Episode 116: How Alumni-Powered Venture Funds Can Transform Regional Biotech Innovation

Want to give back to your university in a different way? On this episode, come learn about 1834 Ventures and how they're engaging alumni to innovation. You're listening to BIO from the Bayou, empowering biotech leaders with the tools, assets, and expertise to improve healthcare outcomes.

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Serving the entire Gulf South, but recorded in the heart of New Orleans. Welcome back to BIO from the Bayou, and we are BIO We are live from BIO on the Bayou right now at our conference. And with me today, we have some incredible guests that are going to be talking about their company. I'm your host, Dr. Elaine Hamm. I'm the executive in residence at Tulane School of Medicine. And today with me, I have Patrick Hernandez and Evan Nicole from 1834 Ventures. Welcome to the show.

Thank you so much for having us.

Thanks for letting me corral you in the reception area and say, hey, want to do a podcast? And you guys were such good sports. This is such a tough funding environment that if I can ever grab the ear of an investor and get some advice, I think that our listeners would especially appreciate it as well. So tell me a little bit more about yourselves, and then let's get into the origin stories of 1834 Ventures.

Absolutely. Evan Nicole here. Patrick and I joined forces to bring 1834 Ventures into existence about a year ago. So we were talking about that last night, actually.

So old. It's been forever.

But it's really neat to hit that threshold. I'll give kind of the quick context on the fund and then we can go into our respective backgrounds. But we started the fund around a year ago, and in January of this year is when we applied. So we're an SSBCI-backed fund. So we applied through the state of Louisiana in January. We got approved in February, and then we were off to the races fundraising right after Mardi Gras, actually.

Oh, perfect time to kick it off.

Yeah, exactly. That's right. And then we had our first close in July of this year. We held a second close about a month ago, somewhere thereabouts.

Yeah.

To date, we've raised about a third of our fund. So our goal is to be a $20 million fund when we're fully capitalized. And so we're pretty close to that benchmark. We've made 3 investments to date, about to make our 4th. So it's very exciting for us. We're an industry-agnostic fund, so we'll look at a lot of different deals. I don't know, for the purpose of this conversation, 2 of our deals are biotech companies. Getting to our fund thesis, we invest in founders that we say have Tulane in the DNA. So we not affiliated with the university. Think of friends of.

Yeah.

And so our goal is—

FOT, Friends of Tulane. That's right.

Yeah. So we are attempting to catalyze the Tulane alumni network across the country. There's 150,000 alumni all across the country, and many of which who have this very deep connection to New Orleans and to our region. And so they want to see it grow, succeed, and thrive. And we are helping to enable that at the same time, helping to grow and scale companies here too.

So much to talk about just from that one statement. So, but before I have so many questions, but Patrick, let's hear from you as well.

Sure.

So Evan and I both truly care about the betterment of New Orleans, of Louisiana, and we really see this fund and using SSBCI funds to catalyze that as the perfect opportunity at a time when it's truly needed. As you alluded to, it's a tough market out there. Louisiana is historically undercapitalized in terms of venture capital, and The more opportunities that we can bring to the state, we can try to make that better.

Yeah. Let's talk a little bit about SSBCI. Besides being one of the millions of acronyms that are out there, not just in the fundraising world, but also in the government world, tell me a little bit about SSBCI for our listeners' purpose. I'm a company that I am, Cadenza Bio. We're funded by SSBCI funding, and that has just been a real catalyst for us and a real opportunity for us to kick our company off the ground. So tell Our listeners may not know about this opportunity. There's a lot of SSBCI funding out there. So tell us a little bit about what it is and then maybe how our listeners might be able to find such a source as well.

Absolutely. So SSBCI stands for State Small Business Credit Initiative, and it was a program from the federal government, the US Department of Treasury, that deployed money into each state across the country. Each state then had the ability to divert those funds to debt capital programs or equity capital programs. And the state of Louisiana and Louisiana Economic Development decided to put the majority of their funding into venture and seed capital. Essentially what it does is there are funds that are considered SSBCI funds.

Mm-hmm.

And those SSBCI dollars will match private investment into the fund on a 1-to-1 basis. Those funds can then go and deploy capital into our ecosystem. At the same time, the state of Louisiana, through the Louisiana Growth Fund, is also doing direct investments. So there are 2 opportunities to take advantage of this influx of capital. At the end of the day, the state really wants to see more economic development and wants to understand how receiving these funds will help to create new jobs and keep more businesses.

Yeah.

Yeah, that's great. Well, and Evan, I want to go back to you, something that you said of just like one really great way to give back to the university. I mean, after we graduate, we all get those letters from advancement saying, hey, you just gave us a whole bunch of money and now we want more. It's really hard to get people to reengage with their university after they've gone and left the hallowed halls of the university. And I feel like there's such a great way now through a mechanism like this for alumni to reconnect with the university and really give back to the university. I mean, not everyone can get a building with their name on it. Maybe one day. Yeah, I pretend that the Harold Hamm Diabetes Center is my dad. It's not. Well, maybe one day. But the piece around giving back to the university through a fund is so fascinating. So tell me a little bit about that. How do you find the alumni? How do you get people? How do you reinvigorate that university-led piece of it?

So I'm smiling because much of my professional background was at the Office of Advancement.

Of Advancement. Oh, you know so well. It's hilarious.

I was the one who was calling.

Like, please.

Yeah, that's right.

Yeah.

Yeah, please give your time, talent, and treasure. And so I very much appreciate that question because I think in a way we have created a new mechanism for alumni to get involved. Certainly, this is not a philanthropic endeavor. Our goals are to get a return for our investors.

Definitely.

But at the same time, the level of engagement that we have the opportunity to do with and throughout the alumni network is a special one. And it's a charge that we don't take it lightly in the sense that, you know, I mentioned before, just the vastness of the alumni network, they want to be involved. And so, whether that's being a subject matter expert, helping with the diligence process, whether it's being able to facilitate a connection to XYZ alum in Denver to a company based here that maybe there's something along their supply chain, but we're also playing Yenta in the sense of connecting those dots.

That's great. I love that. I'm gonna steal that line, playing Yenta. Okay, well, I'm gonna pivot just a little bit of, let's talk about this market and how hard it is. And I'm sure you I know you guys have seen a ton of pitch decks. I know you probably started out your fund, you were probably wondering like, how are we going to source deals? You're never— once the moment you say ventures in your name, you're never going to be short of getting, I'm sure, emails and people stopping you. So what helps? What stops you actually? Like, what stops you when you see and open up a PowerPoint presentation or someone corners you in a literal elevator? What makes you go, okay, this person isn't crazy, this is actually a really exciting opportunity?

Yeah, I mean, So I would say that we are coming into this, especially with both of our backgrounds working with entrepreneurs for many, many years, we recognize that someone may have a great idea and doesn't have the training to convert that into a pitch deck.

Yeah.

So as long as the idea at its core seems like it could be something viable, we typically try to take that meeting. It does mean that We can't get to everyone immediately.

Sure.

But we want the opportunity to be able to talk it out with the entrepreneur, to get deep down and understand what they're doing.

Yeah.

And ultimately from there, we will go into a bit more of our traditional analysis of how big is this market? Is it a real problem or a perceived problem? What experience does the team have that makes them a great operator to bring this business to scale?

Yeah.

I think the only thing I would add to that is when you have such a finite amount of time to, to speak to an entrepreneur, truly in an elevator pitch, I wanna know the why. I wanna see the passion sort of coming through and being able to start to build that relationship, start to plant the seeds of trust. And so I think as a founder, it's challenging because when you have such a finite amount of time, you feel like you need to throw everything and the kitchen sink at who you're talking to and to prospective investors. And that's not the case. This is an initial conversation. You are saying this things to get me excited to want to learn more. So, don't feel like you need to do that all in one sitting, certainly.

Yeah, I struggle with that, especially. I want to tell you all the things. One, I'm really excited, but two, like, I want to make sure you know everything that I know, and you don't need to know all of that in an elevator. That being concise and at the same time telling your why as an entrepreneur can be really, really important at getting that hook.

Absolutely. And if it's an elevator pitch, maybe that founder needs to ask, what are we actually looking for? If they're coming through our website, they should read our website because that is—

Crazy concept, right?

Because ultimately that is an area that we can try to cut down on how many meetings we're taking if there just isn't a fit within what we define as our strategy.

Yeah. So, what excites you right now? I mean, what gets you really looking forward to getting out of bed and I get to go do this today? Not an easy question.

No, I, I mean, I woke up at 4 o'clock this morning and, you know, it was one of those, you have an idea and you're just sitting with it and tossing with it. And I think that sort of speaks to the level of passion that both Patrick and I and excitement we have doing what we're doing is that it is that thing that, you know, when we wake up, it's one of the first things we think about. And so I want to see that in our founders as well, because as it was said, Over the course of the last panel, not only are you entering into prospective marriage with the founder and their company, you're talking about a 10-year relationship. So it's not only that, but you're gonna be going through the ups, downs, trials, and tribulations. And so I think it was said you're walking through the fires of hell together, arm in arm. And so there needs to be at the very beginning stages a level of trust that is developed to know that You have my back and I have yours.

How do you do that? You're pitching, you're in a lot of times these days it's over Zoom. How do you get someone to trust you? I mean, I think that's just what it is. How do you, when you have an hour Zoom or maybe 5 minutes in a hallway, like how do you build the trust in a relationship?

Our approach is one that we are interacting with the entrepreneur at multiple touchpoints throughout our diligence. So, while we are looking for things like enthusiasm at the outset.

At the beginning, yeah.

We recognize that maybe that trust won't be there immediately. There are plenty of cases where we've watched founders grow over time.

Sure.

And we've seen them develop relationships. That's not always the case, but we do expect throughout that diligence process for you to be honest. We're doing a lot of diligence, and so we can call BS.

Yeah.

And if you were trying to pull one over on us, that will absolutely ruin that trust.

Yeah, yeah. And sometimes the best answer Yeah, absolutely. And honestly, that gives you another opportunity. I don't know, I'll go find out. That gives you another opportunity as an entrepreneur to reach back out and say, hey, you asked this really great question. Here's this. I'm gonna keep it concise. I'm not gonna send you 30 pages answering your question, which I am guilty of, so.

But, but I think too, being thoughtful and asking really good, curious questions, that's one way that you show sort of that active listening at the very beginning, because active listening to me shows coachability. I think that's one of the things there are certainly some elements at the very, very beginning that are indicators, whether they come through or not, but certainly you plant those seeds.

Yeah, I like that listening piece of it. And as an entrepreneur, it can be really hard because you sort of have your prescribed— it's almost like in a job interview, like, what questions do you ask to the person that's interviewing you? I mean, there's the standard ones like, what's your check size and all of that, but have you had a question where you're like, oh, that was a really good question from this entrepreneur that you were like, yeah, this, that's Good question, and made it stand out in your head?

Yes.

But?

Yes, but trying to recall, I mean, certainly, I think Patrick and I have been drinking through—

You've had a lot.

We've been drinking through the fire hose for the last 5 years.

Yeah, just getting blasted in the face with the fire hose. Yeah, yeah.

But certainly, I can absolutely think of pitches that we've been in, whether they've been in person or virtual, where there have been those questions that have been asked. It's not just you're giving your pitch and then it's asking questions at the end. It's a level of engagement throughout that process. Yet, to answer your question, always ask a question or always have questions to be able to ask, not just at the end, but throughout.

Well, that listener piece is so key, right?

Yeah. And they should be— there are some that are logistical, and we absolutely understand those, but there should be some that just show genuine interest in hearing more about how we think about things, what might make this a great fit.

Yeah. I think that How to Win Friends and Influence People mentality of just listening more than you talk, which is hard when 'Cause you're like, I'm gonna pull up my slide deck and then I'm gonna vomit science all over you for the next 30 minutes. That it's not set up to be a listening type conversation. And so it can be really hard sometimes for an entrepreneur to navigate that.

I would also add Speed of Trust is another great call out, both good books, but I would encourage folks to take a, take a listen.

Yay. I have something to download for my plane ride home. That's amazing. So that's great. Speed of Trust. Okay.

And particularly with us, I think one thing that founders should know and recognize is we are industry agnostic. We do not have medical backgrounds. Yeah, we will bring someone in to help us diligence that. But in that first pitch, we need to understand how this is a good business model more than how that science actually works.

Yeah, that's right.

Yeah.

Patrick and I, we are not doctors. We just play them on TV.

Yeah.

And so that's been one of the beauties about what we're doing is being able to partner with the alumni network to bring in those subject matter experts that are assisting throughout the diligence process.

What a great opportunity for alumni to give back to, of just like, oh, I mean, I hadn't even thought about being on the diligence side as an alumni. I've worked with alumni groups before, and that— what a great opportunity. You can serve as a KOL for a fund that's, you know, generalist, and you have to know all the things. You have to be an inch thick and a mile wide, and that can be really, really hard. And what a great way to kind of combine those resources of like, well, I know the chair of physiology that works on this disease and sees patients on this disease every day. I'm just going to reach out to her. What a great opportunity to give back and also help you guys out. Make sure that you're not going to be the next Theranos and make sure that you have something real that can not only help patients, but also bring a little bit of return and return to the state as well.

So that's right.

Well, great. Well, guys, thank you so much. I'm so glad that I ran into you in the hallway and said, hey, want to do a podcast?

Absolutely.

Thanks for having us. I don't just ask everybody that. I promise I'm just grabbing strangers off the street. But it was really great to hear you guys talk on the panel today. And so I wanted to have opportunity to share some of the things that you guys are doing with our listeners.

So, well, we certainly appreciate that and thank you for having us on to be with you.

Thank you. All right. Well, as always, we will have more information about Evan and Patrick and 1834 Ventures in our show notes. Be sure to check them out and see you on the next episode of Bio from the Bayou.

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