What Every Angel Investor Should Know in 2025

My name is Ryan Micheletti. I'm head of global operations for the Founder Institute. I'm a general partner at the Veteran Fund, and I've spent the last decade leading the team that helped us scale to 8,000 portfolio companies across 200 cities, where I built a personal portfolio of 700 startups. Today I run the Venture Network and the Veteran Fund, which invests in seed-stage critical technology companies with elite military veterans on the leadership team. So today we're going to discuss new investment models to maximize returns, and we'd also like to do extensive audience Q&A. So we do have an international audience joining us. Please say hi in the chat, tell us where you're tuning in from. And if at any point during our discussion you have a question you want to ask, just go ahead and put in our chat. Our producer here in the background will send it to me and we'll try to get to as much audience Q&A as we can. So before we begin, I'd like to give a quick shout out for the FI Venture Network, which is our exclusive network of early-stage VCs, angels, and investors from the Founder Institute's global network. Including Decile and VC Lab communities. So as an investor member, you get first-look access at our companies that are raising capital and exclusive invites to events and opportunities like this and others. So the application takes less than 5 minutes to complete. It's completely free for investors. We just want to build one of the best investor networks in the world. So please go to fi.co/venture to learn more. All right, let's go ahead and get started. So I'm excited to introduce our incredible panel of speakers today. Sirhat Palla is the president of Newfund and a GP at Cross Ocean Ventures, and Ashok Kamal is the executive director at Newfund and also an extensive angel investor. So Sirhat, would you mind doing a quick introduction for us?

Sure, very quickly. First of all, it's great to be here, you know, especially given the fact that, you know, we'll get to talk about a lot more how Newfund Venture Group pioneered the venture group model And being able to talk about that with another pioneer of their own model group like Founder Institute, I think is pretty, pretty good. I'm looking forward to it. I am, you know, even though I'm on the investor side of things for the last almost 6 years now, I am a founder. Once you're a founder, you're always a founder. So I started my first startup in the very early days of internet in the '90s. And then after that, you know, one after the other, you know, some failures, some, you know, successes that led me to about 6 years ago after my last exit to say I am ready to put my head and just try to help the other founders make an impact rather than try to be in the, you know, the steering wheel of things. So it's great to be here.

Yeah, well, thank you for joining us. You know, Newfund certainly has a great reputation and it's an honor to have you both here. Ashok, why don't you do a quick intro now?

Yeah, thanks, Ryan. Like Sarhad, excited to be here. And, you know, going back decades, I've had multiple interactions with Founders Institute from Boston and New York City, where I was from, to where I'm now located in San Diego and the program here. So it's great to be full circle and to be working with you now and Mike. I am also coming from an entrepreneur's background first. I guess maybe the most interesting, if I look back on the 10 or so companies I've been involved with starting, would be a hip-hop record label in the aforementioned New York City, and that's obvious why, which was pre-tech. In fact, we created a little Winamp player when people weren't even listening to music online. But that ultimately was a failure, and it was a bootstrapped company, so at least we could only lose our own money. And then fast forward, I mean, 10+ years later, The maybe most interesting company that I started was in the recycling software space, and that was in the early 2010s. So all of that and more led me into dipping my toe into angel investing in, I think, 2015 is when I made my first angel investment. And now I'm a part of a new fund, and we'll talk about how the angel world has converged into the venture group model that we now work on refining and building every day.

Yeah, amazing. It's also interesting to see just how addictive angel investing and just the whole startup scene can be. And so maybe let's start off with just a little bit more context around Newfund and how it's evolved over time. Ashok, I mean, you're the executive director there. So do you want to just chat a little bit about what inspired the formation of Newfund? How has it evolved over time?

Yeah, Newfund existed as a classic angel group for more than 10 years before I personally encountered it. My discovery was actually through making an angel investment in San Diego, where I had moved for lifestyle reasons, and then shopping the deal around to look for other investors to participate alongside me, finding what was then called Tech Coast Angels San Diego, a sort of classic angel group model here in San Diego and part of a network of other Tech Coast Angel models in Southern California, pitching the company to them ultimately not getting funded, not having the best experience, not the worst. I've seen, you know, the spectrum, but not getting funded and having the tables turned on me personally as a then investor and helping out kind of as an advisor operator for the company, uh, where the Tech Coast Angels board, because again, that's what it was called, asked me if I'd be interested in coming in as the executive director, the first one, the first full-time employee to be hired at this organization. And I thought it would be a great way to, one, learn about angel investing, and two, to build my network in Southern California since I basically had no network when I moved here from the East Coast. Um, what I discovered, and this led to the changes that we'll talk about, was a very problematic and broken model. And I think any product or company that we all as entrepreneurs want to or should work on has to start with a pain at the neck bleeding problem, and I can say that Tech Coast Angels San Diego and the Angel Group model was unequivocally and unapologetically broken when I got involved in 2016. I would say the classic Angel Group model is often still broken, you know, today, but we wanted to try and fix it, um, and so what did we focus on? The core problems with the type of angel group that Tech Coast Angels San Diego was, were both structural, having to herd cats and chase small checks, not having an efficient process for getting to a decision for entrepreneurs. So you have this, and then not having a, a sort of founder-friendly or what we'd call founder-fair culture. So who's gonna actually go and raise money from a group that, uh, takes forever, is not clear that they're gonna even write a check and might treat you crappy along the way. Clearly, an adverse selection bias, which then if you look at the returns, you know, right, of these organizations, they're not going to be great. So that's the broken organism that, you know, we— it was by no means just me, but the leadership at Tech Los Angeles San Diego wanted to try and fix. And we focused on creating a better model, crafting, and obviously refining, which we're still doing over the subsequent years, namely launching our annual fund where we pool capital from the group and deploy it through a voting system among the members. That's one of the core elements of the venture group, but I think we'll talk a little bit more about that.

Yeah, that sounds good. I mean, like on that same thread, Saurabh, do you want to dive a little deeper into the venture group model? Maybe like an overview, some of the benefits. It sounds really interesting.

So when we talk about the venture group model, we almost have to talk about what It is not, first. And I actually want to go back to a little bit also the historical roots, because when Ashok said when he encountered this group, the model was broken, which I somewhat disagree with it because I think the idea was good, but the model really never worked. And I can, you know, unequivocally say it myself because Interestingly, um, with my second startup, I did a pitch to this very same group as a founder myself. It was one of the worst experiences that I had. Um, and in fact, I have to say, it made me want to not raise funding, uh, because I, I was up to something. I, I just started a company, early days with e-commerce, literally using my credit card, $3,000, $4,000 on a balance. And I grew that company from zero sales to almost $1 million in less than 6 months being profitable. And I was pitching this group, you know, my business. And it was a somewhat very early days of the internet. So I even had to explain what internet was to half of the members. And it worked really bad. And at the end I told myself, you know what? I'm gonna be much better spending my time on things that I can control rather than trying to go and, you know, pitch things to people that probably do not understand. They want to understand it, but only a few, and then will take forever to write a check. And I could rather increase my sales, which worked out really great for the first couple years, uh, until the market— the timing was right. You know, and new people, new companies was come— were coming in the market with more capital, more mentorship, more advice, and they were able to come in and do much better. And at the end, I did have somewhat of an exit that gave me a chance to build something bigger and better, uh, after, uh, after that particular exit. But I, I— that was a lesson for me, especially now in my current role, to make sure that other founders will not have similar type of experience. Yeah, I mean, angel investor concept is a great concept because here you have people that love innovation, that are intellectually curious, that want— that, that would like to help founders, that want to be involved. Uh, but then, you know, then the model is so decentralized, democratic to an extent that it's not very workable, that um, you know, they are not able to deliver. So, uh, so the venture group model in fact started from looking at what was right about the angel investor model and what was not good about the angel investor model. And imagine the, the main difficulty, and the main, I think, the problem is you put through in an angel investor model investment decisions are made by individual investors that have all different kinds of experiences, backgrounds, and investment thesis, if they have one. And then, uh, you make them go through a very prolonged process. Some of, some of them, you know, they, they— and, and it's not standardized, it can take forever. Any— at the end, you might not even get one or two checks of $25,000, $50,000. So it's a very unknown model. And, and what the Venture Group model is at the end of today is about people that want to invest, and they don't have to be angels. I think that's one of the key differences between Venture Group model and the angel investor group model is in the Venture Group model, the members are— they don't have to be angel investors. We have VCs, we have CVC partners, family offices, and so forth. And in fact, I mean, I got exposed to the concept of new fund when I was a VC and having difficulty with my due diligence process. But we can talk about that later. And what the venture group model is able to do is with utilizing a venture fund that is funded by membership, we make that venture fund an operating model where we can get organized, but to not to an extent where there is a structured bureaucracy, and then use that venture fund for our making investment, making decisions due diligence, and at that point be able to put the founders to a more standardized process where there is a potential end result with a meaningful check and support that will come after that decision-making.

Yeah, I mean, you, you cover a lot of really good points there. I mean, like, maybe let's dive, um, into the economics of this. So, so essentially it sounds like, you know, the typical angel model is an individual angel will put capital into a company. And when you have, let's just say, like 50 angels looking at a deal with 50 different bank accounts, it can really slow down that process. What was kind of the, or what is the thinking around the pooled capital and how does that actually work? But what are the economics around it and what have you found to work really well?

Well, we can talk about the economics from both the manager's perspective as well as the entrepreneurs. Let's start with the entrepreneurs because to our point, if the UX isn't good for entrepreneurs, you're You're not going to get great, let alone, you know, the best entrepreneurs, which is how you then make returns and economics for managers, right? The adverse selection bias cannot exist for any successful fund manager or investor. So the economics for entrepreneurs in a, you know, fund or pooled capital model like we have at Newfund, what we call our annual fund, is they can get a check for $250,000 to $500,000. In 30 days or less with a single cap table entry based on a democratic vote of the people who are in that fund. It's a highly structured and rule-based system where the entrepreneur can have transparency into what the steps will be, and they will get an answer, yes or no. Obviously, the answer is usually no because that's the business of venture capital, and we see a lot more deals than we're able to invest in. But any entrepreneur who's worth their weight understands that. When we say yes, we say yes pretty quickly and we say yes pretty potently with a multiple six-figure check. So that's the economics for the entrepreneurs. We can talk about the manager side if you want right now, Ryan, or we can, you know, continue on that.

Yeah, I mean, I just— I think it's a great innovation in the angel investing space for multiple reasons. I think it does fix a lot of the problems with that, you know, founder experience going through angel groups. And it's frankly even why, you know, when we were talking to founders who are going out and fundraising, some of the historical best practices are to avoid going to angel groups simply because of how long it would take to get the capital, how long of a process, and how cumbersome it is to manage all of that. And so maybe talk a little bit about the economics on, just so we understand the fund structure and how it works, how it differs from a typical VC fund versus like the old angel group model. Like how does the venture group model operate internally?

Yeah. And you don't have to look far to see examples who had either bad experiences with angel groups or, you know, mixed experiences because that's both Serhat and I, you know, although I wouldn't say I was treated unfairly, my deal got turned down, which was a miss by the way, you know, in retrospect, if you follow that deal now, uh, 8 years later and in Serhat's case, it was, you know, not only a miss, but also it was, uh, not a rewarding experience. So, you know, that's a common, I would say, story arc if you talk to people that have pitched angel groups, you know, for the past 25 years, including who pitched them yesterday, right? Uh, now when you can flip the script and make the fund, even if it's an angel fund or a venture group, however you want to, you know, kind of frame it, process more compelling, then as a group leader, let's say, or fund manager, and we maybe will use those words somewhat, you know, synonymously here, you can also build an infrastructure around the organization, which is a key element of being able to sustain and grow it and make it rewarding for all that are involved. So in other words, in a typical group where people are writing individual checks, you know, in the rare instances of having a hit, it will it will spin back to the individuals who are involved, but it won't necessarily benefit the organization, you know, right? And most people who are not stock picking or startup picking in this case, which is even harder in an individual deal, let's say 1 out of 100, if the group's even seeing, you know, attractive deals out of 100, which many are not, um, it's not gonna have a, you know, social contagion effect, right? Since we're running a fund, we have a carry like all funds do. Ours is lower than market and that's by design. So it's a 5% carry for our annual fund. But nevertheless, there's some economic benefits, you know, where we share in the proceeds and the success, you know, of everybody that's in the group. Um, the other maybe more direct economic benefit to the, our organization is we've been able to grow the group exponentially. So, you know, when I came in in that 2016, you know, era, there were like 60 people that were, investors in the group and not all actively investing. Now there's over 300, and everybody in the group pays dues to the group, you know, like many syndicates. If they are in the fund, they pay their carry to the fund, and we've now started to generate carry for the first vintage fund, which launched in 2018. Um, so, you know, it's more like a VC economic model than a nonprofit angel group that, you know, we still kind of have feet in, you know, both sides of that world as we continue to also evolve as a group. And I think that process will, you know, continue to, you know, reconcile and crystallize over time. But the bottom line is it becomes something where hopefully you can see better deals and then also share in the benefits.

Yeah, that makes a lot of sense. Um, you know, just without getting too much in the weeds of like the technical piece, I mean, is it structured as like a limited partnership? Like a typical VC fund is like, how is it? Or and then like the carry goes to the organization as like the manager or the GP. How, how have you guys structured it from like a legal perspective?

Yeah, it's a multi-asset SPV that gets created every year. So it's a vintage or annual fund system. Let's just say 2024, 2025. The current vintage spans, you know, 2 calendar years. We set up an LLC for each year. It's a multi-asset SPV, unlike an individual SPV where you have to, you know, push and then circulate each deal, right? The capital gets pooled over a typically 6 to 8 week process when we have to stop fundraising because again, we have more than 300 members of the group and the SEC cap is 249. So for the last 4 funds, not the first few funds when we were figuring it out and growing. But for the last 4 funds, we've hit the SEC cap within our group of 249 members and around $6 million total to deploy over the course of that cycle. So that's how it's legally structured, and then it's managed by Newfund, the organization.

Yeah, thank you for sharing that. I mean, I think this is, uh, really interesting innovation because when you compare it to even like SPVs on AngelList, where sometimes it's like 2% management fee, 20% carry. This seems like you're getting this membership, you're building this community who will be more hands-on, I think, than most SPV investors, but the economics make a lot more sense and I think are more fair while it still also aligns with the greater goals of the organization. Has this new economic model around the venture group, does it change the return profile of the types of companies you're looking for? So like an angel investor would be happy with like a 3 to 5x return in, you know, 3 to 5 years versus VC fund, they need to return, you know, 100x in 10 years. And so what would— how does that affect the types of companies you invest in? And does— is that— is there a difference between what you've done previously with like more, let's say, a more traditional SPV or angel model and like a VC model?

There are a few differences and we can talk about, you know, kind of the current system and then maybe Serhat can talk about some of our learnings, you know, as we do a lot of data analytics now and, you know, where the puck may be headed or at least some of the, you know, irons will enter the fire since, you know, it's not really a monolith. And at this point, I think we're diversifying into multiple products as opposed to, you know, one or two. But to answer your question, people ask me often, would new funds like this deal? And let's just say we're talking about our annual fund, which is the majority of our capital and sort of, you know, process. There actually is no new fund that decides if the deal will be like— remember, there's an invisible hand that does not have an investment committee. This is a divergence from a classic, you know, VC, right, or classic angel list syndicate lead, right? The members vote democratically on whether or not we should fund a deal. So if you're one of the 249 people in New Fund 24, the current fund, then you have a proportional vote to whatever your investment is in that fund, right? It's not something that's selected by a centralized authority. So the appetite spectrum from some people who maybe like a classic, you know, angel deal with the, you know, lower maybe risk and lower return profile versus the moonshot, you know, kind of hunters are all in this same basket of investors. And the bottom line is, if 5 people want to write up a deal memo and push it to vote, then the crowd decides. And that's a very different model, obviously, from any, you know, centrally managed fund. There are benefits and also there are downsides, you know, to that model. And that's something we're grappling with right now, which Sorha can talk about. But that's how it runs today. And I think it's reflected in a very diverse portfolio. If you look at the, you know, 120 or so investments we've invested in, and generally it's worked out well for us because, you know, we've done well in some, say, later stage medical device deals when some of the, you know, earlier stage, uh, you know, flavor of the moment, you know, tech deals we passed on, let's say, right? So there's a pretty, uh, wide portfolio there, but, you know, I think it's something that we also have to keep evaluating critically.

Yeah, I mean, one thing I would like to add on to that is keep in mind that Newfound Venture Group is, is truly a pioneer in this sense. And it's a former founder. When I look at Newfound Venture Group, I actually see a startup. And the startup that I see is a startup that have the beginnings of the product market fit, is most likely at the seed stage, that has a beachhead market. And now, uh, the, the first annual fund model that we're talking about is more of a generalist model that depends on our totality of the group behaving in our current fund structure to decide what type of companies we would like to invest in. 90+ percent of the companies we end up investing in is venture fundable companies that are more in the seed stage, and they tend to be, you know, uh, in few different industries. But what we have understood, and now we're at the point of, you know, increasing our toolbox and improving our product-market fit is the fact that different, different investors have different thesis, different risk appetites, different desires for, you know, upside. Uh, so we are, you know, our plan is to create more specialized fund models within our general model so that we will have a group that will be more pre-seed and more, you know, uh, early on, uh, ideally the very first check in an institutional manner. And then we can, you know, focus on, you know, building our seed to Series A model that exists. And maybe later on we can improve with secondaries and the Series A and B type of things that, that will come along. I mean, our— even though our system is decentralized, it might sound like it is like too disorganized. In fact, it is not. I think the administration and Ashok's leadership have driven a structure that is very workable. For a fund, for our, for our, for a company to be funded, only you need only 5 fund members to determine that this is a good investment, participate in a due diligence process where at the end they will create a deal memo that goes to the fund membership that will within, you know, 48 to 76 hours decide if we would like to go ahead and invest in that company or not once there's a deal memo. And then when we look at it historically speaking, out of 125 deal memos, uh, you know, close to in the last 6-7 years we've done, you know, 96% of the time the group decided what the ad hoc investment committee came up with and the deal memo recommendation is within their expectations, then they go ahead and approve it. So it's not really a very decentralized in a sense that it is dysfunctional.

Yeah, and I would just, you know, clarify there that when Sarat says 96% of the deals got approved to fund, that's of the maybe 2% in totality that we've looked at. And here's the reason why, because you may be thinking, well, if any, you know, 5 people can just write up a deal and, you know, get it to this rubber stamp vote then, you know, we'll be investing in everything when we're doing, you know, 15 deals a year, you know, of $6 to $10 million, right, in aggregate. Here's where the, you know, maybe DNA of the angel group and, you know, the non, you know, kind of fund, uh, spirit comes into play. Because in order for 5 people to write up a deal, one, it has to go through the process of review and evaluation and screening and due diligence by the totality of the crowd. Two, there's a trust and reputational bond there. Many of these people actually know each other, you know, personally and professionally, because we do also have a lot of in-person, whether it's in San Diego where the majority of our current in-person events and meetings happen, which, although they're all hybrid as well, but now in these cluster markets of Austin and Boston that we've launched, and we have others on the roadmap, um, you don't wanna just write up any old deal and send it to get the guillotine, right? So the process leading up to a vote, which is very much based on the professional trust and, uh, respect within the group— that's the culture, you know, right— makes it such that only serious and top-shelf deals get a chance to get to the finish line.

Totally. I mean, in order for someone to go to the trouble of even writing the deal memo and getting 5 other people to support it, I mean, you have to have strong conviction in that company. So there is that hurdle. It acts as a really good filter. So I'm not surprised that like that's actually the first barrier that kills a lot of the deals is like there's just not enough conviction from any individual investor. So I actually think that it's really interesting. There's a couple of questions here in the chat. I mean, we could dive deeper in the venture group model. We should definitely talk about like the portfolio success and support side of it. But, but let's get to a few questions here. So Ram is asking, what is the criteria that new fund investors look for in investible startups and what is Newfund's investment thesis? So maybe one, are there specific types of companies you're looking for? And then two, are there any benchmarks that you also look for?

Well, given everything we just talked about where there is this Newfund invisible hand, or maybe it's an invisible brain, we can't say that there is a single criteria. However, if we were to just distill down to one, the majority of the deals that we've actually funded, and two, the kind of deals that we're looking at now, we're looking for, you know, 100x type potential investments. So not really much different than your typical venture capital, you know, syndicate. And that's just the basic economics of running a fund, which is still very similar in our case to any fund model when we're talking about economics. And you asked me about that before, Ryan. So, um, We are looking for outsized outcomes, knowing the, you know, rate of success for any startup investor. In terms of our specializations within those kind of venture-grade deals, we tend to do more in deep tech. So a good portion of the new fund composition comes from some of the biggest companies in San Diego. We're talking Qualcomm, we're talking Illumina, and then our remaining membership largely is represented by the other big tech and big life science companies, you know, around the country. So we do have a deep tech specialization. I mentioned, I posted in the chat, we have another Agentic AI Demo Day coming up where, you know, we're looking at deals that's open to investors. We've already picked the deals and we, you know, do meetings like that on a recurring basis. But I think if we were to characterize the thesis within new fund, it's really deep tech.

Yeah, that's really helpful. I love the idea of creating sort of like mini funds or mini specializations within a new fund because one, it might help you avoid that SEC cap and then so you could grow your investor base. But then two, you know, especially like San Diego, it's like life sciences, deep tech, defense, those areas are really hot right now. And so I just, I really like what the vision is of this. There's another question here by Annabelle. She's asking— there's actually a couple of questions in here. So what's the ideal cap table structure for an early-stage startup that's raising its first round of funding in terms of balancing a strong investment for VCs and angels while the founder also can retain control? So what's like the ideal kind of dilution, I guess, in that kind of pre-seed to seed to Series A? And then the second part is, you know, how much equity should that founder be willing to give up Um, so maybe we could talk a little bit about like the dilution aspect going from pre-seed to seed and then Series A.

I think what we, what we look at is pretty similar to the general guidelines and benchmarks of the venture capital, you know, landscape, which, you know, I think, you know, de Carta or C Founders Institute, I mean, the answer is 15 to 20%, right, per those rounds.

But I mean, there's— that's pretty well established.

Yeah. So, yeah, but, but if, you know, like there's established guidelines on there, but like 10-15% before you go to the institutional, then, you know, 10-25% depending on how you do. But at the end of the day, by the time you're a founder, you come to Series A, you still would like to have at least 55% plus or somewhere on there equity left so that you are in a, you know, fundable position for the future. —dilution.

And take a lesson from Serhat. Just go to an angel group that doesn't treat you well so you don't even want their money, and you'll retain more than the typical CARTA benchmarks, which are for the venture capital universe. Now, you still have to succeed then with the company, which that's the hard part, right? But he kind of threaded the needle there.

Yeah. Yeah, I think that's really interesting. I mean, a lot of founders might think, like, okay, VCs are trying to screw me and take most of my company. It's good VCs. It's actually the opposite. Like they, they want the founder to still have a lot of skin in the game going into that Series A, like you mentioned, sort of at the 55%, because that's going to keep them motivated to perform. And so just back of the napkin math, Annabelle, is you should anticipate about 20% dilution. And then if you do a really good job, you have high traction and you could raise at better valuations, then maybe it's closer to like the 10 to 15% dilution in each round. But Just if you're going to project it out into a standard case, I would use the 20% mark, and then hopefully you can do a little bit better than that. One other question here, and then let's dive into the portfolio side of things. Enviro18, I think this is a founder. What is the period expected to receive an ROI when investing in early-stage companies? Is it different for an angel group like Newfund versus a VC fund?

We still go by the general benchmarks. So I think, you know, the answer, if you take any venture report, is really in the 10-year-ish, you know, kind of range. Um, and that's the life cycle for most venture funds. You know, not surprisingly, some of them are often going to 11 or 12 years now because that's when the bigger, bigger outcomes often tend to happen, if they're going to happen. Um, so, you know, I would just say and repeat what Saurabh said, we're generally going by, you know, the guidelines of the industry that we operate in. And I think the only difference here is there are people within the group and within the fund who may be happy to double their money in 2 years. And so we may see a small number of deals that fit that profile. And at the end of the day, no investor is, you know, beating their head against the wall if they get their money back 2 times after 2 years. It's just That's not the way you can build a mathematical venture model because it won't make up for the ones that are inevitably going to fail. And we can talk about, you know, portfolio, both wins and losses. So even within Newfund, where there is this invisible brain, we're still not going to be looking for deals that profile to a 2x in, you know, 3 years. We're still going to be looking for, you know, big 10x to 100x type returns that might take 10 years to, produce.

Yeah, one caveat to that is that is, I think, with the venture group slightly different is the fact that since venture group is driven by the, the, the, the member base, and when you have a member base like us which has close to 353, you know, members now, you have these different pockets of investors with different investment thesis. So in the, in the, even in the last 12 months, we have had cases where we have done collectively as a group, not necessarily through the venture fund, but the group working together, creating different SPVs or direct investments. You know, keep in mind some of these members are— can write like larger checks too. We were able to fund companies that might not be as venture fundable in a true sense. They were companies that are, you know, like, um, ideally will become a more private equity acquired type of company with less risk but less multiplier, be able to utilize the, the, the, the group membership to raise even— you know, I think one of those deals raised, uh, more than $4 million in the last year, but it was not a true venture fund, uh, type of company. But, but the fund didn't invest, but the members that got together, that understood the company, understood the subtle differences, was able to work together to achieve that. I think with the venture group model, you have a larger group of members that are trying to understand the founder and can sometimes crack harder to crack deals, either because of the industries that they come from or the different type of signals and noise or the very detailed, nuanced, technical requirements, you have a better chance to be, to be understood.

Yeah, and I think that's an important point because, you know, you don't just have us here, Ryan, as, you know, emerging VC, you know, micro VC X, that would say exactly look at the Carta data, you know, for what's the dilution, or exactly look at, you know, this, you know, hot industry report from CB Insights if you want to know what we invest in. What Saurabh is saying is the bones of this organization here still allow for different types of investments beyond just the typical emerging manager, you know, VC fund that, you know, you'd be talking to or working alongside. And that for us then creates diversity. So we have a diversified portfolio that I talked about, but we also have a diversified financing portfolio and we're continuing to build upon that because at the end of the day, we want to be responsive to this large collection of extraordinary members who want to deploy capital. So then we have to build products that facilitate that. Some of them are existing and legacy products, and some of them are going to be new products. So it's not exactly like a buffet where we'll invest in anything under the sun and through any means, but it's more like maybe a Turkish breakfast. You can hear the accent of my friend over here where there's sweet stuff, there's some savory stuff, But at the end of the day, it's, you know, still mostly eggs and bread, you know, right? Like even, and, you know, that's the venture, you know, type deal that is the majority of investments we make.

I mean, as the Turkish American here, I was supposed to be doing the Turkish analogies, but you really hit the target there. I know it's good to talk about some success stories and specific examples, like one of my first dealings as a member with Newfund, and I think the first time I understood the magic behind this group was there was a female founder that I got introduced that was building a digital identity solution that utilizes blockchain. And this deal came to me early in November, right before Thanksgiving. It was a hard deal. And I felt really, I really liked the founder. I really thought there was something there, but it was just too much for me to handle. And I utilized the group. And even though it was a blockchain model that at the time was a no-no for a lot of venture funds, the group came together, was able to, you know, dissect the, you know, the deal in a way that understood what was the core value proposition. And even before the end of the, uh, the year, within 4 to 5 weeks, Thanksgiving time, we were able to close that deal that gave that female founder the chance to be able to actually complete the, the funding round that she was trying to finish. And she couldn't have a lead before, and now with us coming on board, she was able to conclude. So this venture group model, by being more I think, you know, harder working and, uh, and a wider diverse, uh, understanding and, and the expertise, uh, was able to do a deal like that. I think it would have been very hard for a small emerging fund to do just because of the, the depth and the diversity of the experience.

And I think if you look at and you ask us, or what people say distinguishes our group, you know, the most, it's the breadth and depth simultaneously of the membership, where we can see a deal that's next-gen sequencing, or we can see a deal that's 5G wireless, or we can see a deal that's a B2B SaaS, agentic AI. And we have multiple experts who, you know, ran units in companies that are doing that or built companies themselves in those spaces, or they're just highly dialed into those spaces if they're emerging. And that's, I think, what really is our greatest strength. So we're just building operations around that asset base, right, to be able to successfully deploy capital into good investments. There's another Turkish proverb I'll share that I've heard from Serhat, and it's, if you have milk and you have sugar, let's make halva. Halva is a dessert. So our milk and sugar is that we have, you know, these members that are exceptional and we have capital and the halva is making good investments.

Yeah, I couldn't agree more with that depth and breadth. I mean, we do something similar with the veteran fund. I mean, we're limited to 99 LPs, but we were very strategic with who we brought on, who are subject matter experts in these various areas of like critical technologies. And it's just, you know, it's amazing to see like one, like they want— the investors want to be hands-on and want to be helpful, right? Like, you know, they don't want to just put like blind capital to work. And so I do think like leveraging the collective network and experience is important. I think along those lines, like, what do you guys do? What's, what's sort of the process post-investment? When the companies need support? Do you have like a specific like check-in or do you have like an annual update or is there like a Slack or communication channel where companies can put their asks? Like how do you manage the portfolio and supporting them with that many members? Well, it's multilayered.

I'm kind of on this meta layer where I'm dealing with all the companies, including, you know, signing documents and, you know, wiring funds and therefore Generally, my role tends to be, okay, we're gonna be raising a Series A. Can you make some introductions to some investors? And I do that and, you know, every few times a year it lands in, you know, a million dollar check or a hundred thousand dollar check. Uh, but then there's the more, uh, specific individual company role. And I'll defer to Serhat since, you know, for example, I can think of a company based in Florida. It's a health tech, you know, wearable that, you know, he is constantly you're filling that role for, and there's others, and you can, you know, share a few examples and specifically what role he plays.

Yeah, with our investment process, we, we have an ad hoc due diligence team, and oftentimes one or two members play the role of a deal lead that ends up becoming, um, if there's a border observer seat, they usually take that seat, but they become the liason of the group with that particular company. And they are, you know, they get the investment updates, they become a way to look for ways to synergize our resources in a way that can help that company. If there are particular asks, they come to the group, use our, you know, internal Slack channels to ask for specific help from the group. So we do have that, um, you know, liaison person, uh, from our membership that is on the company side, and ideally stay with them. I mean, practically speaking, we know, uh, that we come early at this generally, you know, late pre-seed, early seed stage, and we know that most of the time the value that we can create for our portfolio companies happens in the first 24 to 30 months. Because if, if the company doesn't wear a good job They usually graduate and they go to their Series A and other investors. Now we became a second or the third circle that they sometimes come to, but until that point we are close in contact. And if, if you consider the fact that we have about right now 15 investments per year at any given time, our practically, uh, number of portfolio companies that we can help is about 35 to 40, which is not that hard to keep in touch with given how many members and, uh, you know, what type of connections we have on a regular basis.

Yeah, that's really interesting. Um, I've got more of a personal question here along— we have— so we have some aspiring founder— or excuse me, aspiring investors who maybe are like thinking about getting into angel investing, um, on this call. You know, Sarat, as a GP in a VC fund and as an angel investor and as an exited founder, like, how do you think about your allocation to angel investing? Because like, obviously you're skewed pretty heavily towards like tech investing and startups, which are like, you know, essentially high-cap stocks. Um, how do you think about your, your personal investing strategy when it comes to that, and also balancing the fact that you're also a GP in a VC fund?

And I think, like, I, I have to say, I do have another identity as an investor. After my exit, my relationship to early-stage investing didn't necessarily start with angel investing. It started being an LP in VC funds, and I did that because I thought that was the best way that I not only have exposure to this asset class but also can, you know, be involved with, um, helping, you know, uh, founders. Um, and I did some LPing in several different emerging funds, which I quickly realized that even though, you know, being an LP in an emerging fund is great. You have exposure to the asset class, and you do it in a very healthy way that you have diversification. You are not investing in one particular company, but then you are also one layer further away from the founders. I realized that my, um, my preference as an investor wasn't just the ROI that I expect from this asset class, but being able to have be close to the founders, both from an intellectual curiosity, also pay it forward mentality to help the founders. And I did realize that I could do that supporting the emerging managers. But let's face it, as emerging managers, now that I am a GPS fund too, you, you know, you want to use your LPs as a resource, but I mean, you, you— there is a, there's a limit to it, and they cannot really be part of all the investment decisions all the time or have direct, you know, founder, you know, founder connections. So my, my GP came from after my LP, uh, and I, I think it's a healthy exposure because, um, I'm still diversified. I have more investment as an LP than a GP, and then my angel investor came almost as a gap filler where You know, when you're a GP or a, or an LP to a fund, you are limited by investment thesis and you cannot make investment decisions on a regular basis, and you're not as opportunistic and proactive. So I use still my angel investment, uh, exposure as a way to fill that gap and maybe invest in startups and founders when there are enough signals for institutional investors to come in. But I do have this personal conviction in that founder that something might happen. And, and I, and I, I mean, I have, uh, you know, I have investments now where I invested as an angel investor first, then as a GP in CrossOcean, and then, you know, Newfund invested as a portfolio company, and even you know, multiple times, uh, you know, in, in different stages. So having these different tools really can give you, uh, not just more exposure but can also help the, uh, the journey of investment, both for the founder and as an investor yourself.

Yeah, that, that's a great overview. Um, there's a question here in the chat. It really comes down to like deal flow. And just to tie it into, to your answer here, how do you think about like partnering with other funds? So for example, you know, as a source of deal flow You know, if another fund has invested in the company, is Newfund on their like speed dial list to like send the company over to Newfund? So like, one, how do you source deal flow as the venture group model? And then the question here in the chat is like, how do you— how does someone, you know, come to the attention or how do they become top of funnel for Newfund?

I, I, maybe I'll start and then I'll let you— I show, because that's a very critical not only question but also the difference when it comes to venture group. Because with the venture group, let's— I mean, our entity structure is, is designed to have our stakeholder in the core, which our number one stakeholder is, is our investor group. And but that doesn't mean that we are not founder-focused, because for us to serve our stakeholder, number one stakeholder our investor, we have to really serve our founders because it's the founder that creates the value that helps us, uh, with the serving the investor. And because of that very purpose, since our stakeholder, number one stakeholder, are the investor, we are not, um, primarily looking at, oh, we should have all our LPs and investors put all our money in our funds, or we should keep them in our group and, you know, try to put a barrier around them. On the contrary, we love having members that are VCs, we love having members that are family offices, or, you know, you know, high net worth individual angels that go and LP in other funds. Because when we have more exposure and more, uh, you know, deal flow partners both upstream and downstream then we can, I think, improve our deal flow and also can help support our company. So we are super, super open and enthusiastic, motivated to be able to work with, uh, you know, from, uh, with other, other investors. And I'm sure Ashok has some other things to add on that.

I would just, in summary, mission critical, mission critical, mission critical, the relationships with other investors, whether they're investors that are in the group— I'm talking professional investors, and we have many— whether it's investors that are sharing whether it's investors that we're sharing deals with.

Yeah, that makes a lot of sense. Is there a— in the last like 5 minutes here, right, there might be a couple other questions. So I'll do a last call for questions here. But what is— what's one of the things that you found is maybe not working very well with the venture group model that you're actively working to change? Or is there some friction point that, you know, you're working to continue to increase the value that you guys are creating as a new fund?

There's 100 things that we're working on constantly just to improve our organization, you know, from the technology stack, you know, to the culture, which, you know, culture is like bonsai trees, right? You have to constantly, you know, work on it. But I think the thing I'll dial in on here is, to quote not a Turkish scholar, but a hip-hop legend, you know, going back to my roots, Jay-Z. The gift and the curse of this decentralized, democratized investment decision model that we have, and we talked about the gifts. The curse is that sometimes you have competing priorities and sometimes you have loud voices that don't necessarily understand a space as much as a quiet voice. So the consensus-driven model can work in some scenarios, but it can also be a blind spot in other scenarios. And I'll just say it's a problem that we're working to fix.

Yeah, very well said. And I think also, like early on I said, it's newfound. We are pioneers, which also means that we have a lot of things to solve because we are at that seed stage startup level where we now know what's working, what can work better, and what we need to fix. Um, and like, like having more organized, uh, subgroups of investors with their own fund, individual funds that have more, uh, more organized and, uh, investment thesis with better designed decision-making processes will definitely help us perform better because now I think we are not probably doing as many early founder bets as we want because we are looking at a little bit more technology, a little bit more validation, uh, than, um, than probably is required to be able to do these higher moonshot early-stage bets. And I think, um, you know, our success rates when it comes to failures is, uh, is, is high. But I'm not saying that it's in a good way. I mean, when we look at our 100, 10, 15 investments in the last 7 years, we have maybe, you know, a couple dozen, you know, successes and failures. And that is already, you know, somewhat clear. But I think we should have had more failures than what we have now, which makes me believe that we didn't do as many tough bets, and that's something we're trying to fix by having a more, you know, a comprehensive toolbox.

Awesome. Well, there's, uh, I know we, we're wrapping up here, just one quick question. Boris, I'm going to take your question in the chat, I'm going to kind of repurpose it a little bit. What, what's your tech stack look like? What are the tools that you guys are using? Is there anything that you found to work really well when either managing the managing the investments, are there any approaches or tools that you've found to be particularly helpful?

Yeah, well, I think asynchronous, kind of, and self-serve along with sort of livestream, real-time tools as enablers. But let me introduce you to our CTO, Serhat, who I think can talk a little bit about where it's headed right now and some of the things we've been building both in stealth and then deploying, because he's really been a visionary visionary there, and not just a visionary but an operator.

Again, thank you, thank you for that. Uh, um, since we are pioneering in a place that is dynamically changing and also happens to be a small niche industry, as you can appreciate, we do not have established tech solutions out there we can easily implement to our use cases. So we have to use different types of tech stack layered on top of each other and have to create, you know, custom integration solutions to maybe customize it to our use cases. And also the fact that just like any other community-driven organization, we have super users, we have occasional users, so we have to have a tech stack that serves these different type of personas. So we have a flock-like— it's like Slack-like solution for super users that are using it on a daily basis, even multiple times, almost like a social media platform. Then we have solutions that are more learning platforms that is more demand on, service on demand type. Then we are using CRM solutions that integrate and help us identify what's working, what's not working. How we can engage and onboard our members better. But by no means we are close to even, uh, saying that we have found the solution. This— it is very hard, I think, trying to do what we— what we are doing, which is basically trying to create that third different type of investor, uh, uh, class that is different than the angel investor and the venture fund model, which is not like— we are not in the middle, you know, we are not saying one is better than the other, it's just different. We, you know, maybe I'll leave it at that. If you're a founder today, you know what you're expecting from your investors. You're, you know, you're not expecting just capital, you're investing, expecting responsiveness, conviction, strategy, customer partners. And if you're an investor, what you're expecting is to be involved, to learn, to back companies you believe in, you know, to actually know what's going on after you write a check. So in that sense, the Venture Group model that we're building is trying to deliver results for those both sides. And with and without any type of tech stack, that will be a hard ask, and we're just trying to do to accomplish that.

Yeah, well, thank you for, for sharing that, and, and thank you to both for joining today. I mean, this was a really great session. I think that the audience got a lot of value from it. So it's top of the hour. I think we got to end here, although I feel like we could keep talking. So any final last words for the audience, Serhat or Ashok? Maybe what's the best way to learn more about Newfund and get involved?

So newfund.com is our website, and spoiler alert, we're relaunching the whole thing over the summer along with a lot of the other backend tools and infrastructure that Serhat just alluded to. But you can find us on LinkedIn. We definitely encourage connection. And we've met some great founders on LinkedIn, just to take that one platform. Some of our members, some of our favorite members have connected with us through that platform. But we're generally, I would say, accessible people. We— I can appreciate the journey that both the founders as well as the investors, you know, on this webinar are embarking on. And we're kind of all in that same boat together. It's a hard time, you know, for for venture, whichever side of the table that you're on. And also really appreciate you and Mike, Ryan, both from the Founders Institute perspective as well as the Veteran Fund, a, you know, institution here in San Diego that speaks to the culture, speaks to the mission, speaks to the spirit. And we're just very happy to be working with you as well.

Yeah, well, likewise, you know, appreciate the partnership with Newfund and looking forward to doing some great things together. Um, I'd also like to thank the audience. Thank you for joining us today. We'll send out the recording here in the next 24 hours. And again, if you're interested in learning more about Newfund, um, go to their website. And then if you're interested in learning more about the FI Venture Network, you can go to fi.co/venture. Um, thanks a lot, guys. Looking forward to the next one.