How VCs Raise Money From Investors (LPs) feat. Gale Wilkinson

Today, I am super thrilled to have Gayle Wilkinson joining us from Chicago. Gayle's the founder and managing partner at Vitalize, vitalize.bc. It's a seed fund.

I don't really follow, you know, the what's popular in the market. I think it goes back to the fundamentals of what we think is a good deal within the industry that we're looking for. It's an interesting time in the world. I think we're going to see a lot of shifts happening energetically on the planet, and we have to start paying attention to just treating people better and giving others opportunities, and it will end up coming back to us. I think entrepreneurs, they build solutions to solve problems they've had. And oftentimes you don't know how big the market is until you do the research on the competitors and do full market research and customer research and really validate that there's a larger opportunity there. I think that's the step a lot of founders skip because they get so excited about what they want to solve. Probably my biggest learnings are don't always believe a founder. And so, I tend to believe everything at face value until I'm proven otherwise. And then, once you have lost my trust, you're probably not gonna get it back. In respect with AI, I think every company in work tech will have a flavor of AI, but there's not really AI companies per se. I care a lot more about—

Hey everybody, welcome to the Building Public Podcast. I'm your host, KP, and on this show, I interview world-class entrepreneurs, ambitious startup founders, creators, and builders on the internet who are boldly building the future in public. This podcast is my excuse to take you all on a curious journey to understand, learn, and hopefully be inspired by the worldviews, insights, and stories of these fabulous people changing the world. So far, I've gotten the rare privilege to sit down with incredible guests like Gary Vee, Alexis Ohanian, Kat Cole, Sahil Lavingia, and many more leaders. So check out the full podcast listing at buildingpublicpodcast.com. Now buckle up and get ready for our latest episode. Hello everybody. Welcome to yet another episode of the Building Public Podcast. I'm your host, KP, and today I am super thrilled to have Gail Wilkinson joining us from Chicago to the Building Public Podcast. Welcome to the show, Gail.

Thanks, KP. I'm excited to be here.

So just a quick intro for someone, you know, who might be new to Gail's work. Gail's the founder and managing partner at Vitalyze, vitalyze.vc. It's a seed fund and an angel community investing in transformative work tech software. Remember the word work tech, 'cause we're gonna double-click on that in a minute. Together, she's raised about $23.4 million. I'm not sure if it's just Fund 2 or together from Fund 1 to Fund 2.

That's Fund 2. Yeah, Fund 1 was $16 million.

Oh wow, fantastic. And the angel group is about 500 people. Both, it's actually the world's largest angel group for both accredited and non-accredited investors. And she's deployed over $70 million in capital across 100+ companies. This is amazing. I wanna start off on what I was priming earlier about, which is work tech, 'cause that seems like a thesis that you really like, you know, stood by. And I'm really curious what drove you to that particular thesis, and what do you think is the underrated aspect about that thesis?

It was really just driven by my theory that all of us doing early-stage deals need to pick something to focus on, because there are so many deals. I mean, even today, I still get dozens dozens of requests to talk to founders and it's founders from all over the world and all different kinds of industries and you can't manage it. And so you have to figure out what do you really love and double down on it so that you start to build a brand around it. Founders know how to find you, co-investors know when to send you deals. And it was probably 5 years ago when we started doing a lot of work tech and I realized we're still saying that we're generalist B2B investors in the market, which is not really smart because we weren't getting a lot of specific deal flow for work tech. And as soon as we planted our flag there, we get a ton of it that's very relevant and very strong from co-investors that we like.

Was your prior experience in the work, like work tech, did that lead you into deciding this was the right thesis for you? When did you realize that, okay, we're going to plant our flag on this particular thesis? Or what experiences have led you to that, I guess?

Yeah, well, I think it's just fun. So I personally like it. My team likes it. And I had started a couple of businesses in HR tech in the past. So I knew the space pretty well. And when I looked at the deals I had done previously, both personally as an angel, and then also at my role at Irish Angels at the time, a lot of it was work tech companies. And I define work tech as any company that makes work outcomes better. So if you think about what that means, a lot of companies, it's a lot of B2B software. Um, and so we're just looking for big ideas that truly transform workflows and work outcomes.

I love that. Awesome. You were also part of Kauffman Fellowship and it was a 2-year program. And I'm actually really curious, what is that program? Someone, if someone doesn't know what that is about, including me, I've heard a lot about it, of course, but definitely never experienced that. So I'm really curious about what is the program? Is it kind of like an MBA for VCs or aspiring VCs? And the part 2 of the question is, what were your unique, like 3 takeaways or learnings from your journey there?

Yeah, I would say it's an executive MBA for VCs. And my favorite thing about the experience is the network. I have amazing friends who I can go to and ask questions of any type. I think I just asked in the group chat for help with the line of credit and I already have help. So I mean, that kind of safety net and line of just any sort of question that you have is amazing. I would say that aside from the network, the biggest thing that I personally got from the experience was a confidence builder. And what I mean by that is for somebody That doesn't necessarily come from a background where I had done a lot of deals or, you know, grew up even knowing what venture capital was. I think I, I learned about it in business school when I was 27. I, I sometimes didn't feel like I, I fit. And when I sat in the room with all these other VCs, many of whom were at big name funds, or you could tell they're extremely bright and very talented. And there were many times where that experience let me know like, hey, I actually know a lot in this room and I can contribute a lot in this room. And it was a way for me to kind of get rid of the imposter syndrome.

That's a big factor in everything. I'm actually curious, given the fact that you were in these rooms with such brilliant and bright, you know, investors, what were 3 or 4 traits for you that you took away from that experience and thought, okay, I'm gonna embody these in my journey? Like, what makes great investor in your playbook personally? And is there any role model?

Yeah,

that comes to mind.

This goes back to authenticity. So this is where a lot of people, I think, mess up because They believe they have to be a certain way, or I want to embody what someone else does well, or I want to copy that, or I want to model after whatever it is. And at the end of the day, we have to figure out what do we like, who are we, what brand do we want to project to the world, and what impact do we want to make? And then figure out with all of those attributes in mind, what is the right move for us in terms of the firm and the industry and how we present ourselves? So, I actually think that there's a lot, a lot of different ways to do venture and that the diversity is what makes our industry really interesting. Um, I do think there's quite a few pockets within our industry that think there's only one right way to do things. And that may have been what blew up the markets in the last couple of years because they all invested in the same stuff and they pushed the prices way up and then it had to correct, right? So like, there's still a lot of work to be done in venture, but for any VC that is brave enough to be authentic and do what they want to do and what they're very good at, They're going to find success.

Let's talk about the dramatic shift that happened, right? From 2020, '21, almost to the first half of 2022 was like ZIRP, zip phenomenon, or whatever you want to attribute it to. It feels like post-May 2022, everything has shifted to a different dynamic in the venture land. What is your perspective on this? Is this a temporary ride out the storm situation for founders? Or is it like the new reality where you— this is just how it's going to be because it was how it was for years before the bubble happened?

I think moving forward, it's going to be a lot of what we saw in 2023, where funding is a lot harder to obtain. Um, a lot of that is being driven by institutional LPs. I think they're going to continue to put their cash in what they consider to be safer assets.

Mm-hmm.

Um, as that happens and less money is available for venture, I think it will get very concentrated in a few multi-stage large firms and then a ton of small funds is where the retail or the individual investor will put their capital. And I think we're going to lose a lot of the funds in the middle, to be honest.

Yeah, you either have to be like a strong thesis, personal brand, small fund, right? It's almost like a barbell strategy, or you have to be a blue chip tier 1 name recognition.

I think it's more a function of where the funding is going to come from. So if you think about today, in 2023, we closed fewer funds than we've seen since I think it was 2017 or something like that. I mean, it's, it was so hard to close money this year because what happened is these large pensions, endowments, corporates, they had put so much cash into funds. And on paper, they're underwater right now because the values were too high and they were all chasing the same hype stuff.

Right.

And then looking at that, you have to imagine that there's a lot of fear that these institutions have where they're like, oh my gosh, I have to stop the bleeding. And so I'm going to move it to something safer. And as that happens, there's ripple effects in the entire industry and every single venture firm, except for the very big ones, are going to find it a lot harder to raise money. And I think we're going to start seeing more closing.

And the crazy thing is it trickles down to founders raising their rounds. It's wild. When you said the fear, what comes to mind is I think something I was reading about Warren Buffett, where he was saying something on the lines of like how there's 2 cycles. It's either the greed cycle or the fear cycle. And it's almost like herd behavior collectively, right? Like I remember during that era, like I wrote 10 checks, angel checks in the ZIRP phenomenon. And I was so greedy. Like, not greedy, like so greedy, but like I was driven by FOMO, right? Driven by, oh my God, this is the hottest deal ever. Oh my God, that's crypto thing. Oh my God, this other thing, you know? And now it's like the opposite. Everyone's frozen, including me, but also like even like actual friends that I have who are fund managers, like very, very meticulous in diligence now, but it's like too much, right? Wow. You're like, this is interesting the way I think the pendulum swings. And

that goes back to, you have to be brave and you have to have the courage to know exactly what you want to invest in and not care if it's a hyped deal. And believe me, I've gotten pulled into hype deals, um, not as much as many other VCs, but it sucks when it happens and you just learn from it and you move on. But

yeah,

you have to be willing to know what you like and to keep investing in it. And so our firm is continuing to invest just as we have been.

So I saw on the website, was it almost 7 or 8 you said roughly on each year? So how many have you invested this year and what has it been like, you know, in 2024? Yeah,

we are on deal 16 of our fund 2. Wow. So we expect 30 to 35 companies. We're about halfway done. And we do 1 to 2 deals per quarter, just kind of depends on what that looks like. And we have out of our angel group, we've done 14 deals now. So we do a, you know, probably averages to 1.5 per quarter.

Right. And has it, I'm curious, has most of them been AI-based products or what's been like 1 or 2 patterns you're noticing this year?

I don't really follow, you know, the what's popular in the market. I think it goes back to the fundamentals of what we think is a good deal within the industry that we're looking for. The first thing is it has to be a huge market. Can this be a $100 million revenue business? Can it be worth over a billion dollars?

Right.

And then from there, is the founder really good in the sense that they know the market, they've already executed and proven that they can get traction, and we believe in their vision to grow this company into a big one? And then we're looking for proof points. So, what is there about the business that we, you know, see it and we say, okay, we, we think there's something here, whether that's clients and revenue, it could be just customer research if it's a pre-seed company that our angel group is looking at. But we always want to understand, is this morphine and a painkiller, or is it a vitamin and a nice to have? And that's the distinction that we're really looking for. In return, in respect with AI, I think every company in work tech will have a flavor of AI, but there's not really AI companies per se. I care a lot more about data. Data is where the proprietary value lies.

Fascinating. Hey, you mentioned the morphine, like the painkiller versus vitamins, which is I think a great way, a great framework. I wonder, what do you think about all the founders who are building vitamins? I wonder why are they doing that? Because it feels such a common sense wisdom to not do that.

I think it's hard to tell.

There's a bunch of them even on my— even in my circle, like they're building vitamins. And I'm like, why do you think that happens at all?

I think entrepreneurs build what problems they've had, build— they build solutions to solve problems they've had. And Oftentimes you don't know how big the market is until you do the research on the competitors and do full market research and customer research and really validate that there is a larger opportunity there. I think that's the step a lot of founders skip because they get so excited about what they want to solve, which is great. And I think a lot of those that are vitamins can be awesome side hustles, but I don't think that they should raise venture because they're never gonna get the revenue to sustain that kind of growth trajectory that's needed.

Yeah, venture's a moonshot business, right? You, you're dealing with moonshots. It's another thing also, which I found It was a very, very hard lesson that I learned the hard way is that not every business even comes to the classification of moonshots or like $100 million ARR. One of my pitches was like 4 years ago, I pitched Floodgate at a meeting with a partner, which is funny because he later worked with me at On Deck. His name's Sean Zhu. And like 8 minutes into the pitch, I was so passionate. I was building something like a sustainable lifestyle business, right? But I thought it could be, could be a venture backup. And he goes like, KP, like, show me the path to $100 million ARR. Like, where's the slide that shows me the path?

Yep.

And I was scratching my head. I'm like, what does he mean by $100 million ARR? Why is that even a benchmark?

metric. Yeah, you know, whether it's a consumer or a business product, can you get to $100 million revenue in 5 years?

I feel like that should be like at the incorporation, you know, LLC, C-Corp, they should give you that slip, right? They're like, is your company $100 million ARR worthy? If not, don't even entertain any VC meeting.

Minimum ARR is $100 million. Yes. And we still see some plans that are much slower than that. And we have to tell the founder, this is not a VC-backable business. Sometimes our angel group will do it because the angel group has the luxury of investing really early and knowing that there is a huge acquisitive market between like $15 million and $75 million of enterprise value. And if you only raise once and you can get a 5x in a couple of years, there's a good IRR on that. But VCs can't do that.

Yeah, that's, it's hard to teach that though. Like I live in Atlanta, right? Like, and I go to these, I go to the Tech Village. I'm a, I'm a mentor there. And it's like, it's hard to teach that to founders unless they were exposed to this, you know? So, okay. I have a fund-related question, um, which is something you tweeted about, I think was the genesis of my interest in wanting to have a conversation with you, you said something on the lines of like, for Fund 2, um, you learned quite a lot in terms of like fundraising, um, and the future of LP capital. I'm really curious, what were some lessons you learned? What were some observations you had, especially raising for Fund 2?

I think, um, it all boils down to what we already talked about in terms of there's just gonna be less capital going forward. I probably had 300 conversations with institutional LPs, about half of whom want to stay in touch for my next fund.

Is it just for fund 2?

Yes.

Wow.

And many of them like what we're doing, but they're looking for something very specific. And at the end of the day, I'm just going to call it like it is. They're looking for the perceived best networks and what they perceive to be the best networks are fund managers that spin out of big funds like Kleiner, Accel, or Sequoia. They're looking for kind of the darling founders that have started the Airbnbs, the Ubers, that sort of thing. Or they're looking for founders Founders of VC funds, so GPs who have really great networks in with tech executives. Like I've had an LP be like, can you get the CMO of Microsoft on the phone right now? And so it was just a very interesting lesson in how big name dropping is for the LP.

Yeah, it's counterintuitive though. I wouldn't think, 'cause you know, you have social proof. I mean, you have to work with Fund 1. You are not like a small $5 million GP fund in my view.

Like experience doesn't matter.

Wow. It's wild.

And they're not gonna tell you that. And it took me a long time. It took me a long time to realize that.

It's never like directly communicated, right?

Yeah. And a lot of, a lot of VCs aren't gonna say this out loud, that the institutional LPs, they all follow the herd. They all look in the rearview mirror to make decisions and try to just repeat things, which doesn't make any sense in an innovation economy. Yeah. And they're all—

Would you say they're more risk-averse than average?

Oh yeah. So your LPs are, are risk-averse and then GPs are risk-seeking and founders are really risk-seeking. And so you've got this weird situation. Wow. And the LPs—

wait, wait, wait. And then, and customers are risk-averse generally, right? Unless you get the early, like the, the beta customers, which is like a, like in the, in the current of like early adopters, right? So you got— this is an interesting dichotomy. You got these LPs who are risk-averse, like you said, what did you say? And then VCs who are risk-seeking. Founders are extreme risk-seeking.

If you think about too how an institutional LP works, and this is not all of them, and there are some amazing institutional LPs, I want to preface that. There are a couple in my fund as well. But I think we have to start to call out what's happening in the institutional LP landscape because, you know, you've got a bunch of university endowments that won't publish their numbers because they only invest in literally a certain type of fund. And they're not investing in any women and they're not investing in any people of color. And they're all, it's probably all Stanford grads and they all probably live in San Francisco. So it's like, how is this going to create returns?

Yeah.

At the maximum level when everybody's putting money in the same thing, but they don't care because historically, you know, a fund like Sequoia has done very well and they will likely continue to do very well, but not, you know, not everybody's going to get into that fund. And so they, they look for, okay, who's getting in with Sequoia? And I want to invest in that fund manager. So when I talk to them, they want to know, who do you invest with? Who invests after you? You know, who, who, who, they want to know all these people. And so it's effectively name dropping, which is nuts to me when I care about, can my founders perform? Can they make money? And can I at least 3x net the capital for my LPs? And that's, that's it.

It's also, you know, what's also buried under all this is like the strength of your thesis. That blows my mind, right? Like that, it's like it's buried under all this is the actual thesis on which you're trying to raise. That's interesting. Wow. So that was a big, I'm sure, big lesson. Is there anything else? I mean, to me, another observation or lesson was the fact that it's still like a huge volume game, right? 300 meetings. I knew the first fund would take that much generally, but like even second fund. Wow.

And that was just with institutions. I mean, I have a lot of LPs in my fund, many of whom are individuals. So I had several hundred conversations with individuals and some family offices. It took 2 years to raise the fund. I think it takes most small funds or new managers 2 years to raise. It's a long time.

Any interesting observations about the family offices, the way that world or that circle works?

You have to, if you talk to family offices, you just have to find one that has capital that they're ready to deploy and they like your thesis and they like you. It's more like an individual, but you have to meet with the person at the family office who can make a decision and they have to have allocation ready, which is the same as any LP. I think

Yeah.

A lot of LPs will take meetings and they don't, they're not really ready to write checks, but they don't tell us that. It would be like me taking meetings with founders knowing I'm not gonna write a check. That to me is just wrong. I would

never do that. Yeah. Yes, exactly. I mean, just email, just say the thing, you know, just don't, don't. Yeah. Is that very common though? I'm, I'm very novice to this thing. Is that very common to just take the meeting?

So LPs want to take meetings because they want you in their CRM in the event that you become hot in the future. So if you end up being a successful GP, they're gonna be calling you and be like, hey, we talked at this point, can we, you know, have another meeting?

Yeah, but that, you know who else does that though? Like mega funds, associate partners do that. And I hate that, by the way. I'm like, don't, when, when your head's down building something as a founder, you just don't wanna do those. Like I get so many of my, like in the fellowship we have a couple like AI founders, one of them from London, and he pinged me the other day and he was saying, KP, I got like, like 15 meetings set up. up in London VCs because he tweeted something that went viral. We looked at all their like LinkedIn bios and all of them associate us like, don't take the meetings. It's not— he's not a partner, he's not going to make decisions. Then fine, right? But like while you're building, don't do it. So anyway, um, yeah, that's, that's interesting. I also think that there's a big portion of the world who just love to just have meetings. And I'm sorry, but they just think that— it just kills me because I love— I'd rather do a— I'm sure you, you agree to that. Like I'd rather get work done Like actually move something forward or have something like a podcast that can stay on the internet for a while, that has staying power, or just spend time with my son. You know, like those are my 3 better options instead of just like socializing with somebody over drinks. Okay. So fund learnings are really interesting. Anything, if you go back to fund 1, like anything you would do differently?

So much differently.

Really? Yeah. What would you do differently? It's part of it's just wisdom. I think you just, you know, you like growth, right? Evolution.

Probably my biggest learnings are don't always believe a founder. And so, I tend to believe everything at face value until I'm proven otherwise. And then, once you have lost my trust, you're probably not going to get it back. But I had a number of founders in Fund 1 tell me, oh, I've got this revenue is coming. It's almost here. It's coming. It's definitely, we're almost at $1 million of ARR. I can't tell you how many companies have almost been at $1 million of ARR for 3 years now. And it's like, stop lying to yourself. Like, this is so messed up. Or,

or shake them off.

The term sheets are coming. They're, they're coming. They're coming. One of our companies shut down 4 or 5 months after we put our last capital in, which is terrible because all these term sheets were coming. They're coming. They're coming. And a bunch of other big VCs were in. And, and it's experiences like that where I'm like, who cares who writes the term sheets? Who cares how strong the VC brand name is? I care about the partner in the deal and are they actually doing work? And is the founder, founder that I trust. And so, I, I have to review everything, you know, and there are some trends you can look for. Founders that are really pushy, got to get it done, got to get it done, got to get it done. At this point in my career, I pass on. But before, I'd be like, oh, there's all these other great VCs and I have to move really fast. And none of those deals ever worked out.

I think the biggest thing to— seems like what I'm hearing is the hardest thing to fight among— I mean, against a founder is this hopium they have, right, about their company. And this is a term that I heard recently and I loved it. I'm like, oh, that's true.

Hopium?

Hopium, yeah. Because they don't— like, they're slightly delusional and you need that. Like, you need to be a little bit crazy.

You gotta be a little crazy.

Yeah, of course. But the thing is, when you're walking the line between crazy to delusional, and after a while, if the numbers— like, ball don't lie. Like, numbers don't lie. Your metrics and traction doesn't lie. And yet you seem to feel like there's a Hail Mary just around the corner. And you're like, okay, after 2, 3 tries, like, maybe the fundamental business model is not working. Or you got to do some pivot or hard conversations with customers. But there's this hopium that they will like take in and also give it to the team and also give it to the investors, I think, which is like, it's just, it's just happening, you know, which is,

yeah,

it's hard because it's, it's one of their unique attributes among founders. Anything else? Anything else come to mind about Fund 1?

We did follow-on investing out of Fund 1. 50% of our fund—

You did more or less follow-on?

So Fund 1, 50% of our fund was follow-on investing.

Which is standard, right? Which is great, right? Yeah.

And fund 2 is not going to be any at all.

What?

Wow.

So diversify the bets?

Say it again.

Diversify the bets kind of thing?

Yeah. So I want more shots on goal because at the early stage, it moves the needle way more if I get into a company as early as possible than putting more money into a couple of the companies and hoping that I picked the right one. It's a different strategy. It's a Series A or a Series B strategy. And that's not what I'm good at. I'm good at talking to a founder early on, and assessing, are they actually gonna kill it?

Yeah.

And so I want to do 30 to 35 of those bets. And I tell founders upfront, we don't do any follow-ons. Look, we can help you get follow-on capital from our co-investors in our network, but it's just not something that we're gonna do.

Yeah.

And that takes the burden off of us for the few companies in your portfolio that are gonna be kind of limping along. Yeah. They, they're not gonna die necessarily, but they're also not on the VC trajectory they need to be on. And a lot of those companies come back and they ask for more money.

Yeah.

And learning from fund 1, do not do those deals. You really shouldn't do those deals. They hardly ever work out to a point where they're gonna be the huge winners. Those that are the huge winners, they figure it out and they get on that path pretty fast.

Wow. Some harsh, harsh lessons, right? Both for you and the founders.

Yeah.

I'm like, I'm like really soaking all of this cuz it feels such good wisdom coming from a lot of pain, clearly. So it's like very, very good.

I've made many mistakes, KP. I've made many mistakes.

It's, it's beautiful. I mean, it's like, you know, that's his wisdom, right? It's just how we learn. Okay, what is the number one thing— I don't know if I got this question from one of your blog posts, maybe I did— what is the number one thing the founders can do to catch your eye for an investment? I loved that. It was, I think it was your blog post. I loved it. But yeah,

short email, short notes.

Me too, actually. I hate when one line can suffice a paragraph. Yeah, but anyway, go on.

If a founder has a business that they think is a fit for me, there's There's 2 ways to get in touch with me. One is a cold email and like, don't go through LinkedIn because I get way too much stuff there. Twitter, I will sometimes read, but sometimes not, but email I will. And I will delete all the ones that they're obviously canned and they found my name on a list. But if somebody specifically reaches out to me and they have like one line where it is authentic or unique to us and why they wanna work with us, and then tell me your value prop, tell me where you're at in terms of traction. And then anything else that's interesting that would make me want to invest in this company. And if you, if you pass that, and literally I'm looking at that for 30 seconds, then I will reach out. I might ask for more information or I might set up a call. But it's, it's pretty, it's pretty hard to get, to get, to get that to happen. Uh, most founders write really long emails.

Yes.

And I'll just delete it cuz they can't get to the point.

Yes. I'm like, why? Like, who's these, who's training all these founders to write these long-ass essays? Yeah. In the first email. Yeah.

Dear generative AI, please make your stuff shorter. Thank you.

Yes. Yes. Yeah. We, we covered a lot of what I had. Let's talk about the, the sort of the discrepancies in the landscape, right? And one of the ones is something I think you commented on, on LinkedIn or I noticed somewhere, but not enough female founders getting capital allocation. And before we started the podcast, you sort of serendipitously riffed on something that I thought was really interesting was that you traced the problem all the way to You know, um, who's writing checks to the GPs, which is the LPs. So you want to, like, I actually want to, can you give a lay of the land of like, what are the numbers like today? I know they're depressing. I know some men don't like to hear all this, you know, like, don't, like, you know, my wife, like, ah, he's the life of being a man. I'm like, I'm fully oblivious to that actually. True, right? Because he's like, you just, you know, you don't know the privileges. I think it's important and intellectually important to understand where the lay of the land is, you know, for the 8% of men who care. So what is it like right now when you were raising, or what does the latest stats say about the discrepancy?

Depending on the data sources, 1 to 2 2% of assets under management within venture capital are managed by women. And I'm sure—

That's on the VC side, correct? That's on the VC side.

That's on the VC side. When you look at founder funding, and you can look at any underrepresented group, Black, brown, women, LGBTQ, it's less than 10%, pennies on the dollar, right? So, it's just, it's abysmal. And there's so much opportunity there. And here's why. Here's why you actually do want to consider investing in somebody that looks different, because they have had to prove themselves. They've had to be better than average to get to where they are today, because it's so hard for them, for us. I mean, it's hard for me too, that I want to give them a chance. And I think it's silly to overlook them. And there's all this data on how much better performance is, but people don't listen to data. It's weird. Like when you really get into The psychology behind it. We have to unlock men in this conversation for all underrepresented groups, not just women, but like white, white men who've historically been sitting in the position of power have to pay attention. And I implore, especially fathers with daughters,

Ooh.

Your little girls are not going to have it any different until you start to pay attention to this. And you have to be the heroes. Like, men, white men are going to be the heroes of this. It's those who start to pull people up to invest differently, to— it's hire and it's wire. Give them the jobs and give them the money. And when you start to do that, you're the one that has made all this stuff possible. And I don't think of it as a zero-sum game. I mean, there's way more value to be added as we bring funding to more groups of people.

I love the way you touched on, you know, a lot of the fathers. I feel like it's true. It starts at home too, right? Like, Like encouraging, you know, your kids to take more shots on the goal. And especially if you have daughters, like, you know, don't chart out the safe path for them and just let them get a taste of being an entrepreneur as early as possible. And then like that kind of exposure really helps a lot. I have— I don't have that experience right now because I only have a boy, 2-year-old, but I cannot wait, you know, for him to get exposure to my life. And hopefully, touch wood, if we ever have a daughter, I can't wait for exposure. But I think, you know, going back to what you just said, I, I'm— I, I spent a lot of time at ATV, and ATV has this program called, um, it's a diversity program, and it's for— it's called ATV Takes a Village. I go and spend time, office hours there, and I'm floored by their hunger, the appetite of all of these founders, you know, who are especially diverse founders. But the one thing that I've noticed is, and I try to keep helping them with that aspect, is that I think they underestimate the education of the business game we I mean, not when I say education as in it's just lack of exposure, right? I grew up in a small village in India, and the most I saw was a bank teller. My dream, my grandma's dream for me was being a bank teller. You kidding me, right? And so I'm like, you know, I learned the ABCs of VC world or venture capital or even a founder world two years ago, and I'm old as thirty-five, right? I'm like, I'm just sitting like, but that curiosity to learn even at thirty-five and at that sense of like curiosity. At 45, 85, whatever number that is, to figure the game out so you can win the game, I think is important. So I always tell them, like, you have to understand more about venture capital game, the VCs, LPs, who writes, who's funding them, who's funding the people you think are funding you, right? It's LPs. And how do you align your incentives to their incentives, right? And they're always surprised at some of these basics that you and I, we know, which is like, you're just one moonshot out of 100 bets they make. And they feel it's such an unfair thing. I'm like, it's not an unfair thing. Gail can only write, Gail can like write 35 checks a year. That's it. Each $35, she's hoping that will make the next Webflow or the next Instacart. And so you have to prove to her constantly in every 6 months, 4 months, 3 months emails that you are going to be the next billion-dollar unicorn. You cannot play anything less. And so it's part of this is also imposter syndrome. They like to not overpromise. And I think the other groups don't have this challenge. They love to overpromise and underdeliver. And a lot of the groups I work with do the opposite. They freaking underpromise and they'd like to overdeliver. I'm like, Like, you're helping nobody by not gassing yourself up. You got to hype yourself up, right? You got to talk billion dollars. You can't just think million dollars because you're not going to get the first meeting itself, right? My experience by pitching Floodgate with a side project taught me so much because I was a joke in that meeting, but I learned so much, right? And eventually, you know, we became friends. And so all this to say, I think so much of this exposure too. And so I think, yeah, anything else you want to add to that or anything you want to— Any other comments you want to make?

No, I mean, I just, I think— Do

you have kids? How are you grooming your kids?

No, I just have dogs. And they're not in VC.

Oh, missed opportunity.

They're interested in just a few things. So not really venture. It's an interesting time in the world. I think we're going to see a lot of shifts happening energetically on the planet. And we have to start paying attention to just treating people better and giving others opportunities, and it will end up coming back to us. So it's, it's a fun time. I know there's a lot of— there is a lot of energy and appetite among a lot of different groups of people to see some changes happen. And I, I try to do it in a way that doesn't alienate those who sit in a position of power, because that's not going to work. Yeah. But I, I invite them to be brave and step into the, the place where they can be part of the solution and they can be a hero of the solution.

Yes.

And I think that messaging works much better.

Right.

And it invites them to be part of the conversation versus feel like they're part of the problem, which is not true.

Yeah. Couldn't agree more. Okay. So, in terms of founder advice, do you have any advice on selecting the right problem or right idea? Learned, like painful or not so painful experience of like, how do you pick a great idea? How do you pursue that?

It has to be something that you love. Remember that startups take years and years and years. And there's ups and downs and ups and downs. So you have to really love what you're doing, or it's not a good idea. Period. Full stop. And then the other thing I want to share with founders up front is: What do you want? Do you want control or economics or both? Is this something that you want to run on the side or run your entire life and make a bunch of money from or little money and not work a lot? There's so many different things that you can decide to do that I'd really spend time on that first because a VC-backed business is not for everyone. If I were to leave my fund today and start a business, I absolutely would not raise venture capital.

Yeah.

Because I like working with a small team.

Yeah.

And I don't wanna build a big team. Yeah. Because that's not, it's not authentic to me and I would hate that. So think about what you want your life design to be.

Hmm.

And then fit the entrepreneurship into that. Is it gonna be a bootstrap side business? Is it going to be something where you can take debt? Is it, or is it gonna be, you're gonna go for it cuz you really want to be the one that figures something out in a big, big way, then go after the VC. So figure that out first, and then what area do you love? And just start paying attention to things that look like they're broken, but make sure it's not just something that you've found is broken. Talk to the potential customers and really do the customer research first before you nail what you're going to work on.

That's great advice. I mean, I think talk to customers is like underscoring it over and over and over, highlighting it over and over again, right? That's awesome. I think those, those are, you know, all the questions I had today. Looking forward into 2024? Because we're like, at the end of the year, almost. What is going to be your big focus for the next year? What are your hopes for the next year?

So our team just finished our fundraise. And we're in a mode right now where we're cleaning up operations and trying to automate some stuff and just getting to a place where we're very operationally efficient. And the next step for us is to put a lot of effort into finding great deals, helping our companies. And the third piece would be growing our angel So we have a 500-person angel group that allows both accredited and non-accredited investors. And that's been a huge asset for us in the sense that founders love it. And we've helped hundreds of people write their first checks because they can write checks as low as $1,000. So it's a combination of those things. It's a lot of fun.

We'll plug all those links in the show notes. And hey, once again, thank you so much for being here. Really enjoyed this chat.

Appreciate it.

Keep in touch. All right. Thank

you.

Cheers. Have a good one. Bye. Bye, Gayle.

Bye.