Nate Pierotti of New Stack Ventures joins Nick to discuss The Mendoza Line in VC, Why Most Investors Fail More than they Succeed, What Founder Greatness Looks Like, and Lessons from Pitching to 500 LPs & Closing $42.6M. In this episode we cover:
What The Mendoza Line is & It’s Implications for Venture Capital How New Stack Finds & Selects Great Founders Lessons from Pitching over 500 Limited Partners and Raising $42.6 Million
The host of The Full Ratchet is Nick Moran, General Partner of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area. To learn more about New Stack Ventures by visiting our Website and LinkedIn and be sure to follow us on Twitter.
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Transcribed with AI: 0:02 Welcome back to TFR. Today the great Nate Pierotti, Principal at New Stack joins us to play part interviewee and part host. Nate joined the firm as an intern in early 2020. And has quickly ascended to the principal role here at the firm. Nate was a founder prior to joining New Stack, we can dig into that a bit here today. And I’m very pleased to introduce everyone to Nate, he’s been just an incredible team member, friend and investor here at new stack. Also going forward, Nate is going to assume the role of guest host as he interviews some of the top VCs in the business. With that we’ll kick off and learn a bit more about Nate, and then transition to a discussion about New Stack’s new $42.6 million fund that we announced last month. Nate, welcome, my friend. 1:03 It’s good to be here. 1:05 Yeah, this is exciting. This is a new thing for us in a bit of a role reversal. So I’m going to interview you and then we’ll we’ll turn the table. So just to start off here, Nate, you know, what was your path to venture? 1:19 And, yeah, I would say it’s different than most, I’m from a small town in eastern Iowa. And, you know, to my knowledge thus far, one of the few in the industry from the state, and I take great pride in that. But you know, I grew up not exposed to the tech industry. And I didn’t know what venture capital even was until I was 21 years old. So the way I ultimately found my way into tech, though, went to engineering school, I discovered a real problem that needed solving. And I started a business around it. So my junior year in undergrad, I started a business called monarch with some great co founders and had the privilege of building a business alongside them for three and a half years. And at that time, I had an opportunity to exit the business, which I took and was between what do I want to do next? Do I want to go do another one? Or do I want to join this industry that I’ve heard and learned about at that time, which was venture capital, and I gravitated towards that for a few reasons. Think as I developed as a founder, I love networking with other people and learning about their businesses and their models. And I’d be on Crunchbase every night looking at the recent funding rounds, asking why did this company receive x? And what is the potential for this business? So the foundation for VC had been laid during my time as a founder, and the interest was there. So after exit, I came across the opportunity here a new stock and the rest is history. 2:53 We’re very fortunate for it. But yeah, tell us more about monarch, you know, in lay terms, what was Monarc? 2:59 Yeah, I’ll caveat by saying the goal was never to be a venture scale business. And at the time, my background was on athletics, I grew up playing football, different sports. I unfortunately didn’t have a brother growing up. And anytime I wanted to practice I needed someone to practice with me. And that I think remained dormant up until when I was an undergrad, which ignited the spark which is my friends on the football team had a similar issue where even though they had other quarterbacks on the team that could throw them footballs and, and practice, they still had very little reps in their free time. And in probing a little bit deeper, I learned that the machinery they were using it to practice and train was created 40 years ago, and asking myself the question, What else and sports specifically football hasn’t evolved in 40 years, I couldn’t think of a single thing. It’s everything is evolved so much. But the equipment that we’re training these athletes with is the same and hasn’t evolved for 40 years. To me, that was crazy. And going back to engineering school, I was learning about these technologies at the time that made autonomous training possible. So how do these athletes train independent of anyone else? And that was a problem that we set out to solve, which is how do you allow athletes to train on their time with out anyone else’s help, or on anyone else’s time? So what we ended up building was a combination of robotics with wearable technology. So we had this machine, and a player could wear a tracking device, they could run it perform any sort of route or drill. This machine would track them in real time and allow them to train autonomously. We would gather data from the machine and the wearable and we’d be able to match it up together completing the data cycle, where rather than under a stream of data, you know exactly what that athletes doing. And we would sell those to collegiate and NFL teams with the goal of eventually expanding into other sports and modernizing training equipment. 5:14 Amazing. So wide receiver is tearing down the field, your machine can throw a ball and hit that wide receiver on the run accurately. Correct? 5:24 Yeah, correct. Yeah. I mean, it was a very challenging engineering problem. That was, you know, that was also one of the exciting reasons to go build it, it was asking myself at the time, like, what else could you go build that no one else has built before. Like today, we look at these businesses. And they’re all sorts of analogues. Like if you’re going to build a wearable on your wrist, you could look at Fitbit, you could look at Whoop, Apple Watch all these other comps out there to understand what components are they using? How did they do this on the tech side? And what we were building at the time, it didn’t have an analog it had never been done before. And it was funny, because when we were talking to customers, and we would say, would you buy this? Or do you have these problems, they would say that’s really interesting. We just don’t believe that can be built. And we were all so excited about the opportunity to go build something that just hadn’t been built before. From a technical standpoint, 6:21 Crazy. I think I got a BA in high school physics, I’m glad you didn’t recruit me, I think, would have been useless. But I can only imagine how complicated those a 3d and four dimensional models, you know, with pitch and yaw and everything else on the machine must have been. 6:39 Took a lot of minds to put together outside of just our team. Incredible. 6:43 So you know, how do you think being a founder has helped you in your your journey so far as an investor? 6:49 Yeah, I think to be a founder, and to be an investor, you need to be an optimist. And when I founded monarch, I was very naive. But I was also very optimistic. And going through that process. And you know, keeping that optimism high makes me optimistic, whenever I’m coming across anyone with a big vision that I think is as crazy as I was when I was setting out to build a company. But more so than just optimism and being able to understand a founders vision and get there with them and be in the same boat rowing in the same direction. The empathy that I feel like I’ve developed for these founders, and that I have for the founders that we’ve invested in, is rooted in my own experience, because it’s one thing to invest in these founders, and it’s another to have been in their shoes and experienced the highest highs and the lowest lows and having been there before, I’d feel like I have true founder empathy. And I tend to be there for founders more as a person first, and then an investor. Second. And yeah, I think that’s just been tremendously helpful in helping navigate founders provide guidance strategically, but also just having them navigate helping them navigate the challenges that they’re going to come in their personal life. 8:14 100%. There’s just so many factors that can’t be taught. But having gone through it, you know, if you’ve got that level of crazy Oh, yeah, I think Charles Newhall talked about it on the on the show recently, founder of NEA, you know, I mean, it takes a very unique minds to go on this journey. And if if you’ve got one of them, I think it’s probably easier to spot a like minded individual. 8:40 Yeah, definitely. There’s a radical obsession around the problem being solved. And you know, staying up until 2am, flying through emails Inbox Zero every day. So yeah, look for people that have that same craziness as I do, or I did when I was a founder, and I gravitated towards it. 9:00 So does the investing scratch the itch. Nate, are you going to jump back to the founder said one of these years? 9:06 Well, I think being a founders, it’s around having a builder’s mindset and the achievement of something great. I believe we operate very much like a startup, which is one reason why after I started, I wanted to stay and make a career here. And it’s because we operate very much like a startup, we have big ambitious goals, and we’re not afraid to talk about them and relentlessly pursue them. And that’s what I get up for. Right? The pursuit is something great with, you know, someone who’s crazy as I am, and I would consider you that person. And that itch is scratched by that builders mindset and that relentless pursuit of being great. 9:45 Good, good. Love to hear it. You know, I want to support you in whatever endeavors you choose to pursue Nate, but you know, very, very privileged and fortunate that that you’re working with us here and in just do an incredible deal. Will’s day in day out, four of which are closing currently. So lots of activity. 10:07 It’s been a busy month. 10:09 Busy month. So with that, maybe we’ll transition you know, I’ll turn over the mic to you. And we can we can talk a bit about, about fun, too, which you were, you know, very much part of the race process and deployment. 10:21 Yeah, well, no, I think everyone is as excited for this as I am. But Nick, I’d love if you could go back to the beginning and take us through the thought process that led to the founding of new stack. 10:33 You know, I’ve spoken about this before, on the show, right, I was kind of an independent, that started investing my own money. And that led to a podcast, which led to SPVs. And now a couple of funds, right. So I’m not going to go through the play by play on that. But you asked, you know, about the thought process, right. And I think, you know, if I rewind about 10 years, I started diving into venture capital, like like many others, and was trying to learn about this industry, and in the mechanics and how things worked. You’re a sports guy with monarch. Are you familiar with something called the Mendoza line? 11:16 I’ve heard of the Mendoza line. But you could, yeah, get me reacquainted with it. 11:22 I put you on the spot. So it’s, it’s sort of like the minimum bar of competency in baseball, right, and batting. So I think it’s 200. Right? If you bet 200. That’s like, the minimum to be competent, right. And if you look at the best player in baseball is probably hitting, you know, the batting average is around 350. Right. So it’s an extra hit and a half, for every 10 at bats, that separates the worst polling and baseball from the best. Right? I mean, that’s not a huge gap, right? Between worst and best. But the thing that stands out to me about that is they’re both pretty dang low. You know, these, these guys go up to the plate, and they fail more than they succeed. And when I looked at venture capital, I found something quite similar, right? Historically, the loss ratio and venture is well above 50%. Even the best VCs, you and I were talking about Sequoia before and some other big names that that we’ve been speaking with about various deals, even the best VCs fail at this most of the time. And really, most VCs only care about the billion dollar, right? So when you look at it through that lens, they’re often right, less than 1% of the time, right, a very small fraction of a percent of the funded companies go on to achieve the outcome that aligns with the investors objective. So it’s a strange industry where failure is chronic. Now, of course, returns are asymmetric. So you make up for it on the back end with blockbuster winners. But the point stands that even those considered the best are wrong more than they’re right. Right. So that was kind of my first shocking observation, right, this domain of like, the Uber intelligent business people. They’re just chronically wrong. Right? And I think one explanation there, Nate is, for me, One explanation is that building a venture scale company, could be the most challenging professional endeavor in the realm of business. And maybe that that high failure rate is justified. I think, for me, the other explanation is that there are a lot of companies receiving funding that never should have in the first place. Right. And it said another way, VCs are selecting for the wrong characteristics. The variables that most VCs are selecting for, very rarely mapped to the outcomes that they hoped for. So that begin sort of my deep dive, much of which was done on the podcast, I know that you’ve plugged into that and helped in many ways, over the years on the show, but, you know, that kind of began my journey into the science of selection. What are the myriad characteristic variables and intangibles that are both predictive and not predictive? 14:23 Yeah, and that’s where I wanted to go next. So when you were digging into these various characteristics that you’re alluding to in the success factors for the startups, what what did you find in how come investors get this get the picking portion wrong so frequently? 14:41 Well, I don’t I don’t pretend to have all the answers. But I can talk through sort of the theories and and discoveries that we’ve made right as a group, it kind of the exercise begins with or for me, it began with looking at the failures and looking at the successes, right so I can’t remember who it was, I want to say at CB Insights or, or one of those outlets, but they published a list of all the notable tech failures, well funded companies that ultimately failed. And it was a really long list, there were hundreds of companies, but they actually had some quotes in some context and some dialogue from the founding teams. And the majority of the reasons, well, you know, I’ll ask you, this is before your time with new stack, but, you know, what do you think made up the bulk of the reasons for failure? 15:33 Lack of focus. 15:36 Very good. I mean, that that I would say, is was a key derivative. You know, most VCs are gonna say, oh, it’s market timing, right. But if you actually read read through all these quotes and comments from the founders, it was usually running out of money, right, or team dynamics, you know, something on the team, some issue with the team. And the vast majority of these founders, guess what their profile read like, right? The majority were Ivy League educated or Stanford educated, right? They had worked at large tech companies. And they had headquarters in San Francisco. Right? So a lot of these failures had a lot of commonalities. Right, they were all very well educated, you know, San Franciscans or Silicon Valley. And, you know, they were the common sort of tech people. And, you know, I looked at this, I said, Yes, a founder needs to be smart. And they need to have access to talent, and they need to have access to customers. But since when does Silicon Valley have a monopoly on business builders? Right, that just never resonated with me? Of course, there’s a lot of tech talent, and there’s a lot of capital, but that alone doesn’t create a remarkable Business Builder. Right, just because you’re located in a region and you work for a company. That doesn’t make you. Great, right? Yeah. So you know, I looked at the successes to Nate and my personal heroes, right? I tried not to look at too many modern examples, because, you know, we’ll see if those stand the test of time. But when you look at the historical examples, like my heroes were Rockefeller and, and Ford and Edison and Disney and Sam Walton, right? None of those guys, were Ivy League educated, right? None of those guys, of course, were in San Francisco, that was kind of before, you know, the big surge in tech there, of course. But when you look at these folks, there are commonalities between them. Right. They all have an unquenchable thirst for success. They all have unbridled obsession with making things work. None of them let capital get in the way of success. They all ran. Like, if you read the biographies, they were running out of money, they were raising money, they were hand to mouth. I mean, there were successes, failures, they almost got shut down at various times, these guys thought persisted. Right? team dynamics, you want to ask Rockefeller team dynamics got in the way of success? Are you kidding? Like, these guys aren’t gonna let team dynamics get in the way of success? You know, they found a way. And they had. I mean, if you’ve read the biographies, there were plenty of problems with different stakeholders and team members and whatnot. But they persisted, right. So it’s, for me, the quantum unit of success in business is mindset, and motor, you know, continuous forward momentum at any cost. And this is not something that jumps off the page of a pitch deck or LinkedIn profile. Right? It requires real face to face connection. And importantly, the ability to spot greatness when it’s staring you in the face, remains to be seen, if if we’re one of the firms that can truly spot the greats. But first, you have to start with a thesis and the thesis is your education. And your work experience does not make you one of the greats. Right? It’s it’s really your mindset and your motor. And so that’s kind of where we began as a firm and, and that’s what we look for. 19:37 How do you vet for motor? And how do you vet for mindset? 19:40 Well, you do it all the time, I should ask you Nate. 19:45 Well you know, I feel like I might have part of the answer key over here, but I’m sure that the audience is asking themselves that right now. So if you could reveal I guess what we look for in terms of vetting for those those characteristics. 20:00 But the truth is we can’t come to a conclusive decision on those things in a very short amount of time. But we can certainly filter out the ones that we don’t think are going to reach the bar. And we can get, I think, good insight into people that have the potential for it, or may have the it factor, as we call it, right. And so I think, you know, you and I will utilize a lot of little tips and tricks and tactics to kind of pressure test founders and their level of commitment and their level of obsession. A funny example, you know, one of our founders, Tarik, over at fair market, he was hiring sales leaders, and he would intentionally send them an invite, I think for like, 6am on a Saturday, which, which I think is, you know, we don’t do that specifically, but it’s a funny way for him to test, you know, is somebody committed enough to show up to an interview at 6am? On a Saturday morning, right? Obviously, that’s, you know, for a sales role. So we’re talking about founders here. But there are a variety of ways that we can get a sense for somebody’s unbridled, obsessive nature, right, the mindset of failure is not an option, and forward momentum at all costs, right. And so in a way we, we know how we operate. And if a founder can’t operate at the speed, and agility, and momentum, as the venture capitalist, then we’re way off. Right? The founders need to join, they need to be at a higher level than us, right, the true greats. So there’s a variety of tips and tricks, and then we try and quantify it, as you know, Nate, like, we will take our key factors, I think we’ve got seven on the founder side that we think are necessary for success. And we’ll put them on a scale 50th percentile, the 99th with very specific definitions of each, and have a pretty candid conversation about, you know, where we see the strengths and where we see the gaps. 22:14 100%. And it’s unique process, but big believer in that it helps us identify those that are that have the it factor, as we call it 22:26 We’ll tell you in 10 years. 22:29 Don’t hold your breath. 22:31 It’s a I’ll say this, though, like this is what makes it so fun to work with you, and work with the founders that we invest in. Because it’s just it’s delightful, working with people that inspire you every day with their commitment and and how resourceful and how they turn bad situations to good, how they turn noes to yeses, right? How they close massive enterprise contracts, when you know, they got three months of runway, and the customer doesn’t know the wiser. I mean, it’s it’s miracles happen. Business miracles, right. But it’s just a fun thing to be a part of, if you select the right partners that are true fit with your mindset as a firm, 23:22 it’s the best part of the job. I was asked by someone recently, you know, what’s your favorite part of being an investor and it’s all about the people, right? Like working with people that are just getting after it. They’re teaching you things, which is always interesting. And they’re running 110 miles an hour the way that we do as a firm. And when you find those people being able to add them, adding them into the portfolio and working with them on a week to week month to month basis. That that’s what it’s all about. 100% 23:51 It’s why we don’t work. We have fun. Yeah, right. It’s a lot of fun. 23:57 Yeah, I want to talk about fun one and fun two in a minute here. But prior prior to diving in and talking about the tactics and the strategy, I want to hear from the horse’s mouth about the vision and the end goal for what you wanted the firm’s to become, and why that was so important to you. 24:15 Well, we have this thesis in this tagline of investing in outsiders, right. I think the conversation we just had sort of illuminates that thesis and why it is the thesis. We are outsiders. You went to Iowa. I went to Indiana, right neither of us worked for a tier one VC before this and neither of us had a billion dollar exit you know, with some startup even though we’re we’ve both built amazing products and companies. And because of that, it it gives us some insight into some other folks that maybe don’t have the shiny resumes and all the pedigree in the Prop Finance, to go out and raise a $10 million seed round at $100 million post, right? Like, I’m still baffled at how that can happen. But, but it’s nice that, you know, we’re a group outsiders that are pretty committed to what we’re trying to do. We get to empower founders to achieve their, their life’s greatest professional ambition. I mean, that is, is a remarkable thing to do. And many of these founders in Phoenix or Atlanta, or Minneapolis or St. Louis or Chicago, they just don’t have access to capital at the early stages, right? When all the proof points aren’t there, when they don’t have the traction. And they don’t have these bright, shiny resumes. They can’t access money. And it’s a perfect fit for us, right, we don’t need to see traction, we need to see mindset, right. And we look for proof points of progress, of course, but it doesn’t have to show up in the ARR for us to act. So when I think about the vision for the firm. You know, I think there’s a huge opportunity between the coasts, I mean, you and I kind of strategize about this a lot. And it’s, it’s a lot of fun to kind of think through, you know, how we can try and match the level of our founders in our endeavor to build this great firm, and become the de facto standard between the coasts, right, we want every founder, that’s building a business outside of the valley in New York, to be thinking, my goodness, I would love to have new stack involved. Right. And it’s, it’s a challenge. And every every great thing in life is, but, you know, I think we’ve put some good pieces together, and we got a real shot. 26:45 Couldn’t agree more. So we’re gonna talk about fun, too. I want to talk about fund one, which kicked off in 2018. How big was fund one? What was the objective for the fund? And how did that lay the foundation for subsequent funds? 27:05 You know, I, I have relationships with many emerging managers, right, folks that have listened to the show over the years, or, you know, we’ve we’ve met at various events, and they will often ask, you know, for, for input on fun one, and, and what they should be thinking about, and the strategy and the reality of the matter is Nate fun one is about getting in business, right, you got to put together enough capital, to have some portfolio theory and strategy, some portfolio construction, be able to do enough deals that you can do some good deals, and, you know, try and scratch out as much ownership as you can. Right. So with, with any fund, and with any professional firm, you know, we’re trying to build a legacy institutional firm here, and not just, you know, hang a shingle and be in business as VCs, you know, as so many zombie firms have become, but you got to do a few things, right? You got to prove you can do good deals, you got to pick good deals, right, which is a function of access and selection. Number two, you got to get ownership. Right? If you don’t get enough ownership in these deals, then you’re not going to have portfolio rehearse. It’s critical. So ownership at entry with first check. And then third, you need to prove you can get ownership at exit. Right? So that’s kind of a function of reserves, and Paratus. And who do you double down on in which companies do you not reinvest in? So those three things are kind of the archetype I’ve used for the firm. First and foremost, just getting great deals and getting business right. Number two, get your ownership and entry. And number three, prove you can get ownership at exit. So with fun one, we had to get in business and we had to select good deals. And I think fortunately for us, we’ve had a lot of good luck since the beginning and that that helped us in our mission on fun too. Hopefully, the luck continues, but we were fortunate to make some good pics, I think and we couldn’t prove number two with fun one, you know ownership. We we did some creative tactics to increase our ownership happy to talk about those. But now you know now we’re moving on with a proper fund. We have a proper vehicle for you. 2.6 million and we can do one and two now. With with fun too. 29:38 And with fun, too, like you’ve said 42.6 million recently announced a couple months ago. What was the goal for fun two, and what was the biggest objection that you received from LPs when sizing up? 29:53 Yeah, I think you know, we want to build a firm here and in order To do that, we need more talent. And we need the ability to lead deals and do enough of them to provide the appropriate level of diversification. For the stage, we’re investing, right? We’re investing in a very risky asset class, we covered this before, more of these things go the wrong way, then go the right way. Even though loss ratios are dropping, still, the majority of these things are not not going to go to a billion, right, not even fraction. And so, you know, so we’ve got to do great investments, we’re trying to do 35 of those average check sizes, a million bucks at entry, and we tend to get double digit ownership. So we got to lead and CO lead these deals, which is a big distinction, right? Leading deals is a whole different business than CO investing in deals in venture capital. It’s similar to the delta between being a VC and being an angel. Right? There, all three are very different businesses, leading deals, co investing in deals being an angel investor. And with this fund, we’re co leading and leading every deal, right? We have some exceptions and stuff. But in general, our philosophy is leading deals. So we got to do that. And we got to prove real performance, we got to put together a track record, right, because there’s a lot of LPs out there that need to see proof. They need certain proof points in order to commit. I mean, I remember having a conversation with a friend of mine, a limited partner, institutional limited partner during the pre raise, have fun, too. And he said, Nick, you’re not going to raise institutional capital. And I said, Watch me, you know, I’m going to go out and I’m gonna raise institutional dollars, the truth of the matter was, he was right. And he had reasons he said, Look, the track record is good. It’s one of the stronger ones I’ve seen this quarter, these were his words, but it’s early, you know, it’s not fully bait, we need to see more B rounds and C rounds to get institutional backing, or you need to be a spin out, right, most of your peers that are having success raising 40 $50 million funds have spun out of a large brands, and can point to attribution, and can show that, you know, they’ve had proper training, you know, by by a big firm, you don’t have that, and without, you know, being a spin out. And without a mature track record. Institutions are just not going to pull the trigger on you, because it’s too hard for them to underwrite the risk. Well, I, you know, I was stubborn, and so I went out, and I pitched a lot of institutions. And you know, how many I converted? 32:48 Well, I’m guessing zero. 32:52 You know, right, because you were there. We did not convert institutions on this fun, and that was a disappointment. But on the other hand, we had a lot of success with some other key partners, a couple strategic partners, a lot of family offices, and, and some high net worth individuals. So the pitch works, it didn’t fall on deaf ears, but our ICP, so to speak, ideal customer persona, you know, it was mostly stubbornness on my part, but I should have opened my ears and listened a little more and put more effort into the beachhead customer segment that was a better fit for that fund. The good news is, though, we’ve laid the groundwork with a lot of institutions that are reaching out with frequency to get updates and hear how things are going. So it didn’t work. But it worked. In that, you know, now we have an opportunity to to build relationships with those people and build confidence over time as we prep for fun three. 33:55 And when you’re in the pre raise process, and you’re socializing this step up from six to 40 million, with the objective of getting higher ownership, how do you convince LPS that you can do this you that you can get in early with ownership, be the primary partner, if we haven’t had a big track record of doing so? 34:20 That’s the question. Right. And it was, it was tricky. I think when we first scoped out fun to about midway through fun one, JR. Tells me so JR. is our CEO here, right? He’s been around since the beginning. He tells me that on the whiteboard, we put 25 million up on the big board. And that was the goal. And the venture partner that was in the room at the time. His jaw hit the table, and he said, No way are we going to step up, you know, for x the font size because fun one was 6 million and change, right? And, you know, that grew over time. And part of the reason that that target grew And we ended up, you know, having a wild ambitious target kind of a reached stretch goal of 50 million, hoping to get to 30. Right, and kind of having a, a wild stretch of 50. But the reason we did that is really portfolio construction. Right. So we talked about this before in eight, but it’s important to select good deals, but it’s also important to lead deals. And we had two choices, we either take smaller ownership stakes, and we don’t lead everything. Or we do less deals, right. So instead of 35, maybe we do 2025. problem with doing 2025 deals that precede and seed that’s a suspect product that you’re offering to your LPs, in my opinion, you know, as a fiduciary, with the failure rates in the industry, I mean, you can be really dang good. But remember that Mendoza line, like the gap between average, competent, and the best in the industry, is pretty narrow. And you really have to hope that you get some blockbuster successes to you know, cover all the sins in the portfolio. And when you’re doing pre seed investing, you know, it’s big risk, you know, to assume you’re gonna get a multibillion dollar out outcome. That’s, you know, pretty speculative. So, so we didn’t want to do 2025 investments. We wanted to provide appropriate diversification, which meant we were going to have to sacrifice significantly on leading deals and getting ownership in order to reach that 35 number. So we had to take up the target. And we just had to say, I mean, obviously there’s there’s some stubbornness here, we’d like to say about the founders, we love founders that are super stubborn about the vision, but flexible about the path to get there. I think we’ve been really stubborn about the number, we got to get over 30, you know, way better if we get to 40, and a dream to get to 50. For this fun. The path to get there was not the path I thought it would be. Right, we ended up converting a lot more investors. I mean, we have around 100 investors in this fund. Some of my peers have 1012 1320, right? It’s a whole different LP makeup. But we achieved the goal. And now that allows us to do a proper strategy. We can do 35 deals, and we can lead all of them or CO lead, you know, most of them and get double digit ownership. 37:39 You talked about the path and how it winded quite a bit. The strategy may have changed, maybe not the strategy, but the tactics may have changed. Can you share more on the path from pre res going to market? And what led up to first close? 37:54 Yeah, so for us the pre res. I think I spent maybe eight months on the previous process. It’s not something everyone does now. But historically, that was a really important part of the process. You got to start socializing, what you’re thinking about, you got to get feedback on it. Right feedback on thesis, what’s resonating? What does it feedback on your pitch deck, feedback on portfolio construction fees, reserves strategy, right? There’s a lot of components here, that it’s really difficult, especially as a single GP. I mean, we’ve had a lot of team help, and people that have leveled up to extreme levels, that new stack, but you know, back in the day solo GP, trying to put together the strategy, if I, if I did it, just with the whiteboard, you know, in the room with a couple folks, we would have made some bad decisions. But, you know, I spent a lot of time with other GPS during the pre race. And then LPs, that I respect that have been big supporters of ours in the show for many years, and got a lot of feedback. It also helps to have mentors and advocates. Right, so all these prerace discussions, you know, these people are going to help you if they like you and support what you’re trying to do when you actually go out for the raise they can help with with networking. And they can help you navigate a tricky closed process. Right? They can give you tips on sales, right? Not every venture capitalist is Built to Sell I certainly wasn’t sales is not my strength, right? I’d like to think analysis and in trying to spot greatness when it’s in front of you, and run a really great diligence process. I’d like to think that’s the strength. But if you want to be successful as a VC, you can’t just focus on your strengths. You got to fill out a lot of different skill sets over time. So So yeah, so that was the prerace process. And then what was the second part of your question? 40:01 Yeah, leading up to first close, how did the tactics change from what you expected? Going into dialing for dollars to actually gearing up for first clothes and gaining gaining your first commitments? 40:17 Yeah. Well, I mean, I’ll give you an example of a mistake we made tactically during the pre race. So part of the pre raise effort was also sort of emboldened thing and activating our existing LP base. So we had, I think, 42, LPs on fund one, small funds, 6 million change before you to LPs. And you got to go out to that LP base, and hopefully you’ll level them up. Right? Most fund managers will tell you, if you get to 2x in dollar commitments of your existing LP base, you’re winning, right? So if you did a $10 million fund, if the existing LP base gets you to 20, then that looks great. Right? JR, here, he kind of runs investor relations. But he had had, at the time, more limited interaction with the limited the limited partners. And our tactic, our strategy was, hey, Jr, why don’t you call everyone and feel them out, see where they’re at? What they want to commit to the next fund? And do they have some friends that they can link us up with, and then I would go out and focus on all new prospects. So that’s kind of how we divided and conquered, right. And, you know, some of the LPs, notably, like our biggest LP on fund one or anchor, he wasn’t, I think he wasn’t super pleased that I didn’t give him a call, you know, and since that time, you know, Jr, has grown the depth of his relationships with all our LPS because he has regular interaction with them now, but at the time, you know, that IR was kind of investor relations was was a new role for him. And so we got to know from our biggest anchor, during the pre race process, feeling him out in his temperature on, you know, coming in at first close, we got to know a zero. And, and that was problematic, because, you know, he was great LP and had a great network of other LPs that he kind of brought with him. And so, you know, that was my time to turn a no into a yes, we’ve, we’ve talked about that with our founders, but you know, I was on the spot. And so I remember scheduling a call on a Saturday with that LP and his cohort of friends. And we turn that no into a yes. And he came in, in a big way for fun, too. But that was a lesson, you know, this is a relationship game. And, you know, I made a mistake of neglecting to a certain degree that relationship, and it was a really important one. So there were there was a lessons learned during the pre raise. 43:04 Would you would you say that was the biggest lesson that you learned? Or, in hindsight, if you could go back to the pre race process? What would you have told yourself or what it’s a piece of advice that you would give yourself? Now looking back? 43:19 Well, I think you need to know yourself, write your own thesis, your own differentiation, you need to know your target. We talked about this before the ICP, right? And you got to prequalify. Right, like, fill the top of funnel. But then prequalify. Otherwise, you end up kissing a ton of frogs, like we’ve gone through this exercise with founders where we’ll just take meetings to take a lot of meetings. And then you find out in the first five minutes of the meeting, oh, I shouldn’t be meeting with our thesis, or, you know, it’s, it’s just not something we would do, right. Most of what we do is b2b, SAS, this is, you know, maybe a DTC company that’s in San Francisco. Like, that’s not what we should be focused on. And, you know, I was all about kind of top of funnel and just taking action. You know, it’s kind of that aim fire ready, methodology. And there’s goodness, there’s a lot of good in that, right, a bias for action and forward momentum. But the pre race process is a strategic exercise to get things right. And if I could go back and do it again, I’d spend more time on making sure our thesis, you know, was clear and differentiated, which I think we actually did a good job with. But defining the target better, and pre qualifying those targets as they came in. Right. 44:45 So how many how many meetings would you say you took through the duration of the fundraise? 44:51 If you recall, well, for the CRM, we use streak and the total well, number of contacts, the total number of contacts in streak is 505. I thought it was in the four hundreds. So this is just the pipeline for fun to that is a combination of real targets. So, you know, qualified LPs, it’s all it also includes what I refer to as gatekeepers, both passive and active gatekeepers. So those are, you know, friends that can can be helpful and can make introductions, but aren’t a LP target themselves. So choose, you know, if we had 500 targets in the system, I took that many meetings and leaves. And I would say on average, it was probably for the LPS that converted, it was probably three meetings would be the average, I would guess, for those that converted. So you do the math. I mean, we had 100 100 ish commits on fun, too, if each of those took three meetings. You know, that’s 300 right there plus the other, the balance the other 400 people in that list. So maybe, maybe 700 meetings, maybe more. 46:12 On top of everything else, too. That’s on top of running the flaunt the firm. 46:17 Well, thank god, we’ve got a team, right, that could do that while I was delinquent, negligent and running around trying to raise money. 46:24 Yeah, I’ve learned a lot during that time. Sir, you did. So how do you leading up to first close? How big was the first close? 46:38 I think we did first close around 12 million is my recollection. 46:42 Okay. 12 million. How do you go about breeding urgency for first close, when so many LPs can just wait for a final close? How do you get people to commit? 46:55 I mean, if you got the answer that question, I’d love to hear it. It’s difficult, right? So first close, yeah, we got to 12. So fun. One was six, we got the existing LP base to 12 for first close. And then ultimately, we got the existing LP base up to 18, I believe. Combination of after first close, so we about 3x, fun one, LPs. I think, as far as the urgency piece, the obvious one that that we used and most people use is you raise the minimums over time. Right? So we started out with 250,000, minimums, I believe. And, you know, progressively you have a certain number of slots, you can fill it that or you just put a timeline around it. So you say, you know, after this date after December, the minimums jump to 500. And so you try and create urgency around a deadline there. And yeah, sophisticated LPS that have been at this a long time, they’ll call you out. They’ll say, you know, is there anything that structurally, that requires you to raise the minimums at this point? And the answer’s no, for us in that case. So you know, in rare cases, yeah. You admit LPs, they come in a little late, but they want to come in at the original minimum, and you got to make judgment calls. In general, you stick to your guns, but you make some exceptions here and there. If it’s an important LP with an important network, so that was the primary thing we did, was raising minimums. 48:33 Got it? And how did the tactics change post first close? Ahead of the final close. 48:42 Tactics like fundraising and in sales tactics? 48:46 Yeah, whatever comes to mind, how did either strategically or tactically what were the changes? Did you change your approach who you’re talking to? I mean, you talked about upping the minimums, but was there anything else that you did? To close the remainder? I mean, shoot, oh, 30 million. I mean, there’s still 30 million to raise after that point. I’m curious, what changed from that first close up to the final close? And I’m sure track record was a part of it, if you want to speak to that, but it’s a big jump. 49:18 Yeah, it was a big jump. So I mean, there were some, some desperate moments. And, you know, there was a lot of hope, and a lot of commitment to making it happen. You know, some valuable things we did you recognize, yes, you have to have top of funnel, right? You have to have targets to meet with and pitch. And like we discussed before, you got to prequalify those so you’re not wasting your time. But something we did is we implemented daily meetings, you know, with our analyst ears each. And he was kind of my co pilot on the funnel. And there’s a couple of ways we approached it. But you know, LinkedIn was about I will tool. But you take all these folks in your network that are we identify them as key allies. And there’s two ways you can utilize your network either take a key ally, and you go and look through all their LinkedIn connections. To see anyone that smells like looks like, feels like they could be a family office, a high net worth an institutional lp. And then you reach out to them and say, hey, you know, we came across these five folks, are these eight folks, you know, are you close enough with anyone that you’d be willing to reach out on our behalf for an introduction? Right? That’s one way. And then the other way is you identify the targets that you’re going after? If you can, right family offices are often intentionally mysterious and hidden, and don’t want to be found, right? Unless it’s the perfect referral, you know, from the right person. So some of these targets are mysterious, right? It’s not like an enterprise SAS startup focused on procurement, where you can, you can identify all the decision makers you want VP of procurement or sustainability are operations. And you can go out and target everyone you want. In this industry, a lot of the targets don’t have a title that’s common and homogenous, and they’re hard to find. So that other method is really, if you can find the targets, you know, institutional targets are the easiest to find, then you can look at them and see your common connections. Right? How many connections do you have in common? And are any of those a really strong ally of yours, and then you reach out that way. But I would do daily meetings with Zeke to go through, you know, different allies, because we had a list of hundreds, I think hundreds of different allies. And one by one, we kind of pick them off and say, you know, who’s the list that we can send it to this group, and requests, you know, strong introductions. So that was something we did and shook a lot of trees, Nate, I mean, we we filled, we filled the pipeline. Doing that took a lot of work, and a lot of effort. But it paid off. You know, we got a lot of really high quality referrals and introductions. Aside from that, I think the other primary motivating factor during the raise was the progress of the portfolio. Right? So you’re doing deals, Austin’s doing deals, I’m doing deals, but the reason you do a first closes, because you got to start deploying, right. And as you deploy, you get in some good logos. And you can you can market those, the LPs are often more excited about talking about the companies, and they are talking about the VC firm, right, because the companies are doing all sorts of interesting things. VCs, you know, tend to be a dime a dozen. So strategies are a little less unique. And so as we started doing deals, that became great collateral, I don’t know, if you remember putting together like, sort of a white paper, you know, that described each company and potential exit outcomes and, and then the markups came quick, right? We got, we had a couple blockbusters early, I think our third investment, we did a precede round, we let it you know, got strong ownership. And then within seven months, they were closing a Series A from inside at 65 posts. And I mean, we’re close to a 10x Multiple on that one. And we had a few others that just popped really quick. And they weren’t hype investments. They were real material revenue growth, great net revenue, retention, you know, strong expansion revenue. I mean, these were fundamentally great businesses, without the pedigree without the flash without the hype. That raised at huge, you know, huge material gains big up rounds, and that helped a lot. 54:11 And they’re true to thesis, right? Like, how many times do we see fund managers go out, put together a fund and they’re promising one thing to LPs and the construction of the portfolio after the deployment period looks entirely different. 54:26 Yeah. Well, I can’t speak for everyone else, but I know they’re out there. You know, people. 54:31 We’ve heard stories. Yeah, we can leave it at that. Yeah. 54:34 Yeah, we’ve, I mean, we’ve been banging on thesis, right? Mostly b2b SaaS, outsider profiles. And we get in, I think our average pre money is around four and a half would be my guess, historically, somewhere in that neighborhood. So we get in really early. And this is a game about, you know, assets and pricing, price and entry. price of eggs. Those are the two things that matter. And that’s how you deliver returns. And if you’re just a price taker, and you’re not thinking about the former, right? You’re leaving money on the table, even with successes, right? You’re, you’re leaving money on the table. And it’s a really important thing that we think about. And it’s important part of what we do, because it has a ripple effect on the entire strategy. Yeah, 55:25 I mean, those margins add up paying a little bit more, even if it’s 20%. More for startup, if you’re getting that ownership, your check size is increasing 20%, you do that enough, all of a sudden, you’re investing in 20% fewer companies, and you’re 20% Less diversified at the end of the fund. 55:42 That’s exactly right. I think that’s what a lot of folks miss, right as they go into sort of institutional VC management is if your strategy is structured on ownership, right, if ownership is a really important variable to you, which it is to the LPs, I guarantee it. So if you’re not thinking about ownership, you know, could be an issue. But if ownership is central to the strategy, then if you’re paying up for deals, right, if you say our average post is going to be 10. And your average post is 20. You got to pay a much, you got to cut a much bigger check in order to get your ownership, right. And the result of that is just what you said. You end up doing a lot less deals, right? So you’re either going to compromise on your ownership, which means you’re likely not going to have portfolio returners. Or you do a lot less deals. And you don’t have nearly as many at bats to hit to hit some of those out of the park. 56:42 Yeah. I mean, I saw firsthand how difficult this fundraise was, and the strain I’ve put on you the entire team. If you’re being candid with the audience, so give us one of the toughest times during the fundraise that you can recall. 57:01 Oh, it was a piece of cake. 57:05 Sounds like it. 57:08 You know, it was a difficult day when our anchor check from fun one delivered a no, it was a good day when that no became a yes. Another difficult day was our anchor target investor. I mean, we hit it off the first meeting I had with this guy. It was yeah, it was like a great first date. I can’t think of a better analogy. We’re just in sync. It was an amazing meeting. And this is a guy that, you know, minimum check probably would have been 5 million bucks. I mean, he wasn’t an anchor target. And he had anchored another firm. And the best thing is that he built a firm in a different industry that had almost the same tenants as us. Right? Actually, a friend of the firm recently said this that Romney, a diva at 1984. He recently said to me on a call, he’s like, you’re the Moneyball firm. And I had never kind of put two and two together. But he’s like, you find all these intangible values that really lead to success, right? It’s not the big, strong six foot five guy with the square jaw and has five tools that you know, as the most successful baseball player, it’s, you know, maybe it’s the guy that’s a little overweight, and has, you know, a funny throwing motion or whatever it is. And I thought it was really kind of him, you know, to make that analogy. And when I was talking with this anchor LP candidate, he had applied a very similar methodology in a completely different financial context. And it was transformational. That’s how he built his firm. And he saw all these elements. So you know, you kind of mind meld sometimes with founders, we kind of had that. And we’re just going back and forth. And I remember getting off the phone and telling my wife, I think we found her anchor. Like I was delighted. Only they jumped on a call with him two days later, and he said, Yeah, you know, I’m gonna sit this out. And it’s gonna be a no. And he had, you know, committed to another VC fund, I think four or five months prior. And he just thought, in general, he had a VC fund, and, you know, we were differentiated and really interesting, but, um, you know, he had already kind of checked that box. And that was pretty deflating. And I remember having that conversation with him. I said, I said, Sir, let’s let this be an out right now. And not enough. Let’s let’s keep in touch. Because it’s going to take us a while to raise this thing. And I’d love to learn from you. And, and build this relationship over time and you said okay, That makes sense. And eight months, it took us eight months, but eight months later, he became, you know, our anchor investor. But it was. 1:00:08 Just a testament that there’s multiple paths, right? Like you easily could have thrown a fit and said, you know, Fu and let that be the end of it, right. But it like going back to what we were talking about at the top of the call, it’s like, having that fire and that mindset of just, you know, you’re gonna grind through it, you’re gonna break through walls, you’re gonna turn noes to yeses. I it’s just a, this is how it manifests on the venture side. 1:00:35 It’s the best thing about a no, is that any answer is actually a good answer. A yes is amazing. And a no is fuel. It really is. And it, you know, took me a while to figure out that mindset. You know, I’ve been at this for almost 10 years now, and the nose stung early on. But we really weren’t worthy of big yeses, you know, and back in 2015, and stuff. I mean, we’re still getting our footing as a firm figuring out our strategy. And over time, the nose just began to feel good. Because it was fuel, like, well, I can either prove you wrong, or I can get you to come around. And both of those in my mind are, you know, challenges were the challenges. So, yeah, the notes thing a little bit, but it’s always an opportunity. 1:01:33 It makes the successes feel that much sweeter, right? 1:01:39 That’s right. I remember Nate, I remember when you were thinking about joining us in an internship role, right, your principal, when you first join in an internship role, you start a vet in us after we give you the the offer, or you’re pinging me on nights and weekends, and that strange times and, you know, is responding to you and you had a tough choice, right? How do you go from CEO of a funded company that’s been successful, to an internship role bottom of the totem pole, at a firm that, at the time, you know, we had 6 million under management and the blind pool plus some SPVs. But this was not a sure thing that we were going to be able to level up, you know, to sort of a proper fund. So I’m really glad we got you. 1:02:25 I’m really glad I joined. I think the key is not thinking too short sighted, right? Joining as an unpaid intern, that’s a portion of the story. And if you plan on sticking around for a long time, it ends up being a minor, minor percentage of that overall story. And it also made it that much sweeter, I remember starting and I don’t think any internet joined full time. And I said, I’m going to be the first and it worked out, fortunately. But I think part of it is believing in in the upside, but also the team, right? Like the best part is working with other killers. And I think when I had the opportunity to meet you, I was like, This is my time, my type of guy, and we’re going to build something. 1:03:09 It was a strange time beginning of the pandemic. But I’m sure as heck glad you didn’t say no, because I would have been able to show it up on your doorstep. And in the UK, or in the know, you know, I would have been hell bent on making the no, yes, we’ve got some stories like that with founders, do we we don’t have to tell them today. But, you know, tough deals to get into. You better get on a plane and get out there and make it happen. Right? 1:03:35 That’s right. I mean, there’s always there’s always a path, right? Just because whatever, whatever you’re coming across in that moment in time, the you know, find a solution. Figure it out. Be resourceful, get creative. That’s right. I mean, to your point, we could rehash it probably another hour about all the stories we’ve had together, and how we’ve gotten our way into some deals, but it’s also a fun part of the job. 1:04:03 It’s a fun part of it, especially when you get the fit, right? Because if you go above and beyond, and it’s the right, partnership fit with the founder, the founders is gonna go. All right, let’s do this. 1:04:14 Yeah. Because they can feel it too. They can feel it too. They don’t they don’t want someone that’s going to take the quick No, they want to feel like if you have that fire, and we’re able to show that or the founder has a fire and we’re able to show that. They’re like, okay, these guys are my type of my type of guys. We want to they want to be associated with us as much as we want to be associated with them. 1:04:39 100% and the founders were very helpful during the fundraise, too. I mean, networking and connections. They’ve seen us build from nothing. Right? You said this at the top, but we’re more of a startup. We happen to be in the financial services industry and supporting founders and deploying capital but It’s a startup, and the founders feel it. And they’ve known it from the beginning. And it’s part of what kind of makes the relationship so special because we’ve grown up together as companies. 1:05:12 All these war stories are running through my mind right now. And I’d love to 1:05:18 reverse interviewer. I’ll do you and get all your input on the first couple of weeks, 1:05:24 I think so, I want to turn our attention back to the fundraise. And leading up to the final close. Some fund managers have said the majority of capital comes in the last few weeks of the raise. Was this the case in your experience or what transpired the last few weeks? 1:05:41 For us? I think it was the last couple months. Certainly the last few weeks, a lot of those commitments landed. Because people need they need a deadline. At the end of the day, you need a deadline. It’s not like a startup financing, where there’s clearly a firm deadline and a closed date. At least if you’re doing a price around. You know, with this, you had to give people a deadline. But it was those last few months that things really came together and we set the closed date. So Nate, you remember this, but we you know, we held our sort of LP Summit. And it was at a suspect time because delta hit in our top 10. I don’t know if you remember this, but our top 10 limited partner prospects all canceled, right? They had committed to coming. And I even had like five of them participating on a panel at the summit. And our top 10 cancel, right number 11 came. And we ended up closing number 11. I think it was a $2 million check. But that was a tough time, right? Because let let a lot of air out of the system. And we had a wonderful summit, very successful summit with a lot of great people that showed up mostly local. And that kind of catalyzed a lot of conversations, right? So we have this this big event, LPs, bring the friends, and then that kind of sets up some coffee meetings and some zoom meetings thereafter. And that allowed us to set the final close, I think it was when I had 40 or 50 LPS in the diligence interests cultivation phase of the funnel, when I had that number, and the aggregate, you know, amount of those commitments, estimated commitments was another 20 million or so that’s when we set the final close. And we said, you know, we’re gonna give ourselves eight more weeks, I think it was and push to the finish. And, you know, try and convert as many of these prospects as possible, those were all people we had actually done a meeting with, right, if they were in the diligence phase for us, we had done at least one meeting with them. And I felt like, you know, that was our time, whether we ended up converting the 40 or 50, or, or a small, small fraction, or most of them, it was time to draw the line in the sand and just finish up. So that would have put us we did first close in November of 20. And then we set the final close date for, I believe, November of 21. And then we had a couple stragglers that you know, like big jacks that had to finalize some stuff. So we ended up pulling them in in December. And the official final close date was was in December. But we communicated to everyone, you know, final close in November. And so that kind of was a motivating factor, even though we we had flexibility to stretch a couple weeks. 1:08:55 Yeah. And we recently just announced the phone close. So despite it being officially closed five months ago or so we recently announced we’re a little over a third of the way through deployment. I’d be curious if you can provide maybe a behind the curtain look at the portfolio as it’s shaking up today. I mean, we see a lot or we have seen a lot of momentum rounds. We’ve seen a lot of hype rounds get done over the past couple of years. I’d be curious to just hear you speak to how the portfolio is shaping up and what we’re seeing today as a firm given the current environment and how it’s been affecting the portfolio. 1:09:36 Yeah, it’s a good question. You know, there’s a lot the public markets have corrected. And there are a lot of VCs going through some challenges at the moment. It’s interesting because you and I, we do a lot of networking as part of the job with CO investors, whether they be at seed or Series A. And there’s a lot of folks that are writing down their portfolio Helios variety of investments, right? So these are investments that were made, where the companies have to grow into those valuations, right? In some cases, these are businesses that haven’t launched a product yet. And they’re raising at really, really high seed valuations. That’s not what we do. I mean, that’s fundamentally the opposite of what we do. We don’t do hype rounds, we don’t do momentum rounds, everything we do is, you know, not flashy, it needs more traction, to justify, you know, the price. And so our entry point is, you know, quite low on a relative basis. From a valuation standpoint, our ownership is relatively high compared compared to most of our peers. And our startups tend not to raise any rounds on hype and momentum. We see momentum rounds happening all the time, we’re VCs keep piling on, and, you know, safes on safes and different tranches at different caps. And we don’t, I don’t know if that’s a luxury or a curse. But during, you know, the bull market, it felt like a curse. Because we didn’t get that benefit in the portfolio, we couldn’t go to LPs and say, Oh, my gosh, look at all these, you know, frothy written up startups. But the The advantage is that every market we do have is earned. Right? It’s real progress. It’s real traction, these founders are not raising on the team profile, and a killer deck, right, and a big idea. So the great news is we haven’t had to write down anything. We just had another series, a close, you know, at a really tough time, from a market standpoint, and it’s like 55 million posts, something like that. Investment we did, probably seven months ago, again, seven, eight months ago. And you know, there was an opportunity for those VCs to adjust the valuation down. I think the funny thing is, they were getting more interest, you know, from the coasts and probably could have gotten a higher price. So yes, then the nice thing about the position we’re in is that we don’t have to write anything down at this point. And I feel, you know, great about the portfolio. You know, you’re the one who actually recently ran ran the stats on portfolio construction and where we’re at. So you want to give the report on, on how we’re doing? 1:12:40 From an ownership perspective, or any particular metrics you want me to hit on? 1:12:44 Yeah, give us the highlights, you know, amount deployed and owners average ownership average entry, 1:12:50 yeah, we are 46% deployed at an average ownership position of 13.8%. And that’s across 16 investments with an average entry post money of 7.3. So pretty good. And that’s in so that includes the four that close it, yeah, that that includes the four that are in closing. And that’s with an average check size of 930k. 1:13:23 There we go. That’s the model, right? Make promise LPs. You got to be flexible. But you got to fulfill your obligation. We’re trying to do, you know, deals off the coasts, at good prices that are really strong deals that are going to mark up quick. And we have material ownership. Yeah, I mean, it’s a privilege to have this team and be able to execute on the vision. And I think we need to do more of it. Right. Let’s stick to our knitting. And let’s produce some really good returns. Yeah, there’s a lot of returns to be made in software out there. I know web three is sexy, and the metaverse and all this stuff, but there’s a lot of money to be lost there. Not that there’s not a lot of money to be made. But there’s there’s a lot of money to be lost and b2b SaaS is still it feels like getting number three to me enough feel like it always 1:14:16 amazes me when we’re speaking to some of these founders in these legacy spaces. And hearing the the processes and the workflows that are still on spreadsheets, and how disjointed these workflows are the siloing of data. It’s it’s crazy. I’m, again, probably stories for another time, but it’s very eye opening and there are huge markets out there that are still relatively low hanging fruit and yeah, I’m more I’m more comfortable placing. placing my bets there. But we’ll we’ll see. 1:14:53 We’ll see. You know, web three is great. Maybe we should start looking at web four. And and I don’t know Uh, 1:15:00 Yeah. So Ramy actually posted something about that. And which is, which is funny. 1:15:06 We were just chatting this morning. Okay, 1:15:09 I figured I figured I saw him tagged you in it? Well, you know, that’s a good segue, I guess into talking about what the future looks like. So how is fun to lay the footwork for what will be fun three before too long here. 1:15:24 You know, as you say that this is a fun one company, but I’m just reading TripScout announced their $10 million series A led by accomplice amazing, just announced that as we’re speaking, yeah, so that’s fun one, how does fun to lay the groundwork? Well, we got to keep doing great deals, we got to keep getting these deals marked up on fundamental true progress with, you know, amazing leaders that just have this crazy momentum, and build, you know, multimillion dollar companies. And I think if we do that, we can prove the selection piece in a leadership capacity, right? There’s a lot of VCs out there that start as CO investors, it’s the most natural place to start, because it’s, you know, smaller checks. And it’s easier to kind of lean on and leverage the diligence of other VCs and kind of choose from a basket of venture fundable companies, as opposed to choosing from a basket of every company out there that may or may not be, you know, venture fundable. So we got to continue to prove the track record, prove that we can select improve that we can select as a lead investor, you know, that’s, that’s doing their own diligence, with most of these companies never having raised venture capital before, right. So it’s, it’s a risky proposition. And we got to continue to prove this ownership, I think you said our average ownership and then entry is 13.8. For good, you know, I think our target is 12 and a half to 15%. So it’s nice that we’ve been able to maintain that, in a bull market that was getting out of control. Right, many of the deals we would look at that would be priced at six posts were at 12. And many of the deals we would look at, they were often priced at 12 posts would be, you know, 2025. And so those seem to be coming down. Anecdotally I’m seeing more rational pricing. So I think if we continue to do that, you know, we can raise a funds that helps us prove kind of the third major test, which is more ownership at exit, which is how do we put together a really thoughtful reserve strategy and make good decisions? You know, on the follow on investing, institutional LPs are really interested in that, you know, the last call I had with a prominent institution out east, you know, him. He was like, which SPVs are you doing? And which ones are Aren’t you doing? Because right now, SPV is kind of the only method we have for reserves. And he’s really interested in to talk about the ones we’re not doing. Right, there needs to be some decision making around that you shouldn’t just, you know, deploy for every up round you get, you need to show them that you know how to jam your winners, really. So that will be the next big test. I think fun three, you know, looks more like 100 $150 million fund, we’ll see where the markets at at that point. But that allows us to once again, do the proper diversification and the ownership and entry, but then also have that complimentary, you know, one to one reserve ratio, so that we can maintain some of these positions in the best performing companies. 1:18:50 It’s an exciting future. Well, to wrap up here, Nick, what would you tell to any prospective founder listening to this episode? on whether or not to reach out to new stack? Or what would you say to a prospective founder that’s listening to the show? 1:19:08 Look, if you’re if you’re an outsider, if you’re a reverent if you get that chip on your shoulder, if failure is not a part of your vocabulary, and you’re you’re hell bent on building a category, defining b2b SaaS company between the coasts, we would love to be your partner. And we’ll help amplify that and we won’t get in your way. We’re not MEDLARS we’re not going to ask you for reports and stats every month. We’re going to try and figure out you know, the areas where we can provide the most value and amplify the efforts that will be helpful to the business, namely on the capital side, and make sure that we have a really competitive tier one series A So yeah, if I mean if the mindset resonates If you’re listening to this, you know you are. There you go. 1:20:03 Well, this was a lot of fun. I think we might have to do another episode where we’re doing a deep dive on some of the war stories that we’ve had. But this was a great look behind what we’ve been up to over the past couple years and some of the trials and tribulations, 1:20:20 Let’s do it, you know, every every six to 12 months, we can, we can do a recap. And we’ll get some of your thoughts on that too. Because, you know, we go through a lot of the same stuff, but I’m sure we see different aspects of fun. 1:20:32 Definitely. Well, thanks for joining. 1:20:36 Thanks, Nate. Appreciate it, man. And good luck. I know you’ve got some hosting coming up with some really prominent LPs and some some folks that you’ve built great relationships with. So best of luck with the the hosting duties on TFR and really excited to kind of pass the mic over to you. 1:20:52 I’m excited to be a part of it. Probably the first time of many times hearing my voice for the audience. So hopefully, they’re not sick of me already. Awesome. 1:21:02 Thank you, sir.
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