The Exchanges

Q What about the one you can mention then?

A Yes, no, well, I will mention just quickly about what that one does, um, and then I'll mention the most other recent investment. Um, so that one is something in the clothing space, uh, specifically in menswear. The other one though, which, oh man, this one was, this one was an easy, well, is an easy yes for us. It's a company called Lola. It is a subscription service for tampons and for women's sanitary products. Now, Reason one, we said yes. Um, Jordana and Alex are two very smart, very brilliant women. Who are putting this company together? Um, we are probably gonna put even more firepower behind them. We actually weren't able to do the large, the amount that we wanted to do, um, because of how strong of an investor cap table that we have in there. Um, like, we're in there with, like, Box Group, and Vayner, and, uh, even, actually, Karlie Kloss, the supermodel.

AI assessment note: “It's a company called Lola. It is a subscription service for tampons”

Q So, can we start off today by hearing a little about your backstory and how you made your way into VC?

A Sure. So I got into the industry by pure accident. So I graduated from Columbia University as a biomedical engineer focused on biomechanics back in 2008 and went to the one industry that all biomedical engineers go to, which is private equity. Um, the reason why I did that actually, uh, yes, no, it's all laughing necessary. Um, the reason I did that is because, um, there was a firm called Gotham Consulting Partners that was hiring On campus, and I was like, oh, I started by a chemical engineer. A bunch of engineers work on the firm. We get to work on all different industries. I specialize in healthcare and pharma, biotech, so I might be interested to learn more about other areas, and private equity has always been just so interesting about me, uh, interesting to me about just how it works, and PE consulting is very much like two-client system. Um, you've got the deal team of the private equity firm and then the portfolio company itself that you're working with, so you've got to satisfy both parties, um, which is not the easiest. On top of that, But the bigger thing is, it was just such an interesting work that I was doing, a lot of outside-the-box thinking. So when I was working through that, and I did that for five years, I did project work for the first two years, then ran the business development team for the last three. Uh, during that transition from project work to biz de…

AI assessment note: “I got into the industry by pure accident.”

Q And with the rewards-based crowdfunding platforms, would you rather invest before they raise the money on the platform and then see their product Product market fit kind of evolve, or would you rather know for sure that there is a product market fit before investing?

A It's a case by case basis. I mean, the way that we do a lot of our due diligence is really focusing on people, product, and pipeline. And if there are a lot of really strong areas and strong pieces that we're comfortable with that knock off a lot of check boxes within our due diligence before they've launched the product, I mean, we've invested in a couple companies pre-launch, um, we'll be okay. And a lot of them will be kind of in the later stages of pre-launch. It's like, if you think about a healthcare, there's, um, There's like three stages of clinical trials that a drug has to go through in order to actually get FDA approval. Um, I would almost suggest that we would basically start looking to come on in within, or on stage two, potentially stage three.

AI assessment note: “It's a case by case basis. I mean, the way that we do”

Q And today we're going to switch over now to the side of the startup. Um, so switching now, what key pieces of advice would you give, or what are the crucial elements to run a successful business? Say the first a hundred days, what are the most important elements?

A You have to make sure, above everything else, That your team is just so cohesive and solid. You have basically the three roles that you have to iron out, which is the marketer, the operator, and the technician. And depending on the kind of startup, technician can be almost negligent or could be absolutely crucial. I mean, with a more technology heavy, and again, I'll just focus on our area that we, our area of expertise and product side. Um, if you're working in a more high-tech consumer, or if you're working on things that really require that extra software to back everything through, you're gonna need a technical co-founder, but with, like, something of e-commerce, you know, it's almost negligent, but you really need someone who can be the face of the brand, and who can sell the shit out of your product, sell the, sell the crap out of your company, And be able to be that face. Um, then you need someone who, who is really going to handle those day-to-day work behind the scenes, and, you know, may not be part of the spotlight the entire time, but people are going to recognize your work. Um, sometimes those roles will switch around, but you have to make sure you figure out who exactly is going to be filling out the general piece of the role. Then, of course, it's cohesiveness. I mean, you need to make sure that you guys can work together and understand and respect each other's O…

AI assessment note: “You have to make sure, above everything else, That your team is just so cohesive”

Q And then, as a seed investor, and even a pre-seed investor, uh, Does Sarah Lacey's analysis of the Series A crunch, where there's a widening gap between the amount of companies that raise seed funding that then go on to raise Series A, and there's a disproportionate amount that don't go on to raise Series A, does that concern you, that increasing amount?

A Uh, it definitely concerns me, uh, and I definitely just want to say I do have the ultimate respect for Sarah Lacey, even though I don't always agree with her. Um, the same thing actually goes for her colleague Paul, Paul Carr. Um, but the bigger thing for me is the Series A crunch definitely exists a lot when it comes to technology and app-focused and software-focused startups. When it comes to products, there is a lot of money that you're starting to see being raised in the seed round. You're seeing one million dollars. One million dollar rounds, two million dollar rounds, 2.5 million dollar rounds. What's very interesting about is the combination of factors of where you have repeat entrepreneurs that are really coming in, like, for example, David Smith of Cotopaxi, who we invested in, you know, raised a three million dollar seed, um, but the bigger thing was because he's a two-time successful entrepreneur. However, you're also dealing with other startups that are raising about a million, and really the million dollar seed is kind of an average these days on product, because you need the right amount of money to handle the entire production Sourcing and distribution processes. Then, of course, have enough money left over for marketing. So I'm not too worried when it comes to Series A crunch for our sector. I'm definitely worried in general, because there is a lot of money out…

AI assessment note: “So I'm not too worried when it comes to Series A crunch for our sector.”

Q And then, as a seed investor, and even a pre-seed investor, uh, Does Sarah Lacey's analysis of the Series A crunch, where there's a widening gap between the amount of companies that raise seed funding that then go on to raise Series A, and there's a disproportionate amount that don't go on to raise Series A, does that concern you, that increasing amount?

A Uh, it definitely concerns me, uh, and I definitely just want to say I do have the ultimate respect for Sarah Lacey, even though I don't always agree with her. Um, the same thing actually goes for her colleague Paul, Paul Carr. Um, but the bigger thing for me is the Series A crunch definitely exists a lot when it comes to technology and app-focused and software-focused startups. When it comes to products, there is a lot of money that you're starting to see being raised in the seed round. You're seeing one million dollars. One million dollar rounds, two million dollar rounds, 2.5 million dollar rounds. What's very interesting about is the combination of factors of where you have repeat entrepreneurs that are really coming in, like, for example, David Smith of Cotopaxi, who we invested in, you know, raised a three million dollar seed, um, but the bigger thing was because he's a two-time successful entrepreneur. However, you're also dealing with other startups that are raising about a million, and really the million dollar seed is kind of an average these days on product, because you need the right amount of money to handle the entire production Sourcing and distribution processes. Then, of course, have enough money left over for marketing. So I'm not too worried when it comes to Series A crunch for our sector. I'm definitely worried in general, because there is a lot of money out…

AI assessment note: “it definitely concerns me... So I'm not too worried when it comes to Series A crunch”

Q And at your stage of investment, have you seen quite a bit of deal flow move into the crowdfunding sector, into platforms like Indiegogo, Kickstarter, and other equity crowdfunding platforms?

A Absolutely not. I actually work very closely with a lot of the rewards-based crowdfunding platforms, so it's actually, and just as an FYI, we've invested in a crowdfunding platform, so Indiegogo and, uh, Kickstarter, uh, The bigger thing for us, actually, is we want to work alongside them to help really facilitate great companies to come through. Like, I'm close with the head of hardware for Kickstarter. I'm close with the head of hardware in the northeast section for Indiegogo. And as they're going through great products, and as they're going through things, I mean, you're going to see a lot of cloudy, interesting startups, or interesting products that are going through Kickstarter. It'll do really well, and they really don't need to exist. But the bigger thing is they always are also, they're also are always looking for great companies that will be looking to use that as an extra tool for marketing. And they're looking just to keep using their resources deeper and really work more closely with investors. So we're doing everything we can on the rewards base. On equity-based crowdfunding, I would definitely say it's a little bit more of competition. But again, we would love to work alongside them, especially as while there are more and more equity crowdfunding Platforms out there like the Seed Invest and Angelists of the world, um, they're getting better and better in terms of …

AI assessment note: “Absolutely not. I actually work very closely with a lot of the rewards-based crowdfunding platforms”

Q And today we're going to switch over now to the side of the startup. Um, so switching now, what key pieces of advice would you give, or what are the crucial elements to run a successful business? Say the first a hundred days, what are the most important elements?

A You have to make sure, above everything else, That your team is just so cohesive and solid. You have basically the three roles that you have to iron out, which is the marketer, the operator, and the technician. And depending on the kind of startup, technician can be almost negligent or could be absolutely crucial. I mean, with a more technology heavy, and again, I'll just focus on our area that we, our area of expertise and product side. Um, if you're working in a more high-tech consumer, or if you're working on things that really require that extra software to back everything through, you're gonna need a technical co-founder, but with, like, something of e-commerce, you know, it's almost negligent, but you really need someone who can be the face of the brand, and who can sell the shit out of your product, sell the, sell the crap out of your company, And be able to be that face. Um, then you need someone who, who is really going to handle those day-to-day work behind the scenes, and, you know, may not be part of the spotlight the entire time, but people are going to recognize your work. Um, sometimes those roles will switch around, but you have to make sure you figure out who exactly is going to be filling out the general piece of the role. Then, of course, it's cohesiveness. I mean, you need to make sure that you guys can work together and understand and respect each other's O…

AI assessment note: “You have to make sure, above everything else, That your team is just so cohesive”

Q And with the rewards-based crowdfunding platforms, would you rather invest before they raise the money on the platform and then see their product Product market fit kind of evolve, or would you rather know for sure that there is a product market fit before investing?

A It's a case by case basis. I mean, the way that we do a lot of our due diligence is really focusing on people, product, and pipeline. And if there are a lot of really strong areas and strong pieces that we're comfortable with that knock off a lot of check boxes within our due diligence before they've launched the product, I mean, we've invested in a couple companies pre-launch, um, we'll be okay. And a lot of them will be kind of in the later stages of pre-launch. It's like, if you think about a healthcare, there's, um, There's like three stages of clinical trials that a drug has to go through in order to actually get FDA approval. Um, I would almost suggest that we would basically start looking to come on in within, or on stage two, potentially stage three.

AI assessment note: “It's a case by case basis.”

Q Uh, why so bullish on Sphero? We had Brad Feld on the show. What are you excited about with Sphero?

A Sphero has been around for a number of years, um, and they have chugged away in terms of building these great companies' products, and, you know, the way that Sphero has been able to do so well is just they had their two or three products that just, they finally got their big break in stores, and what really gets me excited about Sphero is they took the ball that Bob Iger gave them, I mean, pun intended, I guess, um, and ran with it. They just took it, and they ran with it, and they sprinted with it. Bigger thing also, I would say even, but just being about bullish on Sparrow, is that would be bullish on Boulder, Colorado. I mean, I was there a few weeks ago, uh, working with Techstars, working with Galvanize, working with Boomtown, uh, three accelerator programs out there, working with the Veneta Project, which is opening a Boulder chapter out there, and there's just so much focus towards building strong businesses and building great products. I mean, Brad created Techstars in Boulder. Sparrow started in Boulder. Outdoor Voices started in Boulder. SendGrid started in Boulder. Um, so on and so forth. And it's very comforting. Sparrow and Boulder as a whole is continuing to keep growing.

AI assessment note: “what really gets me excited about Sphero is they took the ball that Bob Iger gave them”

Q And at your stage of investment, have you seen quite a bit of deal flow move into the crowdfunding sector, into platforms like Indiegogo, Kickstarter, and other equity crowdfunding platforms?

A Absolutely not. I actually work very closely with a lot of the rewards-based crowdfunding platforms, so it's actually, and just as an FYI, we've invested in a crowdfunding platform, so Indiegogo and, uh, Kickstarter, uh, The bigger thing for us, actually, is we want to work alongside them to help really facilitate great companies to come through. Like, I'm close with the head of hardware for Kickstarter. I'm close with the head of hardware in the northeast section for Indiegogo. And as they're going through great products, and as they're going through things, I mean, you're going to see a lot of cloudy, interesting startups, or interesting products that are going through Kickstarter. It'll do really well, and they really don't need to exist. But the bigger thing is they always are also, they're also are always looking for great companies that will be looking to use that as an extra tool for marketing. And they're looking just to keep using their resources deeper and really work more closely with investors. So we're doing everything we can on the rewards base. On equity-based crowdfunding, I would definitely say it's a little bit more of competition. But again, we would love to work alongside them, especially as while there are more and more equity crowdfunding Platforms out there like the Seed Invest and Angelists of the world, um, they're getting better and better in terms of …

AI assessment note: “Absolutely not. I actually work very closely with a lot of the rewards-based crowdfunding platforms”

Q And how long do you like to know the team before then you make an investment?

A I mean, our due diligence takes an average of Two to four weeks, depending, depending on our past relationship with the co-founders or with the, with the entrepreneurs running the show. Um, but I would say definitely the bigger thing is that, like, I really just want to get a better understanding of how the business works. Um, and then I really want to get a better understanding of their backgrounds. Like, I hope the startup founders should understand is, like, when you're coming from larger experiences and coming from really strong backgrounds by company by company, um, Um, we're gonna do our homework, we're gonna ask, and we wanna, really are gonna try and get as much information about you and how you work and your style as necessary. Just, you know, everything is public in the internet, really, and it's so important and imperative to showcase how good of a founder you can be. You're never gonna be perfect, there's no question about it, but you have to be aware of the way your work style is.

AI assessment note: “our due diligence takes an average of Two to four weeks”

Q And you said there, you said about VCs wanting to provide as much value add as they can to their investments. How can startups then ensure that they're getting the most value from their investors?

A So first off, if, if a startup ever thinks it's a sign of weakness for them to reach out to their investors for help, there is something very seriously wrong with that startup founder. You have to understand that this is a two-way street. We're going to do everything we possibly can to, to help, to be as helpful, to be as approachable to our founders, because the bigger thing is If we have an introduction or two that we can make, and we understand, like, what's going on in this specific part of the business, we can be a lot more helpful. The other side of the piece is sometimes you're going to get so bogged in as a founder on something, and you're going to be so stuck within the trees that you're never going to think about before, so it's like, oh, wait, if I step two, if I take two or three steps back, take a look at it from a bigger angle, and understand, okay, who can actually help me with these kinds of issues, or help me with these kinds of items, Um, you'll probably recognize that your investors are probably gonna have an answer for it. We try to build a reputation at Brand Foundry, both for our current portfolio companies, as well as startups that we get excited about, to be as approachable as possible. And startups work seven days a week, ok? What's so important to us as investors, and I cannot say this enough times, we have a moral obligation to be as helpful and as ap…

AI assessment note: “if a startup ever thinks it's a sign of weakness for them to reach out”

Q And I'd love to dive into the East versus the West Coast startup ecosystem comparison now. Uh, so why are you putting your faith in New York, not in San Francisco and Silicon Valley? What are the strengths that New York has?

A I wouldn't say I'm putting my faith in New York, but I do definitely say that there are very different mindsets and styles to New York versus Silicon Valley, or San Francisco if you really want. Um, the bigger thing is, um, New York really focuses on building sustainable businesses. Silicon Valley and San Francisco is a dollar in a dream mentality. That needs to exist, because we would never have the Googles, the Facebooks, the, you know, the Ubers, the Etc. of the, the Airbnbs of the world, primarily because these big ideas probably would not have gotten funded in New York, because everyone's going to look through traction, everyone's going to go through, uh, really revenue streams and everything, and that doesn't mean that These companies could not have existed and done well within New York, and definitely know they would, but when it's a really big idea, just need the capital in order to really get it going, Silicon Valley is going to be a much safer place for it. Now, quite frankly, Silicon Valley also has a lot of issues. I mean, women in tech is, I mean, a black eye, I think, is an understatement in the world of startups and venture capital, and it's, Pardon my French, but it makes me so fucking frustrated that it's, it's such a problem. You know, we invest a lot in women at Brand Foundry too. Seven out of 13 companies are female founder led. Three out of the seven are tw…

AI assessment note: “New York really focuses on building sustainable businesses.”

Q And how long do you like to know the team before then you make an investment?

A I mean, our due diligence takes an average of Two to four weeks, depending, depending on our past relationship with the co-founders or with the, with the entrepreneurs running the show. Um, but I would say definitely the bigger thing is that, like, I really just want to get a better understanding of how the business works. Um, and then I really want to get a better understanding of their backgrounds. Like, I hope the startup founders should understand is, like, when you're coming from larger experiences and coming from really strong backgrounds by company by company, um, Um, we're gonna do our homework, we're gonna ask, and we wanna, really are gonna try and get as much information about you and how you work and your style as necessary. Just, you know, everything is public in the internet, really, and it's so important and imperative to showcase how good of a founder you can be. You're never gonna be perfect, there's no question about it, but you have to be aware of the way your work style is.

AI assessment note: “our due diligence takes an average of Two to four weeks”

Q And you said there, you said about VCs wanting to provide as much value add as they can to their investments. How can startups then ensure that they're getting the most value from their investors?

A So first off, if, if a startup ever thinks it's a sign of weakness for them to reach out to their investors for help, there is something very seriously wrong with that startup founder. You have to understand that this is a two-way street. We're going to do everything we possibly can to, to help, to be as helpful, to be as approachable to our founders, because the bigger thing is If we have an introduction or two that we can make, and we understand, like, what's going on in this specific part of the business, we can be a lot more helpful. The other side of the piece is sometimes you're going to get so bogged in as a founder on something, and you're going to be so stuck within the trees that you're never going to think about before, so it's like, oh, wait, if I step two, if I take two or three steps back, take a look at it from a bigger angle, and understand, okay, who can actually help me with these kinds of issues, or help me with these kinds of items, Um, you'll probably recognize that your investors are probably gonna have an answer for it. We try to build a reputation at Brand Foundry, both for our current portfolio companies, as well as startups that we get excited about, to be as approachable as possible. And startups work seven days a week, ok? What's so important to us as investors, and I cannot say this enough times, we have a moral obligation to be as helpful and as ap…

AI assessment note: “if a startup ever thinks it's a sign of weakness for them to reach out”