An American investing in LatAm with Ali Jamal

Hello.

As everybody's getting on here, welcome. I'm Martin. I'm the managing director of Incisive Ventures, and I have with me today my longtime friend and poker player Ali Jamal from First Check Ventures, who is a specialist in Latin America. And this is part of our ongoing series where we talk about investors from all over the world and what's interesting in those particular markets and just get a feel for what's going on in other parts of the world. And hopefully afterwards we'll have some time for questions. I think on here, we've had about 50 people say they were going to join, but we have 10 or 15, but we'll get going. We're going to talk for about half an hour and then people can ask questions of either me or Ali. And I thought I'd start off Ali, just by saying, hey, why don't you tell us who you are, how you came to this investing, and what you're up to at First Check Ventures.

Thanks, Marty, for having me. Really great to, to be a guest on this. I've had a chance to join a few times watching, and so it's really good to get a chance to join you and speak about my journey. I'm now the venture capitalist, but it always feels a little reluctant to say that because I don't really think of myself as a vc. Kind of try to think of myself as a startup person. And my background has been in startups. I've been doing it for about two decades at this point, initially in Silicon Valley and then just ended up getting recruited into jobs all over the world. Most recently ended up leading growth for a couple of different unicorns in Latin America. And while I was there, I also was working as an advisor and mentor for different startups and also started writing more and more angel checks. And I was actually in Latin America when the pandemic hit and I think everybody needed a hobby and mine ended up being doubling down on angel investing. So I started writing more and more of my own checks and doing more and more mentorship. And then you start running out of cash because you're getting super excited. And I wanted a way to leverage the things I was seeing and have more of an impact for them. So In July of 2020, I created an angel syndicate on Angellist. Basically started reaching out to a bunch of people. It was also the pandemic, so it was a great time to reconnect with people, told them what I'd been up to, how, like, what I was seeing in the world and why I thought there was this gap in across emerging markets and that there were a lot of really cool companies that were being built that just weren't being served yet. Started syndicating a couple of deals on AngelList, the first of which was actually a startup in Venezuela called Yummy. That deal did well. So I then did a second and then a third and a fourth and it just ended up snowballing from there. Eventually ended up leaving my job to focus on angel investing full time. And then I started to realize that the deals that I liked the most and that actually were performing the best were the hardest ones to raise for, which were the super early stage ones, especially in emerging markets. And it was a lot of my LPs are based in the US. They didn't really have exposure to these emerging markets so they wouldn't know which of the early stage deals to invest in and have begun the process of creating a fund around that idea. And I'm now working on these different projects and really just trying to spend as much time making the ecosystem better.

Yeah, yeah, thanks for that. And I think that's where we met first was at on Angel List because I did a similar thing. I was running a company in LA.

That got shut down by the pandemic and I was like, what am I.

Going to do now? Am I going to start another company in the middle of a pandemic? And I was like, you? I was like, maybe I'll start writing checks because I like doing that. And then a bunch of my friends are like, hey, we want to invest with you. I started doing B2B software and pre seed and I have 3,000 LPs in my syndicate. And then a bunch of those LPs are like, we just want to do all the deals you do because your.

Deals over subscribe and you have limited allocation.

So please start a fund. I did my first fund on AngelList.

And now I'm onto my second fund.

What do you think is different or have or are you doing different now at with as a syndicate manager and or maybe different now as a fund.

Manager versus an angel?

What I see is there's an order of magnitude difference in the number of deals that you see. I'm getting way more deal flow as.

Of T because your name's in all these fucking databases and people are cold.

Emailing you all over the place and DMing you on Twitter and stuff. But I also think about the things.

A little bit different. Check size, portfolio construction and maybe a lot more than I was as an angel.

How do you think it's different between an angel and being a manager of a fundamental.

Yeah.

So I feel like there's a big difference between, between all of them. Right. I think as an angel, you're looking for returns, but you're also looking for ways to help. And it always felt like the big part of it was also like that ability to help with syndicate. It obviously I was looking for great companies, but it also felt like I was looking for companies that other people would think were great and, and things that other people would get excited about and things that other thing people would get really into. And now when I think about a strategy for a fund and for a portfolio, it's more what do I think is going to be really exciting and how do I fit this overall into what I want to spend my time on and what I want to spend my energy on. And so I feel like that there's definitely a transition there and a difference there. One of the other big things I think is stage wise is with a syndicate, you have to wait for the deal to be mostly done. Everybody loves these, oh, we're the last check in, we're the last money in. Right. And so you're waiting for 90% of the deal to come together, which means they have to have a VC lead, they have to have their co lead, they have to have. There are other angels involved. And then you're coming in and you're trying to sneak a check in last minute and you're trying to move very quickly and you're trying to create this hype cycle. And with the fund, I don't feel like I have that same desire. Like I don't want to be in the same rounds as 16 other people. I can actually be the literal first check and I can work with the companies more and I can develop them more and I can benefit them by actually introducing them to other investors in a way that you can't really when you're waiting and waiting at that for the last check in vibe. And so I feel like that's probably been the biggest thing and then because I'm now coming in earlier and have that ability to just write the check and I don't have to wait for all the other LPs to put their money in, you have a lot more bargaining power and I hadn't really thought about that or realized how big of a difference that could be. But before you're waiting around for all these other things and so you take the terms as they're there. And now I can negotiate for better terms or for I There's no reason for me not to get pro rata, right? Whereas with the syndicate, like sometimes you'll get it, sometimes you won't.

Here.

If they're not gonna let, if I'm the first check in and they're not giving me pro rata, like what the hell is going on? Like, it's just.

I've noticed that too. It was really hard to do first.

Checks on the syndicate because a lot of the LPs were looking for that co investor signal. And so I'm on my syndicate now.

Doing follow ons and Andreessen Horowitz and NEA and Index and all these fuckers have marked up my deals. And frankly it's a lot better for.

The syndicate those kind of LPs when they see a big name co investor signal and those deals are a little more successful.

Another thing that frustrated me a little.

Bit on the syndicate was just the timing.

We're definitely in a little bit of a slower time where you have time to do diligence, but there were. Is 21 and 22 there a huge.

Time where you got a fund by Friday or whatever and you just didn't have time to pass the hat with the syndicate. And I think with the.

And you also didn't know what number.

To commit to the founder. And it was. It caused some issues there, like maybe.

I can do a hundred, maybe I do 150. But with a fund you can say.

I'm committing this amount and the money's there. You can make a little bit stronger commitment to the founder, which I've found goes a long way with founders.

And then I think just having that stability and reliability because you never know with the syndicate what's actually going to hit or how high it's going to hit. And sometimes you'll have a deal, you think it's going to do well and it stumbles. And then sometimes you have a deal, I think it's going to do all right. And for some reason everybody catches wind and they just throw money in it and you're like, what the hell is going on? I don't even think this is that great of a deal, but it's oversubscribed and it's just going crazy for some reason.

Another thing that I found, I wanted to ask you if you found the same. I find myself on my fund investments doing probably 10 times the portfolio support.

Than I did on the syndicate investments.

I don't know if it's because I put bigger checks into the founders or they have my cell phone and I'm a real name on the cap table, but I was just doing a lot.

Less with the founders on the syndicate because it was usually a smaller check into a bigger round and this time I'm sometimes 50% of the round and I just get a lot more attention and I spend a lot more time.

I was on three founder calls today where guys were going over product plans.

And asking me for feedback and future financing and stuff like that.

And I actually really like that.

I feel like I'm engaged a lot more with my fund companies than I was with my syndicate companies.

Yeah, I think that's definitely true. There's, there definitely were some syndicate companies that I worked very closely with, but there also were some where they would.

Just like ghost you.

You'd write a check that you never hear from them.

Exactly, yeah.

And I think the other thing is that the relationship between myself and the LPs feels very different. I felt like in the syndicate role you really feel like you're playing more like a matchmaker or on an, almost like a broker dealer where you're introducing people to the deal and yeah, I like it. I'm putting in a couple thousand bucks. But buyer beware with the fund. It really feels you are responsible.

Right.

Somebody else trusted you with their money.

Yeah, yeah.

And so the responsibility level feels a lot, feels a lot different. And so I feel like I'm really trying to take as much ownership on that responsibility level as I can. And I think that also probably something to do with why I'm spending a lot more time with the portfolio companies and really trying to make sure each company is a hit.

Yeah, let's talk a little bit more specifically about Latin America. It's not one market. I was wondering if you could help for our listeners lay out how you.

Look at Latin America.

Either the different sectors, side parts of the market and, or secondly after that.

If you think about how you think.

Of the different parts of the market, then what do you think are the big opportunities? Everybody knows that sort of fintech has.

Already happened there, but what are the.

One or two categories you think that are still underinvested in Latin America?

Yeah, so I think it's hard to talk about Latin America without starting with Brazil. It's the huge elephant in, in the room. It's one of the biggest markets. It's a large economy, it's 35, 40% almost of the Latin American economy. There's the differences that it does speak Portuguese, that ends up being a bit of its own kind of self enclosed environment. But There have been some really huge successful companies that have come out of there. Nubank being one of the bigger, more well known ones, which, which is the Brazilian Fintech. And then you have Mexico and Colombia, the next two big markets that everybody is looks at and talks about. Mexico is the bigger economy but has been a little bit slower to produce, produce kind of a tech ecosystem. And Colombia is well known for producing great founders. In fact, the founder of Nubank is actually also a Colombian who ended up moving to Brazil. And so they're well known right, for, for having this entrepreneurial mindset. Part of it, I think has historically been or thought of that, that there's just so many struggles happening in Colombia that the founders all think it ended up becoming part of their DNA that they had to figure out some way to create things. And that's been one of the kind of historical trends. And then there's different markets, have different stories. So Chile is definitely a very interesting market. It tends to be a little bit more self enclosed as well. But you have the government of Chile and Startup Chile which have really done a lot for the startup ecosystem. Argentina has historically been a really great place and has a lot of great engineering talent. But then economically there's been some challenges over the last few years. We're hoping with this latest election and the new new president and administration.

Do you think he's generally good for startups? He seems to be getting rid of a lot of government red tape which.

Has got to be good for startups.

But I haven't seen him talking a.

Lot specifically about entrepreneurship. It's more about getting rid of socialism.

Yeah.

I personally think that socialism tends to be a hindrance towards startup freedom. So I think it's a step in the right direction. Over the last few years we were also seeing a lot of Argentinians leave Argentina to move to other countries in Latin America that were more economically free. Whenever I've been in Uruguay, you usually end up hanging out with a lot of Argentinians there because they've all left Argentina and it ends up being an hour ferry ride or two hour ferry ride back to Buenos Aires whenever they want to go. But they can be in Uruguay and have a much better tax situation and much more stability with their economy. And I guess just overall there's different things happening in different pockets across Latam. It's not really just one monolith. I think that there are really interesting companies happening across all these markets. It's just a matter of actually going and finding them. And so.

So what do you think are some trends that are going to drive the next sort of 10 year of growth down there? Because we've already seen a major investment in fintechs like Nubank, we've seen some.

Of the ride hailing companies or delivery companies.

Is there a particular sector you think.

That'S going to drive a lot of.

Value creation in the next 10 years or is it going to continue to be those? Or what are your general thoughts?

Yeah, I think that one of the big things is even though we now do have something like Nubank, which is a fintech, there still are a ton of market and fintech opportunities that haven't been solved yet. And so 90% of the population still doesn't really have access to proper credit or debt. It's still incredibly difficult to run a small business and to get access to expand out your small business. And so when you look at a lot of the things that I'm still seeing or that I'm still investing in and ends up being verticalized financial parts. So when we're in the US you go to a bank and that bank does actually like a hundred different things for you and we don't even actually think about it. Whereas in Latin America the bank usually doesn't do any of those things, or they have to do one or two of those things, but the other 98 are being ignored. And if you need a car loan, you're going to need to go and use one type of company. If you need a property loan, you're going to need something else. If you're going to need a construction loan, you're going in somewhere else. So there's all these different, I think financial components that still need to be built. I think it's going to be hard for one person or one company to really offer all those services. And so I still think there's this huge need just for more financial services. And I think each one of those could be a multibillion dollar company.

My one big investment down there is Jeeves, of course, which seems on the.

Credit card to be doing well.

And then I think this lack of access to credit and capital has made it incredibly difficult to do things. And so there's been all these systems have evolved because there wasn't access to credit or capital and all these inefficient marketplaces that were created based on that. So I think there ends up being a lot of people in the middle wetting their beak between supply and demand and issues with logistics, issues with transportation. All these things I think are actually because of capital and now that we're figuring out ways to solve for the capital problem, it's going to open up solutions for inventory financing or for transportation, for cross border payments. And I think that you end up with a whole slew of new solutions. Yeah.

Are those developing in the free market like they did in America or are you seeing in some countries what's happened in India, for example? In India there was a lot of.

Interest in fintech, but then the government.

Said actually we're going to go with UPNP payments and we're going to take, we're not going to let people make money in the middle on money transfer. We're going to take that off the table. So the screw Visa and all of.

These guys and they have a particular.

Regulatory framework where they're trying to enable.

Access to things like digital money at.

A low cost barrier, not allow people.

To create unicorns in certain categories of their economy.

Are companies or countries in, in, in.

Latin America thinking about it that way.

Or is it very much still the free market?

In Brazil you do have picks and, and there are some things that are specific to different countries or to different regions. But overall I think that's also the beauty of Latin America is that there are a bunch of different countries and to a certain extent it's going to be hard for one country or one set of places to really create rules and regulation for everybody.

But are there any, are there any countries that are thinking about ways that.

Could really like screw from a regulatory environment?

Certain industries? For example, what happened in China, there was a ton of investment in distance.

Learning companies by the venture capital firms in China.

Then all of a sudden the Chinese.

Government came along and said actually those all have to be nonprofits. It's illegal to make a profit doing distance education. All those venture bets went to zero in five minutes.

And that happened to me in India. I invested in a company that was trying to do a public.com a UGC.

Stock recommendation thing and the government in India said actually you need a securities license in order to make stock recommendations. So they outlawed user generated content stock recommendation. So you can't do a republic or a robinhood in India. They just basically made it illegal.

Do you see that kind of regulatory sort of demon in any of these countries potentially? Or is it still more let the.

Innovation go and let people do what they want?

In most countries there's definitely things that pop up from time to time. Super apps have a long history of being or fighting with local taxi unions and things like that. Like where they'll ban Uber and then they'll unban it and then they'll ban it again and then they'll. In Colombia they were trying to make all of the gig workers have to be employees and then you have to provide for them and provide for their national healthcare, blah blah, blah. So there's always going to be stuff like that. But I think the apps themselves and these startups have actually been doing such a great job that I feel like they've won the hearts of the people more than the governments have in most of these places. And so I feel like there's this threat where if the government was threatening to shut down nubank or Rappi or whatever, I think the people would actually be rioting against the government and not against the new banks in the rappies of the world. At least that's been my experience.

And it's like what act in America?

Uber asked for forgiveness rather than permission and had to fight the taxi unions.

In every place but one.

Because in most places because consumers just loved the service, it was way better.

I know you don't typically invest in crypto and I don't invest in crypto either. But I've gotten convinced that in third world countries the use case for crypto.

Is much stronger than it is in America, especially stablecoins to get off these inflationary currencies and stuff like that.

What do you think or do you.

Think at all about the use case of crypto in your markets?

Yeah, so I agree. The few Web3 investments I have made tend to be in emerging markets. I made, I invested in a company called Lydio which is offering dollarized banking in Colombia for using crypto. I've been in a similar investment in a startup in Brazil as well that that does it specifically for B2B. And so I agree, I think that the cases in Latin America, especially due to instability of the currencies in countries like Argentina and Venezuela, really make a strong case for web3 and for crypto as an option.

But dollar based, not these coins of.

Whatever or not even bitcoin really, which is much more volatile.

The primary use case I've seen is.

People just want to get their money out of their local currency into a stable currency and be able to transact that with other people without looking over the shoulder type of thing.

And I think also like four remittances, right? Because I think a lot of these countries also have people that are working in other markets and then try to send money back. And just the ease of use, I think it makes it a little bit Challenging or the, sorry, like historical transfer of money is challenging in these places. So anything that makes that easier for people, I think is exciting.

Yeah, yeah.

Remittances, it should be better, but sometimes.

The gas fees on Ethereum and stuff like that can screw your remittance costs, but who knows?

Okay, and maybe you could before, when.

We stop talking here, just summarize, like.

For you as a vc now, what is the perfect stage and size of.

Company that you're looking for, the size check you write, the kind of founders you want or whatever, what for? As far as an entrepreneur, what should they have to pitch you?

I guess the way that I usually frame it is Latin America is amazing. And you go there and so much of it is even nicer and better than the US and then you'll stumble into something and it feels like you're getting transported back to 1950s and it really feels back to the future, right? Where you know what's going to happen over the next 30, 40 years because you've already seen it play out in these other big markets. And so what I'm looking for is people that are out there trying to solve these big, basic everyday problems that people are having, particularly the problems that affect, like the middle class. In Latin America, the middle class has doubled over the last 20 years, poverty's been cut in half, and the elites in these markets still don't really give a fuck and they don't really do anything for the everyday person. And so when I find a founder who's focused on solving a problem that everyday regular people have, particularly things that are really simple, right? Mortgages and banking and inventory control or money to expand your business, like these aren't rocket science. You don't need to convince me that people want a mortgage, right? You might need to convince me that people need an AI app to tell them their horoscope or something. But I know that people want cheaper, faster money. People want a house, people want to save money for their kids. And so when you found one of these ideas and you're passionate about it and you've started building towards it and you have a live product that has some customers and people are starting to use, I want to hear about it almost like as early as possible. You don't need to have a live product before you reach out. You don't need to have customers before you reach out. I want, I've, I get most excited when I know it's something that you are going to be building no matter what, where you don't need a ton of Money to get this thing up and running. And then, Mike, money is coming in, not to get you from zero to one, but from one to a thousand. And that you understand what I'm bringing to the table and why you want to work with me and not millions of other people out there that have money. That's usually what excites me the most.

All right, let me ask you. There's a company that I think he talked to you and I heard them pitch yesterday. So I'm going to ask you about that company and then we'll go to questions from people. So if you have any questions, raise your hand and we'll call on you. But I'm trying to think of the name of the company, but I bet this guy yesterday, he started a vertical market software for the private security industry. He said he talked to you. I forget the name of the company, but basically he gave you some statistics that blew me away. He said there's 4.5 million private security people in Latin America, like twice as many as police. And the scheduling and of all of those people is clipboards and paper and spreadsheets. And there's a huge staffing turnover, 140%. And so it was pretty much a basic scheduling and recruiting set of software for these private security guards. But if you could reduce turnover and increase accountability by letting people take pictures as they walk around on their thing or something like that, that seemed like a pretty basic use case, not complicated software. But also, I had no idea that private security was such a big industry. And also incredibly like paper based today. And I think you're going to see a lot of industries like that, huge industries that are run on paper and text messages.

Yeah. So I, I believe it was a Mexican company, right?

Yes.

Yeah. I really liked the company. I really liked the founder. They still don't really have that much traction. I think they were still very.

Just getting going, but.

But it was really interesting. The problem was it wasn't a Delaware C corp. And the. I think during the pandemic, people were a lot more flexible on what they were going to invest in and people are setting up the Cayman sandwich and all these things, and US investors were totally fine with it. I think the environment that we're in now, it's going to be extremely challenging for Latin American founders to raise if they aren't setting up a Delaware Sea. Most of the American VCs I've talked to have basically said they're not investing anything. It's not a Delaware C. And Most of my LPs have told me don't invest in anything if it's not a Delaware seat because we don't want the headache of all the LLC reporting stuff that's going to happen.

I agree with that. I agree with that. I don't remember whether it was Delaware.

C Corp or not.

I just thought that was an interesting.

Huge business that was basically had basically no software.

Yeah, I love that idea. And I was very close to running a check but he the lead VC didn't want them to convert for some reason into a cpi.

I found that too in India and other markets. Some of the local VCs want to keep them in the local jurisdiction and.

That just makes it hard for them to raise from outside.

I'd love to take questions from anybody here if anybody has raised your hand or put your thing up. Yeah, okay. Hey Clement. Hey. I just voted you.

Terrific. Well, thanks for the information. It's been a great conversation so far. I'm curious if you all have different expectations for the founders you back in the States versus the founders you back in the emerging market.

Why don't you start? Ali?

Yeah. One of the biggest things is cost is much cheaper in Latin America. The cost of an engineer In Colombia is 1500 or $2000 a month. In Silicon Valley, if you're getting an AI engineer, they're asking for 15 or 20,000amonth. So writing a 50k, a hundred k check in Colombia or Mexico ends up giving them a significant amount of Runway and enough for them to actually get to a point where they can have some real revenue, where they can then go and be self sustainable. When I write a 100k check in Silicon Valley and the guys coming back in two months, I haven't really, they haven't really made any progress. And if the team is technical in the US and they're not demanding the same kind of salaries, it makes it much easier. But the biggest difference I've seen is just that my money goes a lot further in Latin America towards building a real product.

I would agree. I, I think I would expect them.

To be operating at a getting much farther on a smaller raise.

But in terms of the profile, I profile I would look for a founder, I think it's very similar. I look for the best founders I.

Can anywhere in the world.

And great founders, they have some unique personal insight into the market they've gone through. Most of them have gone through some process of hey, I was looking for a solution for this thing and I was working at this company and I shopped for all these things and Nobody was doing it and I fucking hate it. But I've got to build this thing because nobody's doing it, right? They've got to have that sort of over the top dedication to need to see their invention coming out in the world. And I find that wherever it is in the world, the kind of bad founder, which I see much less in places like Latin America, I see a lot in America is I was in.

An HBS class and I read this Gartner study about how big this market's going to be. And I decided to start a company in the top, right, because it's going to be big. That's not the kind of founder I want to back. I want to back a founder that has some personal experience in the market.

Either business or strong technical, that has.

Some unique insight into why the industry, why the world needs the product he wants to build and why nobody else is doing it and why right now is the right time to do it.

Thank you.

All right, thank you.

Hey, Carlos.

Hey Ali and Martin. Thanks for the session.

I wanted to ask, how do you.

See the current landscape and the changes in the last years across Latam in the precede scene in terms of check size and sense of valuations today across Latin America?

Yeah, I think I've noticed several things. One big thing is it feels like family and friends rounds and angel rounds have disappeared. I feel like for a lot of the people that were angels are writing checks before just aren't writing checks right now. And so then I feel like that's rippled across the whole ecosystem where a lot of the funds that were previously kind of seed funds are now running at pre seed valuations. The pre seed people are now becoming incubators and everybody's trying to get a little bit earlier and come in at a slightly lower and lower valuations. I think there's been this exodus of kind of large US VCs that were writing these kind of 5 million, $10 million checks. Like those guys have gone, right? The tigers and the softbanks aren't coming in and just swooping in free seed anymore. And then what's been left is the founders are actually much more conservative with their money and their time and their energy. And so they aren't expecting these big $5 million checks coming. And so they're building out their teams slower and smarter and they have less burn, they're getting to break even faster. And so these companies look to me at least to be more resilient and to have more potential because they didn't get stuck with this legacy overhead of all these extra employees they didn't need and all this infrastructure that then they're trying to switch. And so people are building real products, getting to revenue faster, scaling up slower. And I think it's actually probably a better thing for the ecosystem, but it's a tougher time being a founder right now.

I think it's a better thing for the VC ecosystem.

Both Ali and I are small investors.

And we still do depend on those later stage guys to write the big checks. But when they were coming in sight unseen and writing big checks and dumping.

Money all over the place, it was not really good for founder behavior or overall eco.

I don't know what's happened to Latin.

American unicorns, but in America there were.

1500 or something unicorns. And I saw an analysis a couple.

Weeks ago that most late stage guys think that about 70% of them are not unicorns anymore because they just didn't get far enough. And there's a big reckoning happening in American late stage. And I don't think the drive to get as fast as you can to a billion dollars was good for a lot of people.

Thank you for your question. Carlos Mitchell, did you have a question?

No, I'm listening in I'm interaction Medellin day. I just got down here and I'll be meeting with some folks who are trying to support like the AIM group here, but then they're trying to be a little bit of a hub for latam. So Ali, I might reach out to you. No, I mean I was just trying to tune in. I was just like, I just got in like literally an hour before this, but I had some of the same questions that a lot of folks, that a lot of folks are having and I did connect with in my earlier days. I did the first venture forums for Latino entrepreneurs and Silicon valley back in 2005, six, seven. Some of those friends are now VCs. You know, I'm curious to see how much actual investment because they do focus on U.S. hispanic or Mexico. I think mostly most of them are Mexican descent and as Ali was mentioning, there's a lot of crossover business opportunities. But now that I'm here, I know that there's an interest for latam. So I'm like, ah. And I just happen to see one of you guys post think Martin probably I did.

But make sure you connect with Ali separately because he's been in the market.

For quite a long time and knows the landscape can probably help you out.

But yeah, but I'm trying to support them because I think they're wanting to find out more people like yourselves and I'm. I know I'm going to get bombarded with those kind of questions but how can they attract more investment and then just support entrepreneurs?

Yeah, well I think one of the interesting ways to do it and why.

Keep wanting to look at deals with Ali is it's.

I think it's great to have a VC who understands local ecosystem like Ali. But also maybe a pre seed VC like me that has a little more US connections. Especially if you're building something that could potentially sell to the world as opposed to just the region.

Right.

Then I, then what I can do.

Is introduce you to series A investors in the US when you want to do that later round.

If you're building something for the world but you're based in a low cost country, you, you should have in your preceder seed a local investor, somebody who understands the market plus a US potential.

Connector investor that they can get you capital from outside the region.

Makes sense.

Just my interest in Latin America.

Okay.

Okay, good to know.

All right, thanks for that. I think we have another question from Clement. Yep.

I'm unable to start my video but that's fine. I wanted to discuss syndicates, SPVs. Were you all charging management fees for these SPVs and also how many deals that you leave through SPVs until you raise your own fund.

I never charge management fees in my SPVs, only Carrie. I think that's a punk ass thing to charge management fees in SPVs. The reality is you're doing it for a couple weeks when you raise the money and there's not much to do in a fund. I have management fees because there's expenses, travel and there's software and there's infrastructure and all of that stuff. It's more understandable in a fund to have fees. I don't know about you, Ali.

Yeah, I'm not a punk ass either. So I did not charge any management fee. I have Carrie coming. Hopefully we'll see when that happens.

Follow up question. How many deals did you all leave with the syndicates before you raise your own fund?

I did about 130.

I did about 67.

Thank you.

Which is quite, quite a lot. I think 2019-2022 was a very active time on Angellist.

I'm not sure. I heard an interesting statistic. I'm not sure if it's true, but.

Volume on Angellist has gone way down.

In terms of syndicates and participation. And I heard at a conference last week that four syndicates on Angel List are responsible for 70% of the deal volume on Angellist today, despite that, despite there being over 3,500 syndicates, there's been a real concentration of managers on Angellist.

Thank you.

All right, thank you for that.

Let's hear from Par.

Par probably mispronounced your name. I'm sorry about that.

Yeah, no, no, Martin, thank you. Hi, I'm Praveen.

Hi, Ali.

So question is, yeah, the world is moving toward AI and a lot of VCs are now looking at, hey, if I'm going to get a seat where startups are doing AI only or we're still looking, who is solving as I heard all the conversation and I understand that mostly looking forward for the founders who are solving real problem and just not putting the AI into it. So the question is, is AI mandatory to raise fund in today's world unless it is solving a real problem?

I don't think so.

So let, let, let me go first, ali. I'm a B2B software investor. I invest in people that have identified some business problem that's fucked up somehow and they use the best software technology they can to solve that business problem. Now, almost all of my companies are building on the cloud AWS or Google. I don't call them cloud companies, they're just software companies.

I see AI as something like that.

It's part of the plumbing, it's part of the tool set. What I'm really looking for in my AI companies, I'm invested in three companies that are primarily AI driven companies. But what it, what they're doing is that they have identified business problems that were previously intractable, that are today tractable through some fundamental capacity that's available with AI. This is a company that could not.

Have been built before AI.

For example, there was a company in Sri Lanka called Aristotle hq. And what they're doing is tracking leads in your CRM and stalking 20,000 people in your CRM online and looking at what they're doing in Twitter and Facebook and LinkedIn and they're collecting all sorts of intelligence on the leads that you have and then they're looking for potential changes in buying signals. Let's say I talk to this guy a year ago and he moved jobs, when he moved jobs, that might be a good time for me to outreach. So that sort of intelligence layer of stalking 20,000 people online, this was an intractable problem when you had sales agents.

That were tasked with doing that.

This is a tractable problem with AI. This is a company you could build today with AI.

That you could not build without AI.

Is that an AI company? I don't know. It's a B2B software company. It's trying to get you more sales. You happen to be. The unlock is some new intelligence layer which is now basically free with these AI LLMs. Right. So those are the kind of companies I'm looking for. What, what unlock does this AI intelligence layer give you that allows you to build this today where you could not.

Have built it even a year ago? That's what I'm looking for.

I agree with everything Martin said. I tend to be anti hype as much as possible. So the more buzzwords I hear, the less likely I am to invest. I want something that you can explain in a sentence what you're doing, ideally in five words. And if you're wasting one of those words on AI it usually doesn't go well for you. So I think that there are. I think AI ends up being the feature, just like blockchain ends up being the feature, just like AWS and cloud ends up being the feature. If you're trying to sell the feature as the main thing you're doing. Get worried. Yeah.

Because bad.

Yeah.

B2B SaaS company and so that's why I asked that question and we are in market and we don't have. We have AI as a piece, not as And Martin, I really your answers and the way you have described how you invest in that company which required AI or for that matter data intelligence so that. And I would look into that company so that we could be using it for. To grow our sales. Aristotle. Right.

From Sri Lanka.

Aristotlehq. Com.

Yeah.

And you're raising.

I would love to hear about it.

Have a forum on Twitter. I'm sure all you'd love to hear about your company but I want to hear the founder story of I had this personal problem. I've worked in this industry for five years. Nobody was solving it. I when AI came along it unlocked a solution that was never possible before that. I've been waiting for five years and here's why I'm how I'm building this.

Solution to this problem I've been trying to solve for years and it happens to use AI if that's the case that that's what I want to hear.

Is what's your business problem?

What's your insight? And I hope you use all the latest, coolest tools to solve that better than anybody else.

Yep, that's what we are doing. But thank you, thank you very much.

I look forward to hearing from you yeah, thank you.

Thanks.

All right, I think we have just another four or five minutes. If anybody else has any questions, raise your hand or we can.

Oh, Maximus Seneca has a question here in the chat.

Martin, are you using OpenVC to evaluate your pitch deck? I am not using OpenVC to evaluate pitch decks.

I am part of their network and.

If you apply to OpenVC, I will get pinged. I have written my own AI pitch deck analyzer in ChatGPT and most of the VCs that I know are starting to use some amount of AI for.

Their funnel and stuff like that.

The reason I wrote my own is that OpenVC's scoring algorithm is generic against what the stereotypical startup deck might look like. And I have a very specific thesis. I define pre seed as having an MVP done.

Some VCs say pre seed you can.

Do with an idea and no mvp.

I define a certain team size and stuff like that.

So I had to make the analysis specific to the stage that I do. I only do B2B software, I don't do B2C, I don't do crypto, I don't do CPG, I don't do drug discovery. So I had to add all of that logic to it. While OpenVC might score a medical device company deck very well, I would score it very lowly because I don't do medical devices.

That's what I had to do.

Are you part of OpenVC, Ali?

Yeah, I think so, yeah, I think I did it, signed up for it at some point.

Yeah.

I think Stephen's doing a good job trying to increase access there.

I'm a fan of all of that kind of stuff.

There's one other question in here and then maybe we can wrap up. How do you see the PropTech AI industry to enter the US market? Jeremy asked that. What do you mean? You mean PropTech AI industry from Latin.

America or is that specific to the the U.S. jeffrey?

The U.S. to enter the U.S. market from Latin America?

Yes, Correct. I don't know.

Do you invest in proptech Ali?

Yeah, I do. Typically if I'm going to be investing in I feel like there's again there's a lot of problems in latam prop tech that are problems that Latin America in the actual latam countries and so I tend to focus more on those.

That are not transferable to America, things about access to mortgage and things like that.

Access to mortgage how you need a guarantor and there's really no MLS that exists. And so there's all these sorts of similar problems there. I Guess the biggest thing is I'm looking for companies where the founders are experts in that space. And I guess I get a little bit worried. If you're a Latin founder, are you really expert on the US HOA market? Right. Like, it seems like there's, there's a bridge there that you have to have deep knowledge on. And so if you have that knowledge, then I don't really care where you're, where you're from. Like, I think great companies could be built from anywhere, but that the experts usually have to have that deeper knowledge.

Okay, Yeah, I don't know anything about access control and security. Yeah, that wouldn't be an area I would be interested in investing in. Let's thank you very much for your time, Ali. Thank you everyone for attending. I think most people here know that they can find me on Twitter at Martin G. Tobias. Where can people find you, Ali?

LinkedIn is probably easiest. It's just Ali Jamal on LinkedIn. And if you go onto the First Check Ventures website, there's also a form to submit your company if you want me to take a look there as well. But I'll also respond on Twitter or wherever else you may find me.

Okay, thanks for your time, man. And I look forward to investing in some companies with you, Ali. And playing poker again sometime. I played poker and I went to the liquidity conference with Jason and Chamath.

And all those poker idiots. And we played poker till 2 o' clock at night every night.

It was a lot of fun, but it was real time poker and it was a smaller game than they played.

Normally at home, so I was happy for them.

All right, awesome. Thanks for your time, Molly, and thank you everybody for coming.

Thanks, everybody.