July 28, 2020

Family offices VS venture funds during covid and where should founders go to get funding, by Matt Thompson.

Family offices VS venture funds during covid and where should founders go to get funding, by Matt Thompson.

In this episode Matt Thompson, Partner at Skyview Capital explains why he thinks that family offices are more mobile during covid and why some of them might be a better option for raising money. We also discuss how Skyview Capital invests during these uncertain times and how they find the projects to invest in.

Skyview Capital: http://www.skyviewcapital.com/ 

Matt Thompson's email: mat_iii@yahoo.com 

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Transcript

This is fun reason redo and today's a guest speaker Thompson partner at Ventures and yeah. Something is wrong with this. Sound for. Sure. So, I, there was a background, right? This is fun. Reason. 

Redo. And today's a guest speaker, Matt Thompson partner at sky view Ventures, and this happens, it will mainly talk about Skype Ventures and what's going on with the venture capital investing right now and during this spin down. 

So, Matt, less kickoff by you giving us some background on yourself and on. 

Skype Ventures sure. So, Matt Thompson, and I've been with Skype view capital and Ventures for the past eight years. 

Skype capital is a private equity firm based in Los Angeles that really focuses on tech Telecom and software. 

And then, we decided on J, venture capital initiative about three years ago, we time I'm part of, and it's gotta be Ventures also based in Los Angeles and century city. 

And we've done eleven investments in this venture capital arena, and we've deployed around thirty million dollars of capital into those and eleven businesses. 

And the businesses, the theme is really tech enabled services. But then also wellness and better for you. 

So, let's say a way to blend some of these trends with digital technologies along with some of what's going on with consumer wellness. 

Got it, and when you were saying that you have deployed, you know, thirty million dollars into those eleven companies, that means that significant chunks of capital went to each company at which stage? 

Usual investing in terms of, like, is it series A, is it series B. C. for which one is that? So, for our first check, it's typically and the in the seed through a stage. 

And then and then if the companies need additional capital, then it might be a follow on, in, in in a B round. But our typical is growth stage sort of see to the a round. 

And typically, we like to invest in businesses that have already proven some revenue or customer traction before we get involved. Nice and pretty sure. 

I mean, it's pretty rare for me to interview someone who is investing later on stages. Most of my speakers are precedes C round investors so I'm curious how do you find your deals? So how do you source your deals? 

So we find the right ways. Part of it is a lot of entrepreneurs will come to our website and submit email and we'll see some proposals that way. 

We'll also go to picture events or host picture events and entrepreneurs will meet us that way. And if it sounds interesting, we'll bring it to our investment committee. 

I'm also part of tech goes angels, which is one of the largest angel groups in the country and sometimes we found deals that way, and then invested in those businesses. And then a lot of it is network. 
It's meeting people a recent deal that that I did more personally was with a company called verbal, the 
rpl, and it's a podcast platform for monetizing podcasts and other audio media. 
And that's one I met through our someone I've known for several years. Nice. I should probably check out that platform. Definitely. Sounds. Great. Sounds great. 

We'll be happy to you, 

but on our Pre to call, 

you mentioned that you're also doing some family offices businesses, 

and he mentioned something that really caught my attention, 

which is family offices being a bit more opportunistic. 

Right now why is that? And how is that? Yeah, so it's KB capitals having Ventures is is really the, the investment vehicle of Alex tiny. 

So because of that, we're able to able to invest more opportunistically. We're not stuck to a set mandate. Like, we don't have to just do technology investments. We don't have to just do wellness investments if we can. 

If it sounds interesting irrespective of stage, we can invest in those things. 

So, we can be a little more nimble and that's why our equity checks can vary, they can be smaller or larger, not set limited by certain LP requirements. That's really cool. 

Actually responds to my question. Really? Well, I, in my understanding family offices something that's very stable. 

Something to invest in one specific field and is pretty much risk averse, but I guess it's not that way anymore, which is great. So. 

My next question was about the current situation, so for his founders right now, who are trying to raise minds, heard her on a virus what's your conditional? Where should they go to find money? 

So actually, Jackie doesn't poles of angel investors and in the venture capitalists and. Investment early stage investment is definitely down in Los Angeles.
I think it's down about twenty percent in terms of transactions evaluations have also come down, but deals are still happening deals,
especially if it's,
you know,
some things are really enhanced things like distance,
learning telehealth things around coping treatments. 

Those those kind of kind of businesses are actually doing quite well. E, commerce is doing very well. So some businesses are able to continue raising capital, especially things like digital media, for example, a verbal company. 
I mentioned that that's in the digital music space. So it was able to raise money from other investors 
during this pandemic time and we've also invested in some other businesses during the the pandemic. 

For example,
we had an earlier investment in Super coffee,
which is a,
which is a protein rich and oil do ready to drink coffee beverage, which is sold in a lot of stores around the country. 

And they recently raise more money at a twenty million dollar evaluation. So that was right in the middle of pandemic. We've also invested in business eleven perfect during the, during the pandemic and we also invested in. 

Our other our artificial intelligence company called byte installed during the pandemic period. Nice. That's really impressive. 

And your actual once you move a little bit back to what you said earlier, which is networking. I know that. It's like big chunk of how investors source or deals. But right now, networking seems to be really tough during this current virus. 

So, what's your recommendation on that? So it's definitely harder. It used to be there be. 

In person, demo days in person pitch days that you could go and meet tons of in an entrepreneur could go on meeting a dozen of angels physically. 

But in some ways, there's a lot of these things have been replicated in the virtual environment. There's lots of on sort of online pitch days and online picture events so it still exists is a different format. 

So, deals are still happy to just have to be a little bit more focused on using zoom rather than going in person event. 

I think it's definitely more challenging now, so we have to be a little bit more diligent in terms of reaching out to the investors because it's, it's a little harder to meet people over zoom, but it's still can happen. 

Right, good point and wipe out some events. 

So I know that some events it then they have, 

like, 

a main goal or whatever that was called and I think I tried to only once during this during the current of hours and, 

I mean,
it wasn't why,
of course,
I did not really have a good experience there, do you know any events that, 
like,
specifically say that,
you know,
after our events you can chat with other participants and,
you know,
network?
Yeah, no, it's definitely.
It definitely shows some limitations of zoom there's actually a cool new platform for, for meeting people and for sort of replicating the,
that the convention experience called,
run the world and they just raised a round from Andreessen Horowitz. 

It's a really exciting company. And I actually had a panel with the founder of that business and I, I think that's a way to make things a little bit more more organic to have a better experience and just sort of the, the panel kind of experience on zoom. 

So, I think there's actually a room for different platforms to make the informal networking a little bit more organic. 

But I think the key is to partner with some of the good organizations like angels is has moved from a, a model where they always used to do virtual pitches for the first stage. 

But now all the stages are happening, over over zoom. So, even a couple of years ago, the first pictures would be done over WebEx. And then now, just even the later stages and later diligence happen over. 

Over virtual means, right does sure I have seen tons and tons of apps. They're trying to tackle that problem. You know, not working specifically. So if you do your research, probably you're gonna find something. Really cool. 

But, let's get back to the thing. That you mentioned earlier as well, tech coast, angels, your also investor there I was curious. How does how do those two roles align? 

So, being a member at, and being a partner adds Ventures. 

So, I've been a member of angels for several years, you know, tech angels has a, as a side fund that they just raised that invest in, in interesting businesses that come through. 

So, that tech closing does Los Angeles fun is about a roughly a million dollars that it has invested in five companies so far, and it still has about a half of the money to deploy. 

And it's so is the largest annual group in the country and but everyone, there's basically a volunteer, you know, they're their personal investor, but they're also volunteered to help with the community. 
And then, but my daytime job is Skype Ventures. 
But there's a lot of overlap because, because with telcos, angels, it's a really broad pool of entrepreneurs that we can see. And then perhaps some of the later stage companies. 

A Skype Ventures can invest in and we have invested in some previous techies, angels investments. Nice. Nice. Nice. The overlap is actually pretty interesting. 

Can you give like, a couple examples that of the overlap again? 

So, 

by it installed, 

was it a deal the angels angels have invested in several years ago and then Skype capital subsequently invested in became a major investor in in byte installed and by 

doing that,
we're able to learn about it through tech angels but then dissipate separately. 

And then there's been some other examples of companies that I brought, the tech goes angels and, and it just depends on whether angels or sky view or personal investments right, right. 

As in investor, in both of those firms, I bet you've seen tons and tons of beach deck. So I was curious. What do you think are the three just must have points on the beach deck? 

I think the key elements to a, to a good business includes a large market. 

You know, and it potentially, it's it's a market that doesn't exist yet, but the potential to be a large market size. 

It needs management, so a CO founder, or a founder, a cofounder that really have authentic knowledge of the space and have come up with a way solve a problem in a much better way. 

So, it's a, it's the market, it's the management team and then, and then some element of note. So the sense that isn't somewhat defensible. Do they have some? 

Do they have some process? We have some know how it allows the their idea not be immediately replicated. I also think it's important to have the ability to generate margins over time. 

So is there some way to allow your per unit economics to to be scalable? 

And then another element is mission, you know, it's, it's good if the entrepreneur really believes in the cause, you know, whether it's because they, they have a passion for media or they've, they have a personal experience with the problem. 

It's not just, hey, I happen to think of this idea, but I don't really have any authenticity about. So there's a mission around it. Why you what your employees and management get excited about the business. 

Right. That's a really valid points. And now that we've talked about points that he must have on the beach deck, let's talk about the major mistakes that you see during the presentations, and it can be either verbal or still in the pitch deck. 

So, where the major mistakes, if you see founders make. 

I think the biggest, I think the biggest mistakes that ers make when they're pitching is to not acknowledge that we don't expect them to have all the answers. 
And if they don't have to answer, just say that's a good question. 
And I'll have to get back to, you don't just make something up or, you know, the worst thing to say something that's just incorrect because That'll come back to, to haunt you because you'll lose trust from your investors. Right? 

That's actually common mistaken that seen pretty frequently and founders do not pay enough attention to that one I think, but that's the other thing. The other thing is just be confident. 

I, you know, I've seen some, some entrepreneurs, they perhaps they're not experts in finance and that's okay. You know, you come up with projection. No projection is ever. 

Right, that's the only thing ever a projection is a, is a best guess based on limited information and you shouldn't get so caught up in the, the nuances of Excel. It just shows that. You've thought about the problem. 

You sort of understand generally how the economics work, but be confident about it and presented. 

Well, because I think sometimes during these pitches, you just want to prove that you're able to able to present well, take questions and appear very professionals. 

So, you don't wanna get flustered over some, some small detail, right? That's as as well, you have to, you know, practice a bunch of times to fit to at least low confidence. 

Even if you're Super scared at the exact moment of the pitch. But here, we're moving onto the last question of today's episode, which is a call to action. So, what's that one thing that you would like the listener to do? 

As soon as the episode is over.
I think it'd be great if if there's listeners who have. 

Tech enabled services and software Telecom, a media or these wellness type type products. You know, we've got a Super coffee in our portfolio eleven, perfect water in our portfolio. 

We also have some biotechnology company there. If you're in that space. Please please reach out to me at amp T, Skype capital dotcoms. 

Perfect, I'll definitely leave your email and description of this episode, and also the link to Ventures so that everyone can review what you're up to and you know what your portfolio companies are again. So we'll wrap it up here. 

Thanks a lot med for coming up those pretty good and fast episodes of hit all the topics that we plans really fast. So that was great. And thanks. Thanks for that. Great. Thank you. Very much. Enjoy this. 

Have a great day.