Kiyan Yazdi, Investor at Mucker Capital explains what is going on in the LA ecosystem, why Mucker Capital is so focused on SoCal startups and how it operates during COVID-19. We also discussed two different arms of Mucker and talked about which one fits what kind of startups.
MuckerLab accelerator: https://www.mucker.com/muckerlab-accelerator/
Mucker Capital: https://www.mucker.com/
Venture Studio VS Accelerator - how to choose: https://www.fundraisingradio.com/Carey-Ransom/
Is a guest speaker we have the investor as Margaret capital. One of the most oldest VC funds in Los Angeles. So this app is, it will be mainly focused on the San Jose ecosystem. How it works.
What does marker capital invest in and what's special about. So, can by you giving us some background on yourself and on Margaret capital.
Hey, thanks. Thanks for having me my name is, I'm an investor at bunker capital is a venture capital firm and accelerator located in the heart of Santa Monica of Silicon beach.
We have to what I like to call semi distinct arms of the firm. We have micro lab, which is our accelerator. Then we have micro capital, which start traditional Ventura.
So, what do you generally invest in? So first what stage to invest in second? What fields are usually focused on.
Yeah, so across this two arms, we make precedes take investments out of micro lab, which again is the accelerator and then on the capital side, we're making what we call more traditional venture investments.
So seed and post seed stage investments across both arms of the firm.
We are we share the same strategy, so we're generalists really investing across the broader tech Internet and software space given that I would say, you know, our portfolio breakdown is roughly fifty, fifty.
So fifty percent being consumer facing of some kind and fifty percent being due to be of some kind.
Got it so now, let's talk about Los Angeles specifically. I know that Margaret Gabrielle is pretty well known and Los Angeles, and, like, over half of the entrepreneurs here in L. a know what Margaret capital is.
So, first question is, how did you manage to make yourself so famous specifically in this area? Yeah,
I don't I don't know if I'd call a famous,
but I think,
marker's mission has always been to invest in in good companies and an incredible founders and kind of let the product of the work speak for itself.
So, I think unlike a lot of firms and funds, we've never really done any marketing.
We just kinda put our heads down and work with with companies that were excited to be investment partners in and hope that, you know, the, the outcome speaks for itself.
I think Eric and will, who are the cofounding managing partners that occur did a really good job, you know, contributing and building the L, a tech ecosystem and community very early on, particularly out of lab.
And so they really establish a relationship as as just a contributor to the ecosystem and help and and helping build the ecosystem.
And I think that they helped build reputation through that.
and you've done a great job I think you're being too humble when saying,
that you don't know if you're really famous,
I'm pretty sure you are,
you can be considered famous specifically in Los Angeles,
so one more questions in terms of this,
geographic focus before they call it.
Of course, you're mainly focusing. So how what about now, after the have you started investing somewhere else besides Los Angeles and nearby territories or are you still staying focused?
Yeah, so micro thesis actually has always been to invest in kind of emerging markets right? Emerging tech ecosystems.
And when we've started off in La a decade ago, now, no, one was really investing in LA and Eric, and we'll identify that Los Angeles and all the right.
Resources infrastructure, engineering schools, which equipped a talent and just really innovative thinkers and builders and makers to to be a thriving ecosystem.
And so, we, we've actually been actively investing across the nation and broader broader Canada even for the last. I would say, four to five years.
Whether that be the Pacific Northwest, whether that be Toronto, Vancouver, whether that be Austin, Salt Lake Scottsdale we have investments across the nation.
That's awesome and great job in Windows investments, but let's talk about the two different arms. So he mentioned that there is a visual incubator accelerator arm and the capital arm.
So, with the venture capital arm, how do they cooperate to does the early stage between incubator such accelerator focused on those who can be followed up by the actual fund? Or is there basically no correlation there? How does it work?
Yeah, so I, I call them semi distinct because we apply a similar model to both marker capital and micro lab micro lab again is the accelerator.
I would say it's structured in in a unique way, compared to most other accelerator programs in that.
Instead of, you know, the typical time bound, three month cohort system that you see across many accelerators. We identified pretty early on that. It doesn't make sense to hold, you know, a a D.
C company, the same milestones and curriculum as a vertical SAS or logistics business. So,
what we did is we structured our lab as a company,
specific a milestone bound program where we work with the company to really on an independent basis to really get them to the next set of milestones.
So, what that like is is and that's that's time. That's not time specific. So however, long however, long it takes typically, I would say a company, quote, unquote graduates from liquor lab.
Can we call graduating really hitting that next milestone and raising that next round? That's how we define it. Typically, I would say it's anywhere from, like, three to six months.
We've had a couple of companies linger a little bit longer to get to that point of product market fit for, for.
Like, a year, so but the way the lab is structured is we meet with them on a weekly cadence for what we call their weekly and we we basically assess and analyze every operational facet of the business.
whether that be go to market customer acquisition,
and we optimize them what's working and we iterate on what's not we work with the company in the founder to build a variety of dashboards where,
again on this weekly cadence.
We use the data and insights from those from those dashboards to kinda make those decisions on the capital side. We share a similar similar model and that we also work with the companies and the founders as an operating partner to the business.
But it's on a more flexible cadence, depending on the lifecycle of the business, and the needs. Action there,
there's a pretty compelling I would never say,
I would never say there's a,
there's a promise,
but there's a compelling precedent coming out of Bunker lab where companies have really enough validation momentum traction to raise more of a series day around and skip a a seed round put unquote altogether,
so we're really proud of that as well.
Nice. That's great. Work. That's very work. It's really cool when the company was keep one of the funding funding round so nice nice job there. But let's talk about deal sourcing now. How do you find those companies that you end up investing? Where do you find them?
And especially now during the when all of those events are not not as popular, I would say, or just shifted to the online worlds. How how do you find a companies now?
Yeah, it's, it's a combination of a variety of methods and sources marker lab has an application and you get thousands of applications the year and that's a great source deal flow.
Eric will Monique.
those are all my colleagues have all really built proprietary and valuable networks and so we work with our networks of other investors founders,
just general kind of movers and shakers in the tech ecosystem. Founder referrals are a big part of our deal flow.
Founders know their founders, right? So, I would say founder referrals are often times the best and lastly, I would add to that, you know, we really pride ourselves on being really approachable.
And so, while many investors recommend that you come through a referral, we're happy to to connect with founders through even cold emails.
So, Eric will again, Monique John Omar, and I are constantly receiving called inbound and we're happy to take those conversations as well. That's really nice.
That's really cool that you were open total imbalance and I've seen, I see more and more venture capitalists that start ignoring. I mean, not quite ignoring the warm introductions, but paying less attention to them as they used to. So that's great. I love that shift to be honest.
But is there any difference between the deal sourcing process for the incubator accelerator part of it versus the venture arm?
I would say know outside of just that the micro lab application, right? So still scouring the same sources still working with, with our networks.
While we used to attend a lot of conferences industry conferences now they're more digital, but attendant attending them digitally. I would say our sourcing strategy isn't really state specific outside of the micro lab application.
Great. So let's be a little bit more about Margaret love as most of my listeners are actually early stage.
Founders, and major question is, where should I go when I have, you know, some sort of market validation way, and made some research where I feel like I asked plenty of potential users and I see that there is a problem.
Where should I go next? What's your, what's your advice for that? I mean, except for the obvious one I'm going and just try to talk to you guys and trying to get into the marker Labs.
Yeah, I mean, did you say, once they do have some validation once they do have some like, research on the market, but no actual revenue yet.
Yeah, so I would I would build a case study around whatever validation. That is right?
So validation can come in in, in the shape of of many different forms for a consumer Internet company, or a mobile app. That might be a beta with really compelling user metrics.
And and really compelling engagement metrics, and for a B, to B company, it might be a case study, built around a single pilot or maybe two. Right? Revenue isn't the sole validator of the business.
You can typically flip that on,
down the line when you really validate the product,
or or the or the the demand I would say,
once you've been able to validate that demand accelerators are a great way to to really go to market and really help structure a go to market strategy,
go to go to market is obviously imperative to the business as it's directly tied to how the business is going to scale in the future and acquire customers.
Absolutely great response. And we're moving on to the description investor. There are generally two types of investors, you know, hands on and hands off in terms of market capital.
Not the, not the micro capital Labs, because they're obviously you're very hands on, but in terms of the venture capital arm, are you hands on or more hands off investors? Yeah, and they said, you know.
We approach investing as as an operational partnership, between monger and the portfolio company, or the investment. So I would say we're hands on again. A little bit, more flexible with mature capital investments.
So, feed in posts.
You'd save investments just, depending on the company specific needs and where it is, and it's life's lifecycle and it's next set of milestones but across all our investments across both arms of the firm, we, we act as an operational partner to the business.
Nice. Nice, great.
And moving onto back to the deal sourcing part,
that's when you're getting a cold email away or a request on your websites,
what are this and you're reviewing the pitch deck what are the major three points that you want to see on that?
of course the problem,
really a problem side really outlining what the issue is the solution identifying what what the product
or service or technology is that they're using to address that problem market slide helping me.
Understand. And map out where the current market is, where the competitive landscape looks like, and where the white space within the market exists, I would add to that any, any validation around economics.
So unit, economics, in terms of acquisition costs LTV, average contract values, sale cycles, et cetera.
Right, yeah, those are really, really important points. So we're moving on to just to last question. Today's episode first is the recommendation for those early stage founders who were just thinking of starting their companies.
Maybe those actually, we do not have any validation at all and maybe they have not done any research. What's your advice to them? Where should they start off?
Yeah, so I would I would try and really identify and quantify their thesis. And in this case, their thesis is a problem, right?
So, whatever they're building products for, they need to again validate that that problem exists. And that that problem is substantial enough that people want to pay to have it resolved or,
or whatever their product is helps automate whatever the problem is,
or helps create efficiencies around the problem,
whatever it may be.
So really do research around validating the problem.
And then validating the demand for the problem again early validation doesn't have to be in the form of of revenue at all and oftentimes comes in the form of like a beta or even a single pilot.
Right, yeah, that can serve as validation. I think personally, technical validation is not as good, but that definitely definitely is.
But let's move on to the last question of this episode is gonna be a call to action was the one thing that you wanted to learn to do as soon as the episode is over.
The one thing that I want the listener to do, as soon as the episode is over,
I would say,
for anyone out there,
who's sitting on what they think is a really compelling idea to go out and again, like,
take the first steps start to research the market start to research the opportunity, and for those founders and entrepreneurs that are already working on an idea and,
I don't know what that next step is feel free to reach out to me directly.
My email is Kian monger capital dot com. I'm happy to have a conversation and be a resource any way. I can perfect. Yeah, I'll make sure to leave a link to your email and description of his episode. I'll also leave a link to Margaret Capitol itself and to Margaret capital Labs.
So that one can can, can you review that and also, I will leave a link to the episode where I just published that was about venture studios versus the incubator slash accelerator.
So that's, you know, you're thinking of go into an incubator or accelerator as you are thinking of other ways to keep this process off that steps up for you. So that you can see all the pros and cons and for today work and wrap it up.
Thanks. A lot TN and have a great day.