Alex Pattis: General Partner of Riverside Ventures & Founding Team Member of Hampton on Investing in Startups & Scaling Businesses

Hi everyone. This is Devin from Fluvio, and you're listening to Embracing Erosion, the podcast that lets you inside the heads of product marketers, investors, and go-to-market leaders who tackle changes head-on and turn them into competitive advantages. On this episode of Embracing Erosion, I was thrilled to be joined by Alex Pattis. Alex has spent a decade scaling early-stage startups with early roles building sales and business development motions. Notably, he was the first employee at Market Access Transformation, leading business development from pre-launch to a successful 9-figure exit. Alex's current endeavors are equally impressive. He serves as a general partner at Riverside Ventures, an early-stage venture capital firm that has deployed over $70 million in over 250 high-growth technology startups. Additionally, he's a part of the founding team, in fact, employee number 2 at Hampton, a private and highly vetted community for founders and CEOs. And he's the co-founder of Last Money In Media, a leading VC newsletter that delves into special purpose vehicles, SPVs, which we'll chat about on the pod, Within the venture capital ecosystem, Alex has become a leading voice advocating for the SPV investment format versus the traditional VC fund model. So it won't surprise you that we got super deep and into the weeds on all things investing. But we touched on plenty of other topics as well, such as how to scale a company from concept to a 9-figure exit, how to break away from the traditional consulting model and apply product approaches, Why it's important to iterate quickly and often with messaging, what signals are important to pay attention to when investing in startups, and much more. So without further ado, I hope you enjoy our conversation. Thanks for joining me today, Alex. Appreciate you taking this on short notice.

My pleasure. Excited to be here and chat further.

And I know you're headed out to the Hamptons, so you've got a nice little weekend ahead of you. So double appreciated for taking your last— I think it's going to be— this is your last meeting before you head out.

Yeah.

So I usually start these interviews with going like deep back into the past and have you walk me through kind of like what you did in college or in school, how you first got started in your career. But honestly, I feel like there's a lot I want to cover off on because you have your hands in a couple different things. So I'm just going to start with your time at Market Access Transformation. And you were, I think, like one of the first employees there. And you helped scale that company from a concept, it seems, to a 9-figure exit. Why don't you just give us a quick overview of like, what, what was Market Access Transformation when you joined? And what was that process of scaling the company?

Yeah. So you're correct in, I joined Market Access Transformation as the first employee, the founder and CEO was actually a previous customer of mine. So we had a, I don't know, 1, 2-year pre-existing relationship. And when he had started the business, reached out to me at concept phase, and obviously I bought into the concept and joined. In terms of the business or the product, so we built a market research platform that we are selling into life sciences, primarily pharmaceutical biotech companies, some medical device as well, and really were focused on innovating what was a traditional consultancy-based approach with more of leveraging technology and a market research platform for pharmaceutical life sciences companies to get insights on pricing and reimbursement. These were mainly pre-product, like clinical trial stage assets, where pharma or manufacturers were really looking to get insights from global payers, and then country and, I guess, country-specific payers on pricing, messaging, understanding the standard of care, launch sequencing, just understanding all the things that go into an optimal price point and access from a reimbursement perspective into these various countries. So we built a platform that essentially we sold in a subscription format, which was quite unique to like a traditional consultancy-based. And we were also in parallel building this large network of various payers across the globe to help provide a lot of this insight to pharmaceutical and medical device companies ahead of London. So yeah, that was a little bit on kind of the business, the product. If you want, I can get into like key learnings, how we scaled, but hopefully that's a helpful overview.

Yeah, I would love to. I guess the couple things that intrigued me there. I mean, one is, you know, I run a consulting business. So the thinking behind how do you productize and actually help scale this company up? beyond just consulting hours and, you know, headcount essentially, I think is intriguing. So was that the concept early on was we're not actually going to be building a consultancy, we're building this platform to sell? And in the beginning, was it mainly consulting that and then you sort of built toward that?

Yeah, great question. So the thinking was absolutely, let's build a platform-based approach to do market research. Let's deviate from the traditional consultancy-based model, which Was this, you know, it was the norm, right? It was how payer research was done in the industry. There were, I guess, yeah, there were a bunch of challenges with it. Like, first, we went in wanting this to be like self-service, right? Like, I'm a market access or health economics employee at a pharmaceutical company. I've got my questions, my insights I'm looking for from payers. I could go in, type up my question. and have that be sent out to the right payers based on the specific payer criteria. It didn't necessarily work that easily, right? A lot of these self-serve SaaS products need a little bit of support. I think particularly in pharmaceutical space, that's certainly the case. So we did have this kind of operations arm that would really help with pharma companies in crafting ideal questions so that they could solicit optimal responses, right? I think there's, you know, there's a market research art or skill set that was necessary to, right, without a good input of questions, you're not going to get the right output of answers. And it was necessary to have an operational arm. So we added that. We very quickly kind of realized that that was necessary. Pharma would pay extra for it. But at the same time, it was a much higher margin business from traditional consultancy because we did have a lot of technology via the platform that was automating this and making the experience a lot stronger, even if It wasn't always used externally and sometimes was, you know, internal where we're doing this on behalf of the client. And I think we just, yeah, like that was necessary. We need to listen to the customer, which again, that became quite clear early on. So yeah, at launch, you know, we understood that, we kind of shifted, we scaled. There was kind of like the commercial side of the business and the operations side of the business. We quickly understood that and kind of scaled up the the operations side of the business with a lot of like ex-consultants or data analysts to support that.

Got it. Yeah, I'm jealous of the— you mentioned having a subscription type model and recurring revenue in a consulting business is just like impossible. So, you know, with Fluvio, it's like I have to resell and rebuild the business every 3 to 6 months. So challenging.

To add to that, like, I think that was a challenge and an opportunity. The challenge was the way procurement worked for payer research was, okay, project-based, like, you know, billable hours, what's the, your hourly rate? And so we had to do a lot of education to our customer and procurement departments to help understand the difference, right? Like we would get these RFPs, you know, requests for proposals that just didn't really apply or make sense for our business model. So quite a challenge there, but also when we got them to buy in, I think they understood it was, it was, you know, faster, cheaper, better. And then yes, we did have like a recurring revenue stream where they were purchasing different bundles of credits and we figured out some, some savvy ways to get folks more comfortable early, start low, upgrade your, your credits and so forth going forward. But yeah, something we had to work at for sure.

So when you're building like the commercial model from scratch like that, How often are you reevaluating like the selling motion, like who you're, who the right buyer is, like who your buyer personas, the messaging that's resonating, like how often are you iterating on that? You know, we, you know, experience a lot of larger tech companies who it just takes forever for them to make those adjustments. And I think there's a lot of learnings that can be applied from this, you know, small building smaller startups and that can be applied to bigger companies too. But yeah, I'd just like to get your thoughts on that.

Yeah. Yeah, I think, I mean, year 1, every day, right? Maybe year 2, every week, maybe year 3, every month. So like, it never ends, but we did progress year over year of just figuring out how we're gonna message this, how we're gonna package this, how we're gonna present this, who we're gonna sell to, right? I think, I do think we did a good job, like the market access, global market access roles we were typically selling into. Kind of niche. We had good experience across the team in that niche. And from day one to, you know, being acquired, it was clear that was the right buyer. So we at least nailed that early on. Definitely changes in terms of messaging and every organization works differently, right? Like how the budget works, whether it's, you know, the VP or head of the organization versus individuals that oversee certain products and have budgets like that varies from company to company. So that would Selling into each company was quite a different process. But I think, yeah, as we grew as a business, which luckily it was a very steady kind of year-over-year growth for all 5, 6 years I was there. If you just look at the numbers year over year, you're like, oh, this is a super clean story. I'm sure everything's working fine. Obviously not the case, like any startup. But yeah, I do think we We narrowed in on the right audience. We certainly tried to figure out other audiences that we could also sell into, a little bit of success here and there. I don't think we ever identified a second audience that was like, oh, we really want to deploy more resources into growing.

Got it.

But yeah, I guess the thing I'll say, whether it's at Market Access Transformation or other companies, you know, this is just so key at a pre-launch or super early stage startup where you go in with all these assumptions. Some are right, most are wrong. You got to listen to the customer, you got to listen to the buyer. take that, that feedback and figure out how to get deals done and implement that into the strategy going forward. For sure.

Yeah, we learned very quickly that our— well, I should say my initial thinking on our ideal customer profile was off. And that was evident after like 3 months of outbounding and learning and speaking with people. So definitely can relate to that. So you were there for a handful of years, and then there was an exit. So what was the impetus to deciding— and I don't know, How involved were you in this process? Or what did you see? And what did you hear around selling the business and why?

Yeah. So when we launched this, I remember the CEO telling me, he's like, I think we could grow this to be a $50-60 million company over 4 years. It's not like that was necessarily the goal. But I think that was a little bit of, you know, some grounding on getting started here. And the first couple years we, we, we, I mean, came out of the door swinging. We, I had a good Rolodex from the previous company I was at to sell the product. The CEO was really savvy salesperson as well, right? His background was in sales and we were kind of a good tag team. So the growth was there. I would say, I don't know, 3, 4 years in, we had some folks knocking at the door. There's a lot of consultancies in the space, but not a lot of like true tech product companies. So I think we were pretty sexy. And that, and it's actually funny because we signed in, we went into diligence, signed an LOI with one strategic that was going to buy. The deal failed at the end, thankfully, right? Like we kept growing. And it happened a second time where we also signed an LOI, went into diligence, the deal failed at the end. Thankfully it fell apart at the end because Kind of through all of this, we really kept growing. I don't remember the exact timeline in between first failed LOI, second failed LOI. Maybe it was like a year after that, we ended up doing a private equity transaction where we sold somewhere around 40% of the business, which was kind of an opportunity to cash out, right? We were highly profitable, high margin business, but also gave us a strategic partner. to go out, potentially acquire companies, have capital kind of behind us for potential growth strategies, which ultimately, it was about 15 months, I think, after we raised PE that we ended up getting acquired at the top of the market to a strategic, and it was a really good deal. But I mean, what a process, right? Like multiple failed LOIs, but like good thing that they failed, And I don't know, you know, the thinking beyond wanting to get acquired is I think, you know, we came out there, we built a really cool technology that was a kind of first mover advantage in the space, made a splash in the kind of market access ecosystem. And it was a good opportunity to take some chips off the table for kind of what we built over that period. And I think it was a good outcome for all.

Yeah, I think it's funny. I bet a lot of folks, me included, until fairly recently, and I'm not trying to sell Fluvio in any way. So it's not indicative of what I'm experiencing. But from what I've heard and read, it seems like most deals fail at like at the finish line, or maybe right before the finish line. That's just what I'm hearing.

You know, yeah, I didn't have a ton of like firsthand experience going into that until that happened. But it, it definitely feels that way. There's a lot of politics. Like, I think a lot of these companies Sign an LOI, go into diligence, like expect a rough patch that they can kind of leverage and get a better deal or back out, which, I mean, in our specific case, we honestly were cruising along. There were no like, you know, backwards months in growth or anything like that. So they didn't really have anything to push on to be like, oh, we went in at this, but actually we want to do 0.8x that or whatever it may be.

Yeah.

But you're right, like a lot of these deals, they just don't get done at the final hour. And I think that should be understood. These deals are not done until the money has hit your bank account.

Right. So you went through that experience. And I don't know if that was when your interest began in investing. But now I want to pivot into that sort of part of your, your career. When did you first start becoming an investor or think about investing or getting excited about it? Yeah.

So while I was at Market Access Transformation, maybe somewhere in the middle, like 3-ish years, while I was super excited about what we were building and the trajectory we were on, I also realized it felt that a lot of my net worth was very much tied to one single outcome with that company. So I was interested to diversify a bit. Working at startups, I was interested in startups. Living in New York, I was meeting cool founders, cool people building unique businesses and got interested in angel investing. So to kind of walk you through how I got started, I pretty much angel invested for a year, right? Wrote small personal checks, absolutely loved it, spending time with founders, learning from them, hearing their stories, figuring out kind of who I was excited enough and business models I was excited enough to back and kind of join for the journey, figure out where I could be helpful as an angel. All of it was just a really fun way to spend my time. And I guess while I was continuing that path, I also didn't have a ton of personal capital. That just wasn't going to scale long-term for me. And I had been an LP, a limited partner, in Jason Calacanis's syndicate. I kind of view him as the godfather of syndicates. He had wrote the book Angel, which I read. He had had his Syndicate, which was a great opportunity for me to back and start to see deal flow and be able to write small checks. So I kind of learned a little bit of the syndicate ecosystem through being an LP in his syndicate. And eventually just got to the point where I'm like, this is a great business model. Like, I should do this. So at that point, yeah, I kind of decided, all right, let me see if I can start with my immediate network, right? Accredited investors, folks who are interested in maybe deploying capital into startups on a deal-by-deal Basically, and yeah, kind of started this, you know, what's now been 5, 6 years, but really was like a 1, 2-year journey of just navigating growing an LP base of folks who would be interested to participate in these deals on a deal-by-deal basis with me. Also, you know, being able to access some of the highest quality founders and startups at the earliest of stages. And then additionally, just navigating everything A to Z of running a syndicate, a special purpose vehicle. And maybe just to take a step back and explain how a special purpose vehicle works.

Yeah, I was going to ask you to do that. Yeah.

Essentially, it's a legal entity that's set up for the sole purpose of having multiple individual investors invest into one vehicle that then goes direct on the company's cap table. So it's a nice way to round up smaller checks that accumulate to a larger check that could then be large enough to take its own line item on the cap And this really just provides a lot of value to individuals who want to deploy into the venture capital asset class or startups that maybe, one, don't have a ton of direct access to companies, right? They'll rely on the syndicate lead to view deals and decide if they do want to participate or not and how much. And then also allows for just smaller minimums again, right? Like my individual checks are not quite meaningful and sizable, but my checks alongside 20, 30, 50 other angels, it amounts to a more meaningful check size, which just kind of works better to kind of round up this capital to invest directly.

Right. So it's funny. So you mentioned Jason Calacanis, that's how you got in, he sort of started the syndicate world. What year, what year was this when you started moving from being an angel And then started thinking about creating your own syndicate, just so I have the context and time.

Yeah, I think it was like 2018, 2019. Okay. Yeah, it was, it was like a year into angel investing.

Okay, I'm actually surprised that that's more recent than I thought. So you've actually built Riverside Ventures very quickly. So I started, I started getting interested in doing angel investing. And then I started going through the AngelList platform and signing up for syndicates. I think Riverside was One of those syndicates I signed up for similar path of like I did that, then I was like wait. Well, actually through Fluvio, I access kind of unique opportunities for investment, and I'm sure a lot of folks in the product marketing space can add a lot of value and maybe want to get in investing. And so I launched Fluvio Ventures. We're super nascent. We've only done a few deals, but and much smaller LP base. I think we we have 100 just over 100 LPs. So. I want to know, what were the most challenging aspects of getting your syndicate set up? Obviously, there's the, the supply, you have to have access to unique, exciting deals that are also the right kind of deals in terms of like showing the right signals for someone who's not a super sophisticated investor in some cases to say yes. And then how difficult was it to generate LPs? It's a market, it's really, it's a marketplace. And it's, I think, yeah, I've been kind of brute force. I think we've been fortunate in our few deals we've done to get the allocation in the beginning and to get the LPs to come on board. But like, it was kind of brute force. And it probably still would be today if I got another deal to come through. So I would love to kind of balance those 2 things for me.

Yeah, I think brute force is correct. There are some kind of, you know, syndicate-specific hacks that I think help get deals done, especially early on in the syndicate journey. But It's one of those things about just durability, right? I think a lot of syndicate leads think it's going to be easy. It's not that easy. They don't get the deal done. They're like, screw this, I'm out. And that was kind of the case for me, right? The first couple deals are the hardest. You're working with the smallest LP base, so it's going to be harder to raise capital for those deals than as you go on. And the funny thing about syndicates is I do kind of view it a bit like social media in the sense where it's like the more deals you do, right? So like for social media, that's content. For syndicates, it's deals. It's like the more deals you do, your name gets out, LPs find you, they back your syndicate, they want to participate. So, you know, it grows. It certainly grows over time. If you can continue to put out quality deals, continue to get deals done, it does become easier. Of course, we've seen a lot of market shifts in a short amount of time deploying into startups. But I think another thing that's really important for, you know, something I did and I recommend to other folks is, you know, potentially you could just start scouting for other syndicates, right? And just say, hey, like, I don't have the LP base for this. Let me scout deals, help with diligence, you know, get carry and essentially evaluate from the sideline what deals get done, what deals don't get done, how do they run their process. And then you can kind of get into a position where you're like, okay, I want to do this myself. What I would recommend to folks who are doing it themselves early and don't necessarily have a large LP base is work with other syndicates like myself or others that want to co-syndicate deals, which essentially is kind of tag-teaming, splitting the economics, and kind of being teammates for a given deal to co-syndicate across multiple LP bases.

Yep. Yep.

It's going to be nice to rely on other folks' LPs to, one, get enough capital in to get the deal done. 2, get exposure to other LPs who, if they're interested in the deal, they'll likely be interested in future deals. So those are one of the specific syndicate hacks that I recommend to a lot of folks. And frankly, I still do today all the time, whether it's me having access to a deal and bringing in other syndicates or other syndicates that maybe are smaller, but I'm super interested in the deal they've got access to and work with them. brute force, co-syndicating deals, maybe scouting to get a little bit more comfortable from the sidelines first. And then hopefully that can get you into a position where you're kind of more self-reliant.

Yeah, all those things I did. So you've recently launched— I think fairly recently launched Last Money in Media. The goal there, I believe, is to educate and influence the VC ecosystem around what special purpose vehicles, SPVs, are, kind of educate the benefits of the syndicate landscape that seems to be continuing to grow. So a couple things I think we should chat about, like the economics between traditional venture firms and venture funds, which is Sequoia, Union Square Ventures, like all the big VC firms, you know, listeners have heard that model, versus syndicates, and you mentioned carry. And so carry, I guess, can you just in a quick kind of version break those things down?

Yeah. So exactly a year ago, we started Last Money In. My partner, Zach Ginsberg, and I, he runs Comm Ventures. We felt that there was tons of great content on venture capital, but nothing that was kind of narrowly focused on special purpose vehicle syndicates. We felt we were super well positioned to write about this. We together have done 800+ SPVs, so I'd like to say we've seen it all or close to all. And essentially started this a year ago where we do a weekly deep dive on some topic within venture capital through the lens of a syndicate lead, with the aim of educating folks on literally everything from syndicates, from LP experience to GP experience, to differences between traditional venture and syndicates. And I guess to touch right on your question there. Yeah, so the way traditional venture funds work is essentially they'll raise their capital upfront. Could be $10 million, it could be $100 million, it could be $5 billion. They'll raise the capital upfront and then they'll understand, okay, this is like the pool of capital we can deploy, right? Maybe there's some for initial investments and then follow-on investments, but there's a finite amount of capital that they're going to deploy into X companies Across the funds, typically 10 years, but maybe they're deploying in new companies across 2 to 4, maybe 5 years on the long end. And for the economics, they're typically charging 2 and 20. So 2% management fees annually and 20% carried interest, which carried interest is basically of the profits they would return in the fund. they're going to take 20% of that, right? So they really make their money by returning a profit to LPs. And then, yeah, the 2% management fee that I talked about, right? So if you take those 2%, the 2% across 10 years, typically 20% of the fund will go to fees to, you know, build and grow a venture capital firm, have employees, you know, legal costs, all sorts of costs, fund admins. Things like that. Where syndicates differ is we have not raised the capital upfront in a pooled fund, right? We are going out to find a deal. Once we're excited about a deal that we want to participate in, we're going to go raise the capital. So it's kind of a backwards approach, right? The fund is like, great, we've raised X million, we're going to deploy it over Y years. Syndicates, You know, there is no finite amount of capital, right? We could, maybe we could raise $20K to invest, or we could raise $10 million to invest. So it all depends on the opportunity, but it makes it interesting because generally speaking, it's harder to raise deal by deal because you have to go back every single deal you do to raise money, excuse me, to raise capital from LPs. And You know, that's, that's a grind. There's, there's no way around. However, you know, we didn't raise our fund upfront on some specific thesis that only allows us to do deals at this stage or deals in this industry. So technically, I could, you know, this week launch a pre-seed deal at a $7 million valuation, and tomorrow do a pre-IPO secondary where we're buying shares At a $10 billion company.

And it seems to be happening more often now, by the way. I feel like I'm seeing more and more secondary big, you know, company, noteworthy companies that are pre-IPO, you know, going on the market.

I mean, a couple reasons for that. You know, there's not a lot of IPOs happening.

Yeah.

And everybody has their own needs for liquidity, whether it's funds or individuals, you know, founders, early employees. So there's an interest to transact from a seller perspective. And then from the buyer perspective, look, I think a lot of individuals, it's tough when you're writing $5K, $10K. It's tough to get, like, you're not gonna have direct access into these types of deals. Secondaries and SPVs that are buying secondaries provide a really nice avenue into these companies for individual investors, right? Like, I don't really know other ways that they can get access. And then the other thing is, yes, the valuations are much higher than than, you know, seed Series A round, but the path to liquidity is shorter. And I think it's tough to invest in a seed stage startup that's going to be 10, 15, 20 years to IPO where there might not be liquidity opportunities along the way. So to your point, yes, absolutely seeing a trend in more later stage deals being done.

Yeah, I wanted to— so yeah, I wanted to get your take on— so This show is called Embracing Erosion. We believe embracing change is the way to go. Don't fight change. Feels like in the venture ecosystem, the syndicate model is very different and might be something that is challenging for traditional funds to deal with because from a commercial standpoint, you talked about carry and you talked about fees, right? So these big funds, 1 to 2% annually, they're charging their LPs automatically, they're getting paid. So these big VC firms who are raising monster funds now, $500 million funds, billion-dollar funds, they're taking 1 to 2% of those funds every year for potentially nothing, right? Like, we have no idea what those funds are going to produce economically. That is obviously advantageous to the general partner, the GP who's running that firm, In comes syndicates. You don't take any management fee, and you're totally reliant on the performance of your investments. Seems like those interests are more aligned to LP, limited partner interests. And I'm sure there's counterarguments to this. And now you're starting to see, at least I'm starting to see on AngelList, there's this funds product, right? So now Syndicate leaders can begin to create their own funds, because, again, gives you kind of akin to like recurring revenue, like you just know you're getting paid X amount. Do you see a world in which VCs have to deal with this as a real kind of like, you know, question that LPs will ask is like, are you maybe going to think about creating a syndicate, Sequoia? Because as an LP, I want a little bit more say in what I'm investing in. And I don't really want your 2% carry, or sorry, 2% management fee anymore, because I'm seeing there are other services in market that are not doing that.

So to be honest, I don't really see that as a threat to these traditional funds. The reason is, so yes, right, you are paying management fees to be an LP in these funds, but you're also paying them to build out a portfolio for you, whereas a syndicate, LP, to your point, you'd certainly get to pick the shots and where you want to invest, but you're not relying on the manager to build a portfolio for you. That's up to you. And I think there are folks who do that really well and folks that don't think about that or know about that at all, and that's going to hurt them in the long run. Also, I think a lot of some of these bigger funds that you mentioned, the capital that they're raising from is institutional. endowment, family offices, they're happy to kind of rely on the manager and kind of build out that portfolio for them. Yes, there may be some co-investment opportunities here and there. I think a lot of them do get excited about that. How much they participate in them or not, I don't really know. Some funds, probably a lot, some funds not so much. Whereas, yeah, the syndicates, generally speaking, the LP base, it's really individuals who they're putting a smaller volume of dollars to work, but I think are more interested to actually decide which companies they want to deploy into or not. I guess so from that perspective, I don't see syndicates like economics impeding on the way traditional ventures do. I do think they've got some benefits, especially when we're talking individual investors or even smaller family offices, But I guess the big thing that I think needs to happen in the syndicate landscape or ecosystem is just more education on optimizing for winners and understanding that early-stage venture is extremely risky. Most companies are not going to work out. So if you write 1, 2 checks a year, you're really not building a portfolio that's going to optimize to find that 1, 2 deals that are going to generate 80-90% of outcomes. So I do think building a portfolio and understanding how venture funds think about this is extremely important for individuals who are picking and calling the shots as syndicate leads, but are not relying on the— to manage their portfolio the way an institutional LP does with a traditional venture fund.

Yeah, very good points. Definitely different investors in both scenarios. And you can see the benefits depending on who you are, if you're a big institutional fund, a university endowment versus me and want to start investing in startups, because I think it's interesting. So we've been talking a lot about investing, SPVs, getting pretty technical. I'm sure some of our listeners are like, interesting, I'm sort of confused. You should go to Last Money In. You can sign up for a newsletter if you want to educate yourself. It's very interesting. And if you're interested in getting investing, there's tons of resources for you. But I do want to pivot into some other areas. Given your platform as a GP investing with, through Riverside Ventures, I guess, what are some exciting trends or companies that, that you're seeing? We talked about secondary, so I will kind of toss that aside. Think about the early-stage companies, you know, AI, I'm sure is coming up a bunch, but what sort of trends are you starting to see?

Yeah, to no surprise, AI companies are extremely hot. I think, you know, there's much more efficient ways to run a business leveraging AI. Those are driving pretty high valuations, but also I think getting super competitive and not super defensible kind of at a macro level. So important to kind of understand a lot more kind of on the technology for whatever company you might be looking at there. Another trend I think is we, you know, the market has shifted pretty significantly since Q1 of '22 is just companies having a quicker path to profitability, relying less on outside capital, right? I think we're always going to rely on venture capital. And, you know, there's a certain amount of companies that get funded by VCs who are really well positioned to do that and are building life-changing technology and need to hyperscale this to be unicorn, decacorn business. But I think we've seen this sharp turn of raising capital, focusing on top line and year-over-year growth now to being more of a self-sustaining business or the possibility to do. And I think Yeah, a lot of founders are a lot more interested to build businesses in that fashion. And VCs also want to see that or a path to, if and when it kind of makes sense for the business. So those are some of the things I'm seeing, I guess, as an early-stage investor, like the things I'm looking for. I'm a generalist, right? So I don't go particularly deep in any specific category. But I think that the founder market fit is one of the most important things that we look for as investors, right? So why is this founder or founders building this company, right? Like, why do they care about it? What's their experience that has given them some unique insight or competitive advantage to building in this space? And I think for us, so yes, that's the most important thing. But it's also right when you're pre-product, as we mentioned at the start of this podcast, you go in with a bunch of assumptions. Some of them are right, most of them are wrong. How do you navigate, you know, finding product-market fit? And it's not easy. So the folks who are well-positioned and driven to do that will be winners regardless of what concept they pitched at pre-seed to me.

Yeah, so I always think it's funny when I look at very early-stage company investment pitch decks and it shows this like, you know, the TAM for their market and like what their expected growth is for 5 years. I'm like, you don't, at this point, you know nothing.

Yeah.

I get that some people might be sold on that, but I feel like at this point, most people recognize that that's just, you know, a total shot in the dark. But so I'd like to hear a little bit about Hampton. So we haven't touched on Hampton at all. I'm a part of Hampton. I found it Still find it very valuable. It shows to me that you're still interested in this, like early rolling up your sleeves, helping build businesses. Walk us through, I guess, how you got how you got you know roped into Hampton and what is what is Hampton?

Yeah. So Hampton is essentially a founder community, and as I put it, it's kind of a it's like the go-to place for founders to. Get insight, feedback, and relate with other founders who are in their world, right? True founders building businesses. You know, it's not your investor community. It's not your— your employees are not there. Your family's not there. As a founder, there's probably very few people who can truly relate to you. And those are founders, right? So this is meant to be the kind of go-to place for founders. I also remember like explaining is, it's a way to put your founder network on autopilot, right? Like a lot of people join and everyone is like, I need to spend more time meeting other founders, learning from them, pretty much doing therapy sessions with them, right? Yeah, it is therapy. Yeah, exactly. But it's not easy to grow your founder network. Some people are based in San Francisco, New York, it's maybe a little bit easier. Some people are in, you know, Montana, Indiana, it's extremely hard. And Hampton has kind of been this highly vetted place where founders can come and Yeah, connect in core group sessions once a month where they really go deep on kind of what they're all working through, challenges, get to hear fresh insights, feedback from each other. And then a lot more like in-person events, virtual events, speaker sessions, connecting in Slack, 'cause you wanna talk to somebody who just raised a Series B and you're curious to hear, or you wanna understand how somebody, you know, got their marketplace business off the ground and what were the most important things to focus on. So yeah, it's kind of a great place for founders to come and other founders for endless time. And yeah, the way I got involved, so kind of funny, Sam and Joe, who are the co-founders of Hammock, after Sam sold The Hustle to HubSpot, they actually started a syndicate. So I met them in the syndicate ecosystem, co-syndicating deals. They were awesome to work with. And yeah, I love getting to know them, working with them. And Then they kind of just went quiet at some point, and I was like, "Hey guys, like interested in this deal? You would love to work together. What's going on?" And they kind of just let me know. They're like, "Hey, we're going all in on this Hampton concept." And I just thought it was super cool, right? Like I'm like, "This is a cool business. This is going to be a fun business to be a part of, right? Like a founder community for somebody who loves meeting founders, investing in them." I'm like, "All right, this sounds like a." great use of time. And I also was super bullish on both Sam and Joe and their backgrounds and their expertise to curate a really good community. So got connected with them and essentially was like, hey, I'd actually love to get involved in what you guys are building. And luckily, Sam was— I think Sam or maybe Joe were like, oh, perfect. You'd be the perfect fit based on your founder Rolodex and understanding of them. Yeah, I got involved in this kind of pre-launch state. And yeah, I guess that was the third time I got involved in a sub-$1 million ARR startup business. That was super exciting.

Yeah, that's funny. I didn't know that's how you got started. I don't know Sam personally. I've communicated with him a little bit, obviously, as a part of the community over Slack, but I feel like after listening to his podcasts and such, He's kind of not—he's not all in on on investing in early stage companies anymore. So it's kind of funny that that's how you started it.

Yeah, I think they they thought syndicates were really cool and interesting, and it was a different market when they got started. And they were honestly they were great at it. They had great access to founders, right? They both were accomplished founders who had sold. multiple businesses. But I think after Sam was doing it for a little bit, he just, it just wasn't fun enough or engaging enough as a founder who's more interested in going all in on building versus writing what probably feels like a passive check.

Yeah. Cool. Well, listen, Alex, I've taken you over the time I told you I would cut you off. So I appreciate you taking this much time again on short notice. Right before a long weekend. I guess before we depart, I mentioned Last Money In. Any other resources that, you know, if listeners are really intrigued in getting into venture investing, you would point them toward?

Yeah, I think Last Money In is a great free resource. You can back my syndicate Riverside Ventures. That's a great free resource. And we, 5 months ago, launched a product called Deal Sheet. That's a paid $3,500 per year community, and essentially you get curated SPV investment opportunities every single week. This is across 50+ syndicate leads, so kind of leveraging our network, and then also reduced carry. So 10% carry versus the traditional 20% carry. But across Last Money In, DealSheet, and Riverside Ventures, you should have plenty, plenty to explore as a new investor.

That's right, DealSheet. We actually— our latest SPV, we put on DealSheet. So I forgot to mention, right? Thank you for that.

We are officially partners. I love it. Yeah, that's right.

Cool. Well, again, thanks, Alex. Appreciate it. Enjoy your weekend in the Hamptons. I'm sure everyone's very jealous.

Thanks for having me. This was a great—

And that's a wrap on this episode of Embracing Erosion. I hope you enjoyed it. As always, if you have any feedback or comments or would like to have certain guests on the show, please feel free to reach out to me directly My email is devon@fluviomarketing.com. And if you want to acquire additional product marketing resources, please do visit fluviomarketing.com/resources. Until next time.