Ty Findley of Ironspring joins Nick to discuss Industrial Innovation, Where Blitzscaling Doesn’t Work, Why Sector Focus Wins, and Beginning with the End in Mind. In this episode, we cover:
- Walk us through your background and path to VC?
- Why the decision to leave Pritzker and become an MP at Ironspring?
- What’s the thesis at Ironspring?
- Lots’ of new firms and new funds being launched… How is Ironspring different?
- You’re a “sector-focused” fund… why do you think specialized funds will outperform their generalist counterparts?
- We work in an asset class that often promotes bliztscaling, exponential growth and often spending ahead of progress… how do you rationalize the expectations of startups in our industry with the much slower pace that many legacy and heavy industrial industries… that your startups are serving… are going to move at?
- Glacial pace has benefits… long-term durability of cash flows, customer retention, pricing power… the moat
- Do you think product-led growth can work in these sectors?
- Talk about the difference between “occupations” vs. “activities” and why this is especially relevant in industrials amidst the pandemic?
- How do you think your style as an investor differs most from others (ie. discussion of decision making process/thinking in bets… focus on the decision not the outcome)
- How would you describe your system for investment decision making?
- 4-part framework of the “Day in the life of a VC fund manager”?
- Must-haves for an investment?
- Aligned with your recent collaboration on the article, “Evaluating the Successful Industrial Technology Exits”, you’ve talked about startups in industrial tech “beginning with the end in mind”… why is this important?
- Rumor has it you’re starting a podcast — lots of new podcasts these days, why will your’s standout and what’s the objective?
- Ty’s journey to VC all starts and ends with the word industrial in some form or fashion. He lived industrials growing up, and he saw if you’re not digitizing, it’s hard to stay competitive.
- After hundreds of conversations with industrial innovators who kept telling Ty about the struggles to raise early-stage capital for their solution, Ty came to a conviction that there was a gap in the venture capital ecosystem that needed to be filled to support these women and men who are advancing critical industries and infrastructure that make our country operate efficiently behind the scenes.
- Ironspring Thesis:
- First, they are focused only on investing in b2b, digital industrial applications; second, they are stage-focused; third, Ironspring is built by operators for operators.
- Sector-focused funds are bringing a new value proposition and new products to founders that are differentiated.
- Ty stresses to founders in the industrial ecosystem to begin with the end in mind. What Ty means by using Dr. Covey’s phrase is for founders to objectively set aside all the hype and posturing present in a lot of the venture ecosystem and take a data-driven approach to where the market is valuing industrial innovation.
- Ty understands the velocity you have to deploy in VC, but the idea that a firm can make an investment decision in two to three weeks worth of diligence and catch on the tail end of a process. It won’t ever be something that’s a fit for Ironspring.
- Ty thinks of the role of a fund manager in a four-part framework. Three parts are in a funnel type setup, and the last part is flywheel around that funnel. On top of the funnel are sourcing and networking. The second part is diligence. The third part is to win the deal for both the founder and Ironspring. The final part is the crucial portfolio and fund support.
- Ty mentions that a unique must to move forward in a deal is to have an unbelievably deep founder market fit.
- Ty is starting his own podcast because he sees a need to share the stories of amazing digital industrial founders and investors so others can learn from how they built capital, or how they made their companies and capitalized them.
- Ty recommends for emerging managers to subscribe to the Kauffman Fellows Journal.
- Ty is continually trying to work on his communication with founders. So that when he talks with founders and tries to share his lessons learned. He is not just emphasizing the challenges, but also if they do it right and capitalize on the business correctly. How big an opportunity exists to impact these markets.