In this lively episode of "Venture Declassified," hosts Mike Kelly, Ben Pidgeon, and Jacob Spock dive deep into their screening processes, offering a backstage pass to how venture capital decisions are made. The episode is a fascinating exploration of how these experts engage with potential portfolio companies, balance efficiency with thoroughness, and deal with the challenges of high-volume deal flow.

Jacob, Mike, and Ben begin by sharing their recent experiences at South by Southwest and quickly transition to discussing their week-long schedules. This sets the stage for a detailed conversation about screening potential investments, differentiating between immediate red flags and opportunities worth pursuing. The hosts reveal how each of their organizations handles the influx of applications and inbound interest, underscoring the importance of structure and criteria in maintaining a robust pipeline.

Ben sheds light on his approach at Vision Tech, highlighting the value of maintaining a hands-on yet discerning method to assess new ventures. Meanwhile, Jacob offers insights into Elevate Ventures, where geographic requirements and innovation potential are key factors in initial screenings. Mike provides a view into their process of filtering deals and identifying champions within their team to advocate for promising startups.

The trio also discusses the variables and criteria that can make or break a deal during the screening phase. They touch upon aspects like business model viability, founder preparedness, and market potential. Additionally, they explore how external factors and dynamics can shape the landscape of investing.

The episode wraps up with a thought-provoking idea for future content: conducting live screening sessions with each host leading their respective deal discussions. This engaging episode is a must-listen for anyone interested in the intricate dance of VC deal screening and the mechanics behind investing smartly and successfully.

Key Topics

• Discussion about dedicating time to due diligence and screening companies

• The process of reviewing deal flow and assigning partners for screening

• Various strategies in handling screening calls and time management

• Assessing company validity and readiness during calls

• Differentiating promising startups from less credible ones

• Warning signs during screening, such as a lack of competition or sense of urgency

Connect

Mike Kelly

• LinkedIn

• Website

• Developer Town

Ben Pidgeon

• LinkedIn

• VisionTech

Jacob Schpok

• LinkedIn

• Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this episode of "Venture Declassified," hosts Ben Pidgeon, Mike Kelly, and Jacob Schpok delve into the intriguing world of secondary markets. They explore how these markets offer a mechanism for current shareholders in privately-held companies to sell their shares to private entities. With a candid approach, the hosts detail how these transactions do not inject new cash into companies but rather enable liquidity for shareholders looking to exit their positions.

The conversation is kicked off by Ben explaining the nuances of secondary markets, likening them to purchasing stocks in the public market but with private entities. Mike and Jacob expand on this by providing real-world scenarios, such as employees at companies like Stripe seeking liquidity before an IPO, or angel investors seeking exits after years of sitting on investments.

A substantial portion of the discussion is dedicated to why secondary markets have flourished in recent years, with Ben attributing this to the scarcity of M&A or IPO opportunities. Mike poses an interesting counter to Ben's point, suggesting that public market regulations may dissuade profitable companies from going public, hence the rise in secondary markets.

The hosts acknowledge that while secondary markets offer exciting opportunities, they're fraught with challenges, particularly in determining genuine market prices due to less frequent transactions compared to public markets. They also touch on strategic considerations, using secondary offerings to keep founders motivated or even save personal relationships, highlighting the real-world implications of delayed liquidity events.

As they wrap up, the hosts reflect on the potential evolution of secondary markets, particularly amid global economic uncertainties and the influence of emerging technologies like AI. An informative listen for anyone curious about the dynamics of private equity and liquidity options.

Key Topics

• Introduction to Secondary Markets

• Importance of board approval and rights of first refusal

• Employee stock options and larger secondary markets

• Interest in buying secondaries among investors

• Risks associated with founders selling significant portions of their holdings

• Importance of modeling out an option plan for potential stock options

• Considering secondaries based on current market and company conditions

Connect

Mike Kelly

• LinkedIn

• Website

• Developer Town

Ben Pidgeon

• LinkedIn

• VisionTech

Jacob Schpok

• LinkedIn

• Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this insightful episode of "Venture Declassified," hosts Ben Pidgeon, Mike Kelly, and Jacob Schpok join guest Toph Day to explore the rapid shifts within Indiana's burgeoning tech ecosystem. The discussion centers on the theme of "Innovate or Evaporate," emphasizing the need for businesses to adapt to swiftly evolving technological landscapes, particularly with AI advancements.

Toph illustrates this urgency with the example of Chegg, a company that saw its valuation collapse due to AI tools like ChatGPT. The conversation underscores the necessity for startups to harness modern tools like low code and no code platforms for competitive advantage, as highlighted by Mike's experience using Bubble to launch a tech venture.

The episode delves into the exciting concept of tech convergence—blending software with hardware to form unique innovations. This theme is portrayed as crucial for companies aiming to stand out in today's market. The hosts provide valuable insights on strategic investment in this new era, and that understanding these elements is key to thriving in a quickly changing landscape.

In a compelling segment, Toph declares Indiana the "Innovation Capital of the World," backed by its rich infrastructure, impressive talent pool, and collaborative environment, positioning the state as a prime hub for entrepreneurial endeavors.

Listeners are encouraged to tune in for a thorough examination of Indiana’s role in the global tech scene and gain a deeper understanding of how businesses can ride the wave of innovation to stay ahead in their respective fields.

Guest Bio

Toph is the CEO of Elevate Ventures, the #1 most active Seed and Early Stage investor in the Great Lakes Region, top ten in the US and top twenty in the world. He is also the Chief Visionary for Rally, the largest cross-sector innovation conference. He is an innovator, entrepreneur, business creator, community builder, job maker and wealth creator throughout his endeavors over the last 30 years having co-founded eight businesses in seven different sectors with multiple exits to Fortune 500 companies.

He has led companies across multiple sectors including artificial intelligence, SaaS, hardtech, broadband, entertainment, investment banking and real estate. He is also an IBJ 40 under 40 and top 250 most influential and impactful leader.

LinkedIn

Key Topics

• Impact of AI and Technological Advancements: Discussing the shift in how companies need to approach building software products.

• The importance of disrupting oneself and innovating internally

• Introduction of low code/no-code platforms and their impact

• Investment Strategies and AI in Business: The difficulty in making long-term software investments.

• Indiana's strengths in infrastructure, talent, industry, and cost of living.

• Encouraging Indiana’s Entrepreneurial Ecosystem: Promoting a culture of risk-taking and innovation.

Connect

Mike Kelly

• LinkedIn

•

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

Episode Summary

In this engaging episode of "Venture Declassified," hosts Mike Kelly, Ben Pidgeon, and Jacob Schpok unpack the various types of investment vehicles and the appropriate contexts for their use. The episode is loaded with expert insights into the nuances of safes, convertible notes, and equity financing, making it a must-listen for both budding entrepreneurs and seasoned investors.

Jacob outlines the main reasons why pre-seed and seed stages often employ safes and convertible notes, citing the difficulty in pricing companies at these early stages. Mike dives deeper into the topic, discussing the similarities and differences between safes and convertible notes, including the importance of cap rates and the implications of having or not having a maturity date. Ben contributes by explaining how the size of the investment can influence the choice of vehicle, emphasizing the balance between legal fees and capital deployment.

The hosts also explore more nuanced instruments, such as rolling closes and warrant coverage, providing listeners with a thorough understanding of when and why these might be used. Jacob and Mike engage in a spirited debate over the merits and pitfalls of these investment vehicles, offering contrasting perspectives. Mike's pragmatic approach is balanced by Jacob's principled stance, both underpinned by Ben's thoughtful moderation.

The episode wraps up with practical advice on navigating these financial instruments, making it an invaluable resource for anyone involved in venture capital or startup funding. Tune in to gain a comprehensive understanding of how different investment strategies can align with your entrepreneurial journey or investment thesis.

Key Topics

• Types of Investment Vehicles: Pricing the Round, Convertible Notes, SAFEs (Simple Agreement for Future Equity)

• Convertible Notes

• Precedent and Seed Stage Usage

• Difficulty in Pricing

• Potential Scenarios and Legal Aspects

• SAFEs

• Fundraising Speed and Simplicity

• Convertible Notes vs. SAFEs

• Convertible Notes’ Role in Different Rounds

• Merits and Demerits of SAFEs in Pre-Seed and Seed Stages

• Additional Investment Structures

Connect

Mike Kelly

• LinkedIn

• Website

• Developer Town

Ben Pidgeon

• LinkedIn

• VisionTech

Jacob Schpok

• LinkedIn

• Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

Episode Summary

In this enlightening episode of "Venture Declassified," hosts Ben Pidgeon, Mike Kelly, and Jacob Spock tackle the subject of waterfall analysis, offering listeners a clear understanding of its role in the investment process. The topic comes to life through a real-life scenario where their portfolio company faced an acquisition offer, leading to choices between cash, equity, or a mix of both.

Ben starts by defining waterfall analysis, explaining the allocation of returns and the considerations for investors, like liabilities, deferred wages, and fees. Mike emphasizes the importance for angel investors to ask for detailed breakdowns and understand the financial health of the acquiring company. Jacob underscores conducting due diligence and evaluating various payout options such as cash, equity, and earn-outs.

Adding to the complexity, they explore liquidation preferences, convertible notes, and safes, and how these elements can significantly affect investor returns during an exit event. Jacob emphasizes the importance of understanding these factors to make informed investment decisions.

This episode of "Venture Declassified" is packed with valuable insights for both novice and experienced investors, making it essential listening for anyone involved in the startup investment ecosystem. Tune in to gain a deeper comprehension of waterfall analysis and navigate the nuanced world of investment returns more effectively.

Key Topics

• Definition and explanation of waterfall analysis

• Breakdown of options: Cash, equity, earn-out, seller’s notes and buyer’s notes

• Understanding financials and capital structure of the acquirer

• Evaluating the acquiring company: Private equity vs. venture-backed firms

• Situational analysis for decision making:

• Keeping money in vs. cashing out

• Impact of overall portfolio performance and liquidity needs

• Evaluating industry growth and leadership team

Connect

Mike Kelly

• LinkedIn

• Website

• Developer Town

Ben Pidgeon

• LinkedIn

• VisionTech

Jacob Schpok

• LinkedIn

• Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this episode of "Venture Declassified," hosts Jacob Schpock and Mike Kelly dive into an engaging discussion centered on using AI tools to create a Minimum Viable Product (MVP). They explore the necessary skills, costs, and time commitment involved in product development with a focus on leveraging low code/no code platforms and developer productivity tools. Mike emphasizes how tools like Figma can generate front-end experiences quickly, allowing for iterative design, which is particularly beneficial for early-stage companies.

Jacob and Mike analyze a hypothetical business idea related to improper financial categorization, discussing its scalability with AI-enhanced tools. They outline a detailed go-to-market strategy, emphasizing the importance of validating product-market fit through personal network engagements, cold outreach, and preliminary public testing.

The conversation shifts to product development, highlighting their MVP built on the Bubble platform and a professional website using Squarespace. They discuss their approach to branding, marketing strategies, and the resource commitment required for early-stage development. Mike underscores the significance of manual MVPs using tools like Excel for initial testing and feedback collection.

Jacob and Mike also provide practical advice for non-technical founders, recommending CRM tools like HubSpot and highlighting Bubble's ease of use for building MVPs. They stress the importance of learning from direct customer feedback and iterating based on real-world reactions.

In this insightful episode, listeners gain a comprehensive understanding of the strategies and tools essential for building and validating a scalable, high-margin SaaS company. Tune in to hear Jacob and Mike's expert analysis and practical tips for aspiring entrepreneurs navigating the MVP stage.

Key Topics

• Using AI Tools for MVP Creation: Low-code/no-code platforms and developer productivity tools.

• Current easier and more maintainable code for MVPs, especially B2B SaaS.

• Go-to-Market Strategy for an MVP

• Branding and Marketing Efforts

• Importance of timing in addressing business risks.

• Current AI's inadequacy in handling creative branding and marketing tasks.

Connect

Mike Kelly
LinkedIn - Start Something Ventures

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this insightful episode of "Venture Declassified," hosts Mike Kelly, Ben Pidgeon, and Jacob Spock tackle the often contentious topic of CEO compensation in startups. With an engaging and dynamic discussion, the trio delves into the intricate balance of aligning executive pay with company milestones and investor expectations.

Key Topics

• Budget implications of CEO compensation with regard to business longevity and milestones.

• Risk of misalignment with post-money valuation.

• Signs of bad salary practices.

• The harmful impact of exorbitant CEO salaries on a company’s future and investor alignment.

• Real-world examples of inappropriate executive compensation.

• Discussing salary disclosure upfront during investment conversations.

Adjusting founder compensations based on milestones.

Connect

Mike Kelly
LinkedIn - Start Something Ventures

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.

In this episode of "Venture Declassified," hosts Mike Kelly, Ben Pidgeon, and Jacob Schpok dive into various investment strategies and market dynamics affecting angel investors.

Key Topics

• Investment Strategies: Sticking to goals, but being flexible

• Benefits of Knowing CEOs or Board Members: Looking beyond just using deal platforms like AngelList.

• Emotional Engagement in Investments

• Importance of a Broad Investment Scope: Relying on a strong process and discerning team

• Balance Between Liquidity and Timing: Angel investors' mental preparation for potential losses.

• Considering Political Climate: National political climate and elections influencing market dynamics.

Connect

Mike Kelly
LinkedIn - Start Something Ventures

Ben Pidgeon
LinkedIn - VisionTech

Jacob Schpok
LinkedIn - Elevate Ventures

Hear more interviews and stories like this one at www.VentureDeclassified.com

The information provided on the show is not intended to be investment advice and should not be relied upon as such. The investors on today’s episode are providing their opinions based on their own assessment of the businesses or topics presented. Those opinions should not be considered professional investment advice. If they start up pitched as a part of this episode, it is for informational purposes only and is neither an offer to purchase nor a solicitation of an offer to sell, subscribe for or buy any securities.