah,

6:51
so most of our leads there come from the tech transfer office. That’s the easy way those people have raised their hand identified, I have an invention, they’ve made a disclosure with the university because just like every other university in the world, the universities own all the intellectual property for the faculty entrepreneurs in the work that they’re doing in their labs. So and if they say, Hey, I think there might be something here and the tech transfer officer agrees, then they call us in, and then that’s when we started that engagements. Got it.

7:15
And then, you know, the IU venture fund or the the IU philanthropic venture fund is called as well as this new effort, the IU Angel Network, can you give us a sense for this? Yeah,

7:25
the philanthropic Venture Fund is a really fun project. We started with $15 million in March of 2018, like I said, and it’s been a great endeavor to engage with companies that are either founded by our faculty entrepreneurs that have been through the quarry programming, which we have several up, founded by alumni nationwide, which we have several of those type of options in our portfolio, or are based on IU intellectual property. And we have several of those in our portfolio as well. So somebody that we’ve licensed in IU technology today that wants to help get that technology out into the world, and help save lives many times since we have such a strong emphasis at the School of Medicine, we’ll continue to fundraise through philanthropic donations to that fund and continue to make investments, hopefully, for a long, long time longer than will be involved in the program, but it’s a good one to work on. And then through the process of talking to folks about donating to the philanthropic fund, people said, This is great, I’m going to donate to the university Anyway, I’d love to dedicate my dollars to this, but I’m really interested in this space. And I’d love to have a little little skin in the game to is there a way that I could put some of my own money into these companies, you’re already doing the due diligence and sourcing all the deals, you’ve done most of the work for me just how do I put money in so we’ve spent much of 2019 designing this Angel Network, that’s going to give folks an opportunity to then take advantage of the work that we’re doing on the front end for the venture fund and be able to put their own capital into these companies and also engage as a mentor commercialization partner for those folks or, or a customer for the companies that we’re sourcing.

8:53
Okay, so then the IU Angel fund, is that going to operate as like a co invest vehicle to the to the Venture Fund?

9:00
Yeah, sometimes I think it will. But I don’t think always will do that as a co investment. I think some of those deals are just better suited to be Angel Network opportunities. But there are going to be times where I think we’ll be a co investor on this.

9:14
Got it. So it’ll be a mix and then tell us, you know, what’s the criteria to be eligible for funding from the fund vehicle itself?

9:21
Yeah, so I you DNA is what we’d like to say. So you’d be a student. We haven’t had any students yet. But student definitely is an opportunity. A faculty entrepreneur, commercializing some sort of an IU intellectual property, or a company that’s got an IU alumni in the C suite or is founded by an IU alumni.

9:41
Okay, got it. Got it. Is there another university that you guys took inspiration from as you’re designing out, you know, the focus for the fund as well as the IU Angel Network that you’re working on? Yeah,

9:54
the fund is a little unique. So a lot of that basis was was crafted with our in house team As the angel network, the network of Angel networks, nationwide through universities is pretty tremendous. And we had a lot of help from the folks at Duke, NC State, Georgetown, Arizona, the Irish angels associated with the University of Notre Dame, they were all very helpful in helping us craft, what our network was going to look like, and what was going to be the right investment vehicles for our folks to be able to use.

10:26
Got it. Alright, so are you DNA? So I’ve sent you a couple deals, right? Yeah. i You founders that. Fortunately for us, both of those have sort of turned into early emerging rocket ships. But, you know, what should I be thinking of, aside from just Indiana founder? Is there a stage? Is there a sector? I mean, what should I know, when I’m thinking about sending you deals, that would make it more likely for you guys to pull the trigger.

10:51
So yeah, and I appreciate the referrals always appreciate your great who’s your founders, you know, we primarily focused on early stage investing, we feel that’s a really nice opportunity for us to come in and help support those who’s your founders at a stage where it might not be as easy to raise that money and help to accelerate their path to that next benchmark, where they then raise a Series A, so most of our investments, all except for one of our 15 are very early stage investments, some of them pre management team pre revenue, really just a bridge Steven get to get somebody on board to help run the company has been, you know, really interesting opportunities for us to step in, and vertical agnostic. So that’s the fun part about what we’re doing is we’re not just focused on one specific space. And I think that helps with our deal flow thing. You and I have talked before about, you know, university focus, and does that limit your deal flow. And I think by being vertical agnostic, that helps us keep that pipeline open. And it does make it more difficult for our team, because we have to become experts in a bunch of different spaces, enough to be able to create an investment case for our investment committee. So that creates a little bit more work for us. But I think it also helps us because we can look at deals from a different viewpoint than we normally would had we not had that purview into other verticals previously. Got

12:15
it. So academia and business can be a bit like oil and water. You know, much like business and government or sometimes business and science, you know, it’s it’s hard to find the right balance the right mix, and to get alignment on mission. So I’m curious, you know, how you guys have been able to do that? At the university? You know, what are you doing that helps support the university’s mission? And, you know, how do you find a common direction and mission forward? that benefits the university and benefits? You know, the the folks that you’re working with?

12:49
Yeah, that’s a good question. And you’re right, sometimes those two things don’t mix. And I think that’s where I have a really interesting role is I don’t come from the university side or the academic side. So I can help translate many times between my faculty, entrepreneurs and the academic side of the table, to my commercial partners on the other side, and that that has definitely created some obstacles when I’ve been working with individual teams. I think one one story, for example, is I was working with a faculty entrepreneur, and we kept working on what is this product actually going to be the research was amazing. It was very well funded. And I kept saying, Why is someone going to pay me for this? How much are they going to pay? I don’t understand what what the revenue model is here. And the faculty entrepreneur kept saying, Stop talking about money. Grandma feels better at the end of the day. And I’m like, no one cares about grandma. We only care about money here. And so we butted heads on that one for quite a while. But it was it was fun. And we continue to work together today. So that’s great relationship. But you know, the university proper is entering its bicentennial year of 2020. So it’s a very milestone year for the university and the strategic plan for the university for the bicentennial. One of its benchmarks is to create a prosperous and innovative Indiana by translating IU research and discoveries into products, services and companies. That’s really the pillar of the Bicentennial plan that we’re focused on. And we’re really the organization that’s dedicated to the university to be able to bring that one forward. So we have the full support of President McRobbie, the Board of Trustees, the alumni group, the fountain student Foundation, they’re all well aware of what we’re working on and give us all the resources that we need to be able to accomplish that mission that the university has set forth.

14:35
Good, good. Well, and I know you know, as a broader goal, you and I have discussed that, you know, part of your effort is to design to entice entrepreneurs and new businesses to end investors from around the country to return to Indiana, right IU grads to come back into the state to support you know, the local economy as a result of partisan pitching in the network, whether it be on the investment side or or on the startup side. So how are you measuring that? Are you measuring that? And you know, what are the results of that so far?

15:09
Yeah, I mean, it definitely is one of our goals is to bring people back to the state. And as I’ve traveled across the country in 2019, we chose six communities that we felt had great startup communities and had great alumni bases already established and, and I went into those communities in a series of engagements to just learn about what was going on, create kind of a beachhead for us to land on, and say, We want to be engaged with you folks. And every one of those communities. Everyone said, I haven’t been back to Indiana in 12 years, or 15 years or 20 years, give me a reason to come home, I want a reason to come back to Indiana. And it was every single place I went. And so it’s going to be a long haul. And it may not be the next Google relocating back to Indiana. But it could be a Customer Support Office for somebody who maybe previously wasn’t going to look at Indianapolis or South Bend or Fort Wayne or Evansville. But now they might, because we’ve created that relationship in their community. And we’ve come to them, not asking for anything, just looking to create a relationship with them. And I think in 2020, we will probably hold some sort of an event in Bloomington where we will invite these folks back, we’ll showcase our portfolio of companies will showcase some amazing student startups that are working on campus that then will also showcase things that are happening in Indianapolis and West Lafayette and Fort Wayne, and talk about why Indiana and things that people may not have recognized the growth in the entrepreneurial community through the tireless efforts of some amazing folks who have been in this space for the last 10 years, that have really transformed the number of startups and the quality of startups that we’ve had. I mean, we’ve had two multibillion dollar exits in the last 10 years, that have really created an influx of capital and talent into a lot of the startup companies now that we have that are looking to be some of the next unicorns and people just aren’t aware of that. And we have the opportunity to go out and and bring those folks back. But it’s a long haul, it’s not going to be an overnight thing to be able to accomplish that goal. We recognize that and thankfully, the you know, the folks above me recognize that it’s a long goal. So they’re not asking me every day. Hey, did you get anybody to move back to Indiana yet? And we got you back to Bloomington? No, one you did. I

17:25
was on last week guest lecturing and meet with some of your you know, your great young founders at the mill. So as well as students. Yeah, yeah. So this IU eight Angel Network is part of the programming and the format to bring people back in for group meetings. I’ve just, you know, joined last week. So you know, thank you for the invitation to be part of that group. It’s pleasure to join and see how this whole thing plays out. But what do you envision as far as just the standard programming? And are people getting together? Is this more remote based? How often you know, are we going to see deals give us more of a sense for the tangible play by play? Yeah, I

18:02
think being able to present deals remotely is one of the things that’s going to be a differentiator for us. I know a lot of the angel networks that we researched in the process, not just the university based ones, but traditional Angel networks as well, kind of get stale, because it’s just the people that are in the driving proximity to where the network meets. And they can’t always make that 1/3 Thursday of the month meeting when when deals are being presented. So they may miss out on opportunities. And it just kind of falls apart over time. So I think what we’re going to be able to offer is, you know, monthly presentations of eight to 10 deals a year that that our team has vetted out, we will present those virtually, and document those so that folks can go back and watch them later as well. But what we’re starting to see is pockets of people in especially some of these communities that I’ve created strong engagements and where one person is raising their hand and saying I’d be willing to host in my conference room, a networking luncheon for my fellow Hoosiers who want to come together and be in the Angel Network. And we’ll watch the deals together. And then we’ll we’ll share our questions and figure out if there’s something we want to do. So it’s creating an additional networking opportunity that wasn’t available previously to just Hoosiers that want to get together and and talk to each other and, and I appreciate that. And I think they do to some of these communities, they say, we only get together when you’re here, can you come back more often. So it’s great for me because I get to go to Boulder all the time. But it’s not not a long term thing. I can’t continue to do that. But it’s great. It’s great to get together with those folks. So I think that’s how it’s gonna work. And but then the other cool thing is, because it’s university based, we’re seeing a lot of traction and parents of students. So just like the college basketball team has an incoming freshman class every year our Angel Network is gonna be able to stay fresh because we’re going to have continually have these classes of new parents coming in to give better potential angels. Yeah, I really, I was not anticipating the activity from the parents of students at all. level that we’ve seen, but I think it’s really going to give us an opportunity to have fresh money and fresh ideas over time.

20:05
I tell you what, Jason, as I look around my hometown here in Illinois, you know, all the people that are wearing the jackets and the T shirts and have the sticker on the back of the car, they’re, you know, the parents that are really proud of, of their children that have been admitted to these universities, lots of Indiana here in town as well. Yeah, like that. But you know, the network is quite strong. I don’t know how strong it is for every university. But you mentioned Boulder, you know, when I lived in the, in the Denver area, you know, sometimes for a basketball game, I would go to, to the place where Hoosiers were meeting up, you know, the bar or the restaurant and hundreds of people would show up to these places. Yeah, it’s really amazing how connected people stay to the university in the sports, even that are halfway across the states.

20:48
Ya know, I’m scheduled an event in Denver right now to speak to the Colorado Alumni Association. And their number one concern was not scheduling it in conflict with an IU basketball game. I was like, Okay, I didn’t anticipate that you guys all watched the IU games, but okay,

21:06
maybe in concert, you know, like, do it like 30 minutes before or something I don’t, right.

21:09
Yeah. Now, for sure. We hosted an event up in Chicago, that watch party that was great. I mean, a lot of folks came out. So I think you’re right, that’s an easy way to get together. But people are appreciating coming together. i We’re doing another one of Boston coming up in a couple of weeks that they’re looking for an educational opportunity and to learn more about what’s happening in Bloomington proper. So it’s not just about the sports aspect of it. And I think people appreciate that kind of continued education as they get further along in their careers. Good,

21:36
good. So, you know, I’ve got to pressure test this a bit, because there are some criticisms of, you know, the angel model and the approach. One criticism that I often hear for both University venture funds as well as angel groups is speed. Right? Yeah, traditional angel groups. I can’t remember the average time duration, but it was somewhere in the five month range from first meeting of entrepreneur to getting through all these committees to finally present into the group. Academia also has this stigma of being, you know, very slow with investment decisions. How do you combat that issue for founders that are raising on a tight timeline? You know, I’m a startup founder, I’m trying to close around. I want to go to somebody who’s not only strategic, but can move quick. You know, how do you guys address that?

22:24
Yeah, no, I mean, I think part of that is the burden there always gets put back on the investor. But I think the unrealistic expectations of the entrepreneur comes into play their song as well, I can’t count the number of times I asked them, buddy, when is it you’re expecting to close and they say tomorrow. And really, I think that’s so unfair, because I mean, we’re creating a long term relationship. And they should be doing some additional due diligence on us to see if we’re somebody that they want to get married to, as well. So they shouldn’t be interested in in executing a deal that fast. So I think a little bit of that’s unfair, I would say we have an investment committee. So that is a limiting factor. On our fun side, that does create some backlog. And we only take forward two deals every month. So it is difficult to move fast all the time. But I think the fact that we try to make a decision early on whether you’re going to actually get into our funnel, so we don’t drag out that process. And then once you’re in the process, you know exactly what it is that you’re gonna be able to present to the committee helps mitigate some of that, that backlog and delay in dealing in the academic setting. But because we sit outside the university just to touch just enough that we can be a little bit more nimble. Yeah, it also helps to mitigate some of that as well. But yeah, I would agree. It’s hard. But I don’t think we should bear all of the burden all the time. But

23:47
you will have to, you know, speed up as much as possible, because that objection is real, you know, some founders Yeah, have it. But if you have, you know, if you have a good answer to them on why you can move quicker and get to conviction, they’ll listen, so

24:02
yeah, and I think the other thing is, when we get to Investment Committee, we’re making the decision that day, almost all the time. Occasionally, there’s some additional due diligence questions that might take place to put some contingencies on a yes or no vote. But I’m generally able to take somebody while I’m sitting at the table right after the vote takes place to be able to say yes or no, we’re gonna do this deal. And I think people appreciate that.

24:25
Good. So I was speaking with another university affiliated an investor, not Indiana, not in the Midwest. But last week, I was talking to this fellow really, really bright investor lots of deep experience over many, many years working both within the academic environment as well as institutional VCs. And a comment he made to me is there’s just not enough deal flow when you restrict investments to companies that have an affiliation with his particular university, right. And I would say in general, similar size and scale as India, okay, now out. So he said he, you know, they’ve broadened the thesis a bit. So it’s not just, you know, DNA of that particular university, because it was too restricted. Do you agree? Do you disagree? You know, what are your thoughts?

25:11
I would disagree, I would say that person must have gone to the wrong university, because I have as much deal flow as I can deal with it. You know, I think, for us personally, keeping that being vertical agnostic, helps to eliminate some of that problem. And, I mean, I’ve really I have a hard time believing that’s true. The funds in Indiana that are not university affiliated are constantly commenting to me, where are you finding all these deals? That how are you finding all these deals, and I think our outreach nationwide, and creating those relationships is sending us referrals for deals. And we get a lot of cold called deals through our website that are from people all across the country that are doing amazing startups and our users and want to participate. So I would challenge that person to kind of reach out to their network and make sure they’re creating honest relationships. And they’re getting those referrals from people because people want to support their university, regardless of where you went to school. Right. It’s the college football mentality. People love the Oklahoma Sooners more than they they love the Colts. Right? It’s, it’s just how it goes. And so I would kind of challenge that a little bit. But okay, yeah.

26:18
Well, if you if you guys have the flow, I mean, you can’t you can’t argue with that. So how about, you know, there’s been this emergence of other angel affiliated groups, there’s the alumni ventures groups have started popping up all over the place. You know, there are folks that are leading these funds, in some cases, funds, in some cases, just angel groups, with an alumni affiliation with a particular university. Is that a part of what you’re doing at IU angels? And whether or not you know, what’s your impression overall, the alumni ventures groups,

26:50
you know, it’s hard enough to come by money. So the more opportunities that our startups can have to be able to get a capital infusion into their, their company. I think those are great things to have happened in the network, we haven’t had the opportunity to interact with any of those alumni ventures groups. To date, they haven’t been on any of our syndicated deals. So I can’t say how they are to work with. But my hope is that they’re their mission is to help serve startup companies the same way we are, I think what we’re able to offer separate from what they would was that direct tie to the university. So we have access to students and faculty members and the direct support from the President and Board of Directors from our university. And so maybe we’re, we have access to a little bit more tools that are have that IU DNA than those groups would have. But you know, if people are willing to invest in startups, more opportunities, the better. Got

27:45
it. Got it. And then aside from the university affiliation that you have, you know, what key points of differentiation Do you think that you have versus other angel groups, if any,

27:57
the connection to the university I think is a big one, because we’re able to, there’s a lot of tie ins that we’re able to connect to student interns, employees, emerging markets, research projects, student based projects, that’s been really fun thing that we’ve done is take some of our startup companies in and have them be case caught projects in the business school, and then listen to those market analysis projects that they’ve been working on later on down the road. I think some of these other groups that are more of a fund based model allows them to be maybe a little bit more inclusive of folks that don’t want to do a little bit of the due diligence, that our folks are going to probably have to do a little bit more of by not being a fund model. And so they have, I think they have a little bit of an advantage there over what we’re doing. So I don’t know if it all balances out at the end of the day. But one model is right for everybody. And ours might not be the right one for for some folks. So it just creates additional opportunities.

28:53
Good. So because I know you I was able to get in the loop on all this stuff and join the group. But for other people affiliated with Indiana specifically, you know, how would, how would they go about becoming a member? How do they gain access to what you guys are doing?

29:09
Yeah, no, that’s great. So you know, obviously, it’s open to accredited investors. That’s a key piece of this whole process. And we have a contact form on IE ventures.com. Or people can reach out to me, and I’ve been doing personal interviews with everybody, anybody that submits an application, I give them back some additional information about the program, kind of how it works. And then I’m doing you know, one on one meetings or phone calls with everybody to make sure that they understand how the whole process is going to work. Make sure that they understand what the expectations are of being a member of the network, and then let them know what they can expect from us as an IE ventures team, in terms of the deals that we’re going to present the access to our deal flow, as well as what support we’ll provide down the road and I think that’s helped a couple of times. stop somebody from joining because it just didn’t feel like it was a good fit for all of us. And I also kind of like to know, like, what their intention is, and getting involved with something like this, because I want folks who are, who are honestly trying to help support companies. And, you know, at the end of the day, everybody wants to make some money. But, you know, I’m looking for folks that are going to be able to provide some additional value to to our team, to our students, as well as to our startups. And I think I’ve so far found a really great team of people that are going to be able to do that, and are helping us to continue to grow the program.

30:28
And is there an expectation of certain amount of capital deployed or certain amount of deals participated in per year? For instance?

30:35
No, I mean, yeah, I want folks to do deals, there’s not a line in the sand, where it says, if you do under this number of deals, that we’re gonna have to boot you out of the network, and I don’t think any, I don’t think any network, especially alumni affiliated is going to do that, because there’s a lot of things that you can do to be a valuable member of the network that also provide value to what I’m doing and what the startups are doing outside of capital. So it’s just nice to have active participation from folks, regardless of whether they’re writing checks or not cool.

31:03
And how about on the founder side? You know, why should they they get you guys on their cap table? And how do you work with these founders post investment to kind of help accelerate their progress?

31:14
Yeah, you know, working with the founders has been really exciting, especially the faculty based entrepreneurs, we’ve been able to provide a lot of value to what they’re doing. You know, obviously, we have over 720,000, living alumni, we’re the second largest alumni association in the world. So a press release with your name and our name on it doesn’t hurt, it gets a lot of eyeballs. And I’ve had people say, I just really need a press release that says you’re an investor in my company, I’ve had folks who have wanted to engage with us, because they know they have a unicorn that they’re working on. And they want to use that as their mechanism to be able to give back to the university, and equity realization that they know will see if we invest in what they’re doing. In fact, a couple folks have held rounds open a little longer for us to be able to sneak in at the end. So that that option was there for us if that unicorn did hit. But our team is diligent about making sure that we’re engaged with the startups that that we invest in. And we know them personally, we know what their needs are. And we’re using our network of not only personal and business contacts, but also alumni and university resources to help combat some of those things, as some of the more interesting companies have been ones who wanted to wanted the university proper as a customer. So we’ve been able to plug them into, you know, the buying network or the engineering office at IU Bloomington, which also then opens up all their colleagues throughout the big 10 and the NCAA. So that’s been really fun to help plug people into the university, and then have them work their way through other universities based on those initial introductions. Got

32:49
it? And, you know, just generally, we’ve got a lot of investors in the audience, a lot of micro VCs, a lot of angels, a lot of LPs as well. What advice would you have for folks that may be starting their own Angel networks or their own Angel syndicates? You know, based on your experience, kind of building this IU Angel Network? Are there specific tips, tricks, tactics, advice that you would give to folks that are trying to build, you know, their own groups and their own networks of investors? Yeah,

33:20
I mean, it’s, I would say, it’s not as fast of an adoption rate as I was anticipating it was going to be but now that I look back, it’s we’re capitalizing on relationships that we’ve made over the last eight months. So it wasn’t like we turned on the switch. And all these people started funneling in, it was one on one conversations with people that we had met over the course of the last eight months to a year. So I think, you know, one tip of it’s not going to be as fast as you think it’s going to be another tip of not everybody’s the right fit. And that’s okay. I know, the first two that said, No, I was kind of like, yeah, man, I can’t believe that I thought that person was totally going to be involved. But then once we sat down and kind of evaluated why they didn’t want to be involved. There, it made sense, for me and for them. And I think the third thing was, a lot of the folks that I thought were gonna want to be involved aren’t involved because they don’t need deal flow. And I really, I thought that there was a subset of people that I had met over the course of the last two years that were immediately going to sign up, and I and then when they did it, I was like, what, this is crazy. I can’t believe these people aren’t smart enough. And they’re like, I don’t need deal flow. I have way more deals than I could ever deal with. And I thought you’re right, like this is better suited for folks who want to be angel investors are accredited and have money to invest, but don’t know where to find deals at. Right. So I’m, I’m right now kind of transitioning my focus to this other subset of people that I wasn’t originally focused on originally, and saying, you know, how do I get you involved? And here’s really what I have to offer. You don’t know where these deals are? I do. And so that’s been a little bit of a pivot for us as a startup, to be able to To capitalize on a new customer market that we were originally focused on, and it was kind of funny, when it clicked in my head, I was like, oh, here comes a pivot, just like all the rest of the startups. But it’s been kind of fun to take that little bit of a ride, and look at some different customers, and manage a different set of expectations for those folks that I thought we were going to manage for our original group of people.

35:21
Yeah, no, I mean, that’s, I think that’s a really good learning that we’ve learned as well. I mean, our angel group is now just over 700, folks, and a lot of people that are really, really, really involved and want to do it their self, like they want to build their own firm, or they want to build their own group, you know, they become less active. And it’s really the folks that, you know, don’t want to do this for a living, but do want to be involved that end up being a great fit.

35:47
Yeah, you know, one fun group that I mentioned, the parents of students. And the really fun thing that I think is about to happen with that subset of people is, these folks are saying, we want to do this together with our students as a learning opportunity for them. So, you know, they’re going to evaluate the deals presented together, and decide if they’re going to make an investment together as a learning opportunity for the student. And that’s just an amazing experience for that student to be able to participate in with their parent and with our angel network as a whole.

36:20
Jason, if we could cover any topic here on the program? What topic do you think we should address? And who would you like to hear speak about it?

36:27
You know, I was thinking about that. And as I’ve listened to different episodes, I would be interested in hearing people talk about what software’s or techniques they use to manage their portfolio companies to make sure that they have all the appropriate documentation that they need to, to make sure that everything’s proper on their end. Because I think that’s an aspect that everybody struggles with. I don’t know who the appropriate person is to talk about that. But that’s a topic that I’m interested in personally.

36:57
It’s interesting, because I’m speaking with an entrepreneur right now he’s not, he’s not an Indiana guy. He’s an Illinois guy, but he’s working on software to address just that. It’s pretty interesting.

37:08
We’re piloting a technology called point B that is, was founded by an IO, that Worf at Wisconsin, and we are the two pilot customers for that software that yeah, it’s, it’s actually pretty cool. I think it will become a commercially available product in 2020. After we’re done being in the pilot project, point B. Yeah, Brian Armstrong is his name. He’s out in Boulder, Denver. It’s really interesting. Samantha did the entire rollout for us on that. And it’s a really nice, really nice product at point, B ventures, I think, is the name of the group that they manage. But they developed the software, while they were doing some consulting with more and more said, we don’t have any way to manage all this stuff. So they did that. And then they brought us in as an additional set of eyes. So as they continued development,

37:56
love it, love it when people are their own product, you know, for the right reasons. Jason, what’s one thing you know, you need to get better at?

38:04
Man, what you know, what I need to get better at personally is diligence on paperwork at luckily, we have an amazing team that is more detail focused than I am and reading legal documents. So I let them do that. And I go out and be the goodtime guy and the megaphone. But I personally need to be way better about details in term sheets, and financial analysis. But you know, it just takes time to sit down and do that stuff. Usually, I’m better attuned to going out and talking to people.

38:36
Jason, what investor has influenced you most?

38:38
You know, really three people think Terry Willie, our fund manager. She is very experienced in university tech transfer, licensing and doing early stage deals. She has been more than gracious with her time, and has helped our entire team learn this space. Gary Anderson, who’s on our investment committee, he’s one of the founders of teal ventures in Philadelphia, he’s done 4000 deals, he spends a lot of time one on one with our team, looking at traditional venture deals and why or why not to do things in a certain manner. And then I think thirdly, John Wexler, the founder of launch fishers in the greater Indianapolis area, also the founder of the launching the platform that I manage. I’ve spent a lot of time with him, interviewing companies. And what I’ve learned from him is, what are the right questions to ask to figure out whether these folks are working on a viable business and what the liabilities are with working with them, and he’s just been a great mentor and friend for a long time. So those three people have kind of helped to shape me as a venture investor. Great

39:42
group of people there. And then, you know, what’s, what’s the best way for folks to connect with you?

39:47
Yeah, I mean, I You ventures.com is the best way that gives the a good summary description of the programs that we manage. It also has contact forms and each of those areas and then we’ll get routed to the right folks on our team that They can help address that issue for you. But always appreciate people who want to be advisors or mentors or commercialization partners, customers, or investors to reach out to us and talk. But we also love additional people in the space. So other university Angel networks or university venture funds that just want to network would love to talk to those folks as well.

40:18
Great, great. Well, you know, Jason in the in the time we’ve known each other, you’ve been one of the more helpful people, one of the more and helpful people, you know, when I’ve reached out and need help with something which I have multiple times, you’ve over delivered. And so, you know, anyone in the audience that I think is working on these issues are part of the Indiana network or once get connected. I’d encourage you to reach out to Jason I don’t think you’ll be disappointed. He’s, he’s a great investor and a great person. So thanks for joining us, man. Yeah,

40:49
thanks. Appreciate it, always.

40:56
That we’ll wrap up today’s episode. Thanks for joining us here on the show. And if you’d like to get involved further, you can join our investment group for free on AngelList. Head over to angel.co and search for new stack ventures. There you can back the syndicate to see our deal flow. See how we choose startups to invest in and read our thesis on investment in each startup we choose. As always show notes and links for the interview are at full ratchet.net And until next time, remember to over prepare, choose carefully and invest confidently thanks for joining us