SPLY Capital: Strategic Matchmaking in Venture Capital

All right, so I'm Your host, Kevin McCann and today's guest is Drew Leahy, general partner at Splycap, a venture syndicate and capital partner known for backing high growth companies and unlocking commercial upside through strategic matchmaking. Drew's journey spans both sides of the table. First as a two time founder and operator, and then as a VC managing early stage funds, and now as an investor focused on scaling later stage startups through capital connections and go to market strategy. So Drew's got sharp insights on what separates startups that plateau from those that break through. And today we're going to dig into all of that. So Drew, great to have you on. Let's jump in.

Thanks for having me, Kevin.

No worries. All right, so let's start. We'll kind of go back to the, the evolution. You're kind of your founding story. You've, you've worn a lot of hats as founder, venture investor, operator. What's the through line that connects it all for you? So you stayed in the game. The game was different when you were, you know, the, the, the sales, the operator person. What's the thread that keeps it connected? So you're still in the game.

That's a great question. So I think at the end of the day, I always sort of class myself as an investor operator. Right. So from my perspective, what allows me to be a good investor is the fact that I've built, been there, done that, sold that. Right. And I think that because sales and marketing is such a big part of startup growth, you, you know, from my perspective, the ability to help companies that you're on the cap table with, at the end of the day, you gotta be able to sell and you gotta be able to get in front of people and you gotta close them. Right. And in between that is a lot of details, a lot of precision, Right. And so what we try to do is really not only help with those new introductions that a company may not be able to get, but also on the in between of, you know, how your sales enablement process is going to, you know, what's your pricing strategy, what's your upsell strategy, Land and expand. You know, what is there a free trial? If it's software, if it's hardware, how are you able to get, you know, produce those benefits? So, so we're able to really roll up the sleeves based on our history of investing and operating. And that's what makes us different. That's, that's the throughput through all of it is that we've built companies in the past and We've ran them successfully.

Got it. So that talks a little bit about the kind of the differentiation that what inspired SupplyCap or the creation of SupplyCap.

Yeah. So, you know, I've known my partner Tyler for almost a decade now and we've always been trying to figure out how to get together, how to work, how to partner, how to build stuff together. And I came back from New Zealand in December, back to Michigan, and we had been kind of talking the whole time about how I was coming back to the States and for us, we wanted to do something together. And so we put together this business partnership based on another partnership that he had been running for a while was called Ratchet Wealth Partners. And Ratchet Wealth Partners was a syndicate, you know, had really great deal flow, all kinds of that strategic benefit. And so what we did was we rebranded the company to Supply capital. And Ratchet Wealth Partners was something that people got confused, they thought they were a wealth manager. So we rebranded it as Supply Cap and came out okay. So yeah, the inspiration behind it was let's work together. And you know, Ty had a strategy that was working really well. And so what we tried to do is get together and make one plus one equal three.

Got it. So, so two part question to kind of follow on on that. So you actually just described it as a little bit more than just capital. It's value add network. But how do you decide which deals you bring to investors and what makes your syndicate model maybe a little bit more attractive to both founders and the family offices that you guys work with?

Yeah, sure. So I think for us there's, there's kind of a supply and demand curve that we're always looking for. Right. What deals do we have that our investors like have a propensity to? And ultimately, where, where, where can we find alignment around what we know our investors like that's kind of, that's always ends up being kind of number one. Number two is alignment with our commercial interests. Right. So Tyler and I have a pretty big network all across industries. And so for us, when we're looking at a deal, who are the 5, 10, 15 people that we can introduce this deal to commercially, strategically and otherwise? Right. So those are kind of the two main things. And then the second and then the third thing is like we run a typical due diligence, like a venture capital firm, we introduce customers. We are, I'm sorry, we do customer interviews, we look at financials, we interview members of the team, etc. Etc. Right. So we run a typical venture capital process on top of taking a look at our network commercially, on top of deciding, is this a fit for the investors that we have in our network and what they like to invest in. We have a global network of family offices, right? All over the world, including family offices and investors here in the States. So we have a network, a database. What do our investors like? What can we crush commercially? And then make sure all the due diligence, the typical due diligence process is ran. Got it.

So that's serving it up to the investors. Can you walk us through a typical investment process? Maybe from identifying the deal to, to the close, like what's kind of like the high, high level. But what are the steps of the process for those people that are watching the podcast that don't even know what syndicate means, things of that sort?

Yeah, sure. So it really starts off with finding the deal flow, getting the introduction, talking, talking to the founder, getting comfortable with what their, when I, what their story is, right? Getting to the bottom of their story. And then it's a lot of times it's calling up some of our investors and saying, hey, is this something you'd be interested in? Or maybe it's someone in a VC or an investor that's in that particular industry. So our process from opening a deal to closing a deal is essentially first starts off with meeting the founder, getting their story, looking through their data room, looking through their deck, understanding what their go to market is, what their prospect is for, follow on investment. Right now we're investing at a later stage, but you know, we're also underwriting for, well, who comes in after us, what's that look like? And then it's a process of, well, let's go look at our network, let's go paying our investors our LPs, let's go paying maybe a VC that's in a particular industry that might have a really good foothold on this type of market. So then we go and generate feedback, right? We go generate feedback, generate interest, right? Once we get a little feedback and interest and we feel comfortable and plus that the kind of tribal knowledge internally about what we know our investors like, then we go ahead and build out sort of our syndicate marketing to our, our groups, our networks, and then we go and raise capital, right? Once we raise capital, once we make the customer introductions, right, there's some sort of closing date, the investors wire the investors are in and then we update our investors as time goes on. So, and that process can be usually anywhere from, you know, four to six weeks. It can be sometimes longer, depending on how long the round is open, sometimes shorter. If it's a really hot deal and people have to be in by, you know, August 1st or whatever it is. So it just, every deal is just slightly different. But inside of that process, we run our due diligence, we call customers that they have and we talk to internal team members, we talk to board members, we talk to people that are already invested in the company, et cetera.

Got it. When we were talking last time in the prep for the, for today's call, I think I'd asked how, how involved do you get in the deals after you guys make investment? I forget what the answer was, but I think you said like you, you have obviously go to market knowledge, you've been a sales guy, you're still a sales guy essentially. When you're finding these deals, how much guidance on go to market, sales enablement, that type of thing do you provide to these, these companies that you make the investment in?

Yeah, I think it depends. Some, you know, some companies, we join the board, other companies, we are more of a, you know, a non participating member in terms of like the structure of the governance. But even when we're a non board member, right, we're still active with the company, we're still trying to figure out who can we make introductions to, how do we find a perfect COO candidate or how do we help them find a head of sales candidate or a head of marketing. Right. We're constantly trying to figure out in our network where can we add value or can we apply sort of our thumb on the scale to make our investment successful and get people excited about it along the way? You know, we're also no stranger to going through someone's HubSpot account and being like, all right, what's your deal flow? What's your timing? There you go. How long does it take you to close the sale? What can we, what levers can we pull? How many emails are you sending in? Follow up, right? What's your content strategy? Like, how much content are you putting out? Do you have paid ads? Like, I mean we can get as nitty gritty as we really need to, right? You know, and a lot, a lot of the companies that we work with happen to be B2B sales. So that has like somewhat of a known quantity in terms of like what you should be doing, what you shouldn't be doing, et cetera. And so it's also just figuring out, well, how can we make sure that the process of marketing and sales for this particular B2B company are fitting for the product, the price, the, the adoption rate, you know, the adoption speed. Right. And so a lot of what I try to focus on with companies is, is honestly it's customer enablement. Like there's a lot of companies that have a ton of top of funnel. Their middle of funnel is just sort of generally mismanaged. I don't mean that about any, you know, I don't mean that in a bad way. It's just, it's a hard piece to really lock in in terms of the sales enablement. And so how do you just shorten the time from like someone heard about me to when they pay? How do we shorten that and then get them to share it with their network? Right. I mean, how do you love it?

You're, you're speaking to, to, to our sweet spot. That's actually what we focus on is that middle of funnel piece. What, what are you like from your perspective as an. The, what are the blind spots maybe that you see with companies that are struggling in that like oh no, we get a ton of leads coming in, but we don't really have predictability on when the sales are going to close. Where, what do you see?

I mean, I think a lot of times it starts with making sure you're talking to the right customers first, right? There's a lot of tire kickers out there, right? You got AI slapped on your logo and you say, you know, we're helping manufacturing companies like reindustrialize their process with AI whatever. There's a lot of people that are just going to be like, you know, hey, I'm, I'm, I'm looking for solutions, right? And so I think qualifying leads is something that a lot of folks sort of struggle with. They talk to everyone, right? They give everyone the time of day, you know, and that's pretty like common in sales, right? You got to kind of just talk to everybody, try to move people through the funnel. The more qualified leads you can have from a marketing perspective, the better always. You know, the other thing is just really helping with channel sales, right? Partnership driven sales, right? How do we get a company to partner with another company? They both add value to each other. You know, let's, let's find those co branding opportunities where you can really, you know, essentially sell each other's leads on each other's processes, right. So stuff like that really helps. You know, it can be as simple as like what's your sales scripts like? Is it good enough? You really selling the proper points? Are you really going through and saying these are the three things that matter most to my customers, these are the three things my product does really well. And like, are you really delivering that sales pitch in the manner that it needs to be sold? Right. And the other thing is with startups, a lot of startups are doing founder led sales. People love talking to the founder. Founders have a gravity with sales prospects that maybe a head of sales or an AE might not have. Right. So what does that look like? You know, when is the founder brought in? Is it top of funnel, is it bottom of funnel, somewhere in the middle or as leads are qualified? So it just looks different for everyone. And I think, I think that's the challenge with sales is that there are playbooks and there are best processes and there are best practices, but a lot of it has to sort of be customized and fine tuned based on the company, the industry, the customer, the product. And so, you know, I wish I could like kind of speak gospel and you know, say hey, here's, here's my playbook for sales 101 and it'll give you a thousand x ROI. Right? But it is, it is, it is highly customized and there has to be experimentation, there has to be kind of a rigorous management of like what we're trying and what works and what can we replicate. And you know, there's a process to all that.

You bring up a good point. Like the founder led sales piece. In your experience, when you've seen companies that you've invested in that succeeded in going from founder led sales into my team is now going to go and do all the sales efforts and they have the SOPs and the process built out. What are some of the, if you have seen that, I assume you have, but what are some of the key things that, that founders need to be doing or thinking about to make that transition succeed as opposed to no one can sell like me because I'm the founder.

It's all about case studies and product market fit. Honestly, most people just need really good data to say, look, if you, if you sign up with my software, you sign up with my hardware, you install my battery, you install my AI, you install my, you know, chip manufacturing facility ever, whatever it is. Here's the data. This is, this works. It worked really well for NASA, it worked really well for this top builder in construction. It worked really. You just have to have the thesis, the data, the proof points to that your product works in market. Right? And I think that startup founders stay in the game for a really long time because they're trying to sort through and really get to that product market fit perspective. And the definition of product market fit, which a lot of people don't realize, is you have so many customers, you don't have enough time to service them. All. Right? And so most startups are not in that perspective. They're begging, they're borrowing, they're stealing, they're. They're trying to get in front of the next prospect. Right. I've been there. Right. I know exactly what that looks like. You know, I've also showed up in sales and shot fish in a barrel left and right. You know, people come up to your booth, you talk to them, they sign up, you set them a free sample. You know, in one week, they're. They're converted and you have this like 40% conversion rate on your, on your clothes, you know, initial lead to close. I've also seen it where you're shooting fish in a barrel, you know, because the product market fit is there because the product you. You've created is, Is demanded, is loved, is. Is excited by the customer. Right? So that's what you have to get to. That's the magic that you have to create with technology, marketing, sales. Right? And it's a soup of everything put together.

Exactly. I like what you said about leveraging partners to go to market with what we typically coach our clients on. That's one. Definitely. One of the legs that we go after is, is look at, at the other companies out there that are selling to your ideal customer and work relationships with them to kind of do joint marketing campaigns, joint engagements, to go and present together. Typically, the way I would guide the CEOs and the founders that I work with, like, great, Kevin, that's awesome. How do I find those people? Go to your existing customers. So if you're working with CEOs, CIOs, CTOs, whoever, ask them who are some of your top vendors? Like, who's your top three to five vendors that you. You love working with? When, you know, in whatever realm but, but who comes to mind? And just that alone, I find is, then, then I, then they can go and reach out and say, hey, you know, Drew, I know you know, I talked to Mike and he said that you, you guys are one of their best vendors. We'd love to talk to you about collaborating and seeing how we can go get more mics on the docket. That's typically what we coach. What, what do you, what do you coach? Like, it's one thing to say just go find partners and, and co market. How do you communicate that to some of these Guys that are looking for similar insights.

Well, I think, you know, I, it sort of depends on the industry, but if you have a software company that provides a certain value set to customers and those customers have a certain mindset about using software to solve problems for themselves. Right. And you can say, look, we solved this problem over here and by the way, our partners over here, we know you need help with this. We don't do it.

But they do.

You should use their software as well. And maybe they're not necessarily connected or there's an API. Sometimes there is a sort of an enablement product that, that can be built to build a bridge. But you know, if, if your company can build a really big partnership with a company that's much bigger than yours because you solve a problem for them and they can surface their technology to their users, that's a really beautiful partnership. Right? Yeah. And so sometimes it's just like the commingling of products where like, well, I'm already using this product and my companies are already using this product and this is a great value proposition. Awesome. Well, let's make that trifecta happen. Let's do co marketing, let's do a case study on a customer together, let's co market. Right. So I think that's what I try to do is really, really find a place where you can really leverage something that's super unique and overlaps with the users in the Venn diagram.

Got it. All right, so now we'll, we'll look at some trends and innovation, maybe the, the path ahead. So from your seat, what shifts are you seeing in the 2025 startup landscape, especially with all of these AI focused companies coming to the table? And one thing you, you kind of brought up on our last call, I'm a big fan of it. Is Seth Godin's Purple Cow, in your opinion, how startups be kind of rethinking their differentiation in this crowded and frankly noisy market?

That's the million dollar question, isn't it? That's the hardest part, right?

Yeah. Well, I think like in 2025 is

like, you know, look, the tailwinds, like I actually want to take a step back. The tailwinds for any entrepreneur today are that you don't need to raise a million dollars to build a software product anymore or to build a product to get to market. Right. The number one founders that will succeed will figure out a way to build product, get to market and get users without capital necessarily. Right. And there's some founders that of course they've died before or they have a great network. They can raise angel investment, they can raise venture capital, they can get strategic part, whatever. There's, there's always those founders that are going to be able to figure it out and raise a little capital, build some technology, whatever. But my, my, my instruction for the headwinds of 2025 and 2026 is that there's more people than ever out there selling, right? And so you really have to nail your customer. Pains and gains. It just goes back to the business model framework. It goes back to, you know, very basic operating principles of I have a thing. Here's the benefit of, here's the pain. It solves, and it solves that pain in a. Not a 10% increase or a 10% decrease. Like, it has to be 10x. Right? And so I think a lot of founders, they start a company, they start to learn more about the company. They got to be really, really radical about how much, how much benefit does my product, does my product actually create, how much opportunity does my product actually create? Right? And so focusing on those principles and getting customers and getting growth by yourself, with your partners, with the people you know, with, you know, with your network, I mean, that's just, that's just like the 101 of growth today. And then once you have some success, you can start building these flywheels, right? And it's like, okay, let's say our customer, we landed Raytheon and we did this amazing, like, work with them as a hardware company or a software company, whatever. It's like, well, okay, cool. Like, how are you going to go find more customers that fit that profile, that are going to get them to say, oh, wow, that, that resonates with me. That, that customer pain and gain resonates with me. I want that too. So a lot of it's just like really basic blocking and tackling and ultimately like making sure that your stakeholder management of your biggest accounts, getting data out of those accounts, making sure you can market them. A lot of it's just doing that, nailing those basics, right? And then getting in front of more people that look like that profile.

Yeah, exactly. And, and, and surveys have now become even more important, like, you know, NPS scores and things of that sort. Not just like a check in the box, but like truly asking your customers, what business value are we bringing to the table and how would you communicate it? Because the way we communicate the value we think you took away from our products or our services could be way different than what the customer actually communicates. So I think what I'M seeing is make sure you stay clear on what they're saying. Because using their words, when you're going out to find more people like them, way more relevant and appropriate than you, coming up with like some AI gobbledygook that you're sending out and hoping it's going to hit with your ideal buyer.

I know, yeah. There still has to be a little magic. You know, you can't just put the automation wheels on. It's the human element, the authenticity. It's still, it's still obvious that certain people are just automating the crap out of everything. And it just doesn't sound real, it doesn't look real, it doesn't feel human. So.

So sliding over to like a typical day for Drew, like, what, what is a typical day as a capital partner? Like, what keeps you sharp? You know, you're definitely, you definitely get the, the marketing and the sales, the, the, the go to market strategy piece of it. But what are you doing on a daily basis to engage, find new opportunities maybe. And what keeps you sharp? Who are you reading and what are you, what are you looking at?

Yeah, I'm definitely reading. You know, I feel like I read so much for, you know, what I'm doing in my industry. You know, my day typically looks, you know, a lot. I talk to hundreds of people a day essentially. Like I have, you know, imessage on my computer. I have a lot of different friends, colleagues, WhatsApp groups. You know, a lot of it's just staying up to date with like sort of what's going on on a day to day basis, reaching out to people, you know, someone will pop in on my LinkedIn feed. Oh, I haven't talked to you in five years. Hey, love what you're doing, would love to connect. Like, this is what I'm doing. Like, so a lot of it's sort of just staying up with my contacts and maintaining sort of a contact list that's actionable in some way. My partner and I also have a business called Supply Fi, which is a basically a trade finance business around financing receivables for manufacturers. Today it's with aerospace and defense companies. So what we do is we actually raise capital from investors, produce a yield for investors, and then we deploy that capital with a partner who ultimately is backing receivables from Fortune 1000 companies and governments. And so that's actually a huge focus for me right now is really getting that business off the ground and running and getting the, getting the wheels turning on that. So you talk about my Experience in sales and marketing. I'm literally doing it right now, running, I'm running processes, building funnels, doing marketing, doing operations, doing finance, doing all the different pieces together in order to stand up A venture fund. Not a venture fund, a vehicle, a finance vehicle around trade finance. And so we're doing all that today.

Is it, is that, I mean, it sounds like factoring. Is that factoring your voice factoring?

Yeah, it's, it's, it's essentially business to business factoring. It's factoring for manufacturing, but it's all software driven. It's all intelligent software driven, institutional grade sort of risk management. And so yeah, it's, it's ultimately, it's ultimately factoring, but done in like a very 2025 now, 2026 futuristic fashion.

Interesting. Got it. So, so are you doing all this like funnel building and stuff in house or do you have an outsourced team that you send it out to or who's doing that work?

Right now we're just, we're bootstrapping the company ourselves. Right. Finding investors, helping find, you know, getting vendors over to our partner, you know, working on our sort of funnel as it relates to raising capital for the deals that we have, the demand that we have on the, on the, you know, on the trade receivable side of things. So we're doing it all. Yeah.

So you have two sides of it is finding the, you know, go reaching out to the, the guys and the companies that have the money and then reaching out to the people that need it. So you've got kind of a supply demand side of, of a marketing funnel.

That's right. Yeah. That's ultimately, it kind of looks like a marketplace which is like, I got these people over here that need these things, want these things and have this opportunity. I've got this, this connection over here that has a completely set of needs, wants and desires and you bridge them together with finance and everyone's happy. Like these people are happy with their yield, these people are happy with their cash flow conversion cycle, which, you know, you got to wait 90 days, 100 days sometimes to get paid once your product is shipped. I mean, how can you get the next deal? How can you get the next contract? How can you, how can you really push forward the cash flow operation without a little help? Right. Meanwhile, you're a medium to small vendor. You're not going to go get a $20 million credit line from Citibank or you're even local credit union or Chase or whatever. Like no one's going to bank you, because you're too small. So you're just underwriting these specific transactions where the obligor, the person that's paying the purchase order is a massive company and can be underwritten. Right. You can even get insurance on the factory, on the receivable. And so the whole system works because there's risk management, there's sort of downside protection, and there's a great ability to generate yield from logos and brands and really cool stuff in aerospace and defense that people like to see.

Right. And it's, at some point the government will pay. They're not always the fastest payers. But you feel confident that at some point these guys will get their money or we'll get our money.

They're legally obligated across the board. They don't want to get sued. They might pay a late fee just because the paper got shoveled around, but they're going to pay. Right. And so is Lockheed Martin and Boeing and you know, any of these others that are, that are ultimately contracting with all kinds of vendors for different products and parts and, and the like.

Interesting. We should do a sidebar on that. I'd love to, love to hear a little more on that. We may be able to send some, some companies your way.

Absolutely.

Yeah, definitely. So with that, how do you, I guess just to kind of, kind of wrap this up on a Friday afternoon, how are you prioritizing where you're spending your time across the deals, you know, LPs, operators, this factoring operation as well, building that thing out? What do you do from a best practice standpoint to prioritize and to coordinate your day?

I mean, it starts with goals to do targets, funnel management. Right. Stuff that comes up throughout the day. Time management, time blocking. Right. Right now I block a lot of time every day. I'd say probably 70%, 80% of my day is time block for supply finance and supply fi and everything that falls underneath it. Obviously there's still a lot of work to do on the supply capital side of things. So I'm still present and clear. And you know, you just have to manage the time and manage the blocking so that you can kind of really make sure that you're, you're chunking things out. Context switching can absolutely murder your day. And you know, this is something that we, we talk about, you know, a lot, which is like, how do you focus, like how do you make sure that you're really focused on the opportunities that you have on hand? Right. So there's a decent amount of flow that happens every day and you gotta kind of manage it. But really, for the most part, a lot of my energy is being spent building supply fire right now. That's where. That's where the most of my energy is going. And then the supply cap side of things, I mean, look, there's always. There's always opportunity there. There's always needs. There's always things to do, connections to make. But, you know, on the connection side of things, a lot of it's sort of serendipity. Right. I'm on a call with the family office. Oh, they have a company that does this. You know, buff up. Yeah, we should connect you with these guys over here. Make the connection, pull the whole thing. Took like, I don't know, eight minutes or something like that. Like, if you were going to time it out. Right. Okay, well, you know, great. That's awesome. Right? And then you got to write a thoughtful email and all those kind of things. But, you know, we have systems in place for that and support for that. We have a. We have a chief of staff that is brilliant and fantastic and does a lot for us operationally. And so, you know, between that and we also have venture partners in our network. We have folks that work with us, part of the venture firm. We have partners that work with us as a part of supply finance. So there's. There's. There is a distribution of tasks and. And outcomes and goals. But it really starts with time blocking goals and, you know, really nailing that to do list every day. And then having a very supportive wife also really helps, you know, someone who understands, like, you got to do your thing, you got to close, you got to work late, you got to be up early, you know, so. My wife is a saint, and, you know, she knew when she married me when she was getting into marrying an entrepreneur. So, you know, having a supportive ecosystem behind you makes a big difference as well.

Definitely. Yeah. I second that. Awesome. Well, Drew, thanks so much. This is awesome. Appreciate you sharing your journey, kind of pulling back the curtain, what's going on in your world and spy cap and everything. So if people are listening and they're like, drew, this is interesting. Like that serendipity moment you're talking about. I'd love to reach out to Drew to chat with him about X, Y, or Z. How do people get ahold of you?

Yeah, LinkedIn is where I'm the most visible. I post pretty frequently. Check my messages, et cetera. Happy to connect with anyone on LinkedIn.

Awesome. We'll get those in the show notes, and we'll distribute that we'll be probably right below this video when. Whenever someone's watching it. Awesome. Well, thanks for tuning in, Drew. Really appreciate you joining us on the Executive Edge podcast. Hope you have a great weekend and have a great day.

Thank you. Cheers. Thanks for having me.