Sherwin Estanislao, Founding Partner and Investor at Creative Interlace Tech Ventures in this episode of Fundraising Radio talks about who needs an advisor, how to find one and how much approximately should you give him/her. We also talked about the venture studio model and what kind of founders should work with such.
Sherwin Estanislao: https://www.linkedin.com/in/sherwin-estanislao/
Creative Interlace Tech Ventures: http://creativeinterlace.com/
Comparing Venture Studios with venture capital: https://www.fundraisingradio.com/Carey-Ransom/
Today as a guest speaker, we have Sherwin Lau, founding partner and CEO at C tech Ventures.
And in this episode, we'll talk about advisors to the CEOs who needs as an advisor while they're being a CEO will also talk about differences between syndicate and venture capital from the point of view of a founder.
And we'll also talk about tech Ventures. What they invest in, how do they find their deals and what stage to invest? So, Sherwin allegedly by you giving us some background on yourself and on tech Ventures. Sure, sure.
First of all, thank you for. Having me today constitutes a pleasure to be here on your on your channel. A little bit about myself.
I come from a family of entrepreneurs in Ventures, and, you know, people that just, you know, my family just own their business all my life.
So, I was surrounded by that and, you know, throughout my career, I've invested in multiple different industries, including sports, and may production music, film, and all the way to real estate to now technology.
So, yeah, that's about a little bit about myself in terms of C. I tech Ventures,
we do have a development arm and also a venture arm and, you know,
we leverage a lot of our technology development resources into investing into,
our Ventures in our syndicates.
Got it so by, you know, by the first part that I mentioned in the intro, which is, you know, what is adviser to the CEO, what's what do they do?
Because you're personally an advisor for a few startups right? And their CEO specifically. So, how does how does it work? So, you know, in a typical engagement advising C O.
is really we become an integral part of their company, and it's not just myself,
I have a,
we have a full stop with as well and cmo's on board that can advise the cio's on, you know,
overall business strategy,
and also really identifying,
the the resource gaps right?
And helping them with with the business development and facilitating a lot of the growth, you know, of the company of their startup.
in a timely manner of of one raise capital what's more important whether to build out the MVP if it's too early,
just really identifying,
the gaps in in their capital raise,
or in the development,
or their go to market strategy and then we fill those in for them.
And second kind of a follow up question here, how do you find those starts that you want to mentor and they want to be advisor off and or do they reach out to you specifically? How does that process work?
So, it's, it's a combination of both of, you know, of the founders reaching out to us. And also, you know, we've taken a lot of referrals and, you know, we're we're affiliated with three different syndicate of invest all in the private sector.
And, you know, we're we're involved in a lot of screening as well.
So we sit on panels and, you know, that's how we either, you know, vet our potential portfolio companies and partners and, and most of them are referrals so right.
Yeah, I think that's the standard answer in the VC world for pretty much any questions is just referrals. Yes, mostly referrals. Yes, indeed. Right.
So next question that you had Pre,
optimally pretty frequently from the listeners is how much I pay my advisors, you know,
my mentors what,
what chunk of the company should dedicate just to those advisors and mentors.
So, you know, we, we have a formula at tech Ventures and our for our formula consist of, you know, a hybrid of both.
Equity and cash base, just dependent on, you know, the level of interest that we have in the company and also the level of interest the entrepreneur or the founder has and working with us.
in terms of equity,
we don't have a template or a cookie cutter template saying,
we want twenty,
thirty percent your company if we help you,
build out your MVP or,
help you raise capital a close out around,
we tried to find a true number of the value of either resources that we provide for them development that we pray for them.
You know, we come up with a with a value for that, the dollar, a dollar amount and, you know, and then we decide, okay, well, you know, we're gonna we're going to take on fifty percent of this development or whatever the case is. So, it's a hybrid of both.
And and this is, and it's mostly it's mostly on the convertible note and or safe note, you know, so it doesn't really hurt the cap table until the next official race. Perfect, perfect, great strategy there.
And now, yeah, let's talk a little bit more about CIA tech Ventures. Would you invest in. So we invest,
it's pretty obvious,
it's all in technology,
it's own tech tech platforms,
there there is one company that is a little bit more product base ioti side but, you know,
we look for technology,
we're Texan centric,
so and we invest mostly between preceed and seriously around,
we a lot of companies find themselves,
kinda running out of,
running out a budget,
towards their Series A,
or that's why they need to raise a series A,
because they wanna get the next version out and the next version is gonna cost them several hundreds of thousands of dollars that they just the cash flow for.
that this is,
we provide some of the development for them,
up to fifty percent we're willing to take up on up to fifty percent of their development as a form of investment in lieu of,
equity right so in lieu of convertible note or safe note,
as I mentioned earlier,
depending on the,
the entrepreneur or the company's needs.
Got it got it perfect and next question is,
how do you find those deals just particularly those that you invest in and where do you find those are those mostly through hurdles or do they actually plan your website or how,
how exactly do you find them so referrals is,
has always been our top generator as far as for leads ago and and other,
other programs out there,
cause we have an accelerator,
like an incubator like programs that's also within tech Ventures.
Just depend on the assessment, you know, whether they fall in that category or not. Then we determine what we're, you know, which, you know, which, where they fall into and, you know, a lot of these programs.
That are out there with these accelerator facilities here or incubators. If you will, and they refer a lot of entrepreneurs and founders to us, that can't really afford to pay in play cause most accelerators out there, or other programs out there.
It's, it's a pay to play is a paid to model and, you know, we, we, we truly believe here in tech ventures of given the opportunity for, you know, to to give them some legs to run in a race. Right?
The company, and, you know, the way we do that is, is, you know, we, we don't.
I mean, we want to make sure that it's not a pay to play model if you will, I'm just depending on their capital or their budget, current budget States. So we, we try to be as friendly as possible to startups.
Right? And that's, I think the mantra of all the investors, especially now, you know, just be friendly to the startups. If you want to get some good deal flow. So perfect next question that had to you is the information.
So, in the intro, I mentioned that we'll talk about the difference between the syndicate versus the standard venture capital from the founder perspective. Basically how is tech Ventures formed?
Is it a syndicate or is it more of a standard VC fund? Well, it's it's neither. We're actually we're an LLC and, you know, we, we participate in syndicate investments with our private investors.
it's a typical sinking syndicate of investment,
a group of five or six of us,
participate in a raise and,
we're either participating via check or development resources and friction roles as well.
And in that form. So, you know, it's either process through, you know, one of our attorneys of our choice or ones that we've been working with in the past and, and currently and yeah, so that's that's more of a, our cup of tea.
Got it and I'm trying to go with some interesting follow up question, but I'm not really creative today so let's move onto the next day. I have already prepared.
So let's talk about the programs that you have in tech venture. So you mentioned multiple times that you were doing development for the Serbs? What else is there?
So, you know, we, in terms of tech Ventures, not only do we, you know, do we provide the technical development for, you know, tech companies?
But we also have fractional roles that we can they'll be filling, whether it's an advisory role or fractional, fractional CMO things of that nature. So, and also, we, you know, we help out with the business development right?
And, you know, through my career, and my experience in life, because I do have many hobbies and, you know, I belong to so many different groups. And, you know, I come from a family of entrepreneurs. You know, my network is, you know, have a wealth of network.
And so many different industry, so, you know, we're able to make introductions from the top down for companies in various industries, and, you know, we're industry agnostic.
So, we, we, we have relationships and and in different areas in different verticals and industry. So, in terms of introduction, you know, from the top down, you know, we specialize in that as well.
So some of these, some of these yeah. So, somebody's, you know, somebody services we also provide and, and also is a huge plus for the entrepreneur that we partner with and also invest in as well.
So, got it perfect. Perfect. I understood it.
next question is about difference between you,
early stage investors,
investors and other alternatives who should go specifically to tech Ventures versus any other funding source.
Well, I'd like to see, you know, everyone right you know, everyone's that expensive money. Right? And so, you know, we specialize in really extending the runway for an entrepreneur.
Let's just say they raised their family and friends around and,
that's a set budget for them and, you know,
platforms and and cost,
a hundred K,
two hundred thousand dollars,
just to get a minimum viable product out there.
And then, so what happens to, you know, to entrepreneur that can only raise a hundred thousand of that right? So, you know, we're, we're very friendly when it comes to that and, you know, we understand the, you know, the sweat and tears that goes into building a company.
So, you know, we, we like to become a very integral part of this entrepreneurial venture and, you know, not only will we say, hey, listen, we'll take up, you know, up to fifty percent of the cost of developing this MVP or whatever. The cases.
It's a case by case basis, right? And our decision is based on, you know, within our criteria, right?
If they meet our criteria and then and so, you know, we want to help these entrepreneurs that has very limiting funds to get their MVP out and have some, some extra one way.
We want. We'd like to extend the runway. And with the current.
Capital that they raised within their family friends, and we'd like to extend as much as possible within for our resources right in exchange of course, in lieu of equity convertible note and so on. So, you know, every, every case is different.
Every company's different, you know, and, and the best way to to really find out is to is to either reach out to us and we go through our, you know, our due diligence with that and, you know, due diligence, take about two to three weeks for us.
And, you know, and then we can decide, you know, how to move forward from that point, got it.
So, see, I, tech Ventures sounds very much like a banker studio model, or how is there any difference between Ventures to you and tech ventures or to consider yourself as of interest to you?
It's a combination of both is hard to.
It's it's hard to say,
only because in our portfolio,
we do have a a portion of our portfolio that we funded one hundred percent and we have certain, you know,
companies in our portfolio that we've gone up to fifty percent of of investment with their technical needs.
And also companies that we've invested in, that, you know, not only the has technical requirements, but also has marketing requirements, operational requirements that we fully funded ourselves.
it's a combination of both,
I would say,
but we do we do we do enjoy being a integral part of the company and, you know,
we're not too,
we're not we don't try to increase our numbers,
a portfolio companies.
If that makes any sense, we, because we, we like to have a strong relationship with our portfolio companies, you know, and, and just become a very integral part of their journey and bringing them to the market. Right?
And, you know, based on the wealth of resources that we provide them, and, you know, even whether it's an advisory level, or into the introduction, you know, that can help that growth. You know, that's what we'd like to do.
Understood got perfect. So let's talk now about the we're coming up to the end of the episode, and I have two questions left for you one is about the current situation, the CO bid. It's kind of getting a little bit better, but still a lot of uncertainty.
So, what's your advice to founders who are trying to raise mine right now? Or who are trying to start their companies right now during this? Extremely uncertain times?
So, you know, when covet started, you know, there's a lot of companies that actually, I've seen the spike, and I'm in companies that.
To provide some type of solution for the post covet era,
if you will,
because through through this pandemic and through the covet pandemic, you know,
people are are developing new behaviors and how they do business, even their whereabouts,
and how they,
how they even consume,
or or get groceries right?
So, it's, it's a lot of things are changing.
if you can,
if an entrepreneur is providing any type of these services or platforms that is,
covet friendly or,
that kind of helps the,
the post covet era then I would say.
You know, stay in the lab and, you know, raise as much as you can between your family and friends around.
if you know,
if they come to a dead end with that, you know,
they can contact us and,
we can help them out and,
in terms of being resourceful with the,
how to financed or MVP or how to finance their, their,
we'd love to talk to them.
Perfect. Perfect. Yeah, I'll make sure that I'll leave a link to tech Ventures in the description of this episode, so definitely. Take a look at it. And here, we're moving on to the last question of today's episode, which is a call to action.
So, Sharon, what's the one thing you want to loose here to do? As soon as the episode is over.
Reach out, see if you qualify for one of our programs or an investment for your tech platform, and you can do so by following the link or reach out directly to myself or Peter Chang on LinkedIn.
So, and I'm, I'm sure constancy will leave our links on the, on the page where you can reach out most. Definitely. Recently, I've been doing a great job at leaving good links in those trips episodes.
So, definitely, as usual, my call to action personally is go to the description is episodes I'll leave a link to both share when and tech Ventures so that you can check out both.
And also I'll leave a link to link probably to another episode that has that discussed the difference between the Ventures to you and the VC model, which was really good.
So, if you're considering adventurous to you, but not hundred percent. Sure, definitely. Take a look at that episode. And as usually don't forget to have a good day.