Startup Investing in Uncertain Times: Insights from Experienced Investors

One of the rules we have is like, take your time. And, you know, there's too many deals out there to say, oh, you have to write a check by next week or next or tomorrow or whatever. And usually when I see that, I run the other way as quickly as I can. And you'll miss deals for sure. But, you know, for example, we just were just about to invest in a company that's in compliance in the medical area. And we saw them 2 years ago and we dug really deep, but we weren't sure. They were technically very astute, but we didn't know about the go-to-market. And now they're really getting good traction. So take your time. You'll miss deals, don't worry about it.

Hello everybody, welcome. My name is Adeo, I'm CEO of Dessel Group and VC Lab, and I'm really excited for the session today to talk about really how to identify great startup opportunities in crazy times. Let me give you just a couple Robert's Rules of Order. And then we'll jump into the session. Really excited to see everybody. It's going to be a great session today. So, uh, if you haven't used Airmeet before, on the bottom of the screen you're going to see some emojis. Uh, it's, it's next to this HD thing. If you click an emoji like a heart or whatever, you can emoji speakers. This is really useful if you see something you're interested in or you see something you like, if you emoji it, it's a really great way for us to know that you're enjoying what we're talking about. We can dive deeper, etc. On the right-hand side, you're gonna notice a chat. This is a great place. We've got angel investors, we've got aspiring venture capitalists, we got limited partners, we got a great group of people here today. Introduce yourself, put your LinkedIn there. If you're working on a firm or fund though, Please don't share your thesis because that could be construed as general solicitation. So you could tell about your background, your interests, your LinkedIn, but not your thesis. And so that's in the chat on the right. I see the chat's already getting started. We have quite a few hundred, 400-ish people registered. I expect about 200 people to show. So this is gonna be a pretty, 'cause Airmeet doesn't have the best conversion. But we should have a pretty big session nonetheless. Now, if you have a question, because I'm going to have for me or the panelists, you're going to see in that left, the right-hand panel. Sorry, I think I said left. In the right-hand panel, you're going to see a Q&A. It's two chat bubbles with Q&A. You can go in the Q&A and ask any question about any of the subjects we're talking about, and then we'll try and get those questions on screen for you. I need to run to the airport at the very end, so I'll be joined by my coworker Myrto, and she's going to run the Q&A session part at the very end where it's just dedicated to your questions. But I'm going to try and work your questions into the agenda as we go through today. Okay, enough on the rules of order. Let's get started with the actual session. Okay, everybody. So today, as I mentioned, we will be talking about how to identify some great startup investments in crazy times. And so there's the how to identify great startup investments. And I have two amazing general partners from successful venture capital firms who are going to be talking about their experiences. So I'll be interviewing them in a moment. And then there's, hey, we're also in crazy times. Is this a good time to invest, a bad time to invest? So before we jump in, I'm just gonna talk a little bit about DESEL Group and what we do. I'll talk a little bit about crazy times, then pull the speakers on stage and get going. Okay, so DESEL Group is the leading platform to bring venture capital into the modern era. We provide training, tools, and capital so that anyone interested in being a venture capitalist or investing in venture capital can learn how to do it, can have the tools to do it, and then get the capital to do it, right? Training, tools, and capital. Just on the training front, we operate the leading venture capital accelerator called VC Lab. If you don't know about VC Lab, you probably should. We train over half of all new managers worldwide. So if you're thinking of launching a fund, you really should go to VC Lab. Maybe, uh, Domenica, you could put the link into VC Lab into the chat so people can check it out. Thanks for all the applause there. If you, um, are interested in being a limited partner investing in funds We have the leading training program for that as well called the LP Institute. And we even have a training program if you're interested in becoming an associate or a venture partner in a venture capital firm. We have something called the Venture Institute. So, we train the venture capitalists, the limited partners, and the people that work in the venture capital firms, all. And those programs are all enormously successful. With 80-something MPS scores and producing many great firms, funds, LPs, people who work in funds, etc. On the tools front, we have something called Dessel Hub. If you're building a firm and fund, you should definitely use it. For LPs, we have something called Dessel Pro, which allows you to manage your different LP investments. Both of these tools are world-class, and, and we run 1,000 firms on DeSol Hub right now, just to give you a sense of scale. That's about 15% of all operating firms worldwide. And on top of that, about 600 of them, actually over 600, use it every week, not like once a month or something like that. So they're almost every day to run their firms and funds. So it's a pretty powerful tool. And then on the capital side, We match LPs with GPs and we have our own fund of funds called Premier One. And all that's been going great. So that's a little bit about us. Let's talk about the market. It's been an interesting time. Okay. The, the, the global economy was, was maybe not the healthiest. We have not really recovered the global economy since the pandemic. Large amount of debt in the US, large amount of debt all around the world because many governments printed money, loaned money, did things during the pandemic. And obviously, the US elected as president Donald Trump. And he went out like kind of a bull in the china shop and shook many of the things that the world takes for granted, uh, such as the composition of NATO, etc., and said, hey, we're going to do things differently. And that, that created a bit of chaos that we're in right now globally. So there's a trade war going on, uh, there's inflation, there's market turmoil, highest volatility in, in history, a lot of Things that are tethered to one another and move in expected ways are now moving in unexpected ways, such as the currency valuation fluctuations, the stock market fluctuations, crypto fluctuations. So it's been a very tumultuous time in the economy worldwide. And I'm sure some of the LPs will share with you that, you know, you hear them say things like, oh, you know, I'm not investing right now because of the tariffs. I was at an event the other day. There are a bunch of VCs there and we were all just laughing because it's like, oh, I can't do it because of the tariffs. It's like, is it really because of the tariffs? Are you just saying that because it's the easiest thing to say? And I would say that like, yes, in some cases it's definitely because of the tariffs.

Right?

But in probably 20% of the cases, it's because of the tariffs. In 80% of the cases, just easy to say because of the tariffs, and that's just saying no. But when these crazy times occur, like 2008, uh, 2000 and 2001, etc., historically, the best it's the best time to invest. And that's what we're going to talk about today. So it may seem like, oh my God, there's a lot of volatility and I don't know what to do. The stock market's crazy, the bond market's crazy. You know, currencies are crazy. Everything's going crazy. Well, it turns out that when everything is going crazy, historically proven, Beyond a shadow of a doubt, it is literally the absolute best time to invest, right? As a venture capitalist, full stop. Uh, the best returns, the best companies, the least competition, the lowest valuations, the most availability of talent. All these things come together and it's just a fantastic time to invest. So, uh, without further ado, I'd like to call our two guests on stage, uh, Ollie and Ed. Uh, if you guys could come on. Hey guys.

Hey there, good to see you.

Hey Ollie, good. So we're not gonna just theorize that it's a great time to invest in, and it's not necessarily an easy time We're going to talk with actual investors about what you guys are seeing in the market and what's going on. So why don't we do first, if you don't mind, just doing a quick introduction of yourself, maybe tell us a little bit about your background and some of the things you're investing in without going into too much detail on your thesis. We'll do Ed first and then Ollie second. And then I'll start asking questions about the market.

Great, thanks. Um, so my name is Ed Dewey, and I've, um, I've done a number of things. I was a coder for about a decade, uh, worked in, um, investment banking in New York, uh, doing a lot of financial analysis and, and modeling. Um, along the way, I've— so I've really had my hand in, in finance and investment banking and venture, uh, pretty much most of my career. I did run as a CEO two companies for about 5 years each, one in the consumer products area and one in the software area. So about a little over a decade ago, I've always loved investing, loved real estate investing. I took a chunk of my own money and I started investing. And over the past 10+ years, I've invested in over 100 companies, have had 5 seed investments, 2 NASDAQ IPOs, as well as a bunch of other exits on, on some of my investments. So, uh, about 3 years ago, I got a bunch of high net worth folks together and we created our own little fund, kind of a group. And, uh, we started investing. We invested about 25 companies. And then we decided we're going to start— instead of just doing our own money, we're going to create a traditional fund, thus founding Destal Group VC Lab. And which has been just the most amazing experience for us in terms of what they bring to the table, in terms from an operational point of view and from I have so many questions and, you know, all the time. So always I have a great point person at the Decel Group. So, um, we're now in our second fund, in effect. I've started that in December, and we are deep tech investors in primarily in robotics, health tech, um, and general software, AI software.

Awesome. And Ollie, tell us a little bit about your background. Pretty incredible.

Yeah, so, um, you know, I've been in tech for the last 2 decades, uh, started in Silicon Valley, worked at a bunch of startups in the Valley, and then, um, about a decade ago decided I want to explore more of the world. And so I ended up spending several years in Asia and then most recently led growth for a couple of different, uh, unicorns in Latin America. On the side, I've been an angel investor for more than a decade. And during the pandemic, decided to kind of double down on my angel investing. I was seeing a lot of great companies emerge out of Latin America. I wanted to share them with my friends in Silicon Valley. I ended up creating a syndicate that I ran on AngelList. And, you know, after a couple of years of that, the syndicate was performing pretty well. and I wanted to take the next step and kind of professionalize it. And so ended up, um, kind of going through VC Lab, um, kind of evolving the, you know, process that I was doing and, um, you know, getting a chance to continue to invest in kind of great founders. And so that's kind of really where I am today, is still kind of have the syndicate on AngelList that I'm doing follow-ons and finding some great founders, but really in the process of becoming a more professional firm.

So let's jump right into the topic, which is deal flow, right? And deals in this environment. It seems my camera's a little glitchy, by the way, so apologies for that, everybody on Airmeet. So are you seeing great deals right now? And you've been investors for a long time. How would you say the current deal situation is compared to your past experience? Is it better, worse? What are the differences? What are the benefits? What are some of the downsides? And Ed, I see you nodding, so maybe you can take it first.

Sure. You know, I look back on, you know, really when I started investing probably in the early 2010s and people weren't investing then. And the opportunities, my best, some of my best company outcome, my exits have been during that period. So you take that in terms of the issues that are, as you outlined in terms of in the economy that we're all facing, and then you add AI to it. And it's just, this is like the most amazing time that I've ever seen. And it's just, So many fantastic ideas and things are moving at an amazing pace. So I can't be more excited about the opportunities that are there in front of us right now.

So it's like the craziness of the market that breeds these really good times coupled with AI has gotten you really excited. Yeah. So, Ollie, do you want to go with some things you're seeing better, worse, different?

Yeah, I mean, I think there's been a lot of changes, right? So The last 5 years have been pretty unpredictable. I think, you know, during the pandemic, there was a ton of new companies emerging in a variety of fields. Some of those fields have become less hot, right? Like crypto is no longer getting as much. Web3 is no longer getting as much. DeFi is no longer getting as much. So there's kind of been shifts in the market right now. Um, you know, AI is the big trend, and so there's a lot more AI startups than there was 5 years ago. Um, you know, I think there's still a lot of capital kind of on the sidelines, both from LPs but also from funds. And so I think that kind of changes some of the things that are happening. We've also seen a lot of new VC funds emerge over the last 5 years. And so I think there's all these different individual dynamics that are kind of really having an impact. I think there's a lot of really great companies that are still there, but I think that they're maybe in different spaces than they were, you know, 3 years ago. And I think that, you know, the composition or, you know, what you're making that investment on has changed, right? In certain fields, you can get a lot more traction than you could 3 years ago for that same price. And, you know, in other fields, you have to bet a lot more on the upside. And so I think that's also been something that's interesting is kind of trying to figure out, you know, how do we evaluate, you know, the SaaS business compared to what we would have valued it at 3 years ago. Versus this AI business? And what kinds of multiples do we look at, or do we look at multiples? What kinds of contracts? How easy is it to get a contract, right? With so many new AI agents, what does the cost actually look like to go and get sales done? Um, and so there's all these dynamics that are kind of constantly shifting and changing, and how quickly are companies adapting to these new technologies? And even non, you know, AI companies, how do they adapt AI aspects into their business, right? Like I invested in a consumer business, which is using a lot of AI to handle things that normally would be done by sales agents. And so their costs are 10 times lower than you normally expect from a CPG business. And so all of a sudden you maybe feel more comfortable investing at a higher multiple on that CPG business. And so just how are all these things going to continue to be impacted over time and which bets and risks are you willing to make the bet on now? I think means there's a lot of really exciting companies and it's just a lot more about your personal preferences, I think, than before where there was very clear where everything was going to be going.

Right. Well, look, there was a unicorn factory, guys. For the best part of 10 years. It's like SaaS went from here to here to here to here, then it became a unicorn. It was like, here's how you become a unicorn: do this, this, this, this, this. And like every industry— marketplaces, SaaS, biotech, edtech— ah, there's sort of this path. If you can get to here and get to here and get to here, then you're a unicorn. And then you go here and here and here, right? And that's been kind of thrown out the window, that because AI's come in. It's like, do you have AI? What does this mean to the cost structure? So I think people are still figuring things out. I'd love to hear your thoughts on that comment, Ed, that Ali was talking about, that like kind of all these traditional metrics, all the things that people had taken for granted on how to build and grow fast-growing companies are kind of changing.

So what does that mean?

I mean, I'd say our focus a lot is on AI slices and verticals of industries, less about AI tools. And one of the things we always ask ourselves when we look at these companies with my partners is, is this going to be a leapfrog company? Meaning, is AI just going to leapfrog? And so, which is one of the reasons why we kind of avoid, we look at them, we avoid tools like general like windsurf or certain coding tools, things like that, and looking more at verticals. One example I always give is a company called Angstrom AI, which is basically looking at within the FDA approval process, it's like 7 to 10 years. How do you basically reduce that? And basically what they're doing is they're taking experiments done in the wet lab in the past and they're pulling those experiments into the computer. So that's one element. It's a slice, a vertical AI slice. And those are the kind of things, and there's thousands of those out there. So all these traditional companies that we've looked at in the past, that Ollie's looked at, I've looked at, and everybody's looked at, you know, a lot of them are in trouble, either with brand new AI companies in terms of that have never existed before, in effect, in terms of what they do, as well as AI companies coming in and displacing existing traditional companies. So in my mind, AI is, is, is, is part of the water now, really, and it's really part of like any company that's out there.

Yeah, well, let's dive into that, right? So because we also have some founders here, which I can see from the question, so we've got investors, we've got founders, uh, and the— if you're a founder, I mean, I think it's safe to say that you need to have AI? Is that because you brought up a CPG company with AI, Ali? That would be like maybe the last one, I would think, but you're seeing them now. So is it safe to say that if you're a founder, you kind of need to have an AI strategy right now? And who, who would— either of you can answer that.

Yeah, I think that AI definitely needs to be a part of what you're doing, but like I don't know if you can necessarily just sell the AI. I think you have to be— if you're going to sell me on the AI, you really have to be a top-tier AI person. Otherwise, it's like the mullet, right? You have AI in the back and it's the thing that's running all the things anyways. I assume that, right? But like, what's the thing that you're actually presenting? What's the problem that you're actually going after, right?

And so, uh, so you assume that AI is going to be there in the background, but if you put it in the foreground, you better be an expert, right?

Exactly, exactly.

Ed, what's your—

I would, I would totally, I would totally agree with that. It's, you know, don't try to say I'm an AI company when, you know— now with that said, most most traditional companies or companies, new startups that don't have to be AI first, but they need to look at it in terms of how it can potentially optimize various aspects of their business. So they need to keep their finger on the pulse of what AI can do for them. And I think that's very important. You know, for us, we're primarily like AI first in terms of the technical people that are starting the companies that we're looking at.

So, and look, there isn't, Let's be blunt about that. There's not a ton of AI experience in the world yet because it's still relatively new. The LLM, like a couple of years old at most when the first LLMs were getting wide use. And I want to, so how do you evaluate these founders? How do you evaluate these companies when everything's new? Right? So how do you, so you're telling me there's good startups. There's some component of AI in every business now. That's new. The startups are new. Everything's new. So how do you do your job to pick the best ones?

I'll take that if it's okay, Ali. You know, I think you need to, you know, they need to have a technical background to some level, although the tools now are getting to the point where if you go another 2 years down the road, you know, it's more like, are you a good planner? Are you a good project manager? You know, I think that's really where it's going to go. The acceleration of these tools are pretty amazing. So I don't know, that's kind of where I am.

So you want to see some technical chops in the team.

Yeah, and I think a lot of people—

You want to have a vision of the future because the tools are changing so fast. So you got to have a sense of where they're going. Is that—

I mean, I think right now you have to have technical chops if you're doing an AI-first company, and you just have to spend a ton of time. I would say where we've made mistakes in the past is we don't spend enough time with, with the founders. You need to spend as much of your time— look at their backgrounds, do some references, but spend time with them. And that's really the most important element of due diligence, at least from our perspective, because you're coming in early.

Very early.

We're usually first money in, and then we'll, we'll bring in another partner, another investor in with us. Um, that's kind of the, the typical approach we take.

You're also very early, Ollie. So yeah, how are you— you brought this up at first, right? So how are you dealing with the new world, new founders, new business models, like kind of new everything, right?

Yeah, so I think, you know, very similar to what I said, I think it's about being able to build that relationship with the founders. And I think even though there's all these new VCs, very few people are willing to take the risk early. And so if you are somebody who's willing to take those risks early and focus on building those relationships, it gives you a lot better sense of these founders and what kind of people they are. And ultimately, that's what you're making your investment in. Is the founders and the quality of the founders. And so, you know, are they somebody who's resilient? Are they somebody who can execute? You know, when they give you their 2-week plan and you come back in 2 weeks, have they done 10% of it or 200% of it, right? And so continue to kind of be able to understand who these people are and how they operate is something that is a big, um, a big impact for me. And I think, again, because there are now so many, you know, investors flying around who don't really have that much of a background or just kind of offering cash and offering kind of, in my mind, sort of dumb cash in some of these situations, um, being able to add real value to them and coach them and mentor them over this period of getting to know them I think is also extremely important. So I think that period of time is great because you get to know them, but they also get to know you. And if they can also see that value that you're adding and understand the differences that you would add versus just some random rich guy coming in and trying to write a check, then it also just gives an extra signal about their capabilities.

I'd like to add something on, you know.

Yeah, talk about how you evaluate these founders and it's great. So, Ed, please go.

Yeah, so I mean, one of the things that, one of the rules we have is like, take your time. And, you know, there's too many deals out there to say, oh, you have to write a check by next week or next or tomorrow or whatever. And usually when I see that, I run the other way as quickly as I can. And you'll miss deals for sure. But, you know, for example, we just, we're just about to invest in a company that's in compliance in the medical area. And we saw them 2 years ago and we dug really deep, but we weren't sure. They were technically very astute, but we didn't know about the go-to-market. And now they're really getting good traction. So take your time. You'll miss deals. Don't worry about it. You know, and also valuations, don't, You know, people have, I mean, my view, everybody's got a different opinion on this one, but valuation is important in my view. A lot of people feel it doesn't really matter. And I think that you need to be very smart about that as well.

So let's, all right, let's talk a little bit. This is interesting. So you're talking about keeping founders in your purview for longer than 5 days, which some people are kind of, I need it done now, right? So you wanna watch them a little longer. You want to help them, you want to see how they operate. Um, I also want to talk about valuation for a moment, but let's just stay with this watching. So what's your thought on a sort of minimum and ideal period of time, both Ed and Ollie, to be working with the founder before you make an investment?

I think for me it's probably at least a month. Um, and in that month I'd probably like to have at least 3 or 4 meetings. Um, but ideally I am trying to work with them for 3 to 4 months and really develop that level of trust. What I've noticed in my portfolio is the companies where I've been able to nurture that relationship before we invest, um, And, you know, they have that ability to call me and ask me questions and, you know, are not afraid to open up, have really outperformed the ones where maybe I did feel rushed. Like, I feel like the longer the deals have actually taken to get done, the better our relationship has been and the better those companies have turned out versus the ones where Oh, you know, we're closing next week. Are you in or are you out? And then, you know, sometimes you just do feel the pressure and then you make that investment. I think especially when you're just starting out as an investor and, you know, then they don't trust you. They don't keep you in the loop. You don't really know what's going on. You can't really add as much value. And they'll, you know, they don't trust you. They'll come to you things. And so they make bad decisions. And so I just think that there's all these ramifications of not spending that time to really build up that relationship. And so for me, that's usually a big focus of what I try to do.

Ed, by the way, this is one of the best things about emerging and new managers. They care. They want to know you as a founder, right? And this is true if you're an angel, you want to do the same. Ed, same question to you.

Well, I think that I will agree totally with what Ollie is saying. I will say that who's bringing the deal, I mean, the vast majority of our deals are coming from my contacts that I developed over the years or my partner's contacts. And so there's value there, although you have to be careful in terms of, but you can learn from them in terms of why they like specific deals. So that can accelerate a deal in terms of your due diligence and understanding the person. But, you know, that just investing in a deal because your, your buddy has invested in it is dangerous. But there's value there for sure, you know, when it comes from someone you know or you've known for, for years. Um, but, um, you know, and, and sometimes you got to pull the trigger quickly if it's something you think it's just really— I really, I really love this area and I really have been looking for a deal in this area. Um, you just have to be really careful. And as Ollie pointed out, early investors who are just starting, this is probably the common mistake of A, rushing the decision, investing at too high a valuation, not doing your due diligence.

I want to go on to one other thing and call Merto on stage as well, because I'm going to have a car coming in a few minutes. But, and we got some great questions in the Q&A. So if you have questions, pop them in the Q&A. But, um, hey, Marteau, I see you in the backstage. Great.

Hi.

Um, all right, so my question for you guys, last question before we turn it over to the audience, is how do you source? Because you're, you're definitely— I know both of you are seeing some exciting deal flow in this market, right? And maybe you could tell us how you're sourcing that deal flow on a high level, and, you know, maybe even some things that have changed in this market in your sourcing when it's a bit crazy?

Uh, I'll, I'll take that first. Um, so a lot of it has to do with contacts you have. I mean, I am a Stonester from, from UC Berkeley, so I spend a lot of time on the campus and look at a lot of deals. My— one of my partners is, uh, kind of half-time in innovation UCSF, so health tech. She's a surgeon, and, and so she has very good deal flow. And our LPs, we tend to look at LPs when they come in as having the ability, A, to analyze deals or to be able to deal, bring deal flow, which is really key. So, and here's another thing, we have a pretty buttoned-down operation in terms of looking at deals. So we'll look at every single Y Combinator deal, which is 1,000 a year probably. And we may invest in 1 or 2, but we're looking at those deals more so to understand what's happening because there's usually some very interesting deals. So, we have a system where we look at every single deal and allocate them to the partners to analyze. We'll invest 1 or 2 a year, but for the most part, and that really helps our deal flow as well. So, a lot of it is contacts. I think—

What would you say your volume is that you're looking at roughly?

In terms of deal flow? Yeah. Oh, I don't know. Probably, I don't know, 1500-something, 2000, a lot of deals.

So that, that's that many dozens a week. All right, Ollie, what's, what's your sourcing process and has it changed in this market? And then I'll turn it over to Merto for the Q&A.

Yeah, so, you know, I think again part of it is also kind of dynamics of where I'm investing and what's happened overall. And so I tend to focus a lot in emerging markets. A lot of other investors have kind of cooled off on emerging markets. And so I feel like a lot of that deal flow has picked up for me because there's not as many other options out there. And especially over time, the last 5 years, my reputation as an early-stage investor has grown. And so I think you're kind of just naturally getting more and more deal flow. You know, I now have more than 100 portfolio founders who are also referring deals to me, and a lot of the portfolio founders that are now Series A or Series B or went through YC or these other things also are angel investors as well. And so they'll refer some of their deals to me. And so it just ends up becoming a lot less hunting and a lot more kind of farming, I would say, and kind of continuing to kind of build those relationships. Um, and, you know, again, I think there's also just been shifts in the types of companies that are being built. And, um, you know, I think I was just like thinking back, you know, 2020, 2021 were such an easy time for people to kind of go out and raise quick money that a lot of founders kind of left you know, they're kind of, you know, startups to go and raise at that point. And so I think what we've seen kind of since then is the bar to leave and to start your own company has kind of been raised. And so there's a lot less founders that are leaving kind of big, safer jobs. And, you know, and so there's kind of less companies being started in some of these emerging markets.

All right. Hi everyone. So I'm going to pick it up from here. They unfortunately had to run to the airport. He's got a flight to catch. We are going to be diving into your questions now. So if you haven't been using the Q&A kind of section of Airmeet, now is the time to do so. There's a ton of questions that have come in. They're really good questions. If you haven't had asked a question, go in and upvote the questions that you want us to kind of address during this panel because We only have about 20 minutes left, so I want to make sure that we kind of, you know, emerge the questions that most of you guys want to see answered. So with that, let's get into it. So Narayan currently has the most upvoted question. She's asking, are you— and I know you guys touched on this a little bit earlier, but she's asking, are you evaluating deals differently in these times? Any particular metrics you're paying more attention to?

I think for me, um, there's less certainty around kind of follow-on fundraising, and so I think I'm paying more attention to burn and burn rate than I probably was 2 or 3 years ago, where it just seemed like a lot of companies were getting money thrown at them and it didn't need to be something you were as concerned about. I think now, you know, understanding how much they're burning, what kind of timeline they need to hit their next metrics, who else might be a potential investor in the next round. I think those were things that, you know, earlier on I might not have been as concerned about. But now, as I feel like there's less investors in certain fields or less investors doing things really trying to make sure I understand, um, you know, more of that situation and kind of being able to predict what might happen over the next 6 months, year, 18 months.

I, I would totally agree with that. I think that, um, A, and also having partners with you that you can invest with is pretty key. So, uh, you know, our first deal in Fund 2 we were lucky enough to co-invest with Andreessen Horowitz on a deal in seed level, which was not— Andreessen Horowitz doesn't call me every day by any stretch. So it's an important thing to have other investors there, or they're having revenues. So there is a there's, there's, there's not going to be as much of an issue from a financial point of view. Um, so it's just kind of a formula. I think, you know, Ali's got that formula in terms of looking at making sure that— because we've, we've all done this, we've all written checks and then 6 months later there's no company left. And that's, that's— you learn and you hope that doesn't happen again. But it— so you have to understand, like, where their funding has come, what their burn rate is, you know, how much they need as, as individual founders in terms of, you know, sticking with it. A lot of people have, um, you know, they really need that salary, so you need to factor all that in.

Yeah, Narayan again is actually asking, you know, how do the dynamics between the GP and the LP, um, at this stage differ during these times versus kind of more normal times, if at all?

Um, yeah, I mean, I think— oh, I mean, I think ideally, right, like, you should be communicating pretty frequently with your LPs as a GP. Um, I think in more positive times, and, you know, what I've seen as an LP and an angel, you know, during more positive times where things are kind of just going up and up and up, you know, maybe you're less concerned and you don't really care if the GP doesn't communicate as much. But I think now that we're in these crazier times, that things are just changing so, so quickly, I think it is really important to make sure that that communication flow is open and that you are, you know, being proactive. As a GP. And so, you know, I think that there have been, you know, probably more communication requests, and I'm noticing that more and more GPs are picking up the communication, I think, during these times, partially probably to reassure LPs and partially because, again, more and more people are just being cautious. And so I think that extra communication does go a long way.

Communications is, is key. And, you know, because you want them to be part of your team, you want them to be cheering for you in good and bad times. We're going to have bad companies. And so if you all of a sudden just throw it on them, then, then that's a problem. Also, you know, communicating. And, and there's a lot of excitement in this market right now. So, you know, I, one of my larger LPs I communicate with regularly and he just doubled down just because he's very excited about AI. So I don't probably communicate. I should communicate more than I do, but it's really, it's very important.

Absolutely. Luis is asking, what are investors' general sentiment around investing in edtech? In the current economy? And I think that's a really interesting question around kind of like education and kind of this new world where everyone has access to AI and these large language models. Um, so happy for either one of you to take this.

So I'll take that. It's okay. I'll, you know, one of the things that we do, and it's— there's good and bad to it, is that we'll— we will avoid investing in certain verticals in AI. Like we will not touch sales, we will not touch CRM. And as it relates to it, and there's a huge opportunity there, but to understand the competition and to know who's going to win and who's not going to win, that's a tough thing. And I think the same with edtech. Edtech is going to be gigantic, especially with AI. Can you imagine going to school now with AI there and how easy it is to learn and ask questions? It's your tutor. Sitting next to you. But we're avoided because we don't know— there's a lot of companies out there. And not that we wouldn't look at companies, but we're— we kind of hesitate and looking at that kind of— because it's, it's a— it's an obvious area that's— they're going to be— there's going to be a lot of opportunity. At the same time, there's a ton of companies that are starting up in those areas, in that area specifically.

Yeah. Ali, anything that you want to add to that?

Um, you know, I haven't done a ton in edtech. I think there are some really great edtech VCs out there, um, and so I think part of it is also, um, we're seeing a greater specialization amongst, uh, GPs these days, and so making sure that like I'm focusing on the companies and the areas where I think I can really add the most value. And unfortunately for me, I don't think that's really edtech at this point. There are probably aspects of edtech or edtech-type companies where my background, you know, in mobile and growth could be helpful. But, you know, in terms of, you know, I think traditional edtech, it's not a great fit for me. And so I think overall there's I'm seeing a lot of excitement from other GPs, and, you know, I wish I had that ability to help those companies, but I just don't.

Yeah, yeah. Clement is asking if, you know, in, in the past 2 years or so, if there's kind of like a new sector that you're interested in, kind of, you know, seeing everything that's happening, how does your investment preference change accordingly?

You know, I think there's been a lot of shifts, um, with Trump coming in power, and even, you know, the last year before that, about, you know, and even kind of going back to kind of the pandemic and, and, and the ideas of, you know, changing the supply chain a bit and, and how nearshoring is going to impact us what that's going to do for a lot of other markets in Asia. What's going to happen to markets like India, Vietnam, Philippines, Thailand? You know, I invest a lot in Latin America. How is, you know, Mexico and Colombia going to be impacted by these sorts of things? Um, and so I think that's one of the bigger changes I've seen over the last couple years is The shift in how people are approaching supply chain, having multiple supply chains, how people are thinking about trade, tariffs, importing, exporting. There's this whole slew of things that, you know, around logistics and shipping that were maybe being touched on a little bit before the pandemic. But I think, you know, especially with all the craziness we're seeing right now, I think there's been more and more attention being paid and more and more questions about how do we optimize these aspects of our products and supply chain.

Yeah, I think, I mean, Ali's focus and expertise in Latin America is pretty key, and those type of things really make a huge difference in terms of— and it makes it more complicated, but also more opportunity. In terms of, in terms of what you're doing, because you've built this amazing, um, network. Um, you know, we're more kind of just soft. We don't really look at that much. You know, we're mostly— we're, we're software driven. So we do— we've been moving a lot towards robotics and health tech, but software driven. Um, we just think that software and AI is, you know, just as, as Ali said before, it's like you gotta— you can't do everything. You can't be an expert in another area. And so we tend to look at areas that that we think we understand better. It's like edtech. It's fascinating, but I just don't understand it. I don't know the companies that are there. And so you need to really focus. So, you know, ours is, you know, just more heads down, just looking at software. So we don't really think about more of the global economy and things like that.

Yeah. There's a question here from Supreeth around kind of exits. you know, they're asking, do you go into investing in a startup with the exit in mind? And I think this is an interesting question because, you know, during this kind of market uncertainty, we're also seeing kind of a massive, uh, you know, plummet in exits and IPOs. And so what is your— how do you guys think about exits? Do you think the, the landscape around kind of how a portfolio company exits is going to change massively once kind of the market picks up? Like, how are you thinking about all of this right now?

I honestly, I don't think about it. I don't think about exits that much. I mean, if, you know, if you have a good company and it's growing and it's generating revenues, you're going to either be acquired or possibly an IPO, right? So it's not, um, it's not something they were about. With that said, over the, say, over the last 5, 6 years, there's other ways of exiting, like secondaries. And acquisitions. But secondaries are an interesting area, and I've been involved with some of those in terms of selling out. So that is a new market. You need to keep a pulse on it for selling your shares, especially when there's kind of hype in the market in certain areas. Selling off a piece of your equity in a company, selling 50% in a secondary, things like that.

I think for me, one of the big things is just, you know, I'm investing so early that most potential exits probably aren't happening for another decade. And when you think back to what 2014, 2015 looked like, it was a very different environment. And, you know, even in between then and now, we've seen 3 or 4 kind of major shifts and what exits look like. And we had the whole SPAC craze, and we had this, we had that. I don't know what's going to happen over the next 10 years. Um, you know, we're seeing ICOs become a more popular potential outcome, secondaries. Um, you know, other markets are, um, you know, other public markets are developing. So I think for me it's less about you know, what that exact mechanism is going to be for the exit, and do I have an idea that an exit can take place? So do I think this is a company that can hit $50 million, $75 million, $100 million, $200 million in ARR revenue? Like, what are the chances of those things happening, and is this the kind of founder that could lead that kind of company? That can open up those sorts of locations, that can set that long-term vision and execute against it, that can continue to inspire their team? Those are the sorts of questions that I'm thinking about when I'm thinking about the exit versus just, oh, they're going to be sold to Google in 3 years.

Yeah. Just one last thing to add on that. It's like rarely will I ask a company, when I'm talking to them is like, well, how do you see yourself being sold? Or, or who are the potential acquisition candidates? To Ollie's point, what I'll talk about— and we will only invest in companies where there's the possibility of a 50x return. We're obviously not going to hit those on our— on the vast majority of our companies. But if they don't have that potential, because we're so early stage and we'll have a number of failures, that you have to have that potential. So that's That's kind of my way of thinking about exits is like, do you have potential? That's because we're so early.

Yeah. Yeah. I love that. Um, uh, question for, for Ali from Talha here. How are you splitting investments across different geographies since you are investing between LATAM, Asia, et cetera?

Um, I'm mainly investing in LATAM. You know, I think there's kind of several reasons for that. I just think I'm getting much better deal flow from LATAM. I think valuations are much better in Latin America. I think the traction I'm getting is much better in Latin America at this point. I'm not opposed to investing in these other geos. It's just You know, what I'm seeing is in Africa, in India, you know, the entry point is much higher for the traction. And I've often found the founders are less willing to listen to investors. And, you know, I think there's just been a bit more challenge compared to Latin founders that I've worked to it.

Thank you so much, Ali. Um, Mario here is asking, and, and, you know, we, we do have a lot of angel investors as well as startups, but they're kind of asking, how do you define very early in, in your funds?

Um, I mean, it would be great if they have revenues. It would be, uh, that's not always the case. It really depends on just looking at the other elements, the team, the idea, the traction, have they gotten traction? Traction's really important. It doesn't have to mean big revenues, but is there traction and what do their customers think, right? Is it viral? You know, if it's an open source, you know, how many people are downloading their open source? I mean, things like that. So it doesn't have— revenue is great. Like the company I mentioned before, we waited 2 years. They, they are definitely— they definitely have revenue. So, but a lot of times there's not a lot of revenue.

Yeah, I think, you know, for me, it's— I'm happy to talk to people super early, um, and, you know, at that point it's probably less about the investment and more about developing that relationship. You know, like I said, you know, sometimes it takes a while till you feel comfortable investing. But, you know, if I talk to you now and you give me your plan for the next 6 months and we catch up in a couple months and you're on track, and we catch up in 6 months and you're on track, it just gives me that much more confidence and faith in who you are as a founder and what you're able to do. Versus just showing up 6 months later and saying, oh, look, I did these things. It's just like, okay, cool, but was that the plan? So I think being able to spend that time working together, understanding who they are, building together is really important.

And it's also really important for an investor when you're talking to these companies of being very clear to them where you are in your process. I like what— and too many investors say, oh, well, keep me, keep me informed and put me on your email list, and they have no interest. It's worse. You have to be very, I think, very specific. It's like, I really have no interest for these reasons, or I like what you're doing but you're too early for me and I need to either see this, or I just want to follow you in general. Uh, and you just have to be very, very specific so that it's fair to both parties in terms of saving time.

Yeah, there's a few questions in here about kind of diligence, um, on, on, on these opportunities. Given everything that's happening, has your diligence, have the way you conduct diligence, or, um, the areas that you conduct due diligence in, has anything kind of changed in the way that you assess companies in the face of kind of like everything that's happening right now?

I think that it's this constant, you know, learning process for me. Um, I think, you know, when again, when you start out as an angel, you don't know all the different ways you're going to get screwed over time. And so, um, you know, after, you know, seeing this company fail because of X, or seeing this other thing happen that ended up hurting you, you learn more and more about it. And so, you know, I think you start to pay more attention to some of these things that you might not have looked at or understood fully, you know, before. And so I think it's, you know, sort of this trial by error process that's happened. And then also, you know, hearing from other GPs in this problems they had. And so, you know, I'm in, um, you know, several different Slack groups, WhatsApp groups, have conversations with other GPs. They tell me about some of the horror stories they've had. And I feel like all these things kind of continue to help develop your due diligence checklists. And, you know, you want to make it a easy process and a quick process, making sure that you're checking all the boxes and that you're understanding everything you need to understand. And so I think there's always this kind of debate between speed and legality on everything. And so just making sure that you're kind of continually optimizing and tweaking that towards what are the real things you need to figure out.

Yeah, you know, it's, it's just getting better each day. You learn more and more each day, and hopefully that helps you make better decisions. And again, spending time with the, I guess, both your, the startups to understand their integrity, um, and how they treat you. And you never know, sometimes as soon as you get that check, they their personality changes. Um, and also the same with LPs too. You need to be very careful about the LPs you bring in because some LPs believe that everything is guaranteed in life. And, uh, you know, so you have to spend time with everyone really and just continue to learn.

Yeah, I love that. Everyone, we have reached the top of the hour. Ali, Ed, thank you so, so much for taking the time to sit with us today and share your super, super valuable kind of insight on everything that's happening. So everyone, please give a final virtual round of applause for Ali and Ed, and all the best. We'll see you all at the next events. Goodbye.