Startup Tricks Of The Trade – Interview with John Shumate
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Episode Summary
John Shumate is the CEO of Venture First, a financial services group with a strong focus on empowering entrepreneurs. Venture First helps companies by providing the financial and strategic tools necessary to succeed. John dives into how entrepreneurs can structure their funding, how to build a better connection with investors, and shares a client case study. Tune in to hear more about John and Venture First.
Startup Tricks Of The Trade – Interview with John Shumate
Hi. Welcome to The Successful Pitch. Today’s guest is John Shumate, the CEO of Venture First. John is the CEO of Venture First and focused his career on working closely with venture-backed companies. He’s worked with hundreds of early and growth stage companies across many industries, many of them dealing with highly technical products or business models. He believes strongly in the use of carefully applied rigor to rationalize financial models, business plans and valuations. He’s got over a decade of financial experience, including the buy side and the sell side of mergers and acquisitions, debt and equity capital raises, strategic consulting, complex financial modeling, very few people do that, business plan development, equity and derivative valuation. John attended Wharton. We are so happy to have him on today. John, welcome.
Thanks so much. Happy to be here and looking forward to talking to you about the entrepreneurial world.
I want to jump in and find out how you got to be where you are. Did you know when you went to Wharton that you wanted to start your own VC firm? How did you get there?
Startup Tricks: I got my foray to ventures and venture capital groups and that whole ecosystem and I absolutely loved it.
No, not at all. Business has always intrigued me. When I was a kid, I collected coins and baseball cards and was always hustling and dealing with different people as a kid. I knew I always liked the personalities of people, I liked the interaction, I liked the stories that went along with it and didn’t mind making a buck along the way. That was all good. I knew I wanted to head in that direction and that’s why I went to Wharton to get that classical economic training, but didn’t know that I wanted to go in that direction. Wharton, like a lot of schools, really try to mitt people out to go straight to Wall Street. If you’re not going straight to one of half a dozen investment banking shops there, you don’t want to do that, they think you’re nuts. It wasn’t exactly what I wanted to do. They probably thought I was nuts.
I went to work for an incubator, B catalyst, back when I don’t think incubators were cool or at least not as cool as they are now. That incubator, like many incubators, were flawed for a couple reasons. I was there as we ended up turning it into more of a services group, more of an investment banking group working with earlier stage companies. That’s how I got my foray to ventures and venture capital groups and that whole ecosystem and I absolutely loved it. Ever since then, I’ve just been off and running in that realm.
I love what you said about the stories from the coins and the baseball. I collected baseball cards myself, Ernie Banks was a big one to get. The importance of storytelling is everything when you’re pitching someone. Let’s dive into what do you think some of the secrets are to having a good pitch?
I think the biggest secret for having a good pitch is to be genuine. I think so many VCs, they see so many stale pitches that come across. I don’t care who you are, you’re not the first person to come up with an idea to try to revolutionize an area of healthcare or a piece of technology. You might have your own special twist. But more often than not, VCs are betting on the person. Everyone thinks that they’re betting on the idea, but they’re betting on the person. You see this.
[Tweet “Startup Tricks: Sell yourself first before you sell anything.”]
There’s later stage funds that all they do, and these are later stage private equity funds, all they do is go out and fund individuals for whatever their new venture is. Because they know if they’ve been around the block a few times, they’re probably not going to screw it up. Even if there’s a problem with the idea, they are not going to panic, they’re going to be nimble, they’re going to communicate well with their investor and they’re going to pivot and turn it into either a similar company or something completely different than it already is and they’re going to get a win. They’re betting on the people.
I always tell people, if you can go in and connect with the person you’re pitching to and have a real conversation, whatever that is, maybe talk about their family, maybe share the same alma mater, maybe you had the same healthcare treatment, maybe you go for the same sports team. Whatever it is, make a personal connection and sell yourself before you sell anything. I always start off with that, sell yourself and then get into the issue and what it meant to you to get into this venture, why it resonates with you and why you have a passion for it. Then it becomes so easy just to step into the pitch and talk about the business model.
When these guys challenge you, and even if you have a perfect pitch, they’re going to challenge you because that’s what they’re paid to do, have a collaborative conversation. Let them feel like they’re cooking a soup a little bit with you even if you feel like you have pretty good ideas. Don’t get into a pissing match, don’t argue. Firmly hold your ground on your beliefs but have an intellectual conversation about it. If you make it personal, you got a much better chance.
[Tweet “Startup Tricks: Have a collaborative conversation with investors.”]
I love so many things you just said. We’re definitely going to tweet out, “Sell yourself before you sell anything.” I’m a big, big believer in that. “Have a collaborative conversation.” What a great alliteration that is because people think, “If I have a perfect pitch,” which there’s no such thing, “no one’s going to question me and all that other stuff,” but the whole point is you have to show you’re coachable to have that collaboration because people want to not just give you their money, they also want to give you their ideas and see if they like you.
That’s right. Absolutely.
What are some of the reasons you think most startups fail?
There’s a variety of reasons most startups fail. The biggest one is actually pretty simple, they run out of cash. This is something that I preach to startups. You see so many people, when they’re initially raising their first round, and they love their idea, they’re confident that it’s going to work and that’s great, and they’re extremely concerned with preserving every percentage point of equity that they possibly can. I’m not saying you want to end up with a goose egg when you sell the thing. You don’t. You shouldn’t be foolish about it. You’ll hear successful entrepreneurs say time and time again, “I wish I’d gotten a little bit more cash. I wish I’d have a little bit more room to pivot. I wish I’d gone faster.” I generally tell people, “Raise more money than you think you need.” At least 20% more than you think you need or probably three to six months more than you think you need if you think about it in terms of time.
[Tweet “Startup Tricks: Raise 20% more than you think you need.”]
Got it. How long do you think somebody should plan for? Is it twelve months, eighteen months?
I generally advise people to do eighteen months between rounds or at least between when they perceive a round. The reason is most funding rounds can be pretty drawn out even with a good company, whether it’s through negotiations or telling people your stories and there’s this decent battle of attrition that goes on. I like to tell people to budget six months for a raise. It might be faster, but you got to do six months for a raise. The good news is if you do that and you plan for eighteen months, that gives you a full year just to focus on executing and you don’t have to worry about funding. I’ll tell you what, having that funding distraction, as fun as it can be, it really is a big distraction while you’re trying to execute. You’re trying to have a full year support.
Let’s just do the math recap real quickly for everybody. Get enough money to last you eighteen months so you have a whole year to focus on execution and then you have six months window to be executing and raising funds. It’s an 18-12-6. I love that little formula. Thank you so much for spelling that out for us. Since you’re an expert in valuation, I would love to just hear you talk about, are we experiencing an early stage valuation bubble? How does a founder decide how much they should value their company?
It’s a great question. You have a lot of economists and people in their early stage space talking about this frequently. Really, the short answer is, “It depends.” I think if you look at some of the larger household name ventures, if you look at the Facebooks, if you look at the Ubers, if you look at some of these big valuations and sometimes big IPOs, I think there can be an argument on some of them that there’s a bit of a pricing bubble. There’s just so many dollars chasing those ventures, it gets a little inflated. However, I think if you look at the rest of the pack, the rest of the good ventures out there, I really don’t believe there’s much of a bubble.
Clearly, maybe there’s been a little bit of a hump here with some good economic times and maybe you’ll have a little bit of a dip if we have a little bit of a downturn. I think what we’re actually seeing is a new paradigm for how innovation occurs in the modern economy. What you’re seeing is a good amount of churn. In the past, if an entrepreneur failed and had to close a business, they were labeled a failure. This person is not someone you want to do business with. This is not a stigma, at least in the technology hub. It’s not in Silicon Valley, not in Boston, not in Research Triangle Park. This is not a stigma that sticks with people.
[Tweet “Startup Tricks: No stigma to failing.”]
This is where you’re betting on the person again. It is expected that if you go through enough ventures, you’re not going to win on every one of them. If you take that lean startup approach and you’re going in and you’re doing your work, you’re going to realize some of these don’t work or you’re going to realize that you have to pivot to something else and there’s a lot of change. The good news with this new paradigm, as I would call it, is that it brings innovation to the floor more rapidly. By fleeing more quickly, it allows a new leaf to be turned over for those smart, aggressive entrepreneurs to go on and do the next thing.
The companies that do make it, it allows them to get funding more quickly and come to the forefront more quickly. If you think about the life cycle of a company, or even of a technology in its entirety, it’s much shorter now. If a hundred years ago, GE came up with a technology and took it to market, they could expect that technology to last perhaps decades before it started to decline and they had to either change the product or a competitor will come along and do something different. Now, technology comes out so rapidly that it’s a rapid spike and sometimes that’s sustained, but there’s often a rapid decline after that when something replaces it.
You get a lot of companies that are flash in the pans. That doesn’t mean that they weren’t important technologies. Again, this comes back to why it’s important to have a really good leader in that venture, because even if you knock one out of the park, chances are somebody’s going to be hot on your tail and you’re going to need to change what you’re doing or tweak it in some way to catch up with the trend.
What you just said brings up an interesting question for me, which is when someone’s pitching you, when you’re making a decision whether you’re going to fund someone, not only are you looking at who they are and their track record and not associating any stigma to any past failures, as long as they have some successes in there, but how important is it to talk about a barrier to entry from competitors, that they’ve thought that through?
That’s a good question. I think different people have different approaches on this. To me, I typically am not looking for huge barriers to entry. The reason is, I think most of the time what most people think is a barrier to entry can easily be worked around. I remember this lesson back from when I had a summer position in college at Johnson & Johnson.
Startup Tricks: What most people think is a barrier to entry can easily be worked around.
One of my roles was to support the engineering department for a particular line and make sure they were getting the budget and funds that they needed. I remember one of the engineers looking at a particular product that a competitor had a stranglehold on the patents and the designs on, and he said, “If you could give me a few hundred thousand bucks, we could engineer around this,” and I said, “There’s so many regulations. How does that make sense?” He said, “Listen, if you’ve got a smart enough team and a little bit of cash and enough time, you can get around just about anything. You just got to play with the design.”
When somebody comes to me and they say they have this marvelous barrier to entry, I’m always dubious. I think there’s exceptions when that’s the case, but I really believe that more often than not, it’s about who hustles the fastest, who’s going to beat the next guy to the punch, who’s going to alter their strategy and change and be nimble when they have to. I think that’s the most important thing. Frankly, I’ll tell you, a lot of people, it bothers them if there’s a competitor in the space. It doesn’t bother me that much if there’s a competitor in the space if you can offer some special twist. If there are competitors in the space, that tells me there’s a market for it. How are you going to be better and do better than those competitors is what I want to know.
What types of startups do you like to specialize in, or do you specialize in certain things?
We’re more generalists. However, we obviously love anything in healthcare, a lot of technology. Frankly, we’ll look at some pretty, what I would call, boring ventures. Frankly, you’ll see some, everybody wants these sexy ventures that have a flash in the pan, but I have no problem with what I would call boring industries, manufacturing or the like, that have some cash flow, have a lot of demand and have longer sustainability curve than some of the technology.
Interesting. Now, are you funding at the seed round or are you in series A? What is your niche there?
We’re typically working with companies anywhere from the seed stage up to series B. We have a wider range than most of the guys in our space. We really believe that you’ve got to laser focus in on having the right person and the right ideas. If we constrain that to a very narrow niche, a lot of times it’s hard to find enough ventures to make it go.
Have you a story that you can share with us of someone you found at a seed range and have been able to give them multiple rounds over a period of time since you’ve been in business since 2009?
Startup Tricks: We got involved with them very early on and helped them do a round with some other Angel investors.
There’s a great company that we’ve worked with. We just did a round with them here recently, called Edumedics, and it’s a great company out of Louisville, Kentucky. They are a disease management company. That’s become a little bit of a dirty word in the space because a lot of the companies aren’t driving results, but they really are. The founder’s background, the CEO, Alice Shade, came out of the insurance industry and plan design and had a healthcare background. She really understood the ins and outs very well. The other cofounder was a physician with a lot of hospital administration background. Together, they’ve built this cool company.
What they do is they work with large self-insured employers or large Medicare groups who have large insured populations. A lot of them typically have very high spend for chronic disease. 20% of their members might make up 80% of their spend. It becomes immediately very important to figure out a way both to control that spend and simply to have a healthier workforce. You’re going to have healthier people, you’re going to do the right thing by those people and you’re going to get frankly more production out of them if they’re healthy. What they do is they set up clinics, they do a lot of sophisticated data analytics to really zero in on a particular patient population and they give them some coaching.
The guy who’s got diabetes and COPD and something else who doesn’t really go to the doctor that often and just frankly might need some basic medications and a little bit of coaching, you’d be surprised how much a little bit of that can go a long way. We’ve liked them a lot, so we got involved with them very early on and helped them do a round with some other Angel investors. Then we’ve continued to work with them and just helped them with a $4.2 million round. They’re on their way. They’re running fast.
That must be so rewarding. Since you’re based in Louisville, Kentucky, are you mostly looking for people who are geographically close to you, or are you geographically agnostic?
We’re geographically agnostic, for sure. We’re typically working with companies anywhere from Silicon Valley to Research Triangle Park. We’re mostly in the US at the moment. However, we’ve looked at some deals in Latin America, in the Caribbean, so I would say we’re opportunistic.
Nice. What is your favorite way to have someone reach out to you? Is it through warm introductions? How do you find the founders that you want to hear a pitch from?
I think warm introductions are always the best. Any time you can really sleuth on your LinkedIn and get someone mutually respected to introduce you, it’s certainly going to get a lot more immediate attention. We try to do a pretty good job, whether we get a cold call or an email from somebody who finds us online, or wherever they find us, it’s really important for us to get back and give good feedback.
That’s the southern Midwest polite manners coming through there. I love it. One of the things you said on your LinkedIn profile is that you offer Wall Street quality at Midwest prices. Can you elaborate on what services you offer at those Midwest prices for Wall Street quality?
These are more advisory services. We do a lot of valuation work for early stage companies and for VCs and some transactional advisory services as well. There’s other guys doing this out there who are good, but if you are a venture on the west coast, Silicon Valley Bank, for example, they do good work but they’re usually 3x the price than we are, and we do a great job.
I’ve interviewed a lot of investors on this podcast and I’ve never met anyone who does as many things as you do so well, which is everything from seed to series B, as well as being an expert in valuation, which leads me to a question of, what tools are you using to run your business and stay so organized?
TSP 069 | Startup Tricks: When you’ve got a lot of pieces flying around, you got to keep them organized.
That’s a good question. I’ll just say, for us, we try to do different things because we really believe in supporting the entrepreneurial ecosystem as a whole, whether that’s working with other investors or working with companies and really supporting the entire ecosystem. We think that’s where you get the best squeeze. You’re absolutely right, when you’ve got a lot of pieces flying around, you got to keep them organized.
We’re certainly fans of all the Google tools and we use that for mail and for calendar. There’s other tools as well. We like to use Asana to keep all of our projects organized and we have a lot of people working on a lot of different projects. We can communicate on that and organize them and make sure everybody’s on point with what they need to do. For scheduling, we really like Mixmax, which is a tool that allows you to embed your calendar availability or what you want to show someone is your calendar availability to set up a meeting. You have one email and someone clicks on it that allows you to, in one email, get a meeting scheduled instead of having four, five back-and-forths about when you’re available. We like that as well.
Especially for time zones, that’s really helpful, isn’t it?
Absolutely.
John, is there a book that you would recommend founders read, either about financial valuation or just life in general?
The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers
There’s a bunch out there. I think the number one for entrepreneurs, if you haven’t read it, is The Hard Thing About Hard Things. This is Horowitz’s book. The guy has been very successful, both running an early stage company and as an investor. He’s a little irreverent, which I like. It’s not polished PC stuff. There’s really good advice. Frankly, I think a lot of entrepreneurs, all of us need a support group when they’re going through stuff to see that other smart guys have gone through the same problems they have and it’s not just them struggling. This guy is very, very open about his struggles. Times that he’s completely failed in a company and how you pick yourself up and you do the next one. I think that’s the most important thing for any entrepreneur to read.
Great. How would somebody follow you on social media? What’s your Twitter and all that good stuff?
Twitter is @schumate_john. You can follow Venture First on Twitter as well. If you go to VentureFirst.com, that has a blog post and different articles. We’ve got some good white papers in different studies and some good data on there as well that entrepreneurs can read.
Fantastic. John, do you have any last minute or last thoughts that you want to share with the audience before we let you go? Any last minute startup tricks or anything?
Just have a lot of fun. Try not to stress too much. Work on things that are really interesting to you and that you love. Don’t get too concerned when you hit a hurdle. Be flexible and reach out to folks in the ecosystem. The wonderful thing about the early stage ecosystem as opposed to typically later stage companies is people aren’t as especially guarded about information. They’ve been through the battles just like you have and they want to help you out. Enjoy the community of it.
What a nice, upbeat ending. Thank you so much. You’ve been a terrific guest. We look forward to following you on social media and reading your blogs. Thank you for all your insights about what it takes to be successful, organized and most of all, how to enjoy it and have fun. Thanks, John.
Thanks so much.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Venture First Website
Edumedics Website
Asana Website
Mixmax Website
The Hard Thing About Hard Things by Ben Horowitz
John on Twitter
Crack The Funding Code!
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How To Get Seed Money for Free – Interview with Ramphis Castro
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Ramphis Castro is the co-founder of ScienceVest and is a Kauffman Fellow, a community of over 400 innovation investors worldwide. He is also the managing director of The Founder Institute, which is one of the world’s largest idea-stage accelerators. Today, Ramphis sits down with John to discuss some of the potential entrepreneurial paths in Cuba and Puerto Rico as well as some of the benefits of being a Kauffman Fellow.
How To Get Seed Money for Free – Interview with Ramphis Castro
Hi. Welcome to The Successful Pitch Podcast. Today’s guest is Ramphis Castro, who is the New York City managing director for the Silicon Valley based founder institute, the world’s most successful idea stage accelerator, which helps aspiring founders across the globe build technology companies. Graduates from this program have raised over 500 million in venture funding and they generate 12 billion in investor value. He’s also a Kauffman Fellow, a community of over 500 innovation investors worldwide. From what I’ve read, only 30 people get in a year to do this. That’s incredible. As if that wasn’t enough, he’s also the founding partner of Mindchemy, a full-stack startup ecosystem, acceleration and support organization that helps managers in venture industries. He’s a friend of Judy Robinett. They met judging a pitching contest down in Puerto Rico. Without any further ado, welcome to the show.
Thanks, John.
I don’t even know where to start. Let’s start with how did you get into the startup world? How did you decide this is what you wanted to do with your life?
The story there starts early. My mom used to be our first investor as kids when we wanted to make a trip as a family and make us sell M&Ms. We had to pay her back first and then with the profits, we could buy airline tickets to be able to go to Disney.
Wow, that’s a lot of M&Ms.
It was. Going door-to-door, having her a few blocks away, in the car, just watching us, just going, “Got to get that done.” Definitely got us started early. As my career moved forward, I started computer engineering, I knew after my time in Microsoft that I wasn’t going to be an employee forever, that there was certain ideas that I had been keen on to build. I wanted to get out there and that’s how I got the bug just to, when I came back to Puerto Rico, to really just push those forward. I started my first company. That’s a short version of how that happened.
You were in Puerto Rico. That’s your childhood, then you worked for Microsoft. Where in Microsoft did you work?
Redmond.
Oh, you worked at the corporate headquarters?
I worked at the Office services team, the guys that did the user experience for Office 2007 at the time. A while back.
You started teaching down in Puerto Rico at the university there, I see, in computer science and entrepreneurship.
I made all my mistakes on my first company. That blew up gloriously. The product and the intellectual property was successful, but I made mistakes on the economy and bad partners and it was just a terrible, terrible experience. I got involved into everything else on the ecosystem side to make sure that others didn’t have to go through what I went through then.
That’s part of the story around getting involved in the university and supporting stuff like engineering, how that’s taught more from the entrepreneurship side and the engineering side and then also teaching graduate students on how to use their skills to build mobile companies. A lot of other programs that I’ve been involved with over the years, always trying to fill the gaps of what was needed in the ecosystem and everything I wish somebody would have told me when I was in school and just working on my company.
What are some of the things that you wish somebody had told you that you try to tell people now?
Definitely the biggest lesson learned is the best way to start is just to start. There are all these workshops, all these events, all these articles on the internet. Really, the best way to get the experience to run a company is to actually run a company. You start small. Don’t have this grand idea. Don’t necessarily even call it a company, but really just start with a small testable project. Getting started is key.
[Tweet “Best way to start is to start small.”]
The other is make sure you know who you’re partnering with. This is a long-term endeavor. It will take you a good part of your career, of your life, so make sure that whoever you’re bringing in, you’re able to be fully transparent with them and it’s a long-term relationship that you’re building. You want to want to make sure that you’re honest and open and it’s a collaboration. You watch out for the red flags, dishonesty, bad ethics, those kinds of things, and really reference check people. Make sure that you know who knows them, who’s worked with them. Make sure that you’re having the right people for your team early. Those are two things. There’s a lot obviously, but those are two that I always make sure they’re the first things that I tell new, aspiring entrepreneurs.
You just gave us two tweets right from the episode. “The best way to start is to start small,” and “Reference check your team.” Those are great takeaways. Now, you were judging a pitching contest down in Puerto Rico. You were also a part of Start-Up Chile judge. Tell us what you look for when you’re listening to pitches, either in a contest or as an investor.
[Tweet “How To Get Seed Money: Check your team’s references before you partner.”]
I operate at what is called the pre-seed and seed stage. That is the earliest you can get involved, which is when there might or might not be a team. There might not even be a product, but really something that is the inkling or a start of a great project. In that space, the number one thing I’m focused on is the team. By the team, I mean, why is this the right team to run with this idea? What particularly qualifies them to do it? Why would I think that this is the team to win in this space? The other key piece is, whatever traction they have, and by traction, I mean what have they actually done already? Do they have an early prototype up? Do they have even signups, a landing page where they’ve collected a few hundreds, dozens, thousands of emails, have they followed up with customers. Traction has many forms, but it’s, have they done work and how fast did they do this work and are they moving? Those are the two key pieces I look out for.
I like that. That’s so helpful. What’s interesting about that is you’re not looking for them to give you a 10 minute product demo or a long lengthy explanation of how they came up with this concept, but it’s really about, “Tell me about you and why you’re uniquely qualified. What have you done to show some traction and how fast is that happening?” Which is not normally the focus a lot of people start pitching with. They start talking about, “Oh, this is a great idea and this is going to make millions,” and you’re like, “Tell me what it is you’re talking about and make it easy for me to understand.” I want to dig in to being a Kauffman Fellow. Can you tell us how you got selected, what that process was like and what you do as a Kauffman Fellow?
[Tweet “How To Get Seed Money: What qualifies you to be a founder for this startup?”]
As I mentioned, the Kauffman Fellows is a global network of innovation investors. It’s a two-year fellowship where, as you’re actively engaged in the VC industry with a fund or through other programs related to VC industry, you learn, one-on-one, with a cohort from the best of the best in the industry on how the sausage is made, really, as you gain insights. The process for me is really, I heard of it first through another Kauffman Fellow, Jorge Torres, who’s a venture partner with Silas Capital. They’re a consumer-focused VC firm here in New York. He was seeing my chart records, seeing that I was in the investing world and that was my general direction. That’s really where I’m focused on moving forward. He said, “You should look into the program,” and he introduced me into it.
The process was basically me reaching out to a lot of other fellows, understanding the program and how it matched in my vision and where I wanted to be moving forward. It was just incredible to get to meet the other fellows and what they’ve done and what they represent in their own space in the industry. There’s an application process where there’s two routes. One is an affiliate, so those that are just getting into an industry. They go through an interview process and something called a finalist process. They’re selected by a firm to move forward. There’s the affiliate where there’s an existing relationship with a VC firm or program and would move forward with supporting that candidate through the process. After the application and interviews, you get the call that you’re part of a particular class that starts every year in June in Silicon Valley.
It’s a very select group. It’s almost like getting into Y Combinator or something. Lots of people apply and they only take 30 a year?
Right. We sometimes call it the YC for VC.
Fantastic. What have you learned now that you’re in this prestigious Kauffman Fellowship?
How To Get Seed Money: It really has been around how the global venture industry works.
Definitely, the biggest lessons learned has come from obviously everybody involved and my peers. It really has been around how the global venture industry works. Not just one particular ecosystem, but more globally focused on how innovation happens and is supported by innovation investors and what’s the role in different areas at different stages and what’s our focus and how do we make sure that we support the entrepreneurs, which really are the rock stars here, are the ones that make it happen. How are we really able to focus and help them just achieve what they’re going to achieve, just to help accelerate that and just learn the best practices and everything from how to create new venture firms, new VC funds to running diligence from companies, how to syndicate deals, bringing in other investors, who are the right investors in the right spaces and really engaging the entrepreneurs through the process of really exiting that company or running it forever, if that’s what they want to do.
You also are the founder of the Institute, which is based in Silicon Valley. It’s a stage accelerator program. Can you speak to us about how did that become the world’s largest? What do you do as the managing director?
How To Get Seed Money: A structured curriculum where they are focused on building their company.
The program was founded by Adeo Ressi. Adeo is based on Silicon Valley. He’s the founder of the Founder Institute. The chapters are run worldwide through directors, through regular directors who operate on a part-time basis. Myself, as a managing director of New York, operates on a full-time basis where we have cohorts operating every three and a half months. To take a step back, the Founder Institute is focused on helping entrepreneurs launch their company. It’s focused on essentially employees with generally ten plus years experience that are really focused and committed to launching their company from anywhere in the world, launching a global venture-backable company in whatever ecosystem they operate in. To do that, we have a fourteen week, essentially a three and a half month program where they can participate part-time as considered a full-time job and validate their model. The way that’s supported is through mentors and structured curriculum where they are basically focused on building their company.
There’s nothing academic about it. They are in it, building their mission. They’re revalidating their idea with customers who are figuring out what’s their revenue model, is there a real business around it, understanding the fundraising process. Really on everything that a founder should know about to be successful entrepreneurs. They learn it from other successful entrepreneurs that have been there, have done it and other investors that actively support and invest in companies at their stage and have experience in supporting how that grows.
At the end of that three, three and a half months, do you have a demo day where they get to present and pitch to investors?
Yes. One of the things to keep in mind is these are starting, so they are the earliest you can get. For many of them, a demo days is way too early so they might have, by the end, a fully formed business model validated and a lot of different pieces and a fully vetted due diligence ready company that’s able to accept venture funding with our legal partners that operate in different cities around the world. Here in New York, they support the companies getting launched. There’s basically a first look where we basically bring in the best pre-seed and seed investors in the community here in New York and wherever our chapters are operating to see the companies first. We call it First Look Event. Some of them will be too early. It may require maybe a few, three to six months extra where different investors at that stage will go in. There will be other companies that have either quit their day jobs throughout the process and are moving forward full-time on the business and investors are able to get an early look before the rest of the investor community takes a look at them and wants to come in.
That seems to really be a big differentiator from other accelerators, which most everybody who’s in those programs is doing this full-time. You’re so pre-seed that you let people have a full-time job and do this part-time, is that right?
How To Get Seed Money: It transforms their thinking and they’re able to take the reins.
That’s correct. They operate on a full-time load with their jobs, which could be anywhere, 50, 60, 80 hours a week. On top of that, they do between 20 and 40 hours’ worth of work on top of that. The focus is on getting them to experience working 100, 120 hours plus, what it feels like and feel that pressure over the course of three and a half months. Just gets them into the cadence of running a company, just momentum and keeping up with the tempo and moving forward fast with limited resources, limited time, limited information. They need to keep moving forward. After that time, it really transforms their thinking and they’re able to really just take the reins and just move forward. It’s really amazing to see the transformation.
Do you start working with them that early on who they might be looking at to get on an advisory board?
Yes. The structured curriculum involves ten different topics. Everything from their vision and the idea. Understanding why they want to start that particular company and why them and why now, those kinds of things. Also, the topics around teams and advisers. Who are the right advisers for their company? They’re able to look at our global mentor network of over 5,000 CEOs and investors. Obviously, there’s a lot more in the ecosystem. When they’re operating, they may not be a part of our network, which we can reach through our network as well. They think about that broadly and they really think about how to start engaging and how to start those relationships throughout the course of the program. By the end, they either have them already on board or they know what they need to do in order to get that done.
This seems to me that the skill of pitching is needed not only to pitch investors for funding, but also to pitch potential people to join your advisory board and then pitch potential people to join your team.
That’s exactly right. Everybody thinks that, when I say everybody, I mean generally first time entrepreneurs think that pitching is for investors. Pitching is everybody. You’re pitching your spouse, you’re pitching your team, you’re pitching your parents that you’re not crazy and you’re really pitching everybody on why this is going to work, or even if it’s not, why you have to do it. Money is a part of it, but you’re not in it just for the money, you’re in it because you have to put this out to the world and you’re the right person, you could build the right team to go after it. Pitching is an essential skill because you only have yourself in the beginning.
[Tweet “How To Get Seed Money: Pitch and be clear what problem you want to solve.”]
You only have your dream, your background, your track record, your commitment. With that, you have to pitch somebody to quit their job to come and work with you on something that will most probably fail. Pitching and being clear about what problem you want to solve, why you’re the right person to solve it and what you’ve done to move that forward and what’s unique about your approach, you got to get out there in 15, 30 seconds. Then if you’re graced with more time, then you go 30 seconds more to how you do it, what’s your product. If you get another minute, then you go into how do you make money. It’s really just buying every piece of someone’s attention when they engage with you.
I love that. As part of the program at the Founder Institute, do you have a section where you teach them how to pitch?
Yes. Pitching is an essential component of the program. They pitch in different formats. There’s no right way to pitch so we do everything from 30 seconds, 60 second pitch, 3 minutes with a deck, with no deck, 5 minute with a product demo. They really go through everything and the way it’s done, instruction in the program, is that it builds on previous weeks. In the beginning, they’ll pitch why they want to be an entrepreneur and what are they passionate about or what are they the best at. That’ll evolve into what problem are you solving and differentiating your unique approach in solving that problem. It will continue to grow into the other pieces of your pitch, such as what’s your actual solution? How does it work? How do you make money? How big is the market? And those other pieces of a pitch.
I love how you structured that, that it really starts with you being able to pitch, why you’re uniquely qualified and passionate to do this before you even get into how something works, let alone how it makes money. Let’s also talk about that you’re the cofounder, managing partner of Mindchemy, which is a combination, you told me earlier, of mind and alchemy. Tell me about what you’re doing there.
Mindchemy is a partnership between Marcos Polanco and myself where we’re both Kauffman Fellows and we both met doing ecosystem work in Puerto Rico. We’ve been collaborating and working on different aspects of ecosystem building over the past almost eight years now. Our focus with Mindchemy started with bridging the gaps in the ecosystem. If you go into somewhere where there’s no startup community, probably the first thing is to just say, “I’m starting a startup community,” and that’s essentially what happened in Puerto Rico. When we started our own companies at the time, I started in Puerto Rico and Marcos spent time in Silicon Valley. There was no ecosystem really to speak of and no community. We started with the startup weekends and organizing the pieces that move those communities forward.
How To Get Seed Money: We support programs globally and really support from other ecosystem.
But now, Mindchemy has evolved to more global focus. Over the years, we’ve been fortunate enough to advise governments over the world and ecosystems over the world around really how to really engage and support grassroots leaders, and also now, more recently, engaging with emerging managers. The people that are starting new funds that basically operate like entrepreneurs, but these are VCs that have worked at VC firms, but now are setting off on their own to start their own firm to fill a particular gap in the funding ecosystem. Mindchemy really has evolved into how do we support programs globally and really support from other ecosystem builders that reach out to us where we, from experience, supporting ecosystems in Puerto Rico, Dominican Republic, Columbia, and now more recently, Cuba to really move those communities forward.
Let’s talk about an article you recently wrote about Cuba and comparing it to Vietnam in the early days and all the potential there with the talent and the solutions that are needed.
Thanks for asking that, because one of the key things when people think about Cuba, obviously, it’s 50, 60 years of basically unknowns. It was very difficult for us, for everybody generally from the outside to think about and understand how the culture and the economy and other aspects of it works. When people think about it entirely, they would talk about it from a past tense of things that are not up to date on what they have. People lose sight of the fantastic education system that they have. When you think about the key ingredients for ecosystems and startups, it really starts with talent, number one. That’s something that they’ve invested in for the past half century in more ways than most countries in the western hemisphere.
The World Bank and other organizations have recently recognized Cuba as having the best education system. We’ve had the opportunity and we had the privilege to support some Grassroots organizers that are outside of the politics and really are focused on supporting and growing their communities and their startup ecosystem. In that perspective, people need to think about where we’ve already seen this evolve. People lose sight of the world in their day-to-day, seeing the new cycles and all these things. But really, it’s nothing new. We’ve seen how some of it has played out in the process of Vietnam where it’s still a socialist government and you’re seeing some of the fastest growing companies in Asia coming out of Vietnam now. You have global Fortune 500 companies operating there like Microsoft and Intel. We’ve already seen a piece of that movie. Now, we really get the opportunity to be supportive in whatever the community wants to really grow into and how they want to evolve and what are the ideas that are going to come out of such a high quality talent that is based on the island.
I was reading in your article there about just some basic things like you need your medical things from the pharmacy delivered to you quickly, almost like an Uber version of medical pharmacy delivery. Tourism, of course. There’s lots of different things going on there.
How To Get Seed Money: It’s something that you could easily see scaling through other ecosystems because it’s a real problem.
Because things that we take for granted everywhere it’s something that, when you think about it, there are a lot of communities everywhere, not just in Cuba, that don’t have access to certain commodities. Having somebody, or being able to access your medicine is something that if you go to rural places across LatAm US and LatAm, they might have the same challenges where they might not be able to find what they need. That basically tells you, “Hey, this is where you can find what you need and get it.” It’s something that obviously they’ve experienced over time in Cuba. This are some ideas that came up directly from the community, but it’s something that you could easily see scaling through other ecosystems because it’s a real problem not just there but in a lot of communities around the world.
The internet connection, whether it’s Vietnam or Cuba, is pretty standard now, or is it still evolving?
It is definitely evolving. Obviously, it’s one of the bigger challenges coming in the first time I was there. It was very difficult. It makes you also appreciate the use and optimizing your time. There’s a lot of engaging one-on-one with people and just talking and just really engaging and human contact. The huge advantage that Cuba has is it’s just 90 miles away from one of the largest, most sophisticated Nox fiber optic connections in the world. There’s the Terramac Building is just in Miami. It’s not as if you’re trying to interconnect all of Brazil. If you really just want to increase the bandwidth in Cuba, the government is moving forward with improving their technologies and infrastructure. As the relations with the US continue to improve, you’ll just see fiber deployments.
Maybe Google will come with Project Loons and others that they can initially test. There’s a lot of technology that we have now that can really enable economies like Cuba’s to just quantum leap other economies that have invested in other traditional telecommunications infrastructure over time. That’s a huge advantage that Cuba has over other economies, is that they can take advantage of all the mistakes that everybody else has made in deploying their infrastructure. Now, they can really get it right the first time because we all know how to do it now, how to interconnect the role of fiber and other high-speed solutions. They can learn from other governments like South Korea. The leader in excellence in broadband, South Korea, Singapore, and they can see what works and just really build on top of that.
Tell me about P18. We briefly talked before the show a little bit about that.
The next evolution of Puerto Rico is really break out as essentially the Hong Kong or the Singapore of the Caribbean. If you’re an Asian company, you’re thinking about doing business in China, you could do it in China, but you could build through Hong Kong. There’s very sophisticated business environment that you can take advantage of to really expand and really roll out your Asian strategy. When you think about Puerto Rico, it’s the same way. It’s basically inside the USA, but outside the IRS. That enables companies such as Microsoft to globally really capture and maintain and reinvest their capital abroad in expansion and supporting their operation. That is something that is available for companies. As that evolves, the P18 programs, it’s called Parallel18 after … Puerto Rico is located in the western hemisphere, is a way for companies that are US companies that want to expand to LatAm to take advantage of the same thing Microsoft takes advantage globally, or for Latin American companies that really want to expand into the US really have a softer landing into the US market.
Basically you have a fully Latino culture in Puerto Rico, but it is a US based commercial engagement. You’re able to have companies from all over the world that want to expand into the US really, really have a taste of what being in the US economy can be like and they can take advantage of the fantastic talent that Puerto Rico has to offer that has been a secret for decades now. We have Microsoft, Procter and Gamble, IBM recruiting for the past 30 years, not telling anybody about it. Now, having startups from all over the world come down from the P18 program to come down with a 40K, equity-free and spend five months there, like the Start-Up Chile. If they decide to stay and leave some operations, they could get 75K follow on funding from the Puerto Rico Science and Technology Trust.
What an amazing opportunity for somebody who’s willing to do what it takes and live where it takes, to move to Puerto Rico and get some startup seed money and even more if they stay. It’s great.
It is fantastic. Actually, one of the first ones to buy that pitch is Sebastian Vidal, which he was the former executive director of Start-Up Chile. You have a guy that’s been there, done that, we’ve seen the effects of that in Chile. He believes so strongly in this that he moved his family, has a newborn that is settled in Puerto Rico, doubling down on this. An Inc. article just came out today around how it’s the biggest startup hub you’ve never heard of.
[Tweet “How To Get Seed Money: Puerto Rico is the biggest startup hub you have never heard of.”]
I love that. That’s fantastic. We’ll use that as a definite tweet. “Puerto Rico, the biggest startup hub you’ve never heard of.”
Exactly.
What book would you recommend our listeners to read, either about business, startups or just life in general?
Venture Deals by Brad Feld and Jason Mendelson
That’s a great, great question. One of the things I definitely love for startup founders to really dig into is a book called Venture Deals by Brad Feld and Jason Mendelson. They’re the partners out of the Founder Group. Basically, it walks founders through a lot of the thinking that investors go through, from how to start your deal, how to think about investment, how to think about how things are structured and what are the incentives for investors to support your company and really invest and follow on investing. It’s really an opportunity for entrepreneurs to get insight into the minds of VCs and also to know more than your lawyer. It’s very important that your lawyer supports what you’re doing but then you know enough so that you can ask smart questions about your company and the future of finance. I think Venture Deals is definitely one.
Early Exits by Basil Peters
Another great one is Early Exits by Basil Peters. Early Exits is really around, everybody is unicorn hunting nowadays. An 80 million, 100 million dollar exit is a life-changing event for a first time founder. You could go in that direction and then just go again and launch your second company, like Elon Musk did after PayPal, launched Tesla and SpaceX. That book is really about how to engage your advisers and think about an early exit strategy and think about how does that work and how do you position your company for acquisition and really the mindset around how to actually execute on that strategy.
Those are both great, great recommendations. Thank you. How can people follow you on social media? What’s your Twitter handle, all that good stuff?
I have a big advantage is that my name, Ramphis, is number two on Google. If you search Ramphis. There’s a moth on Wikipedia that’s beating me out. If somebody, someday can do a Wikipedia entry, hopefully I could be at number one. Easy enough to find if you Google. Definitely, Twitter, @jramphis. That’s the easiest way to reach me. Across properties on the internet, AngelList, Twitter, Facebook, you name it, it’s still jramphis.
Great. I can’t thank you enough for being on the show and sharing all your wonderful global insights. It’s very exciting to hear about what’s going on in Puerto Rico and Chile and Cuba and then of course everything you’re doing here in the US with the Founder Institute and the Kauffman Fellowship. Thank you again.
Thank you, John. Really appreciate the opportunity.
Links Mentioned
J Robinett Enterprises
John Livesay Funding Strategist
Ramphis on Twitter
Venture Deals by Brad Feld
Early Exits by Basil Peters
Crack The Funding Code!
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Well Prepared Pitch Deck – Interview with Jason Shuman
Posted by John Livesay in podcast | 0 comments
Listen To The Episode Here
Episode Summary
Jason Shuman is an entrepreneur and a venture capitalist who has been involved with startups since he was 17 years old, and has always had a deep passion for the industry. He is currently an associate at Corigin Ventures, where he is responsible for sourcing and analyzing deals. Jason discusses the charity foundation he is a part of, why there are so many young VCs these days, branding, and so much more on today’s show.
Well Prepared Pitch Deck – Interview with Jason Shuman
Hi. Welcome to The Successful Pitch. Today’s guest is Jason Shuman, who is a venture capitalist at Corigin Ventures in New York City. Jason has a really interesting background coming from the University of Miami. He has been involved in some startups himself, but he is now a big time VC in New York City. Jason, welcome to the show.
Thank you very much, John. How are you?
I’m good. It’s great to have you. We met through Judy Robinett. The two of you were down in Puerto Rico judging a pitching contest.
We were. We got back from sunny Puerto Rico a couple weeks ago. Now, I’m up here in the cold and windy New York weather.
Quite a contrast. I always like to ask my guests, how did they get started? If you would, take us back to the days when you were in college and you were saying, “Hmm, what am I going to do with my life? I’m going to be a VC in New York.” How did that all happen?
Well Prepared Pitch Deck: They were people that gave me a lot of confidence to go out there and follow my passion of entrepreneurship.
I think, to go back even further, I was born and raised right outside of Boston. I really grew up in a family of nothing but entrepreneurs. They were people that gave me a lot of confidence to go out there and follow my passion of entrepreneurship and starting companies. Really, I started getting into startups at around seventeen years old, when I graduated from high school a semester early. I went to work for an identity theft protection company that my aunt and uncle had spun out of a company my grandfather started way back in the day. They did background checks for the US Federal Government and had been really doing well growing the business. I’ll never forget, they told me, “What do you want to go do?” I said, “I’d love to help create the consumer side of the business and really help build that up.”
It was there that I found one of my mentors in Rob Shavell who had come over from SoftBank. I proceeded to shred papers for about two months and shredded some incredible background checks while I was there. As soon as those were done, they let me run free and really put together a plan and help build that side of the business. I decided to go to the University of Miami for college and study entrepreneurship there. Got my real estate license while I was there and started doing that when I was eighteen. I did identity theft protection again and then actually started my first company while I was in college called Category Five.
It was an eCommerce based men’s footwear company where we made boat shoes and driving moccasins. Grew that out for about two years, including for a year after graduation. Before you knew it, I was consulting for startups and got a phone call that ended up leading to an introduction to a VC here in New York because I was making so many introductions between startups in Boston to VCs in New York. Finally, somebody wanted to pay me for all those introductions and that was Corigin Ventures. Here I am today.
What a great story? I like the spirit of giving so much and making introductions. You really are a walking case study of your network is your net worth.
I think that paying it forward is the most important thing here. Ever since I wanted to get into startups, probably around fourteen or fifteen years old, everyone paid it forward. A big piece of that, it also goes back into my background, which is the fact that I was born with something called primary immunodeficiency. It basically means that your production of white blood cells is a little bit lower than the average human being. I would have to get infusions every three weeks. That whole growing up with a health condition like that led me to really be around doctors and donors a lot of the time for a nonprofit that I was heavily involved in. I was always about giving my time and my energy, and continue to do so today, which is one of the things I love about venture capital, is that we can add value to a very wide range of people. Not only the people that we’re invested in, but people that we just meet as well.
Let’s not be shy about the charity that you’re involved with, because we’re going to put that in the show notes. Tell us how people can be aware and contribute to the charity you’re involved with.
It’s called the Jeffrey Modell Foundation. It is a nonprofit that was started by Fred and Vicki Modell in New York City after their son, Jeffrey Modell, had passed away from primary immunodeficiency back in the 80s. Honestly, they’ve been another set of grandparents to me. It’s really helping out with research and trying to come up with a cure for primary immunodeficiency. They do some great things.
That’s now led to your passion for investing in health-related ventures?
Well Prepared Pitch Deck: There’s new types of technologies that are powerful and can really add value to our healthcare systems.
That it has. It’s really interesting. Outside of my own health issues, I’ve had a grandmother with Alzheimer’s, a grandfather that’s had heart issues for a long time. I’ve had mental health issues in my family. I think that in today’s innovation economy, whether it’s the mobile phone or the IoT, there’s all these new different types of technologies that are truly powerful and can really help assist and add value to our healthcare systems and us personally as human beings, as well. I really would tell people out there that the next five to fifteen years, not only do I think that they’re going to be impacted personally, but I think our healthcare system’s going to start to save money because of it. I think that it’s going to improve outcomes and increase access for consumers.
How great? Let’s talk a little bit about Corigin Ventures. To me, it seems a little interesting. They’re a VC firm that does both early stage seed and series A. I usually don’t see that. Usually, it’s just the Angels doing the seed and the ventures doing the series A and B, etc. What is it that makes you guys do both and do you often find that the people you invest in for seed, you become the series A as well?
It’s a great question. Corigin has a unique setup here. Corigin itself actually is a holdings company where, on one side, we’ve got a billion dollar real estate arm. The CEO here is a guy by the name of Ryan Freedman. Truly incredible story, but long story short is that Ryan started to invest in startups about four or five years ago. When he was doing that, he was investing in companies that A, he knew he could add value to and B, that were in verticals that he really understood and had some expertise in. He was being approached by these companies, but he was writing checks between 100k and $1.5 million. With that comes both seed and series A. I think for us, seed in my background, my boss, David Goldberg’s background, we are able to be more hands on and add more value because we’ve been in the trenches before. With series A, we can add value in other ways as well. That includes the check size. We do prefer to follow along with our companies from seed to series A, but you don’t really see us leading too many deals in series A.
Fantastic. Let’s talk about, are you one of the youngest people that has ever been hired by Corigin Ventures?
Well Prepared Pitch Deck: I think you’re going to see a lot more younger VCs getting into the game.
I guess as far as Corigin Ventures is concerned, I am the youngest person that’s ever been hired by Corigin Ventures. I was actually only the second hire here on the venture capital side. As far as New York City is concerned, I have some other young colleagues, whether that’s Heston Berkman over at BoxGroup, Ash Egan over at CommonAngels, Mike Falb at KEC. You have a lot of young people in venture capital now. I think my reasoning or the way I like to put it is that we grew up with technology. For the most part, we understand consumers that are around our age. It’s a target demographic that a lot of companies want to go after because our wallet’s only going to get bigger and bigger. Between those two factors, I think you’re going to see a lot more younger VCs getting into the game and hopefully, getting some good returns for investors as well.
I think I’m going to look back on this day and brag about being the first person to get to interview you on their podcast, because of the branding awareness that you have that’s so smart, where you talk about VCs like Brad Feld, for example, that have branded themselves. What are your plans to brand yourself? How does that help you get good deal flow?
It’s a great question. I think that the Brad Felds, the Mark Susters, the Fred Wilsons of the world, they have an ability to brand themselves because they’ve been around for so long and they’ve seen so much. Therefore, they’re really talking and speaking honestly about their experiences and their opinions, which really do matter because there’s some substance and background behind that because they’ve seen it and they’ve proved that what they’re talking about can be right. With younger VCs, positioning and branding is a very interesting thing. To me, what it means personally is two things.
Well Prepared Pitch Deck: It’s better to put something on paper and look back ten years from now and be right.
One, I like to share my story, my personal story and why I’m interested in certain verticals, how I look at certain verticals, how I try to look at certain companies, so on and so forth. On the other hand, I want to be able to share my story on how I got into venture capital because I think that’s a big thing and a big question that I get a lot as well. If I can, I guess, both A, add value and B, give people my opinion in the same way that the Susters and the Felds and the Wilsons of the world do. Whether it’s right or not, who knows? I’ll tell you what, it’s better to put something on paper and look back ten years from now and be right than not put it on paper at all and everyone just say, “Oh, yeah, I thought that too.”
Absolutely, you have to put it out what you think and feel at that moment. If it changes, that’s fine. You can’t be afraid to know what you stand for because that’s what branding is all about. You’ve shared your story of how you started at such a young age becoming an entrepreneur and leading into that. Is there any other details about how you got the job offer? Was it just strictly making introductions and then getting those connections and then they said, “We want to tap into you because you already have a good network”?
That’s a great question. I was living in Boston. If you ask Sumeet Shah at Brand Foundry, he’ll probably tell you that I was the only free venture capitalist, the only non-paid venture capitalist out there. The reason why is dating back to November of 2014, I started doing a consulting for startups. Prior to that, during what I would call my first failed startup, I had met a lot of venture capitalists. There’s a gap in Boston right now for some seed stage startups. A lot of that gap is in the consumer space. NextView Ventures and Dave Beisel and the guys over at Founder Collective like David Frankel, they do a great job investing in the consumer, but outside of that, there’s not a lot of seed funds that can do it.
I was making those introductions and then at the same time, as far as how I got in, I was adding value before I got in, but I was also maniacally focused about venture capital and startups. I read every single blog post, every single news source I could. I came up with my own opinions. I’ll tell you what, before I went into interviews, which, by the way, the interviews in venture capital are very, very basic conversations with these people. There’s not one size fits all.
Before I went into these interviews, I made spreadsheets on my computer of every single venture capital firm that I was about to go into, every portfolio company of theirs, which partner did it, when they funded them, how much funding they had, the background of the founders. I came up with my own thesis and my own opinion based on what was publicly available about those companies. God blessed me with somewhat of a photographic memory or good memory recall so I was able to pull up some of that in my meetings.
I think that’s one of the things we’re going to tweet out is, “Focus maniacally on what you want because that shows passion.”
[Tweet “Well Prepared Pitch Deck: Focus is the key to getting funded.”]
It does. Have you ever read the book, Think and Grow Rich by Napoleon Hill?
Yes.
That is one of my favorite books in the world. In November, I was doing a lot of soul searching, candidly. I wasn’t sure if I wanted to go into venture capital or work for another startup. Once I figured out that I wanted to get into venture capital, I said I was going to get a job by January 15th because I actually had to get a hip surgery later that month and I knew I was going to be out of commission. It’s like, “Look, go to work and say you will get a job in venture capital by January 15th,” and I said it every morning when I woke up and I said it every night when I went to bed. Luckily I did. It was great.
I love that. That’s the same passion and preparation that founders need to do before they go meet with an investor like you. It’s very complimentary and it shows you’ve done your homework, it shows you’re serious. For you, you did that to get a job. If someone’s pitching you to give them money, they need to do the same kind of focus, maniacal, read every blog post you’ve done. Like what I like to do before I get a guest on the show.
[Tweet “Well Prepared Pitch Deck: Read the investors’ blogs.”]
Totally agree.
Speaking of that, one of the things you wrote about is, while there’s long lead times, sometimes, or feedback loops, sometimes it’s a short one. You spend some time with somebody helping them with their pitch and their narrative. Please share with me that story and also what you look for in a pitch.
First off, I got started here at Corigin and it was David Goldberg and myself. One of the big things, like I said, is we like to add value to our companies. One of the ways that we like to add value is we like to help them go out and fundraiser, whether that’s to fill out the remaining part of the current round or to go raise series A. When I first got here, there was a portfolio company of ours, whose name I won’t mention, but they were in the FinTech space. The founders are brilliant. When I say brilliant, that is an understatement. They are two of the smartest people I’ve ever met in the world and their solution is pretty incredible.
Well Prepared Pitch Deck: It’s very difficult to tell the story and the narrative and sell it in the way that is most effective.
One of the things is, and I don’t care if it’s a founder in our portfolio or outside of our portfolio, being in the company day in and day out sometimes blurs your vision. It makes it very difficult to tell the story and the narrative and sell it in the way that is most effective for either A, raising capital or B, selling to a certain type of population. Investors are not the buyers of your traditional product. The way that you need to position your company is a little bit different. With this specific company, they came in my first day, we had gone through their pitch and then we went, “Look, let’s, candidly, we need to blow up this deck and we need to start from scratch.”
It starts, to me, by the way, the pitch deck creation starts with nothing but blank slides. Then you write a narrative across the top of each one of those slides and you work your way through that, talking about the problem, talking about the solution, what’s your unfair advantage, why you guys, how big is the market. You make all these pieces of the puzzle come together to tell one beautiful story and why you guys are going to win. I think that’s what gets people excited. I will tell you, though, I spent more hours probably working on that pitch deck and the storytelling and networking my first two weeks than I did sleeping or hanging out with any of my friends that are living here in New York City.
I think that’s so great for you to show how much preparation goes into a good pitch. The analogy I tell my clients is, “It’s like the Super Bowl of meetings. It’s your Olympic moment. You only have ten minutes but think about how much preparation athletes do before they go to a big game or a big Olympic moment. You need to do that same preparation and focus and honing.” Because people think, “Oh, I’ll just wing it. No practice. I don’t really have an easy to follow story line.” You’re never going to get funded.
Ever. I put it this way, a pitch deck will never get you funded but it will not get you a meeting. Meaning, if you make a terrible pitch deck and you send it to an investor, they’re not going to even have you in their office. If you make a really, really good pitch deck, it’s going to get you in their office, it’s going to help prepare your pitch actually better. For me, my opinion and putting those into blog posts, it helps me flush out my ideas. A pitch deck does that for founders and it does that for their pitch. I think that that’s a very good way of getting the process going in the right direction when meeting with VCs.
[Tweet “Well Prepared Pitch Deck: A bad pitch deck kills your chances of getting funded.”]
Let’s talk about the process. Let’s assume you get a warm introduction, because most of the investors that I’ve talk to, that’s their preferred way of meeting founders. Would that be true for you?
Yes, 100%.
You get a warm introduction, and do you like to see the pitch deck first or do you like to have a chat with the person and then have them present the pitch deck? Do you have a preference?
It depends on where the warm intro comes from. If it’s a very trusted source that knows what types of deals we like here at Corigin Ventures, I’ll take a meeting and I’ll look at things fresh as soon as the person walks in. The reason why I like to do that is we’re trying to analyze things on the spot as well. It brings up some interesting questions. I’ll speak personally, my brain starts to move very, very fast and I start to think about things that if I come up with those before the meeting, it’s a little bit different and it doesn’t flow, the conversation as well. If it’s just some good friends of mine that are introducing me to another friend of theirs, I may just take a look at the deck. If it makes sense, I’ll have a meeting. That’s definitely the first step, is getting that meeting.
How important is it for you that someone you invest in lives in the New York area? Or do you invest in people anywhere?
Not that important. We’re willing to invest in any company that has a presence in the United States. One of the other investments we made is in a company called ClassWallet and they’re down in Miami. We had a company portfolio from a Chicago called Stylisted. We had one in the westcoast called Vintana. To me, especially in this day and age, companies and investments can be anywhere but as long as you’re transparent and have an open-minded communication with them.
Great. The things that you are particularly passionate in is anything related to healthcare. I think Corigin is also interested in the Internet of Things, is that true?
Well Prepared Pitch Deck: The Internet of Things is a very interesting space in a variety of ways.
The Internet of Things is a very interesting space in a variety of ways too. One of the ways is healthcare, like you had mentioned. The Aging in Place Movement is a really interesting one where baby boomers are becoming seniors by the thousands right now on a daily basis, by the way.
I know.
It’s pretty crazy. I think that a lot of them, research shows that a lot of them want to stay at home and not go into assisted living facilities. With that comes a pretty high level of discomfort for the caregivers, meaning their sons and daughters and grandchildren. I think that the IoT is going to play a very major role in how those people remain at their homes and increasing the level of comfort for their caregivers. On another note, I also think that what people currently view as their daily routines or daily activities at their home are going to change completely for the masses because the IoT is really going to take over those daily routines, whether it’s like an Amazon Dash Button or a latch lock. It’s just going to get rid of the inconveniences of your life and just make it so much easier at home.
Nice. Let’s talk about one of your other blogs, which is all about this great word you made up, which is hilarious. Platformation, did I say it right?
Yeah. Was I too young to create a word?
No, why would you ever put that restriction on yourself? I’m sure it’s the first of many you will create. You’ll have your own dictionary, your own book. If I understood it right, it’s basically when you’ve created a platform that’s so successful that it then generates the ability for other people to create platforms, IE, Facebook has generated so many other spinoffs from it. Is that a pretty good definition?
You got it. I think that we’re going through an interesting time. The mobile phone has already received mass adoption. All these other companies and all these other new concepts have been built on top of the mobile phone or the smartphone, specifically, which was built as a platform to begin with. But then there are these other companies out there, like Uber or AirBnB, that were not specifically built as platforms but are now becoming platforms because they have reached such a scale.
For AirBnB, you have Smart Lock companies that are going after those user bases. You have property management companies that are going after only AirBnB owners. You have plenty of companies there. For Uber, you have companies that are trying to put the taxi TVs in the back of Ubers to increase revenue for the drivers. You have a portfolio company of ours called SherpaShare, which is literally just trying to service the drivers and help make them better with managing their finances and keeping track of all their mileage and usage and making themselves more productive and more efficient.
Let me just ask about that. That’s an incredible focus. Talk about a niche. It’s not just financial planning and keeping track of your finances for everybody’s taxes. This is strictly for somebody who is an Uber-like driver, is that accurate?
Yeah. Really, they’re going after 1099 workers as a whole. That is probably the strongest use case that they went after originally. I think that they were maniacally focused at going after those people. I think you get a lot of natural word of mouth marketing that goes around there. They see such a great value proposition that they become more likely to tell friends about it and then to eventually, if the market size gets large enough over time, the spending and the lead generation that may come through a platform like that, the possibilities are really endless for them. They’ve just created such a sticky product that it’s really incredible.
I love what you just said about that. This is what I’m constantly telling the people I work with on their pitch, which is, “Don’t try to cover everything that you could possibly do. Pick your lowest hanging fruit. Show the investor, like Jason, how are you going to make your money with one niche first, get that before you start talking about everybody else.” This applies to everybody who’s 1099, but we’re going to focus on Uber drivers or taxi drivers first, and then we can go into waiters and things like that.
It’s unbelievable. I think I’m a perfect example of somebody who was once a young entrepreneur that failed to focus. Every time I go in and I speak to college students at campuses across the country, the one theme that I actually speak about the most is the idea of being focused. The reason why is you can’t boil the ocean. If you come into our office, one of the biggest mistakes that …
What did you say? You can’t boil the ocean?
You can’t boil the ocean. It’s easier to boil a cup of water than it is to boil the ocean.
That’s such a great imagery. We’re going to tweet that out, “You can’t boil the ocean.” That’s fabulous.
[Tweet “Well Prepared Pitch Deck: You can’t boil the ocean.”]
The reason I say that is that, if you come into our office as a 24, 25 year old or 23 year old first time entrepreneur, there are plenty of advantages. One of the disadvantages that we see though time and time again is a lack of focus. If you come in and say that you want to go after two, three, four different target demographics, you want to be a B2C company and have a B2B side to your business. Our heads start to spin and it’s just a huge red flag for us. It’s a mistake that I think a lot of first time entrepreneurs make and then they realize, and that’s why their second venture is a lot more successful, because they know that they just need to absolutely dominate, saturate one market, take that business model that they’ve realized is A, working but B, scalable and repeatable, and then move out into other cities. I think the more I get to hang around incredible entrepreneurs, like Sam, the founder of Zeal, I get to see that because they expand on a city by city basis. He is very patient to put the pedal on the metal and go into that next city unless he knows he’s ready.
What I like to use the analogy is, people don’t remember this probably, but Amazon used to just sell books.
That is true. That was a long time ago, but that is very true.
Until they figured that out and mastered that, they didn’t start selling anything else. That’s my favorite example of focus. Jason, do you have any other advice you want to leave our listeners with? Any other books you want to mention or anything at all about giving a good pitch?
I’m definitely available for any specific questions that anybody has. Feel free to tweet me. You may put my Twitter out there, it’s @BoatShuman. Happy to answer questions. I really think that fundraising is very difficult. The media in movies like The Social Network and the TV shows like Silicon Valley, they make fundraising and entrepreneurship seem very easy. I think I want to tell people that startups are not easy and they’re not exactly a ton of fun. They’re a lot of hard work and it takes a very special human being to do a startup and it takes a very special human being and a very special type of business model to go get venture funding. Venture funding is not for everybody. I think just make sure you’re going into the fundraising process prepared. Focus on it, make it a full time job and continue to learn throughout the process and make iterations based on feedback. Hopefully, you’ll get there and we’ll see you be successful. Because at the end of the day, even if we pass on the deal, we’re all rooting for you.
That’s so great. I like what you said, “It takes a very special type of human being to be an entrepreneur, as well as an investor.” That’s certainly who you are, Jason. Thank you for being on the show.
Thank you very much. I appreciate you having me.
Links Mentioned
JRobinett Website
Selling Secrets For Funding
Corigin Ventures
Jeffrey Modell Foundation
Think and Grow Rich by Napoleon Hill
Platformation Today
Jason Shuman Twitter
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