On this special segment of The Full Ratchet, the following Investors are featured:
- Kyle York of York IE
- Vince Hsieh of Cypress Growth Capital
- Madhavan Ramanujam of 49 Palms Ventures
We asked guests to share the best question they’ve ever been asked by an allocator.
The host of The Full Ratchet is Nick Moran of New Stack Ventures, a venture capital firm committed to investing in founders outside of the Bay Area.
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Transcribed with AI:
0:18
Welcome back to TFR on today’s special segment, we ask guests to share the best question they’ve ever been asked by an allocator. Here’s the segment called Best LP question.
0:36
On today’s special segment, we have Kyle York of York. IE, what’s the best question a founder or an investor like an LP has asked you, I
0:44
was very fortunate to have pretty solid success when I was young doing in building my career in my hometown, in New Hampshire, not exactly a tech mecca. And I’ve always kind of been told you can’t build a career in tech or VC in New Hampshire, even though I’m only 45 minutes from Boston as an FYI and I could drive to New York in four hours. But it’s neither here or there. So you know, I want to make as big of an impact as possible on the foundation that I’ve got. And I think there’s a lot I have a lot to give back, and I want to do that. I want to, I want to build something that can reach as many entrepreneurs as possible and help them on their on their growth journey. I just got back from we were 200 plus people globally, but the majority of that is over 160 in India. We have a operation center in Ahmedabad, India, York IE has my name on the building. I mean, it was just mind blowing to see that many people were hiring 10 a month over there. Who are that committed rocking our schwag, you know, like all in on the business and working 10 hour days to deliver for our clients and our portfolio. And again, I think that’s very scalable, but I also like take very seriously the impact we’re making on our own employees as well.
1:50
Today’s special segment we have Vint Shea of Cyprus. What’s the best question a founder or investor has asked you?
1:56
So the best question a founder or investors asked is actually the best question that a founder and investor is asked. So it’s always when a founder asks us, can I invest in Cyprus? So many of our LPS our limited partners are exited founders or exit executives from our teams that then invested in Cyprus later on. I’m an example of that. I was a portfolio company, then a limited partner, and now obviously a general partner as well. So that’s the next question I received. The same entrepreneur I referenced earlier, you know, who asked a lot of questions. The best thing that happened was, the day after he exited, he sent us all a note saying, when’s the next funnel? But I want to invest. I’m in amazing.
2:35
I love that. I just funny enough, we’ve had a number of successes that have invested but we’ve actually had more folks that we said no to that came back to us and invested. And I just met with one in Park City the other day. It was a founder that we had passed on that ultimately invested in us. And sometimes they have early exits, you know, and some of the feedback they think was right on, and they end up committing, which is kind of nice,
3:06
on today’s special segment, we have Madhavan Ramanujam of 49 palms. What’s the best question a founder or an LP has asked you? That’s a good one. I’ll probably
3:16
take the LP questions. I think there are probably a couple of questions that we get from LPS that are, you know, good questions. And we’ve been thoughtful about that in our test and learn as we formed fund one. So the first question that was, you know, made us think was, Do you need a reserve strategy? Because if you’re a, you know, early stage fund, our fund target is 75 million for a fund such as that, you know, you have two thesis some LPS would say, don’t have reserves. Put more checks in many companies, and that’s how you would do it. And then there are others who are like, yeah, if you have a advantage in terms of knowing when to participate in future rounds, maybe you should have a reserve strategy. So we actually tested and learned this. And this comes back to your original question of, what do you do in zero to one, and what do you do in one to five monetization is a sort of ongoing topic area, which means that you know that allows us to also think about pro rata rights or super Prota rights in terms of, how do we actually participate, let’s say in multiple rounds, because there are different topics that we can actually help entrepreneurs when it comes to monetization. And you’re also like working with founders in the engine room on core unit economics, which also gives us an advantage to say, you know, where do we double down? Or not? So we consciously chose that we will have a reserve strategy, but it was after much test and learn. But of course, that’s a hot topic in among LPs. The other one that comes up in an LP conversation is okay, venture fund, that’s great. Why didn’t you think about sweat equity? Why didn’t you just do do this based on equity? And that was a great question. And we actually did a lot of test and learn around this also. And we even talked to like, venture firms who actually have a sweat equity model. And even they talked and said that, look. If you can wind the clock back, we would rather have just an invest and operate model, because every conversation that you have with a founder becomes a transaction, because you’re saying, what is the body of work? How much equity would you actually get in return for it? What are the core deliverables? And that’s just too much friction in the conversation to get in the best deals. So we chose an essential strategy of saying, look, it’s very classic. You know, if we if you have space in the cap table, we roll up our sleeves and work, and there’s zero friction for the founders. And this is what also makes it super attractive for them. And once we are tied in with them, we are tied in with them all the way till the exit. So that’s what I really think of as a value added co investing strategy, and that’s what we are emphasizing in 49 pumps
5:49
that will conclude this installment of investor stories. If you’re enjoying the program and would like to see it continue, take a moment and leave a five star review in iTunes. Okay, that will wrap things up for today until next time over. Prepare, choose carefully and invest confidently. Thanks for joining me.
