How to Create a Venture Portfolio: Lessons from Leaders at Techstars and Founder Institute

Hello everyone, I see a lot of people are joining today, tonight, I don't know if it's morning or evening for you. We have a few great speakers tonight from all different corners of the world. Let me first quickly introduce myself. I'm Jeanette Todrova, I'm one of the directors of the Founder Institute in Eastern Europe. We are a pre-seed startup accelerator, for those that don't know. So we help idea-stage founders launch successfully their technology businesses. Tonight we're going to speak about how to create your venture portfolio. I see a lot of familiar names here. We have invited a selected group of people who are either interested in launching a venture capital fund or running a founder institute accelerator. So hi everyone, nice to see you. Tonight with me, we have two of our top leaders from our FI network. So we have Sunil Sharma, who is one of our global directors, managing director at Founder Institute in Toronto, and also managing director of Techstars in Toronto. And also Ryan Micheletti, who is my colleague from FI HQ and also the Managing Director of the Founder Institute in Silicon Valley. So before we go, let me quickly remind you that tonight it's all about you and your questions. So feel free to ask anything, post your question in the chat. My colleague Felicia is there to moderate and help me ask the best questions. So there will be time for you and your questions. Looking forward to hearing what are you curious about tonight. I will make some announcements, but let's first start with our speakers. So I would like to invite now on our panel discussion Ryan and Sunil. Can you please share a few words about yourself, your experience so far? How did you get into FI and how did you start building your own venture portfolio? So maybe Sonny, would you like to go first?

Okay, sure. Thanks, Jenna.

All right, hi everybody. So 7 years ago, I remember someone that I knew in Toronto had told me about Founder Institute and he wanted a partner to help bring it to the city. I looked at it, I think I vaguely had heard of it and thought it was just a brilliant model because it's so international and global. At the time I was a, partner in a small Canadian VC fund, venture capital fund. And I thought this would be an ideal way to kind of cultivate new startups and be really active in the community without a tremendous amount of infrastructure around us locally, and just see how the, you know, how Founder Institute works. And quickly realized it's an incredible intake program for early-stage investors, A few years after starting it, I ended up bringing Techstars to Canada, and Techstars is this, you know, international tech accelerator. So in my case, I use Founder Institute as a bit of a funnel that can go into investments from Techstars, either the one in Toronto or any of my— we have about 48 Techstars around the world, and a lot of my colleagues are looking for companies, especially in a— with a specialized vertical. And so often I'm making introductions and referrals because these Founder Institute grads are people that I get to know. And I know it's a very serious program and very different from most of the other incubators and early-stage programs that exist, certainly where I live, but definitely around the world as well.

Thank you for sharing, Sunil. Ryan, what about yourself? You also have various experience with acceleration programs. Can you tell us more?

Absolutely. Well, first of all, it's great to be here. Thanks for the invite, Jeanette and Sunil. Always a pleasure to jump on these with you. Hey everyone, my name is Ryan Micheletti. I'm head of global operations for the Founder Institute. So I actually work for Founder Institute headquarters. My role is to work with all of the different accelerator leaders around the world that are running our program in 90 countries and 200 cities. So Sunil and I actually work very closely together with the Toronto program. I'm a co-director of the Toronto program for the last 3 or 4 years, and, you know, we started doing sort of this virtual co-director role before COVID sort of forced Founder Institute to go virtual. And so, you know, in addition, I also run the Founder Institute Silicon Valley, and prior to my work at Founder Institute, I launched the first veteran startup accelerator in the US called VetTech, where we basically had a landing zone for military veterans that were launching technology companies. And so that was back in 2012. I'm also an entrepreneur. I lead a security company in the San Francisco Bay Area that's one of the top in California. And so, you know, the way I kind of look at this, you know, Founder Institute and how everything kind of meshes together, it's a really great way for you to kind of use FI as a global platform. And for me personally, I mean, I've launched 426 companies, right? So I've got this like massive portfolio of startups that are going out and building some really cool technologies from literally like digestible medical robots to quantum computers to the lunar rover. And so what's really cool about, you know, running Founder Institute and getting this global perspective is really seeing the innovation in all these different ecosystems and being really instrumental in helping launch these companies.

Thanks, Ryan. And I actually have a follow-up question. We have a lot of people here listening now coming from all corners of the world. So actually building a venture portfolio probably does mean something different everywhere in the world. So can you tell us a bit, what does it mean for you? Why are you doing this?

Well, so I think to a certain extent, A lot of people kind of want to break into venture capital. I actually, when I was younger, like right out of college, I was working for an investment bank and quickly I realized like going the traditional finance route, which was my background, is not something I wanted to do. And so, I was born and raised in Silicon Valley and I wanted to jump directly into tech startups because that was where the future was. And so like the way I kind of look at venture building and portfolio building you kind of have to take the traditional models and use them as a framework. So like the power law definitely still applies. You know, the traditional thought is that, you know, 1 out of 3 venture capital invested companies will actually return money to the fund. One will break even and the other will fail. So if you look at that, right, and if you cross-reference that with other data such as like 16% of all seed-funded companies will have an exit, you have to kind of take this larger approach of building companies over time, right? And no one kind of gets into this game trying to get rich quick. I think even like starting back in 2012, like I've been doing this for about 10 years now, and now, you know, looking at companies that I've helped launch that have raised, you know, millions and millions of dollars and are making millions and millions in revenue, Right? There's this like big long-term approach that you have to take. And so my personal thought process around this was, you know, if 16— if I need to get, you know, 100 companies that were funded, right, through a traditional sort of seed funding round, then it means I would need to go out and be involved and help launch, you know, at least like 300 to 400 companies. And so Founder Institute really helps me do that at scale. You know, my main job isn't actually running an accelerator. My main job is being head of global operations and helping run hundreds of accelerators, but I don't build my portfolio there. I build my portfolio, you know, working 6 hours a week running Founder Institute Silicon Valley. So it becomes this really kind of cool thing that you do nights, weekends, you know, when you have time, to launch some meaningful companies in your ecosystem.

Yeah.

Thank you.

What did you say, Ryan? The number is 475 or something, did you say?

Yeah, 426.

That's amazing.

I think here we've hit 300 companies. So for the people listening, that means that since 7 years back, on average, I guess 2.5, 2 to 3 accelerators per year, and relatively large ones in Toronto. I think Ryan will agree that they're some of the biggest ones, maybe the two of us, Silicon Valley and Toronto, for whatever reason, we have huge classes. So we have about 300 alumni, and over many years, so quite a large number of them, quite honestly, are not still operating. We know they're not operating. In other cases, some are not operating, we may not know they're not still operating. But there is a large number that are operating and are doing quite well and are tracking well, trending well, raising some money, getting into accelerators or other programs, not obviously not exclusive to Techstars by any means. It's a platform that's open. It's like an open pre-accelerator is how I like to position it here. And smart investors and other accelerators can sort of see that the deal flow that comes from Founder Institute is honestly superior deal flow than most other things I've— that I come into touch with, and very easy to kind of digest. It's a batch-based program, 12 or 13 weeks long, demo day at the end, lots of opportunity to see the companies progress from the earliest stage to the mid-stage when we do some things like mentor idea, mentor progress review, to the graduation. And then if If people are smart, they should, you know, get to know and get after some of these founders because they've done a lot of incredible things, and then they may end up somewhere like in, you know, your portfolio after the program's over.

You bring up a good point, Sunil, and I think, you know, I didn't tell you this, but I actually have a call with Jack from Orbisceed, who went from Founder Institute Toronto into Techstars Toronto, and now they've raised a couple million bucks and they're crushing it. Well, there's this sort of like really cool like network that you kind of build. And so I'll be meeting with him because what— in my security company, we have like, you know, 10 really major construction companies as clients, and that's his exact target market. So now because we have this connection between Toronto, Silicon Valley, like I'm able to help kind of facilitate some of those customer introductions. And if it weren't for the flexibility of that platform, he probably wouldn't have met anyone out here in Silicon Valley, and therefore his company now wouldn't have a beachhead to go after customers locally.

Yeah. Actually, the— sorry, Chad— the Tandem idea that Ryan and I had came up with, which is a bit of a function of the pandemic that we switched to being virtual, which I actually love that this— for me, this works so much better even just being virtual for what Founder Institute is as a pre-accelerator, but pairing up our Toronto with Silicon Valley, the idea is that on the same night, we'll have the class and the same class will run, you know, it's week 2, it's the class on product or the week on hiring and onboarding. It's happening in Toronto with a whole bunch of Toronto-based or even international entrepreneurs taking part in the Toronto Founder Institute, and we start in the evening, usually, you know, 6 PM or 6:30 PM. We have our mentors and we go through our usual curriculum and our usual process of pitching and the sessions and Q&A. And it gets to be a bit late, you know, normally we go for a drink at a bar and in the real world when things were back before, but now what we do is we take a little break and most of the founders and people like me included, we do it again because it's now 7 PM Pacific time, 10 o'clock in the East, and you can do the same session a second time, even if you just turn off your screen and you don't participate as actively, you're listening to the same topic, but by different mentors from the Valley in this case, different founders you're interacting with in breakout rooms. And sure, it's gonna be 6 hours of total time and it might end up being 1 in the morning here, but that's the life of an entrepreneur. And I was amazed at how many people did that and how they use that to effectively participate as though they were in Silicon Valley, meeting top mentors, making relationships with other entrepreneurs, understanding more about what's going on there. And that's a big plus when you think about it, and it's all included. There's no extra work required other than just, you know, listening and understanding a bit more perspective from different mentors and thought leaders. So it's very good, and we can do that in other places like in Sofia, Bulgaria. Why not? That's a great way to get exposure to what's going on in each Great insights, thanks for sharing.

We have a lot of questions in the chat, I want to start addressing them one by one. So Daniel is asking a question: what are the value-adds startups look for from VC partners? I'm guessing if he's running a VC firm, how can he bring value to the founders, let's say? How can we create partnerships with VC funds?

Just to jump in, well, 'cause I'm with a VC firm. One way is it's an opportunity for VC firms to really engage some of their associates, some of their EIRs or analysts, some new people to the fund. It may not be like a good use of time. I think it is, but it may not feel like a good use of time to a managing partner of a very established venture capital fund to be spending a lot of time in Founder Institute, other than potentially occasionally being a mentor, giving a talk, or just getting an update. But for other people who they're trying to groom in the fund, and it's a great way for associates to become active. And one of the secrets of Founder Institute that I still, for whatever reason, I find it hard to— this point is hard to land with the people around us, is that as much as it's great access to these entrepreneurs and founders, what about the mentors? The mentors are generally chosen to mentor because of some experience or some ability that they have, usually as a tech founder, usually as a funded company entrepreneur, CEO, co-founder, CTO. And they are very often crushing it in their own right and are about to do another round of funding, or they've had a recent exit. And they're one of those people that could become, you know, someone to join the bench of another fund as a venture partner, or basically are about to start their new company. And you wanna, you know, that those repeat founders are sometimes the ones to catch early. And if the founder institutes are run in the way that I like to run it, it's you're kind of cherry-picking the top mentors in the ecosystem. You ask them to, you know, give, do a session. It's not a huge ask. Do some office hours, make yourself available on a Calendly link and just, you know, do a few 20-minute calls with entrepreneurs, give back. We don't pay them. They don't expect to be paid. They're just doing it out of goodwill. And they know this is a great program. It has a good reputation in the ecosystems that they live in. And that can become a reason enough for venture funds and other, you know, corporate partners and sponsors to pay attention. And it alleviates that thought. Well, yeah, it's just too early. You know, we, The Founder Institute is great, but it's so early. You know, these are just people. They haven't, many of them haven't incorporated their companies yet. You know, we have, we're way later stage. And you know what, number one, these companies can move very fast. So if you don't pay attention, you may miss it. And 'cause they may get into the YC or the Techstars or 500 Startups or whatever else. And then you're not in the line of sight anymore, or it's the mentors and you're gonna miss out on their deals.

Thanks, Sunil. Ryan, actually Urs, I'm guessing this is Urs from Barcelona, one of our directors there, is asking a question referring to something you mentioned earlier. You mentioned that 60%— 16% of all seed-funded companies will have an exit. Can you expand on this a little bit?

Sure. Yeah, so there's actually a really great article, I believe it was in TechCrunch, that kind of broke down like the likelihood of exit at any various stage. And, you know, the number that really stuck out to me was that companies that raise a seed round, there's about a 16% chance of exit. And then as they go on to like a Series A, Series B, Series C, that percentage increases, like the likelihood of exiting. And so I kind of use that as my benchmark, right? It's like, okay, well, if I'm looking for one exit, right? And let's just say one, because that could be life-changing, right? But ideally you want like 10 or 20 or 100, right? Right. You know, how do you optimize for that one exit that then kind of changes everything and then you continue building? And, you know, the way that I've kind of thought about it, I've actually talked to Adeo about this, like, you know, even if I had like, you know, $100 million in the bank and a bunch of success and exits, I would probably still run Founder Institute because it's fun and it's easy and it creates a lot of value. And so like to a certain extent, like you kind of just need to optimize for that one exit to have the life-changing event and then you continue going down your path, building companies, building ecosystems, and just helping contribute back to the innovation community. So when I first started out, I was like, okay, let's be super conservative and say like 1% of my portfolio will have an exit, right? Because a lot of these founders are very early, and so when you launch, there's like a high failure rate. So I think it's going to be a higher percentage just based on the trends I've seen over the last couple of years. Couple of years, but let's say 1% of your portfolio exits. Well, that means, you know, you need 100 companies, but then if you want to be extra conservative, right, you want 300 companies. And so now, you know, being at over 400 and growing, right, it's not slowing down. Founder Institute's really on fire right now. You know, I could easily see breaking 500 by the end of this year. And at that point, like, one of the trends I've seen is some of these companies that, you know, even though you plan for that 1%, You know, I've got, you know, probably like 30 to 40 like really strong companies with like lots of money raised and they're like going and, you know, doing really good things in the ecosystem. And then there's some where it's like, you know, maybe I mentored a program in like Seattle and I don't really track those companies. But, you know, Sunil, we actually had a surprise in Toronto. That one company that graduated like 5 years ago just came out of nowhere, was like, oh, by the way, I'm, you know, making $1 million a year and You know, it was like, I think it was like 3 or 4 years old and they're making really great progress. So there's a lot of things that kind of happen beneath the surface that you don't see, um, because, you know, it just, you know, these founders are, are super dedicated. And, you know, the way I look at it is like I've got 400 CEOs who are all out there working full-time trying to make their company work. And so our job is basically not just to launch them, but then to like, you know, we have an entire grad support team that goes in and helps provide extra alumni support to the ones that are taking off and are really building something great.

Time really flies. Thanks, Ryan. We have so many questions and only 10 minutes left. So I'll just ask them one by one and see how many we can go through. So Brian is asking, what do founders seem to value most from your accelerator? Is it mentorship? Is it vendor introduction, office hours, legal? Maybe quickly.

Yeah, I think they love the sessions. Like, you know, it's still great. Like, I really believe in batch-based accelerators where you join together, where there's a start date and an end date. And with Founder Institute, you add a lot of attrition. It is very, you know, it's not a given that you're gonna be able to graduate. In fact, the probability is you will not finish Founder Institute, I love telling the founders that at the beginning, so they all know it. Of course, they may not all think that they will be one of the ones who end up dropping out or being asked to leave the program. But generally they love the content, the mentor presentations. If the directors do a good job of selecting mentors who are engaging and who have their own profile and have a, you know, just a fantastic insight into a topic, that makes for a fantastic experience when the program is running. They love the working groups that they are part of because they have to be part of it. It's required and they get to know and help each other in smaller groups. They actually love the assignments. They're very challenging. This is what separates Founder Institute from basically every other program I've seen that's on the early stage of, you know, capacity building. It's these incredibly challenging work assignments that have to be delivered. And if they're not delivered, you get a warning email. And the other thing we can talk about is how Founder Institute is really software. And I wouldn't do this if it wasn't for the software, it's impossible. I do not have time to physically run a program and program everything manually. But they like the assignment, once it's done, they feel good, they did it. Even if they have to drop out, they appreciate that they gave it their best and they weren't ready to finish. They weren't ready to incorporate and make it a real company, but they might take a little bit of extra time and come back again in a few months and try it again. Or they might not, and they might end up staying in their career path in a job, imagine, that pays the money and they can, you know, buy a home and live a normal life. I think the fact that a lot of founders end up dropping out is one of the best things that Founder Institute does. It's not, it's nothing that we really talk about. I believe it, it's great, because there's a downside to this entrepreneurship hoopla that we have going on all over the world.

Yeah, I agree, Sunil. I mean, like, Really, one of the secrets of Founder Institute is we're really looking at the founder, right? It's not the startup institute. We're looking at taking someone who has an idea or maybe an MVP, and it's really about finding that individual person. I usually say that unicorns aren't companies, unicorns are people. And so if you can take this person with raw talent and you can kind of mold them and shape them through the program, That's really like the value that it provides, right? And a lot of these founders, even, you know, we've had founders who've raised like $750,000, making like, you know, others that are making like $10,000 a month join our programs and they get tremendous value because they don't know what they don't know. And we kind of fill in like their blind spots and then we connect them to like a big local network and then a global network afterwards. I saw there were some questions in here about like graduation and alumni support. You know, we have an entire alumni success team that does nothing but focus on helping the graduate companies grow. So we have free postgraduate programs like Funding Lab. We've got a VC Lab for a lot of you who have maybe applied there or looked at launching a VC fund through there. Then we also have something called Venture Lab, which is more geared towards like Series A companies.

Quick comment, we have almost half an hour left, so no rush. It was my mistake, sorry. Great, I'm relaxed, we can actually, we can actually answer more questions. So Kirill is asking, what are some of the biggest challenges and advantages of working on a startup virtually? I guess both from the founder perspective, but also from you, from your perspective of leaders of the program.

Well, it's— you kind of have good timing with the question. So we actually surveyed all of our grads from last year because last year is when we made the move from in-person to virtual, and we, we wanted to get their thoughts because from the leadership perspective— and Sunil, you and I are 100% aligned— like, we wouldn't be able to kind of unite Silicon Valley and Toronto if it was all in person. Um, and also, you know, it's much easier just running the program from your house rather than having to drive through traffic and go to a law firm or whatever. So from a leader perspective, it's actually much better and easier, and there's a higher volume of interactions. So like before, maybe the founders would meet a mentor at a session and like maybe share a beer or something, right? But now it's like we have like a roster of like 30 to 100 mentors all doing office hours and meeting the founders. So the founders are actually getting more face time. And they don't necessarily realize it. I think a lot of these founders who joined the virtual programs always assumed there was like a high volume of office hours. That's really like born out of being virtual. And so like when we surveyed the founders, it turns out that the perception of going into the program was that I think like virtual was like slightly less valuable, but then the perception after joining the virtual program is that like it was more valuable. There are still some people that thought it was like less valuable in person. And it really comes down to networking, right? There's something about like meeting someone face to face, sharing a beer, you know, talking and getting to know each other. That's harder in virtual. But what I find is that actually you can still achieve it. It just takes a little bit more time. So instead of like being right next to someone in a classroom, you're, you know, maybe like after like talking to them on Zoom 2 or 3 times, it's like you still establish that same level of rapport. It just takes a little bit longer, but it really comes down to networking. Go ahead, Sunil.

Yeah, I would say that like, I don't think I could go back to the other way.

I mean, for those of you who are directors or thinking about being directors, I'll tell you one of the biggest components of my time doing this was getting the bloody venue for the meeting, like the weekly session, because it would rotate around. You wouldn't always have it in the same place. You'd have to call like some, you know, office of a law firm or an accounting firm or a tech incubator and talk to different people, including the office managers. And that's what I had to do that, 'cause I'm a sole director. I don't have a co-director here. I just do it by myself. And so that was like something that's very stressful. Like, did I book them?

Like, where is everyone going?

The session is tonight. And do I have a place? You know, they start messaging you. With virtual, obviously we don't have to deal with that. And then the, what Ryan said about the office hours, it is so much better and easier to have. And you have so many more meetings with these mentors through, you know, software, through Zoom or Google Meet or anything else, and they're willing to do it. They're time-limited, you know, 20 minutes. Just, you know, the mentors agree usually to put a Calendly link up, and that saves you from, you know, chasing people down in offices and all over the city. Toronto is a really big city, like, we're a huge city, and we have really poor public transit, and parking is expensive, and it's a nightmare. And I don't live downtown. I'm not in one of those little micro condos and I have to get downtown and then by the time it's over, we go for drinks and you're talking to people, it's, you know, the bar is closing. Literally the bar would close, it'd be 1 in the morning on a weeknight. And I thought, you know, I'm getting too old for this. I can't do it as much as it's fun. So doing it virtually is fantastic. And the alumni effect can be really good. When you start to have alumni, then it's their job to keep the energy going. And sometimes they have physical meetups. I watch it happening in our WhatsApp groups and our Slack groups. There's events that they do and, you know, sometimes people meet up for a beer here and there.

And so that works well as well.

I can definitely share from our Eastern European experience, same, like we are getting high-profile mentors joining just because it's much easier to attend a half an hour session, meet a bunch of founders versus attend the venue. And yeah, so founders are definitely benefiting There's another question in the chat about special purpose acquisition companies. Do you think this is something useful for founders? If yes, why? If no, why? What are your thoughts on this?

I mean, not, I don't think it's, it's not a conversation for the Founder Institute type founders to be having yet. That's getting way ahead. But in Canada, we've had these, we have this term called CPACs, SPAC. It's a, it's a, we've basically had SPACs here forever with our stock exchange, the Toronto Stock Exchange and Capital Pool Corporation. So it's nothing new. It's a trend in tech. I'm watching it. I don't know. A lot of these private companies are suddenly public companies, which means they have to, you know, they have more access to money, but also a lot more reporting and accountability. And we'll have to watch how the stock performance is going to be maintained. And there's some people who think this is, this is like kind of being overdone, but I'm not really in that world that much. So I have never— I participated in a couple just in as an investor on the stock market of some tech companies, but I don't have a lot of expertise.

Yeah, I would say this, and as you asked a question here around like valuations, and I can kind of tell you how I'm looking at the market right now, but overall, like I remember, what was it, like 8 years ago when Instagram was sold to Facebook for $1 billion, and I was like, oh my God, Oh my God, that's like a crazy valuation. This is insane. Then you fast forward to today and Coinbase is IPOing for $100 billion. You've got Airbnb IPOing for, I think it was like $40 or $60 billion. The one thing we're seeing is that valuations are increasing. I think that's because technology has this almost evergreen value where it's going to continue to innovate and get better and create more value as it exponentially grows. So I think valuations will probably continue to increase. It's going to go up and down like everything else. Like, you know, who knows if it's going to be the same as last year, but certainly, you know, if you launch a company now, right, let's say you start a company now and 10 years from now when they exit, the exits 10 years from now are going to be probably larger than what you see today. Right. So that's, that's for sure. And I almost see like, you know, launching companies in Founder Institute, a hedge against inflation, right? Because like you're basically launching them and then they go and they grow and, you know, it's, there's this larger exit potential down the line. The second thing that we're seeing is with these SPACs, and it's definitely a trend, right? I don't have an opinion one way or another if it's here to stay, but one thing is for sure, the time to exit is now being reduced. So to give you an example, Udemy, which is like literally from the first Founder Institute cohort 12 years ago, still has not exited, right? They're worth a couple billion dollars, but they still haven't had their IPO or their exit yet. So you're in this long waiting game of 10 to 12 to 15 years before you get a payout, but it becomes challenging. But with these SPACs, it looks like it could be 8 years to an exit. So you have this interesting intersection of the value being increased, but also the time to exit decreasing. Which is why I think it's a really, really interesting time to be like working with, investing in, or launching tech startups.

Great insights. Thanks for sharing, Kryan. So another question, I guess, Kadir is someone we're working with now to launch in Istanbul. I guess it's the same name. So there's a question for Sunil. What is your best achievement or best or worst experience in the last year? Having in mind like the pandemic and working with all these startups, what are the lessons learned?

Hmm. Well, I mean, achievement, I guess we're as an investor, you know, I think ultimately you're accountable to your returns and your shareholders. We've had a good run at Techstars already. We've had 3 exits out of 30 companies and we just started 3 years back. So that's a, I would say that's an achievement. Our investors should be happy, but also they're noticing that there's some good things happening in Toronto and, you know, keep doing that. You know, they're excited by their allocation and we may even see, you know, more of it here. And I think, you know, those companies are creating a lot of jobs and we're doing it very efficiently. And even with Founder Institute, what I like is, you know, we do it efficiently. We're not paid. We're not, we don't have millions of dollars of government money that I, in our ecosystem is quite common. There's a lot of funding. We're doing it just as a network, as a platform, as software, as relationships, people, you know, like us on this call, or, you know, me and Ryan just kind of tag teaming and lighting up these two cities. And a lot of entrepreneurs are getting their start that way. And some of them are, you know, trending really well and are happy and appreciate that this, like, I love it when, Founder Institute alumni will just simply mention that, you know what, this would have never happened had it not been for FI. Like, that's where we got our start. And as much as I don't really— I'm not looking for any kind of accolades or anything, but I like it when they mention it, especially if they post it on their social media or something, because that is how you validate what we're doing. Because I want the rest of the ecosystem to be aware because I want them to start sending us— it's kind of like a circle, if you can imagine, if everyone starts to appreciate the, what, what we're doing and how, how important it is, they'll start to be helpful and not treat you like some sort of a competition, which, which you might experience where you are. And it's a tricky thing to do it. And it might be cultural to whatever country or part of the world you live in, but, you know, we're really here to try to create wealth for our economies and create jobs and create entrepreneurs that are aspiring and and bringing value to the world. And we have a role in that, and as do others, but if they can start to appreciate our outcomes, then they will maybe refer founders to us. You're a little too early for our accelerator, too early for our angel fund. However, I recommend you do this Founder Institute. I know it's a great program. They ask if an introduction can be made. We say, of course. And then it's basically just apply here, start. We're starting on a certain date, see how it goes. You'll get good value. If you don't like it, you can drop out and it's no harm. But maybe it's going to be the start of something for you. And when you acknowledge it, it's one of the, you know, to answer the question, and that's one of the things that makes you kind of happy because we're volunteering to do this at the end of the day. There's, you know, even though there is some shared liquidity, it's years in the future. And I know I'm not convinced or sure that I'll ever, I'm not counting on any of that. And I haven't seen any of it. But so it's really for the love of the sport.

One thing I'd like to throw in there too, and just kind of something that you said, Sunil. So our theory, and this comes down to like our theory of like ecosystem building here, because I think we're the only company accelerator that has an equity sharing model, which is pretty much our secret sauce. It's how we've been able to scale globally. Really, I'm actually shocked no one else has tried to do this. Maybe it's just they don't know how or it's proprietary. But ultimately, if you look at Founder Institute, it's like the kind of the long term. The very beginning, we're launching companies that did not exist before. We're taking talented people with capacity and we're turning them into entrepreneurs and we're forging them into this path, right? So not only does that go to feed the ecosystem with brand new companies, who will go and rent coworking space, raise investment capital, hire people, right? And just build the ecosystem. But then on the backend, let's just say like 10 years or 12 years, whatever the exit horizon is, right? That company has an exit and then we take the proceeds and we literally give 75% of that back to the local ecosystem. So the way the Equity Collective works is, you know, Founder Institute has a right to invest for, to acquire 4% of the companies at their seed round. And so one percentage point of that 4% is given to the leaders. So the Sunil or whoever is running the program locally. The second percentage point goes to the founders themselves. So that's really cool when the founders basically graduate a program and all of a sudden they have a portfolio of like 20 other startups that they have equity in. And then the third percentage point goes to the mentors. There are some programs out there, I know, especially in like the Middle East where it's like they have to pay mentors to do it. In most places, mentors aren't compensated at all, but we're actually sharing equity with those mentors. And then the last percentage point is held onto by Founder Institute HQ. But if you look at the fact that we're giving away 75% of the money we receive, that then goes to build the next generation of angel investors. And I'm sure the mentors and founders, when they receive a check, they'll be very happy, right? And they'll want to like help support and encourage like the next generation of founders that are then building and growing. What we're trying to do is build this virtuous upward spiral of investing in technology and innovation locally, but then kind of uniting them on the backend globally.

Great points, Aran. We have a few questions around our selection process for founders that I would like to kind of summarize in maybe one or two questions. So we have Ben, Rashad, and Michael asking about How do we select startup ideas? How do we test them, validate them? That's one component. Do we partner with universities in order to get access to more projects?

Well, so it kind of depends, right? So, you know, it depends if you're looking to like invest in these companies, right? Or if you're more of like a company builder and you're just looking for people with ideas and trying to help them. You know, we don't, you know, we take people with ideas at the very earliest stage and turn them into entrepreneurs. And at that point, their idea probably is not great, right? Maybe it's okay, but they need to fix it. And we do that in the program. So we're really looking for like talented people, right? People with like high fluid intelligence, high openness. We have this thing called the Entrepreneur DNA Assessment where people, you know, It's like a psychometric test where we can measure that in people. And so like we're really looking for talent, right? That's all you really have in the beginning. And then, you know, maybe like the average founder who joins our program has like an MVP of some kind or maybe a co-founder. And like you basically will then go and try and fix that idea because maybe their business model is wrong or their target customer is wrong or the product itself is wrong. And it's very common for people to pivot in the program, and that's really what we're looking for. Universities can be good. Sunil, you've got some good experience working with like universities. I think, you know, some of the founders could be pretty raw, but some of the ideas could be good. What are your thoughts?

Yeah, like, you know, it's— again, if we had more time, you know, to do this FI, it's so profound, you could do so much more with it. So for those of you who actually have extra capacity or have a team, if you could put a team on this, it would work because universities and a lot of nonprofit incubators and science-based innovation organizations, like ones that focus on neurotech, like brain institutes or some of the labs or some of the research departments of different universities and whatnot. They are essentially spinning out people or helping build capacity in people to take an innovation out into some market, and they're doing, you know, they're doing the best that they can and whatever they can, but Founder Institute is very different, right? It's like a pressure cooker accelerator with mandatory curriculum, mandatory pitching, your score has to be high enough to continue, you have to convince these mentors that this is a viable business, you have to prove everything you're doing, test your market, test your hypothesis, and try to graduate. So it's actually a great place for these people to end, to go to after they're in one of these other programs that I was mentioning. and we take them in, and it's kind of like very additive to where they've, you know, what their sort of path has been thus far. And so it's a great, you know, and the innovation can be quite broad, just as long as it's a tech company, they, you know, because it's kind of a general curriculum, right? A product, you know, everyone should figure out your product strategy. Everyone needs to figure out how to do hiring and how to do your market positioning, naming, and all that for whatever kind of company you're doing. So it fits nicely. The effort will be going and actually participating in all these programs all over your city to find the entrepreneurs and doing the meetings and tell— doing what we're doing right now, explaining it, because usually it's a lot of times it's one-on-one. Again, another advantage of the pandemic is there's more of these seminars and these webinars happening. So we're talking to maybe 50 or 60 applicants at once live, and they can be from all over the world. And then they can kind of read online, see, see what the program is, join, they don't like it, drop out.

So yeah, so that's how I would look at that.

Awesome. So I'm trying to summarize again another group of questions, but basically the questions are around who is the right person to run an accelerator. So for example, you're coming from a VC background, let's say, But is it a good idea if you're an angel investor or interested to become an angel investor, or what type of people are suitable for this role?

I will start. I will say that, you know, one of the reasons it's, it's, I think it's, it's fair to say that some of the Founder Institute colleagues that we have kind of think it's a little, what's going on in this Toronto? There's this one guy seems to be running this thing time and time and time again, 300+ startups. And somehow like, but really doing Techstars and, you know, involved in some other things in the community. And it doesn't make sense. People wonder, well, what's my actual job? Do I, you know, and I only have one job, which is Techstars. That's my only employment, but I make this fit into my workflow. And so if you are somebody who can see an advantage to having Founder Institute fit in what you're doing, if you're an angel investor, if you're running some sort of accelerator or you're aspiring to run one, this is a good way to kind of get some very good experience experience. And also, if you structure it right, it can, as much as it does take extra time, you know, at least one night a week where we're live, I'm always there. Definitely putting some office hours in. Usually for me, I do it on a weekend, like on a Sunday or Saturday evening or a Sunday morning, 2 hours. And I do a lot of, you know, 20-minute, 50, even 15-minute quick meetings. And I've, of course, I've been watching the companies in the class, watch them pitch, kind of just, you know, watch it. And then I register and we have a little meeting with them It's relatively efficient, but I have a big, big portfolio of investments. I have a lot of founders and co-founders that I'm actually an investor in. And sometimes I believe those founders should be, you know, becoming subject matter experts in an area that they have good expertise in. And this is the place to do it. You know, give a talk at Founder Institute, be a mentor, develop a brand for yourself that you really know about product. And you're, you know, you're delivering this talk once or twice or 3 times a year and they can improve it. And they actually see that, yeah, this is good for me to do. A lot of reasons why.

Hiring.

You have to remember most of the people in Founder Institute will not graduate. But what they have told us all is whatever job or whatever thing they're doing in life at the moment is not what they want to do. They want to do something new and probably be an entrepreneur. But if they find that they cannot, convert that ambition into a viable company, well, they might be fantastic talent for another company, and it might be one of the companies of the mentors. And so if the mentors do a good job explaining what they're all about, they may end up getting applications from technical people, business people to join their company, and they might feel that that's a great way to do recruitment. And for me as a Techstars guy, you know, I have to keep in touch with all my portfolio companies. And if I was— and I'm an angel investor, and acting as an angel investor, same thing, you need to talk to your CEOs and co-founders every so often. So this is kind of a way to blend that together because they're doing Founder Institute as a, you know, they've agreed in 2 weeks they're gonna teach a session so we can catch up there. I can get the numbers, you know, how's the company going? What's the, you know, what's the runway left, cash zero date, you know, any big wins, you know, have a little side conversation which saves an actual meeting. So I do these little hacks that might just be me, But I like that. And it's also, you know, it's deal flow and it's a place for— at Techstars, we own the Startup Weekend platform, and that's a great, you know, it's a hackathon. It's a great place for people to have their first go at being an entrepreneur. There's not that many good spots for them to immediately go to after a hackathon. Founder Institute is definitely one of the places that they can go. And if there are other pre-accelerators as well, so we kind of recommend give them award, you know, I always give scholarships, prizes. Any people that we meet at Startup Weekend, I tell them, you know, now you should do Founder Institute, see how that goes. If, if that works out, then we should talk.

Yeah, those are all great points. And the only thing I would kind of add to that is you mentioned being able to integrate Founder Institute into existing workflows, which I think is super important. So I basically work with and train all of our leaders around the world. The ones who are successful already have a tie back to the ecosystem somehow. Maybe you run Startup Weekend or you're an investor or you run some kind of like event on Meetup. There's got to be some kind of channel that you have, right? With the ones that aren't successful, maybe it's like, you know, a really good sales guy who then wants to become an ecosystem leader. Like, you know, so you have to switch gears from like your workflow and it doesn't work as well, right? Founder Institute becomes really easy if you're already kind of an ecosystem an ecosystem builder, you're already out there and you just add this to it because maybe you go and speak at, you know, an event and you can talk about your company and what you're doing, but also Founder Institute. And maybe you're having a conversation with an executive at another company and you're talking about whatever you want. Oh, and by the way, you should come and become a mentor at Founder Institute. It's really great. And that's where you kind of capture synergies and it's a lot easier to run the program. So I would say like, you know, you wanna have some kind of tie to the ecosystem But you can certainly— like, we actually have leaders who've done a great job using FI to build their brand as an ecosystem leader. So I don't want to discourage anyone who isn't already, but it just means you're going to have to work harder.

Yeah, good point. And we've seen a few chapters, you know, we've created— we've seen a few like get set up in some Canadian cities. And one of the, one of the things that I think contributes to whether they're going to be successful or not is if the local team has access to the best mentors and how hard is it for you to go and get those mentors? I hack it by using a lot of my own portfolio companies. You know, these are companies that went through Techstars or some VC fund that I've, you know, that I'm either part of or know well. And so then I'm just asking them and they often say yes, because, you know, I'm their investor and they know it's a good thing to do. And I make sure they realize it's not a, Not asking them to do something too time-consuming. It's just, you know, prepare a talk, 20 minutes, do some Q&A, score some pitches, and maybe have a, you know, have a whiskey at the end of it online with a bunch of good people, and maybe some office hours on a weekend or in the evening if you have time. And so they usually agree to that. And sometimes they can't, they have a reason why they can't. It's fine. And we just move on and create a big roster of mentors. So if you're able to do that and you have access to the right tech people in your ecosystem, this isn't gonna be too challenging. If you don't have access to that, then it's gonna depend on you, your profile. Are you gonna be able to recruit the right mentors? 'Cause if you don't bring in the right mentors and they're not really the, you know, the people who are visibly tech leaders and that these founders can see that, you know, I want, I'm gonna do that next. I'm gonna raise that money and be like that company, then you may have difficulty kind of positioning the accelerator as being really top tier in your market. And it might look more like a bunch of consultants or people that are service providers and like of that background, and it may not work well.

I want to follow up, thanks, Sunil. I want to follow up on what Ryan mentioned about synergies. One of the reasons we organized this event is actually we saw that there are synergies between running an accelerator and then starting a fund. So maybe Ryan, can you share a bit more about the Leading Institute as a program and then VC Lab as a program and like, how do those both work together?

Yeah.

Because we have people on the line who are interested in both.

Well, so FI is really good at structured programs, right? And that's something that we're, we're, probably like the global leader in right now. So for, you know, people who are interested in launching an accelerator, we have a training program called the Leading Institute that basically you can think of it as like the Founder Institute program, but for leaders that want to launch a Founder Institute accelerator. So it's a couple weeks long, it's about a month. It's cohort-based and we're basically going to be bringing in people who are mentors or leaders to help with the launch process. Process. So we take you through like a structured approach on how to launch an accelerator through Founder Institute. On the VC Lab side, it's similar to— it's another structured program, but it's all in terms of launching your fund. And so that's a much longer program because it takes longer to launch your VC fund. I think it's like 6 months and we run it twice a year, but that's going really well. I mean, I think, you know, we had 200— I think we had 1,500 applications We had to limit the cohort size to 200 people at the beginning, and, you know, out of this one program, we'll probably create 100 new funds, and then we'll run a second program later this year, which will probably have the same sort of number, so like 1,500 to 2,000 applications. We'll pick like 200 or so, maybe increase it a little bit for the second one, and we'll graduate, you know, another 100 funds. And so, you know, this year we could create 200 funds and also, you know, on average Founder Institute creates about 1,000 companies a year. So what I'm really looking forward to is like 4 years from now, right? By 2025, you know, it's possible FI could have a portfolio of 10,000 startups around the world and 1,000 venture funds that we helped launch. And that's like making a pretty significant dent in the universe.

Awesome. Thank you so much for sharing. So before we move to final words and questions and closing, I would like to share just quickly that this new program, Leading Institute, for people who would like to run an accelerator is starting on 22nd of April. So we will be in touch with all of you to give you more details in case you're interested. Another thing we're doing is another info session This is going to be next Thursday. Felicia is posting information in the chat. And we're also active on Clubhouse. So if you want to meet other ecosystem leaders tomorrow, 8:00 AM Pacific time, we're going to be on Clubhouse with a few of our directors at FI from Europe, Middle East. So just join and meet the network. So going back to our conversation, I would like to ask both of you, what advice would you like to give to the people who are here, who would like to work on their venture portfolio? Having in mind it's 2021, what's the reality of the startup world? What is a sustainable next step for people that want to build a portfolio?

I would say, you know, it's a good time to do it. Be active in your local ecosystem. If you have access to startups in other ecosystems, in other countries, if you're positioned that way, that would be, I think that's, it's the time to be investing outside of your ecosystem. And maybe you can even think of a country, if you have like an ethnicity or a background that relates to some other country, there's people here from Greece, from Pakistan, from Iran, If you are able to, even if you're not living in Iran, if you're living in New York City or San Francisco or Toronto, but you're a Persian person with a business background, starting to really invest back home where you have these kind of fast-growing tech ecosystems, and you might appreciate that certain universities like Sharif University is this epic school there, producing some of the most brilliant people, there's an opportunity to invest, connect them with your networks wherever you live. So if you're in that position, that might be a smart way, and it can often require less capital than otherwise when you're, if you're, say, in Boston, or even here in Toronto, the companies are valuations, usually there's minimums and $50,000 or $100,000 as an angel investor. So that's not possible for everybody. And, you know, you can source globally. A lot of times companies are incorporated in, you know, Delaware or in in, you know, some other— some country where it's very investible. So that might be one way I would suggest to get a start is do it from an international lens. The—

what I would add to that too is, you know, if you're already an investor, if you're an angel investor, you know, keep investing, right? I mean, you've got something good going. I'm very bullish on tech. You know, 10 years from now, the world is going to look very different, and it's, it's getting faster. The pandemic has just sped that up. And so, you know, keep doing that. If you're not yet an investor but you're sort of an aspiring investor, you know, you could look at building, you know, companies through Founder Institute. Maybe later on you want to do a venture fund, but like, you know, running an accelerator is a great stepping stone to launching a fund if you haven't done it already. Or you could just go straight into launching a fund, right? But either way, like, even if you go down that path, like, FI is kind of a good option to build like this warehouse of companies that you could invest in while also building your portfolio. So, you know, like everything in startups, like the value is in obtaining assets and in the equity, right? You don't do Founder Institute to make a salary and make a lifestyle. You do Founder Institute to basically build a really great portfolio of companies that will be very valuable. And so I would encourage people to take the long-term approach and realize that, you know, you're gonna have to run, you know, create 100 companies, right, to like get that like diversity out there. But what you'll find is that, you know, about 2 years into running an accelerator, all of a sudden the companies that graduate from your first batch, they're gonna start growing and raising money and getting customers. And then all of a sudden, like, you know, 3 years down the line, you've launched like 50 or 60 companies, the top 10 have raised money, and like you kind of see like, okay, there's like, you know, something really interesting happening. So That would be my advice for the leaders out there.

And very quickly, most promising industry, what should people focus on?

Industry? Well, I think education, remote work is here to stay. I don't think we're gonna ever experience, I think universities are not gonna look like they do now in the very near future. So doing things with like, you know, these even like Udemy, which was like the, The company that Ryan mentioned, one of the Epic Techs, Founder Institute companies, is a good example. We're seeing more and more of that. That would be my suggestion.

Yeah, it was a great talk with Mike, by the way. He gave some good insights on edtech. You know, we actually have a space program at Founder Institute. I like space. It's more of a passion, right? You know, it's still kind of a vague market, but there's a lot of activity going on there. And I also agree, like, edtech is sort of interesting, future of work. I think anything kind of quantum computing, it's very, very niche, but I'm excited to see like the developments there. And then also, Sunil, we've been floating the idea of like e-commerce and kind of taking advantage of that. So yeah, FI is kind of like industry agnostic. So I would say like, it's more about find the right founder with the right experience and they'll be able to build the right thing.

Yeah, and if you have a, wherever you live, if you have like an incumbent industry, like a gigantic world-class tech company. You know, Canada, we don't have a lot of world-class tech companies that you'll have heard about, but, you know, one is Shopify. And so as a result of Shopify, we see a lot of e-commerce here. And I think that's a really synergistic area to focus on. You could even kind of create a vertical. If you really want to be ambitious, you create a founder institute where there's a vertical focus like education, remote work, telemedicine, and, you know, virtual health or, or e-commerce.

Great. Ryan, Sunil, thank you very much. This was so valuable, so useful. I believe also very inspiring for all the people here that are watching and wondering what is it like to run an FI accelerator. I really hope we can have these conversations more often and exchange experience and knowledge. We will probably have those also as a kind of private sessions during the Leading Institute, but let's see. Ryan, we can definitely discuss that. So I would like to thank you for sharing your time today with us. And I would like to also thank everyone who joined us today. If you have any questions, feel free to reach out to me, future@fi.co. You've all been in touch with me via email, so you know how to find me. We are more than happy to answer your questions. We're more than happy to help you launch a fund or lead an accelerator. And we're here to help. So thanks everyone. It was a pleasure and wish you a nice day, evening, afternoon.

Thanks everyone.

Cheers. Yeah, thanks everyone.

See you around.

Bye. Bye.