Learn What Investors Look For: Live Q&A with Jacob Jackson (Julian Capital)

If we're investing in software, for example, we will definitely want to see traction, right? We want to see paying customers growing month over month, you know, at like top 5 percentile or more rates, and that's going to be key to us, to a software company right now, because it's so easy to build software compared to other technology. Like even as a solo founder, you can build an app, by using Copilot and all these things really quickly. So if you don't have users, um, yet, then you're probably not ready for, for venture capital. I mean, obviously.

All right, welcome everyone to our, uh, AMA featuring Jacob Jackson, uh, GP over at Julian Capital. The goal of today's event is to get your questions answered. Um, I'm honored to be the host. My name is Ryan Micheletti. I'm head of global operations for the Founder Institute. I'm also a venture capitalist. I'm a VC over at the Veteran Fund. Which invests in startup technology companies with military veterans on the leadership team. So today we really want to, uh, make this an open conversation. Some things that we'll cover are the key metrics for and prerequisites for funding, how to make yourself more attractive to investors, maybe the best ways to source different funding resources and opportunities from your local ecosystem. And so the first part of the event is going to be a discussion with Julian, uh, excuse me, with Jacob from Julian Capital. And then the second part, we're going to have an open networking session. So the first hour or so, we're just going to answer your questions. So if any, at any point in the, uh, the event today, you can go ahead and put your questions in the chat. Our team on the back end will try to get to as many as possible. We'll filter some of them, um, and then we want to make sure that, uh, that everyone here is able to join us for networking afterwards. So you can meet not only with myself but with some of the Founder Institute people that are on the back end here, and then also the, the people who are here today uh, to join us for the event. So without further ado, let's go ahead and bring Jacob up. Um, Jacob is an angel investor, a deep tech seed investor at Julian Capital. Um, he also, what I think is interesting, has gone from the journey of being, um, an angel investor for individual deals, opening up an angel syndicate, and then also being a VC, um, at Julian Capital. So Jacob, great to see you here today. Thank you for joining us. Do you want to just do a quick intro on your end, and then we'll go ahead and start the discussion?

Yeah, sounds great. Nice to see you, Ryan, and thanks for joining everyone. I'm excited to see what kind of questions y'all come up with. So I'm based in Vancouver, Canada. I'm a good old nice Canadian. I don't know how many of y'all are from up north, but I'm assuming most people are all over the place. I started my career in— just to give everyone a little bit of background, and I'll skip right to the investing side of things. But basically I started my career in physics and medical imaging. I went down the academic path and quickly realized it was way too slow and boring for me. So I jumped ship, started a company. It was not very successful, but I learned a ton. I got a tiny exit out of that. I realized a new problem with that company while I was running it. We started a second company called Medstack. We grew that to Series A, you know, 30+ people, $4 million in ARR. That company just got acquired. I left about a couple years ago. I was the Chief Revenue Officer there, so responsible for sales, marketing, growth, customer success, that kind of stuff. Then I went to another software company called Mammoth Climate and ran growth there for a bit. While I was still at Medstack and through the time at Mammoth, I started angel investing. I wrote a whole bunch of checks into a bunch of software companies. Then about a year ago, I met Julian. Julian's a growth guru. You probably know him from Twitter, if you search @Julian, you'll probably recognize the guy, he goes viral all the time. So Julian started a fund called Julian Capital. I joined that fund about a year ago, and Julian Capital invests in deep tech companies. But deep tech is anything that is, well, the way we define it, it's defined a lot of different ways by different people, but deep tech to us is any company that if they can figure it out, the technology, the demand will be insanely obvious, but it's a technical challenge that the founders are going after. And so we invest in companies like Extropic, which is a new thermodynamic computing chip, or Boom Supersonic, which is the, the Concorde type, the retake on a Concorde airplane. Astro-Mecanica, who's reinvented the jet engine from scratch. All across any sector, those are just a few examples that came to mind, but we invest in everything from biotech to nuclear to aerospace, defense, and lots more. So yeah, that's— and then I guess the final thing I'll say is that my angel investing has turned into a syndicate. Jacob Jackson Syndicate, and we invest up to, we've invested up to $200K in early, like pre-seed angel rounds into all kinds of companies. So I'll stop there. Hopefully that gives the overview.

Yeah, no, that's awesome. I'd be curious to hear if anyone in the audience here is building deep tech, because it is such a nuanced and specialized space. And it's really interesting that your background started in academia and then you moved on to the faster-paced startup world. So again, if you have questions for us, please feel free to put it in the chat. Let me ask you a question of, you know, it sounds like you've probably dabbled in some non-deep tech companies as well, even though the fund is focused on deep tech. How do you compare your investment decisions between something that's like a pure deep tech play versus something that's maybe a more traditional investment, like a B2B SaaS or consumer play?

Yeah, I think so. The way that we think about it is basically 10 years ago, B2B SaaS was really hard to build, and so you had to hire the best engineers in the world who could do AWS, you know, deployments and DevOps and all that stuff, and you have to be able to spin up servers quickly when demand was growing. And so it was a really hard technical problem, and so if VCs could go in there pick the right teams to build those companies, you could do really, really well. Now we find our thesis at least, and this, you know, every— I wanna caveat this, every VC has their own different thesis and their own way of looking at companies. But we think that B2B SaaS is harder to find a defensible company unless there's some kind of network effect or accumulation of data that puts you ahead of competition. But right now we find investing in B2B SaaS is super crowded. There's tons of different people taking on the same problems and the margins are gonna get competed away by the 10 different solutions that do well in each space. And so that doesn't mean that we won't invest in B2B SaaS, but it means that we, we are very critical of the defensibility that each company has when building a B2B SaaS startup. I guess the second piece I'll say about that market And again, this is just our opinion, but we think there's so many VCs that are investing in SaaS that the opportunity for return is lower because they're all competing for the best deals, investing at higher valuations, and the opportunity for super outcomes for a fund are fewer and far between investing in software. So that's why we focus most of our time on B2B SaaS, on deep tech. Instead of software, but that doesn't mean we won't invest in software. So we've done lots of investments into software. It just means that they have to have a compelling story on defensibility, a unique go-to-market that allows them to win faster than everyone else, and they gotta be a team that's moving incredibly fast and is the obvious team to win in that market. So there's just different things that we might look at when investing in software.

Yeah, I think that makes a lot of sense. You know, it's what you said about B2B SaaS, like maybe 10 years ago, it being deep tech. How do you feel about AI now? Is this— are we beyond the deep tech category with AI? Or are there pockets of AI that might still be considered deep tech?

Yeah, so there's sort of the two sides to look at AI. So as a founder, you know, there's so much opportunity in AI right now. You can go out and take advantage of what ChatGPT has opened up with their API and build a great company really quickly. And in a year from now, you could be doing a million in revenue, and you don't even need VCs, honestly, to do that kind of thing. Um, and I recommend everyone go and do something like that in AI if you want to build a nice business for yourself. But if you're determined to build a venture-backable business, You can't just build a wrapper on ChatGPT. That's at least just my opinion or the way we think about it. You have to go and build something unique, defensible, and enduring in the AI space. So what the kinds of things that we might invest in AI may be data center technology that makes them more efficient, require less energy, or get energy cheaper to a data center. Chips companies, which is a really difficult space to get smart about and investing, but there's a lot of opportunity there as well. Yeah, and I think, and then on the investor side, AI is extremely competitive the same way I was talking about B2B side. It's actually even more competitive from a VC side. So the rounds are starting at, like, if it's a really great AI company that can win in a space and is doing something unique, the seed round might be in the hundreds of millions of dollars valuation. And so we kind of stay away from that. We are a seed fund. We try to invest at under $25 million valuation. And then the other piece, which we were just talking about as a fund, is that whatever technology is the hottest in each year is not the biggest company that started and seeded in that year. So you can go back like 20 years and you can look at, you know, 2014 was drones, the hottest thing, and, you know, defense is the hottest thing another year, and, you know, whatever the different sectors are. Now it's obviously AI, maybe it's going to be crypto in 2025 again. The biggest company to be seeded in that year will not be a company from that industry, and that's just been 100% of the years going back. As long as venture. So we avoid the hottest.

So like when you're thinking about investing in companies, right, like we were just talking about, you know, national security, defense, and AI, like, so do you, do you try to stay away from AI in the year of AI, or, and are there technologies that are either complementary, um, that could be, you know, substituted as an investment instead of, instead of the main one?

Yeah, so I think it's always super important as a founder to remain focused on the problem that you're solving and not the technology that you're using, right? So, um, a lot of people are, I'm gonna go build an AI company because AI is super cool right now. But no, you should find a customer that has a big problem, and AI is one of the great technologies that you can use to solve their problem. So every company that we invest in is using AI in some way, even if it's just their developers are using ChatGPT or Copilot or whatever to help write code. Um, I use it all day long as an investor, right? Just like, it's the fastest way to get the information that I need to do diligence on a company. Um, everyone is using AI now. Every company is using AI at some point. But if you're, if you're talking about how you're, you're an AI company, you're doing all this, we kind of steer clear of that because that means that they're not focused on the right things. They should be focused on the problem and how they're solving that problem and not the cool tech that they're using to solve it.

Yeah. And then in terms of how you think about technology trends, is there something that you're more interested in now? Or like, or when you see a very hot technology like AI, you do— it sounds like you tend to shy away from them when they're like, you know, in the peak of its heat. But then how do you figure out what companies to invest in outside of that big trend?

Yeah, so I think we try to get as smart as we can on each sector because we don't know where the big company is going to come from. And so we just did like a big memo on— a research memo on robotics, and then we did another one on defense. And we'll probably— I'm working on another one to do energy. And just to learn as much as we can about each of the different spaces that we might invest in. And then we try to keep our mind open to really weird and different companies. Because the— like when Anduril came out, everyone would have said nobody can build— nobody can get into the defense sector and compete with Raytheon and Northrop Grumman and all that. Nobody's done it for 40 years. No startup can do that. But they did it, right? So why did they do it? Because Palmer Luckey is incredible. But if someone was saying, I'm looking for defense companies— nobody was saying that actually when Palmer Luckey started Anduril, so you would have missed it. So what you have to do is have an open mind, be agnostic to any kind of company, and when you see an incredible founder come along who is addressing a problem, which is that in that case that those companies are having— pigging out on profits and not building great technology, and he's going to do it a way better, way faster, way cheaper, and in a new age of technology. You have to jump on those opportunities, and it doesn't necessarily line up with your thesis. Other VCs would tell you the opposite thing, and they would say, we have a thesis, we're really smart, we know what the next big companies are going to be, and we're looking for those companies. We take a different approach. Where we're waiting for the best companies to come along and we keep our mind open to what they might be.

Yeah, that's great. Well, let's get to some of these questions in the chat here. So one of them, I think it is Rahimi, how can solo founders make themselves more investible to investors and what is the minimum they should achieve before trying to raise?

Great question, Rahimi. It's so dependent on the sector, the experience, the type of tech that you're using. Like, you know, if we're investing in software, for example, we will definitely want to see traction, right? We want to see paying customers growing month over month, you know, at, at like top 5 percentile or more rates, um, and that's going to be key to us, to a software company right now, because it's so easy to build software compared to other technology. Like, even as a solo founder, you can build an app by using Copilot and all these things really quickly. So if you don't have users yet, then you're probably not ready for venture capital. I mean, obviously there are going to be edge cases where the software that you're building can't be done quickly or whatever, but in general, that would be a way that we might think about it. But on the other side of things, if you have a 5-year research cycle before you can even like get FDA approval or something like that, before then traction isn't important. What's important there is what's the background research, is this the right team to get through the technical hurdles, and do they have a great strategy for how to land those first customers, defend against impending competition, and so on and so forth. So it really depends on the sector. I can't give one set of examples that's broad, but you as a founder need to know, in order to win in this market, these are the important things of how I'm gonna win, and tell that story to the VCs that you're talking to. And if you have a really clear story of how you're going to win whatever it is that you're doing, and you've made a lot of progress quickly, then you're interesting to an investor. And solo founder, I don't think it matters too much to us, but I know some firms won't invest in solo founders, but it doesn't really matter. We've done that before.

Along that same line, you know, Sean asked a similar question of how much problem validation do investors expect early on? For him specifically, he's addressing consumer scans. He's got 63% positive survey responses. You know, when, when should he stop researching and start executing?

Yeah, um, sorry, keep— pull that back up again. I was just thinking and then I forgot the second half.

Okay, Maybe let's break this into two parts, right? So like you mentioned, like, um, validating the problem. Like, how do you think about problem validation? And like, is there a way to quantify it? I mean, traction's like the, the obvious one, right? Because people are paying you to solve, uh, a problem for them. But like, when you're thinking about this, is there, is there a certain level that, that investors look for in general, um, for problem validation?

Yeah, I think if you really wanna build a venture-backable business, like it's really important for founders to decide what kind of business they wanna build. Because if you wanna build a nice few million dollar a year business that gives you everything that you need in life financially and fulfillment-wise, then it's a very different, setup to building a venture-backed company. So if you really want to build a venture-backed company, you want to go for— it means that you have to be wanting to go for billions of dollars in market value, because otherwise an investor is not interested. And the reason being, it doesn't matter if they get 50% gain on their investment. An investor needs to get 10, 20, 30 times their investment to pay back all of the other companies that failed that they invested in. I think most people probably understand this, but that is super important. And actually, I thought I understood it in the first two businesses that I started, but I really, I feel like every year I go further into investing, I understand it more and more how important it is that you're investing in companies that can be enormous and not just good. So with that backstory, to try and answer this question, if you're going to talk to investors, it's, they're not interested to give you money to keep you alive until you get to some revenue so that you can build a nice business. You have to tell the story of why can this be worth billions of dollars. Once you've got that, then this, it's all about the storytelling. So if you've got interest from your, from potential users, you wanna know that that interest is extreme and is from a lot of people, not just a few hundred people that could buy your product. You wanna find millions and millions of users if it's consumers, or, uh, you know, hundreds of thousands of businesses if they're small businesses, or 1,000 businesses, large businesses, right? So it really— like, there's no one-size-fits-all answer, but that's how you have to think about how can this business become worth billions of dollars and who are those customers and prove that they want what you're, what you're delivering to them. So I don't know if that answers your specific question, but I think it does.

I think it frames up, uh, a talking point here, which is like, how does a company become worth billions of dollars? Like, when you— when a founder comes to you and you're, you know, they're like, oh, we can exit, you know, we'll IPO for like $3 billion, right? Like, what, you know, what are you looking at to validate that opportunity?

Yeah, so it starts with what kind of business is this, and therefore what kind of multiples on revenue or profits will it get in the end? So to give a couple examples, if you are like a maintenance business for a certain industry and there are this many customers in the industry, it's not growing, but if you land them all, this is how much revenue you can get. That kind of business will obtain low multiples on revenue because there's no— the ceiling is fixed. For how big it can get. On the alternative, if you're building, uh, you know, ChatGPT, like OpenAI has insanely high multiples because we have no idea how big this can get, right? And so it's the end state of what the business is. You start with the multiples. So then if we know how much the multiples can be on revenue, then we want to know how much revenue the business can generate. And then we say, okay, then Can it be worth billions of dollars if it can reach that revenue on those multiples? Great. If it checks all its boxes, then we say, how do we— let's validate that it actually can get to that much revenue. So what does that look like? And we break it down really granularly. It's how many companies are there in this industry? How many do you think that they can get? How many competitors have a compelling solution as well? Can this market support multiple winners or just one winner? Is it big enough for that? And then we'll break it down to all the different components, and then we'll say, you know, build it back up and say, can it reach that size? I think that's how we go about it, and it really comes down to what kind of business, how big can it get, and what does it look like, and is it possible for them to get that big in 10 years, basically, is the other piece. I think, hey, you know, if the company can get there in 40 years, it's not interesting to a VC because you have a 10-year fund, which means you've raised a bunch of money, you have to invest it in companies, and you have to return that money to your investors in a roughly 10-year cycle. And so the company that you're investing in has to grow quick enough, essentially doubling or tripling every year in that period in their revenue, in order to pay back the fund in that time.

Yeah, and so maybe to like use a real-life example, right, and I'll just make up the numbers here, but If you're building a software company and let's say this, the revenue multiples for valuation are 10x, that means in order to be worth $1 billion, you need to be able to grow the company to $100 million in revenue. So $100 million in revenue times the 10x multiple means you're worth $1 billion. So that's sort of the back of the napkin math. Is there like, um, you know, because, because multiples change, right? And like, let's say 5 years from now, multiples would will be different in the companies that you're investing in, in those industries. Is there a benchmark you use? Do you like, is it like, um, for deep tech, are you looking at, you know, they need to be able to get to $100 million in revenue by like year 7, which means they could possibly get to like $200 million in revenue by like years 9 or 10. Is there like a minimum threshold of size that you look for?

Yeah, I think the— again, it's like, I think people really always wanna put like, this much revenue is how much you need to raise a Series A, this is how much you need to get to this valuation, but it really is always dependent on the company. We always start with what is the company and what is the end state of this company look like? There are many companies that get bought for a billion dollars before they get any revenue. And it's because they've built a really, important technology that some other bigger company needs existentially, and they'll pay whatever it takes to get that technology. So it's always about revenue, but in a software company, coming back to that example, if you do need to get to $100 million in order to be a billion-dollar company, that to get that 10x multiple, you still need to be growing very quickly at that pace, at that point when you've reached $100 million. So the market has to be much bigger than $100 million in revenue for you to get that billion-dollar valuation at $100 million in revenue. And then yes, we have, if it's a software company that we're underwriting and that's the outcome that we're looking for, we still need to come in at a valuation that makes sense, right? So this is the other thing is founders always want to raise, often want to raise at as big a valuation as possible, but that sets you up for needing to have a higher outcome for VCs to be interested, right? So sometimes you'll see— I mean, this used to frustrate me being on the founder side, is I would see a company with very little compared to what our company had raising at a $40 or $50 million valuation in their seed. And I was like, well, we have millions in revenue, like, why can't we raise at that valuation? But it's probably because I was not paying attention to what the potential of that business is. It probably could be 10 times bigger than the business that I was building, and therefore investors will pay up at a higher valuation because the outcome is potentially higher, and that's really what investors want to see.

Yeah, I think that's a really, really good point. Um, let's jump over to Olga's question here, which is, what level of product development or customer traction do you expect from a startup for you to invest in? I think it's different for like deep tech Right, because deep tech might not have any traction or revenue before they raise some investment. But how would you respond to this?

Yeah, so I'll put on my software investing lens. I think probably most people here are asking about those kinds of questions. So the amount of revenue depends on how much capital you're raising, first of all, and then at what valuation you're raising. And how long you've been at it. So this is another thing that frustrated me in one of the businesses that I started is we were raising 4 years into our business, maybe 5 years for our Series A, and we were at $3 million in ARR, which was above the benchmark that people were saying at the time. You needed $1 million to raise a good Series A. Now it's probably higher, but we had $3. So why couldn't we raise a good Series A? Well, we've been at it for 5 years. And there are other companies that have gotten to a million in revenue in one year. So the time it takes you to get to that revenue is more important than the amount, than the absolute dollars that you are generating. So the most important thing, probably over everything that you can do as a founder, is how quickly you move. So if you start your company today, do not stop moving until you have raised capital, because if you slow down, And it takes you 3 years to get to the point you— it may be— that is not necessarily gonna exclude you from raising money, but it is a scary signal to investors that you're not moving as quickly as possible. So to answer your question, go ahead.

I think that's a really, really good point. I mean, we did an event with Jason Kalkandis 2 weeks ago and, you know, he's very big on product velocity, like how fast do you ship product? Essentially, it's a proxy for how fast are you moving. And I've seen deals where within 6 months a team has built some incredible hardware products that normally would take other companies years to build. And so investors are looking for momentum, right? It's all about the momentum. Are they catching the wave of that company at the right time to get to that help them get to that scale and growth. So I think you shared some really great insights there.

Yeah, it matters more than anything. Like just to add one more piece there is that compounds, right? Like everyone knows like Einstein's 8th wonder of the world is compound interest. I don't know if you've heard that, but that's always stuck with me because every, if you can compound your business or your investments or whatever on a faster pace, the faster pace will look like an exponential and the slower pace will look like a flat line at zero eventually. If you can compound, move your business forward every day, 1% a day or something like that is, I can't remember the exact stat, but you're like 27 times bigger by the end of the year, 365 days. Whereas if you just do 1% a week, you're not even doubled by the end of the year, or no, you're probably at 5x instead of something like that. But it's like 10 times faster if you're compounding every day versus every week. So the speed at which you move is the most important thing for making value, but it's also the most important thing for winning, because if you're moving faster than your competitors, you're gonna win the market. And that's even more important in software Right, I was saying earlier that there's so many people can compete, you can spin up an app really quickly. You want to win in a software market, you have to be the fastest, um, and you have to have the best strategy. Um, in hardware, maybe you could get away with like if you patented first or you have like the best connections or something, you may be able to box out your competitors. But I still think in every kind of company, speed is the most important thing.

Maybe, maybe let's talk about like ways to optimize for speed. So, you know, there's different things you can do. You can like stay very, like a big piece of it is staying very focused, right? Because if you spread yourself too thin, you're not gonna be able to accomplish what you need to accomplish. But are there other strategies or what have you seen with like some of your, your top teams on ways that they've been able to, to either, uh, adjust themselves operationally productivity hacks, any tactics that they use to optimize for that speed?

Yeah, I think that what you said around focus is it. If you're not focused on the one most important thing at that time, then you're spreading yourself too thin and you're not moving as quickly as you could be. And just to give an example, love him or hate him, Elon Musk is the best person in the world at this. You know, he has 6 companies, whatever, that he's building, and you'll see if you just follow his Twitter that for a 2-week period, he's only talking about one of them, right? He's like, whatever it was, winning the election, that's all he talked about for 3 weeks. Then he moved on from that, and he was doing SpaceX launch for 2 weeks, and they got the Starship caught out of the air. Then he got that, and he moves on to to the Tesla Autonomous Day, and it's all about autonomous for 2 weeks. And so he's doing more than hundreds and thousands of people can all do combined because he's focusing on the most important thing at that time, crushing it, and then moving on to the next important thing. And then you can— everyone can take that learning into whatever they do. Um, if you're a startup founder, you don't have 6 companies at a billions of dollars scale, but you have 6 problems. What is the most important problem that you can solve right now, um, that's going to make all the other problems easier and move the business forward as quickly as possible. If you get that done, boom, re-rank your problems and focus on the most important one.

Well, so, you know, for the Founder Institute alumni in the audience, I mean, you know, that's an exact reason why we send you those epic sprints. So Jacob, in the program, we'll send founders who need to catch up about like 30 to 40 hours worth of work that they need to complete in 3 days. And it's like that same kind of like concept of like the surge that Elon Musk does with his companies. And sounds like he's now breaking them into like these kind of 2-week sprints. And so for the founders here, it's like, what are the, what are the things that you should be focused on in these kind of like, you know, 1-week to 2-week intervals where if you just like put your head, head down and like crushed it, that would be game-changing for you. And so it could be, you know, if you're just starting off, maybe it's around validation or maybe it's around bringing on co-founders and, you know, addressing these different, you know, problem sets within your own business.

So let's go ahead.

Yeah, go ahead.

I'm sorry, one more additional point to that, which is that it's not just that it's allowing the business to move quickly because it's the most important thing, but it also allows you as a founder or an individual to keep moving quickly because you don't get bored doing the same things every week or monotonous. Like if you have a setup, you're like, okay, every week I have to send, you know, 100 outbound messages and I have to do, you know, 6 LinkedIn posts and I have to do, you know, and you have your long, your 10 different things that you do every single week, you're gonna slow down and you're gonna get bored of doing that stuff. And you're not gonna be able to move as quickly doing that in the 8th week as you did on the 1st week. But if you go, this week I'm gonna reach out to 1,000 people and fill the funnel, and like, just gonna bang it out this week, and then next week I'm doing something completely new and exciting for the business, I think, I mean, I could be completely wrong on this, but I think that makes you move way faster because you can keep going longer days, harder hours, more focus because it stays interesting. As well as you're tackling the most important thing for the business.

Yeah, I think that's really, it's a really great point. I kind of break my days into offense and defense. Offense are the things that you need to get done to like move the ball downfield, so to speak. And then defense is like, okay, fine, I'll like answer this email that someone sent me like a day ago that like isn't top priority. It's just sort of like the catch-up, the mundane. Um, but I do think, like, founders, if you, if you focus on the things that matter, if you really prioritize the, the tasks that will help, uh, move the business forward, like, that's, that's important. And doing it at the beginning of your day too, like, prioritizing that as, like, you know, some of the first things that you do, uh, in a day is, is important.

Yeah, we're finding out when you have your most energy and putting, filling your calendar with the most important things at that time. I know some people are night owls and they they crush their most important things at midnight, but I'm personally a morning guy. If I don't write something that I have to write really important in the morning, there's absolutely no way I'm writing in the afternoon, I'm too dumb. So I will get up, write something, and then, or whatever the most important thing is that I have to do, if it's a memo or some diligence or whatever it is, I do it in the morning. And so figure out what's important. What's the most effective time for you? And then plan, yeah, as you say, Ryan, your offense around that time, the most important things you're working on in your best hours.

Yeah. Let's go ahead to Stacy's question in the chat. You know, what makes you decide to give a first-timer a chance and invest capital with them if they don't have a track record yet? And I think like what you might be touching on, Stacy, is that there's a lot of data out there that shows second-time founders tend to outperform. And so some firms actually skew towards investing in second-time founders versus first-time founders. Jacob, how do you think about that?

Yeah, I mean, the— it's probably the answer you don't want to hear, but the truth is that an investor will see literally thousands of, of decks a year, maybe more, um, and, uh, most of those companies go nowhere. And even then they'll invest in 20 maybe in that year, and even most of those will go nowhere, right? And so if a founder has done at least a semi-successful business that they learned a ton from, and even more if they have a successful business, raising capital the next time is so much easier because they've already gone through that filter of thousands, right? That doesn't mean that first-time founders aren't successful. It just makes it easier for a VC to de-risk their investment. Now, if you're a first-time founder, the first-time founders actually often have the biggest outcomes, right? Because the best people in the world with the most ignorance about how the world works are able to build the biggest companies out there. So like, you know, Zuckerberg and, There's millions of examples of Bill Gates and all this, who the first time they built their company ended up being the biggest, but those are very few and far between. So you have to show why you could be that, you have to sell that story, right? And so the best way to show that is moving quickly, that you're like thinking about this in a way that nobody else has thought about the problem before is another way. To do it, 'cause investors have seen 10 attempts at whatever business you're trying. So what is it that you're seeing differently and telling a story differently? And then what is, yeah, then you have to go down the list, like we have great traction, we have great defensibility, we have a great distribution plan. And if you've really thought through all of this stuff, investors will take a bet on you because there is that opportunity that you as a first-time founder might be one of the biggest outcomes that can come their way.

Um, yeah, I think that's, uh, that's a good point. So Stacy, hopefully that answered your question. Jose is asking, due to the nature of deep tech, generating revenue is a bit slower and very capital intensive. Um, often founders need to raise capital pre-revenue. How do you pitch an investor when you're still early in commercialization but raising a Series B?

Yeah, so in deep tech, it's often, as you say, much less about revenue. I mean, some cases it's about revenue, like some deep tech founders are able to get revenue early, but some may, as I said, like may get to billions of dollars in value and not have any revenue, and there's everything in between. But deep tech fundraising is more about milestones. So when you raise your your pre-seed, you're going to say, in order to raise our seed, we need to accomplish X, Y, and Z, right? And that may be this many LOIs, letters of intent, from customers who plan to buy your product later when it's done. Uh, it may be this technological breakthrough that we've proven, maybe this result in our research. It may be getting through this step of an FDA approval process. So you tell the investors when you are raising each round what you plan to accomplish with that money. And if you hit those milestones and they were excited about them when they first time invested, then your investors are gonna follow on again because you're hitting your milestones on the timeline that you said. You're already at Series B, you know, you will have told your investors at Series A what you were to accomplish. And hopefully you hit those or have reasons why you did something else or pivoted or what else you figured out that was new. So you have, you're now setting new milestones, but there's new learnings as well in the business. That's what you have to say with this money at our Series B, what are we now going to accomplish based on all the things we've already accomplished? Why are we moving the fastest? And again, tell the story of how you're going to win and become worth billions of dollars, you should be able to raise a Series B if you're hitting all of those things.

Yeah, thanks Jacob. I'm going to combine two questions here. One is around like, you know, do you invest in Canada or mostly US startups? And then another question is like, what are you looking for to invest in startups in, in French Africa countries? So I think the greater question here is, do you invest internationally? And if you do, how do you assess those deals compared to like a US company?

Um, we— our belief is that, um, the best company is not— again, I think we talked about this at the beginning, but yeah, it's like, you know, AI is hot right now, AI in Silicon Valley, it's hot. But the best company that is founded in '24 or '25 is not going to be that that company, like the data proves it, it's not going to be that. So the best company that's founded now is going to be something else that nobody's thinking about right now. And so we need, we try to keep our mind open to anything from anywhere in the world, in any sector, with any strategy, with any technology. And if you can tell a great story, we will take the meeting. And then if in that meeting you impress upon the investors that you're the right person to build this company, that you're already moving quickly, and that you have a plan of attack, then it doesn't matter where you are, what language you speak, or what technology you're using, we'll be interested. And if you want to get in front— I didn't mention this at the beginning, but, you know, a lot of VCs have like a closed-door approach to getting in front of them. You know, you have to have an introduction from someone in their network in order to get your deck to them. We have an opposite approach. So we have launched a website called deepchecks.vc. Any company can submit a deck to that. We review, all 4 of us at the fund review every deck, and then we might get hundreds in a couple-week period. We review all of them, all of us, and we all bring forward the ones that we think could be interesting. Then we debate them and we figure out which ones we should take a meeting with. Maybe we take 20 meetings out of 200 companies, and then we go through our diligence process on a few of them and maybe invest in 1 or 0. So, oh, the other thing I'll say about deepchecks.vc is it's not just Julian Capital that's reviewing those decks. We then take the best decks that have submitted, A lot of them, like we don't filter too, too much, but we make sure that they're legitimate companies with a potential to raise venture capital. And then we share those decks with 300 deep tech GPs all over the world, the best in seed stage investors. So if you have a great deck and a great story and you submit to Deep Techs, you can get in front of hundreds of VCs and probably get a dozen meetings or more. Really quickly. The additional benefit of something like this is that you get in front of all the VCs at the same time. And you may have heard that raising capital is like a bit of a FOMO, you know, you have to create FOMO. If you've ever watched Silicon Valley, they, you know, the TV show, they go and create FOMO for all the investors. It's somewhat true. You do need to have everyone interested at the same time. And so this product allows you to get in front of everyone together, run a tight process, have all your meetings in 1 or 2 weeks, get a couple of term sheets if you have a great business, and close really quickly and get back to work, which is a huge benefit. If you have to drag out your fundraise over 6 months, you're not moving as fast as possible and your competitors are moving faster.

Yeah, and, uh, for deep checks, is that, uh, only seed companies, or are you also looking at like Series A and beyond?

Um, You could submit at Series A as well. So, and it can be as early as possible too. Like, you know, it can be under $5 million valuation, pre-seed, seed, and Series A. We don't invest in Series A, but there are funds on the DeepChicks platform that do. So you may get a little bit less of a hit rate because there's less of the funds do Series A, but you may meet a bunch of investors who do.

And then, you know, Olga was asking in the, in the questions here, like, how do you— so if you're looking at all these companies, you know, looking for great founders everywhere, how do you then like back into and define what deep tech is for you?

Yeah, deep tech means different things to different people. I think what it means to us is that a company, if they're able to build what they say they're going to build, the demand is enormous and obvious. So for example, I think I mentioned this company at the beginning. Astromecanica is a— they've created a brand new jet engine where they've separated out the turbofan from the motor and they can run this engine at 1/10th of the fuel requirements, and they can run it efficiently at any speed. So currently we travel at below Mach. We put Mach 0.9 is how fast commercial jets travel. They could go up to Mach 5, so 5 times faster than normal jets. Now, if they could do that, everyone's going to buy those jets instead of Boeing's dumb jets because they go 5 times faster for a tenth of the price. 10th of the fuel. The question is, can they do it? And so that's what we determine is deep tech, right? It's like, so then we're underwriting, is this the right team to build that? And Ian Brook, the founder, is, we believe, the only person in the world who's set up to build this company. And that's why we invested in Andreessen Horowitz and Lower Carbon and some of the best VCs in the world, invested in this company. And so hopefully that gives it a good example. It's about a technical risk that if solved can be, in that case, hundreds of billions of dollars in value, maybe more.

Yeah, there's a question here from Ibrahima around like social responsibility, sustainability. So let's just kind of define that as like impact. How do you measure impact? In terms of your investment decision?

Yeah. It's— from a Julian Capital perspective, we're not like a climate fund or anything like that. That being said, I think 5 out of the 7 investments we've made in this current fund are climate-related. And the reason is because there's so many trends that support that kind of company being successful right now. There's government regulation tailwinds, there's economic tailwinds as, you know, price of gas goes up, price of carbon offsets go up, you know, fines, penalties, all these things. There's consumer pressure There's board pressure. There's so many things that push companies to decarbonize that if you're building a company that is a climate tech company, it has a much higher likelihood of moving quickly and succeeding because of all of these tailwinds. So we try not to invest in a company just because it's doing a good thing. We try to invest in the best businesses, but that often means that they're improving the world. it, you know, people pay for things that improve their life and are cheaper, better, faster, and that often means more efficient, less damaging to the environment, and improving the world. So we believe that investing in the best companies will improve the planet as well and will often generate better economics if they're improving the planet or or creating impact in some other form.

Yeah, thank you for sharing that. There's a question here kind of going back to like first-time founders. It's by Isabel. She's saying that they're, you know, as a first-time founder, they might not have the right network to start their fundraising journey. What would you recommend? You know, she's a female founder, pre-seed, MVP in the works, life tech, located in Europe, company in Delaware. Like, so, so like, just to kind of summarize this, um, you know, there could be some great founders out there that maybe don't have the right network to go and fundraise. And as you know, like, a big part of fundraising is building out your network. Do you have any strategies or recommendations for founders like this who need to go out and build a network?

Yeah, um, It's hard to break in, and that is for sure true, but maybe it's maybe not the thing that people want to hear, but it's also an important filter because we're investing in the, the best companies in the world that are founded this year. Like, a VC wants to literally pick one of the top 5 companies, hopefully the best company that gets founded in this year. And those founders can get in front of the right people. They will hop on a plane, get into Silicon Valley, they will show up at every event all week, and they'll meet investors and get the insurance that they need, or they'll find another way. They'll reach out to every single investor on LinkedIn, they'll write compelling stories to get their attention. If you can't get in front of a VC and start that process, then you may be a great entrepreneur and you're going to build a great business, but you're not going to build the next SpaceX. And I don't want to sound insensitive, but it is how at least we see it is like, if you can't get in front of a few venture capitalists, you're not going to be able to change the world. With the company, and therefore you're not venture investible.

Yeah, um, because there is a lot of competition, right? I mean, like, when you talk about, like, you know, VCs looking at thousands of deals to invest in few, right? It's like, how do— the question is, how do you become, like, in the top 10% of deal flow that investors see? And it's even, like, higher than that, it's like the top 1%. But, like, you know, starting with the top 10%, what are the things that you, as founder can do to prepare yourself and get competitive with the other great companies that investors are looking at that are led by whatever former SpaceX people who have great pedigrees and insights and networks and capital behind them. So, you know, I think the bottom line is like life is unfair in that regard, but you actually do have pathways to hustle and be able to go out and do it, but it will be harder for some people than others, and that's just totally the way it works.

100%. And it, like, we really try to not, um, just take meetings with people who did internships at SpaceX. In fact, we now are like kind of looking down on that because we see so many people who say that they built space, uh, who built Starship, but then you look close at it and they were there for 4 months as an intern. So We really try to avoid that kind of signal, but yeah, and I know my answer was probably insensitive because it is harder for— it's so much harder for some people who are not in America and who don't have the family connections and the university connections and all that stuff. That is 100% true, but there are ways to get in front of investors like deep checks. We look at those decks completely blind to where they came from, and if it's a great story, the deck tells a compelling investment opportunity, we will take the meeting every time. Y Combinator, if you apply to Y Combinator, now there's probably some referral stuff going on in the back, but you can break through from all over the world and get there. Once you're in Y Combinator or another launch accelerator or Techstars or something like that, you'll be put in front of tons of VCs. So you got to get through one of those filters, and once you do, and once you're in the network of VCs, it all comes down to your merit and what you're building, the story you're telling, the traction you have, the speed that you're moving at, and if you can hit on all those things, you'll be able to raise capital. And it's the first round of capital, it's the hardest, because once you're Once you have raised capital, if you continue to execute, your investors will A, give you more money, and B, introduce you to all of their network because you're the most compelling investment that they've made.

Yeah, I think that's great insight. Jacob, you know, super appreciate you joining us today. Let's kind of wrap this with one last question, which is, you know, a lot of the founders here are pre-seed or seed. What's one piece of advice that you've learned that you would want to share with the founders on the call today?

Um, well, you know, I'll reiterate a few things and, and see if there's anything else. So one, speed is the most important thing. Two, put yourself in front of— in the shoes of the investor who's not looking for a $100 million exit. They're looking for billions of dollars of exit potential. So tell the story of how your business can get there, or don't raise venture capital unless you're building that kind of business. Because really quickly, I've seen so many examples of founders who raise venture capital, build a great business, $50 million in value, $100 million in value, but they raised $120 million of capital, And when they sell their business for $100 million, 100% of that money goes back to the venture capitalists and 0% goes to the founder because there's something called a preference stack where the investors get their money out first. So don't raise venture capital unless you think you can build a business much more valuable than the amount of capital you're raising, or else you will spend 10 years on the project and have zero to show for it financially. You'll have a lot of learning, a great journey, connections, friendships, all that stuff, but you won't have capital at the end of the day. So make sure you're raising the right amount of capital for the business that you're building and tell the story of how you're going to make this compelling for an investor who needs those really, really big outcomes.

Yeah, thank you for that. Well, I think that's all the time we have here. We're going to go ahead and kick off the networking session. Jacob, thank you so much. This This was an awesome chat. I'm looking forward to checking out DeepChecks and collaborating further. So in a moment, we're gonna end this broadcast. Everyone will be returned back to the networking lounge. That's where you can either join a table to meet with others as a group, or you could do speed networking, which is like a one-on-one meeting with people from the event today. So have a great Thanksgiving, everyone, and we'll see you there. Jacob, thanks again, man.

Thanks everyone. Great questions.