The Exchanges

Q And how should an entrepreneur then evaluate how value added a VC can be? Is there any signs that maybe The investor is rather value add light, and you know, their coin box does have very few coins in it, as you said.

A Uh, number one is reference check, and number two is do the math on their resources versus their portfolio. In our case, we have about 60 active portfolio companies. Uh, we're high, significantly involved with about two thirds of them. The other one third are companies that are either way outgrown us, or they're somewhat, uh, less active. Um, and we've got over two dozen employees. So I would look at other funds and say how many folks do you have in your team? Uh, how many portfolio companies do you have? How many checks do you write per year? And you can do a rough calculation of how many person hours you can expect to get from the firm. Uh, of course that's not the only measure. You also have to look at what sort of technology platform they have to support your company. But I think that's a really important test. It's easy to talk about value-add, but it's harder to deliver, particularly given the limited scalability of the VC model.

AI assessment note: “number one is reference check, and number two is do the math”

Q And then delving deeper into kind of the finance sector, in a recent article of yours, you mentioned on corporate venture capital, you stated The challenge is how to disrupt yourself, or at least invest or buy the disruptors. Now, is that why FF have invested in Indiegogo, and how do you view the crowdfunding sector?

A So we invested in Indiegogo at the seed level, uh, when it was not as apparent as it is today how they might impact the broader ecosystem. Uh, right now, we, we of course wouldn't invest in the The crowdfunding space defined as competitive with Indiegogo because we don't invest in competitive companies. There are also over 500 crowdfunding sites, and most of them will fail, so we're glad we invested in one of the clear winners of that game. We are certainly monitoring AngelList because there is no question that they are working up the food chain to make themselves the fundamental operating system of this asset class. We as a firm are not significant users of it, but we, ah, we might possibly, over time, get more engaged in using our service, services. Ah, we are certainly interested in other variations of this, marketplace lending and other versions of, of crowdfunding.

AI assessment note: “over 500 crowdfunding sites, and most of them will fail”

Q And then, does geographic specialization, uh, play a core role to you, or are you much more sector specialized?

A Neither actually. So the philosophy of FF Venture Capital is that as seed stage investors, we should be generalists. We should keep our doors open wide to the broadest possible array of companies. We do not invest in life sciences because we don't have any domain expertise there, but we have invested in drones, in software, in food companies like Plated, and a whole host of other sectors. We believe that the growth areas of We cannot predict in advance, so we don't like to label ourselves a content VC or a social media VC. Instead, we're just a VC that invests in interesting, uh, companies with high growth potential, and we think that that helps, uh, account for the diversity of our portfolio, uh, and, uh, their relatively good performance. Uh, we are, uh, we have invested in, uh, about 40% of the portfolio is in the New York tri-state area. The remainder are scattered across the US in both major and minor geographies, and as I mentioned, quite a few international investments as well.

AI assessment note: “Neither actually. So the philosophy of FF Venture Capital is that as seed stage”

Q And how should an entrepreneur then evaluate how value added a VC can be? Is there any signs that maybe The investor is rather value add light, and you know, their coin box does have very few coins in it, as you said.

A Uh, number one is reference check, and number two is do the math on their resources versus their portfolio. In our case, we have about 60 active portfolio companies. Uh, we're high, significantly involved with about two thirds of them. The other one third are companies that are either way outgrown us, or they're somewhat, uh, less active. Um, and we've got over two dozen employees. So I would look at other funds and say how many folks do you have in your team? Uh, how many portfolio companies do you have? How many checks do you write per year? And you can do a rough calculation of how many person hours you can expect to get from the firm. Uh, of course that's not the only measure. You also have to look at what sort of technology platform they have to support your company. But I think that's a really important test. It's easy to talk about value-add, but it's harder to deliver, particularly given the limited scalability of the VC model.

AI assessment note: “number one is reference check, and number two is do the math on their resources”

Q And then delving deeper into kind of the finance sector, in a recent article of yours, you mentioned on corporate venture capital, you stated The challenge is how to disrupt yourself, or at least invest or buy the disruptors. Now, is that why FF have invested in Indiegogo, and how do you view the crowdfunding sector?

A So we invested in Indiegogo at the seed level, uh, when it was not as apparent as it is today how they might impact the broader ecosystem. Uh, right now, we, we of course wouldn't invest in the The crowdfunding space defined as competitive with Indiegogo because we don't invest in competitive companies. There are also over 500 crowdfunding sites, and most of them will fail, so we're glad we invested in one of the clear winners of that game. We are certainly monitoring AngelList because there is no question that they are working up the food chain to make themselves the fundamental operating system of this asset class. We as a firm are not significant users of it, but we, ah, we might possibly, over time, get more engaged in using our service, services. Ah, we are certainly interested in other variations of this, marketplace lending and other versions of, of crowdfunding.

AI assessment note: “we invested in Indiegogo at the seed level, uh, when it was not as apparent”

Q And then what do you think the white space is then for entrepreneurship and fintech?

A So I'm currently leading a large research study on exactly this topic. The website is disruptinvesting.com. I'll highlight a few areas. Uh, first is, uh, security. I, I think that even now people don't realize just how vulnerable we are. Just in today's paper, I read that Russia's, Russian submarines are cruising around the undersea's cables where most of our internet traffic travels. You could see a lot of very bad things that they could do. Uh, so we're an investor in companies like Secure, which does identity verification, uh, Distil Networks, which just raised a large round from Bessemer. Uh, which blocks bots that steal data from websites. Uh, Ionic Security out of Atlanta, which has raised over seventy-five million since we initially invested in them, uh, which allows for secure use of cloud-based services. Uh, so we're, we're certainly interested in that area. We're also interested in taking manual processes and making them more efficient. We were an early investor in Adapar, which is started by Joe Lonsdale of Palantir and PayPal fame, now, now FormationAid. And Adapart was started because Joe was setting up a family office for himself and realized that family offices usually run on Excel and PDF and said this is sort of ludicrous. There should be a more seamless way to do it. So he set up a company to do that. We not only invested but became a client. We run part of ou…

AI assessment note: “I'll highlight a few areas. Uh, first is, uh, security.”

Q Is that not very normal though at your stage for them to be losing money at the seed stage?

A It's totally normal, uh, but it is ironic by historic standards, right? That's not the normal state of a business. Yeah. That is the norm in our space, and I have to acknowledge that and then address it by focusing on figuring out ways that they either get profitable or raise their next round. Absolutely. So, uh, We have worked with over 200 other VCs who have written fall on checks in our companies, and our relationships with them are critical to our company's continued growth. Number two is our finance and acceleration team. We have a team of nine accountants who provide outsourced CFO services to our companies. Our companies usually don't have their own CFO until they hit about 30 employees, and this gives our companies a lot of comfort That the numbers are in order, and it makes it easier for Kleiner Perkins and Google Ventures and other, ah, later stage VCs to invest in our companies because they know that the numbers are in order. Ah, third is recruiting. Ah, we have built out a, a set of resources to help our companies identify appropriate talent and bring them on board.

AI assessment note: “It's totally normal, uh, but it is ironic by historic standards, right?”

Q Is that not very normal though at your stage for them to be losing money at the seed stage?

A It's totally normal, uh, but it is ironic by historic standards, right? That's not the normal state of a business. Yeah. That is the norm in our space, and I have to acknowledge that and then address it by focusing on figuring out ways that they either get profitable or raise their next round. Absolutely. So, uh, We have worked with over 200 other VCs who have written fall on checks in our companies, and our relationships with them are critical to our company's continued growth. Number two is our finance and acceleration team. We have a team of nine accountants who provide outsourced CFO services to our companies. Our companies usually don't have their own CFO until they hit about 30 employees, and this gives our companies a lot of comfort That the numbers are in order, and it makes it easier for Kleiner Perkins and Google Ventures and other, ah, later stage VCs to invest in our companies because they know that the numbers are in order. Ah, third is recruiting. Ah, we have built out a, a set of resources to help our companies identify appropriate talent and bring them on board.

AI assessment note: “It's totally normal, uh, but it is ironic by historic standards”

Q And is there an individual or firm that you think particularly excels at deal sourcing?

A So I am, I'm biased, of course, but I really like the FFVC model because I think it's a much more efficient model. One of the great frustrations of our friends who work at, ah, most other VCs at our stage is they spend 80% of their time talking with companies with whom they can't consummate an investment. It's sort of like going to a lot of parties but never meeting anyone that you actually want to spend time with. Ah, in our model, we have no one at FFVC, despite our large headcount, whose job is origination. Uh, our team spends most of their time either in the office or, or in our portfolio company's offices. They're not spending lots of calories going to conferences trying to hustle attention because they don't need to. So I think this is a more efficient model, but it takes years to build up to because we've had to build our portfolio acceleration infrastructure and also make sure the market is aware of it.

AI assessment note: “I really like the FFVC model because I think it's a much more efficient model”

Q And is there an individual or firm that you think particularly excels at deal sourcing?

A So I am, I'm biased, of course, but I really like the FFVC model because I think it's a much more efficient model. One of the great frustrations of our friends who work at, ah, most other VCs at our stage is they spend 80% of their time talking with companies with whom they can't consummate an investment. It's sort of like going to a lot of parties but never meeting anyone that you actually want to spend time with. Ah, in our model, we have no one at FFVC, despite our large headcount, whose job is origination. Uh, our team spends most of their time either in the office or, or in our portfolio company's offices. They're not spending lots of calories going to conferences trying to hustle attention because they don't need to. So I think this is a more efficient model, but it takes years to build up to because we've had to build our portfolio acceleration infrastructure and also make sure the market is aware of it.

AI assessment note: “I'm biased, of course, but I really like the FFVC model”

Q And then, does geographic specialization, uh, play a core role to you, or are you much more sector specialized?

A Neither actually. So the philosophy of FF Venture Capital is that as seed stage investors, we should be generalists. We should keep our doors open wide to the broadest possible array of companies. We do not invest in life sciences because we don't have any domain expertise there, but we have invested in drones, in software, in food companies like Plated, and a whole host of other sectors. We believe that the growth areas of We cannot predict in advance, so we don't like to label ourselves a content VC or a social media VC. Instead, we're just a VC that invests in interesting, uh, companies with high growth potential, and we think that that helps, uh, account for the diversity of our portfolio, uh, and, uh, their relatively good performance. Uh, we are, uh, we have invested in, uh, about 40% of the portfolio is in the New York tri-state area. The remainder are scattered across the US in both major and minor geographies, and as I mentioned, quite a few international investments as well.

AI assessment note: “Neither actually. So the philosophy of FF Venture Capital is that as seed stage investors”

Q And then what do you think the white space is then for entrepreneurship and fintech?

A So I'm currently leading a large research study on exactly this topic. The website is disruptinvesting.com. I'll highlight a few areas. Uh, first is, uh, security. I, I think that even now people don't realize just how vulnerable we are. Just in today's paper, I read that Russia's, Russian submarines are cruising around the undersea's cables where most of our internet traffic travels. You could see a lot of very bad things that they could do. Uh, so we're an investor in companies like Secure, which does identity verification, uh, Distil Networks, which just raised a large round from Bessemer. Uh, which blocks bots that steal data from websites. Uh, Ionic Security out of Atlanta, which has raised over seventy-five million since we initially invested in them, uh, which allows for secure use of cloud-based services. Uh, so we're, we're certainly interested in that area. We're also interested in taking manual processes and making them more efficient. We were an early investor in Adapar, which is started by Joe Lonsdale of Palantir and PayPal fame, now, now FormationAid. And Adapart was started because Joe was setting up a family office for himself and realized that family offices usually run on Excel and PDF and said this is sort of ludicrous. There should be a more seamless way to do it. So he set up a company to do that. We not only invested but became a client. We run part of ou…

AI assessment note: “I'll highlight a few areas. Uh, first is, uh, security.”