Nov. 13, 2020

Building scout network - how can it help founders and future VCs? By Wade Fletcher

Building scout network - how can it help founders and future VCs? By Wade Fletcher

Wade Fletcher, Founder at ScoreTwoMedia that was acquired in 2020 and currently the Founder of UndercoverVC, talks about constructing scout networks and how a high school student can grow a small startup. We've also discussed how can startup founders take advantage of such scout networks and how do they work.

UndercoverVC: https://undercover.vc/

OnePagerVC by Open Scout: https://onepager.vc/

Fill out this form to get connected to investors and mentors: https://form.typeform.com/to/vT8gVQDG


Transcript

Then, let's get started and today's a guest speaker will have weight. Fletcher founder add score to media that was acquired in 2020.

and currently, he's the founder at ponder cover BC, and they will talk about how we got to an acquisition offs cartoon media how she acquired his 1st customers and what's going on in under cover receipt.

What does it do? And how is it unique? So, wait Alinsky caused by giving us some background on yourself and on undercover VC.

Sure, yeah, thank you for having me. I'm wait, Fletcher. I'm from Columbia, South Carolina. I'm 19 years old, and I go to Indiana University.

When I was a junior in high school, I started score 2 media to bring a collegiate or professional level media presence to.

Uh, the private schools in the area with with big athletics budgets, I went to a fantastic public school with a really great media arch program. So we had a ton of students that were really well trained in.

Photography videography, editing, social media, writing, et cetera, and we were producing all some content for our school and I realized, wait a minute, we have this pool of talent and I'm sure other schools would love to have a similar presence that we have.

I can package that up and sell it to them and that's that's exactly what I did that score to media. I know we'll touch on that again. Later. Undercover VC is a more recent endeavor.

Um, I have known for a long time.

Um, that venture capital is is where I want to be for my career, but as, you know, as a student at a non target school at Indiana, there aren't a lot of opportunities for students.

Both to be on the receiving into venture capital students with start ups to receive investment.

But also, for students that are interested in working in venture capital, like myself, to, to kind of get plugged in and break into that industry.

Um, simultaneously there are a lot of funds around the country that want to make early stage investments and students.

But might not necessarily have the, the operating budget to establish a scout network on a lot of campuses, or to be on a lot of campuses. So that deal flow just isn't necessarily there.

Undercover VC, since at at the middle of of these kind of 2 groups of students and investors, we take those students that want to make investments, use them to find students that want to receive investment and then connect them with those investors that want to make investments.

Um, such that that we can kind of break the paradigm of.
Of the VC schools, and the non VC schools that currently exist in American colleges and universities.

Nice 1st of all I think it's literally the 1st time in my 3 year that I am contributing someone younger than me. So congrats. Yeah, let's start with the score to media.

1st of all let's talk about the 1st customer acquisition. I mean, you were working with schools as a student of a high school. It sounds like not a really easy deal to tackle. So, how do you approach that? How do you approach other schools?

Did you actually reach out to their offices or do you find some other way through students or how did you.

Sure, yeah, so the 1st thing, I did just the very 1st thing. I emailed every athletics director.

Add another high school within driving distance with my, my 2 paragraph pitch of Hi, this is, this is who I am. This is what I do. This is what I do for you. This is really honestly, before it was even.

Even even score 2 and.

My my pitch then was not for the, the broad focus athletic.

Media that we ended up doing, but my high school hosts a big basketball tournament.

Every every December, right around Christmas that is kind of 1 of known for being 1 of the places that the.

Or the high school up and comers that that you're going to see in the will will play. So. In the, you know, we had I've got a picture of me.
And I'll shoot, what's his name? I'm a reeling my limits of basketball knowledge here.

Yeah, yeah, so Steph Cory played there not too long ago and I can't remember the student's name. He plays for the pelicans. He's from South Carolina. I've got a picture of me enzyme lamps and when when we were.

Juniors in high school, which obviously he's an MBA star now, which is pretty cool but my initial pitch was.

We're already here, we're already at this school, we know how to shoot in this environment.

Let us accompany your team, regardless of what you're traveling from let us meet you at the airport in South Carolina and produce content for you for this week long basketball tournament?

No, nobody took me up on that, but I did get 1 response from 1 of those local athletics directors.

At a local Catholic school that was like, yeah, I mean, I'd love to hear what you had to say, come by my office an afternoon this week and pitch to me and I put together my, my deck and.

Showed up and pitch to him and his assistant, and they were like cool. We're sold how much. And it really was that easy. I mean, it was, it was 1 of those things where.

I was I was not creating a new product. Athletic media is done and there are good models and everybody's seen the amazing content that professional teams put out.

But in my area that hadn't been something that was in the market at all that wasn't something possible for.

A school like that, so it was it was a pretty easy sell. We got in that 1st year.

We got a contract to do their football season, and then that quickly led into basketball for them as well.

We traveled with the team we wrote on the bus.

And, and, you know, and we're at all their games with all the other schools in their conference.

We met people that way people ask, you know, who are these kids running around? Why does it why do you have a whole, a whole media operation traveling with your team?

And that's that's kind of how other schools found us and. We're, we're ready to take them on board.

Nice. That's that's really interesting. Uh, true. Organic growth here. So, let's talk about the fundraising since, you know, it's fine. It makes sense to touch on that real quick. So, do you raise any money for sports media, or?

It was just purely purely based off your revenue.

Purely organic, purely based off, um.

I was fortunate in that costs were super low.

Being that I was was hiring my high school classmates who, you know, I love them, but they're, they're not particularly high skilled or trained employees and nobody has a family to support.

So, labor was cheap a lot of us already had camera equipment that they were willing to contribute what we didn't have.

I was able to buy and then I also have really, really favorable terms with the, because that is kind of the, the limiting factor right? Is that.

I mean, the only 2 costs I have are.

Salary and equipment, because our transportation, we, we were traveling with the teams we were working with.

So, again, wages, high school students were the employees that that was low and then.

Equipment because we had favorable terms with the teams that we were generally receiving half or close to half of the total contract value before the season started.

We were able to use that to get whatever equipment we need to.

Nice that does sound like favorable terms to nice. Nice work there. Simple. Let's talk about the exit. Now. How did that happen? How.

How was it possible to happen? Yeah, so, I, you know, like I said, I had this kind of. Small army of my, my high school classmates working with me.

When I was was finding those people, I intentionally looked deeper down into even kids that are 1516 years old, such that they were with it for a couple of years. And everybody wasn't going to be.

Heading out at once once once college came around and.
I tried last year to to coordinate everything and run everything remotely.

Obviously, I'm at school in Indiana now, 400 miles from South Carolina. There was was no chance of me being there for anything, except for a couple of basketball games over what was my winter break?

And it just wasn't sustainable in the slightest for me to try to run that.

Remotely with coordinating, coordinating the substitutions when people needed out and just getting everything lined up, didn't really work. So, 1 of my.

1 of my better employees that had basically been managing an account. By himself for, for a year or so.
I pitched to him listen, I can't run this anymore. I trust you to do it.
Can we figure out a way for you to buy me out? And that's what he did. Nice. That's a neat.

Buyout, so let's talk about more current situation. So let's talk about Andre cover BC. I personally love the idea itself a love scouts network and.

Everything that's accelerating that process of sourcing deals for investment firms. So it's also a little bit more about Andre cover. Vc.

Sure, yeah, so I opened with this a little bit and I don't want to reiterate myself too much, but.

The big picture is when you look at the landscape of student entrepreneurship in the U. S. there's an incredible imbalance between that 4 to 5 schools that are the quote, unquote VC schools and then the rest of us.

Um, and this is kind of the, the Steelcase.
Philosophy a little bit, but I think, you know, while.
Opportunity is nowhere close to distributed evenly at the moment. I think talent much more. So is. Um, and even if you make assumptions, like, okay, well, you're Indiana students.

You know, you're going to have half as many solid founders per student enrolled at Indiana or somewhere even a quarter as many then MIT or somewhere just on a numbers basis. You're still going to have more awesome entrepreneurs at at schools that aren't.

Harvard Stanford, Berkeley, and and I think those entrepreneurs very often go overlooked. By by investors, not because of any.

Any actual malice or or inherent prestige feelings, but just the reality that when you look at the numbers oh, there are.

There are 10 awesome start ups that have come out of Berkeley in the last 5 years. There's 1 from Indiana. Where am I going to focus my time? Well, obviously, Berkeley, right?

Then then when when students go to be to students, want to be a student entrepreneur.

All the resources are there at Berkeley, because everybody's looking there because they've already put out and they will continue to and there's kind of this chicken and egg problem where.

Schools don't get resources then don't have founders and then don't have founders. Leading to them, not getting resources.

And so our goal is to kind of be that that infusion of resources and, and of access into those schools. Such that we can not necessarily break that cycle, but allow it to to occur on on more campuses.

And to allow it all to happen more more equitably, it's kind of a kind of a plan kind of a double entendre. We like to say we're bringing equity to student entrepreneurship.

Because our goal really is not to not to make a profit for ourselves. We're not taking an equity stake in it.

Um, we're not asking for a, for a kickback or anything. Um, our goal is purely to to create this meaningful change on.

Davis is around the US. Nice. So we'll get back to the business of undercover and see just a little bit later for now. I was curious about the.

The work of the scout network in general so 1st question is how do you find new scouts? Was there a major motivation for them?

Yeah, so well, 1st, I want to. You're not you're not wrong and calling it a scout network because that is the role we serve for investors.

But I think for students, what we can offer is a lot more than than the scout networks that are out there.

We're, we're kind of marrying the best of the best of something like like dorm room funds.

Um, where you have a really intensive investment experience where you're analyzing startups and making investments.

And something like the, the Sequoia scout network or open scout where you're doing more of a traditional scouting role.

In that we call it a fellowship program.

Um, and and, you know, our, our, our fellowship cohorts, rather than a scout cohort, because we're offering.

In the kind of in, in exchange for your.
You're you're scouting, you're identifying these founders and then entrepreneurs.

We're offering these, we're offering an access to the industry that isn't isn't really present at your school. Most of the time.

In the form of obviously everything's virtual now,
but in the form of events of of networking opportunities with PCs,

and our partner network that a student at in Indiana or an Arkansas or a Clemson might might not otherwise have.

Right. So it's similar to venture University, but you don't have to pay like, 20000 per cohort. So that's a lot. That's perfect. By the way. A disclosure not the biggest fan of venture University.

So might be a little biased there, but we'll talk a little bit more about what happens.

We the company once the scale discovers that so, let's see, I'm a scout here in Los Angeles at University of Southern California. I find an interesting startup. What happens next.

Yeah, sure. Yeah so.
We're, we're putting putting our fellows through.

Pretty intensive, and I don't want to say rigorous, but maybe as comprehensive as we can reasonably do training program with theses, teaching them how to identify a startup. And then.

Do kind of some, some fundamental analysis of it to say.

Is this something that has legs at all? Is is it worth going any further than our 1st meeting?

So that's kind of the 1st step right? Is they.

Identify a start up on their campus they find somebody in the in the.

Entrepreneurship center directory or or through a club, or however, they might find them. They identify an entrepreneur.

That 1st step is going to be, is this worth looking at it at all?

If it is, we want to have it in our, our database that we, you know, we've got some, some pretty good systems put together to, to keep things in the system and to to track that data.

Once it's up there, we're going to have a conversation with them where they're going to kind of.

Pitch on behalf of the founder to the group of, you know, this is what they do this is why I liked them and thought they should should move forward.

We're going to take a look at that, and then we're going to try to knowing.

You know, our, our, our growing partner network, and knowing their investment theses their interest in the stage. They invest at try to make intelligent connections with with 3 to 5 venture capitalist in our network. And obviously we love that number to grow. But that's about where it is right now.

Venture capitalists in our network that are making the kind of investments that that founder would be looking for.

In the long term.

Once we've kind of gone through this process and more and have some more volume there and more data to work with.

We'd like to kind of start intelligently, matching or intelligently preparing.

Founders for specific investors, so once we understand, okay, this is what this fund looks for. This is what this partner loves the CMO startup.

How can we kind of strategically help you pitch and even, you know, kind of console with your company on.

The changes you can make, and the ways you can can best go route fun go about fundraising. As a student entrepreneur, I do want to clarify that we are pretty, pretty exclusively focused on.

Student entrepreneurs, the exception to that is if we meet somebody in their senior year and then they graduate.

That's that's kind of the 1 exception, but, like I said, our primary goal is to create change on campuses and we're really hyper focused on that.

Nice. That's really cool. So, what follow up question and what you just told us is that.

How what are the major factors that basically that your scouts are looking at while trying to figure out if that start is actually viable if it's going to.

The last yeah, so at the super early stage.

You know, very often. 90% of the time student start ups are are either.

Totally Pre revenue or kind of Pre real revenue, which is, it's kind of a.

Kind of a fuzzy thing to say, but.

When you're, you're pretty, pretty real revenue. So the, the big thing we're looking for most of the time is solely team.

Obviously, there's some credence to to some.

Consideration of of product and market.

Because obviously, if those aren't there, you have nothing, but our big focus is on the team.

Are these students we believe in are these students that that have their priorities in the right order to be a successful founder right? Cause.

In many cases, your successful student founder is not your for court and a student.
You know, and there's other things that are kind of unique to student entrepreneurship, like.

What does this person's class load look like? They're even weird nuances of student entrepreneurship that, that you really have to consider to make sure.

Is this person in it for the long haul? Is this something they reasonably want to do as a career? Or is this like a little resume booster side project that they're working on?

And, and just really identifying, who is this person? What are their motivations? What are their qualifications.

What can they do? 1 situation where it's a little different, I guess is in more tech transfer kind of. Kind of start ups where researcher.
Might have discovered something on a campus that they want to move forward with. Commercially, I know of 1 start up in our network. Now that's working on.

I'm not a like, a material science major, an electrical engineer so I can't.

I can't say I understand it too thoroughly, but they're working on some sort of, of high capacity battery for.

Um, for defense applications, and I.

The 1st question, the thing I wanted to know from them was, is this patented and what claim does the University have to it?

Just because, you know, without.
Knowing those 2 things that the value of that company was.

Very much in the intellectual property that the team was great, but if they didn't have that locked down, there wasn't anywhere to go with that.

And so that's kind of 1 other thing that came to mind that we've looked at recently but, you know, like any early stage investment, it's that product market team.

Um, but we put a really heavy emphasis on the team. Nice and good luck with that 1 Department of defense is not an easy client. So let's talk about the unique value proposition basically, off undercover VC.

I recently spoke, I believe I had an entry with that person, but not higher. Sure. But anyways, I spoke to the founder of open.

Scout VC. Uh, how are you different from them? Basically you haven't really similar model where there are just a lot of scouts across all the, um.

Campuses in the United States, and basically, it's it's really similar. Are there any specific differences between you and open scouts.

Yeah, so actually I had a conversation with with him, not too long ago on on this exact topic.

And that the 2 differences 1st.

Um, they're on a different subset of campuses. They.

Don't don't disagree with our philosophy that there's talent being missed in other campuses, but they also do have the, the immediate value concern that.

We need to be on the campuses where stuff is happening and so they do have.

A much stronger focus towards leagues and, and those kind of Stanford, Berkeley, Ivy adjacent startup campuses.

That's, you know, we're not opposed to those campuses, but that's not our goal.
Right and that leads me into into the 2nd point, which is we have different goals.
Um, they're creating some really awesome technology for founders raising money.
And I'm not not entirely sure what their long term goals are and I can't speak to that. I'm sure.

Your interview with him will be a valuable valuable lesson there. My understanding from our discussion though, was they've created some really awesome technology. They're using their scout network to get their technology in front of founders.

Which obviously is a different goal from our, our desire to create change on on campuses and student access to.

And for that reason, I feel like we probably have extremely different philosophies in what we look for in, in.

You know, a scout for them, what we call a fellow and and I think kind of our, our motivations.

Are not aligned while our practice might be a little bit.

Got it that's.

Fair enough by the way speaking about their attack I think they've recently released updates on, uh.

1 pager, I believe that's the that's the website, but basically, it's like, Doc, you sign Nope. Not talk to you.

Docs and oh, gosh. Basically, it's just the thing for your presentation that's easy to share with investors.

I'll make sure to include the link in the description of the episodes but 1 more thing I wanted to ask you is about the starves themselves on those campuses. They're not very active in terms of startups.

So, in your personal experience, where do most of those startups are being discovered? Is it in the classrooms? Is it on webinars that those universities host or where do you usually find those new early stage founders?

Yeah, that's a great question.

So, it varies extensively campus to campus.

Um, the 1st thing, we're about to have our.

Fellows do come come here very shortly is create a campus entrepreneurship map.

Of these are the, these are the entrepreneurship related clubs where we think we can find student entrepreneurs on our campus. These are the.

Excuse me the, these are the.
University provided entrepreneurship resources right? Do we have a campus incubator?

Do we have a campus fund many campuses do even even campuses that aren't Berkeley obviously has the house fund that's like, kind of like a huge thing. Stanford. Scott.

Something that, I don't know, the name of some universities have big university organized funds. Many smaller universities are not necessarily strong, many.

Less traditionally startup campuses have student venture funds too. I know Villanova makes seed investments in students. I, you there are some opportunities for that here that they're, they're pretty limited.

And looking through those networks is another great way.
And I think, um, the last thing is just.
Very often on these campuses. There aren't there isn't a huge BC presence.

And so very quickly and starting this, I've become known as the, the VC kid kind of.

I mean, nobody calls me that but, like, amongst my fears, what I am known for, for being interested in some kids are known because he made X app. That's really cool. Or so, and so it makes makes games with hundreds of thousands of users.

I'm known for being interested in VC and for 11 to to talk about this stuff. So I get that that battery founder. I told you about just a 2nd ago. That was somebody that reached out to me through the through the group. Me of a club. We're both in.

That he knew I was interested in that, and he's hoping to raise funding for for this company and he reached out to me that way. I think, in a lot of situations.

Founders, who are fellows, we'll find situations like that where.

You know, people people will just come to know them as this is the person to talk to about about VC or if you're working on something. Cool.

And, you know, finding founders has not been a problem for us thus far, nor has finding.

Nor has finding investment partners. That's that's not something we've discussed a lot today, but.

I have been amazed I thought it was going to be a much harder sell to.

Finds investors that want access to these students, and that are willing to kind of give us some of their time for our training programs and networking opportunities for students.

But it's been super, super easy to find to find investors that are willing to, to go to work with us.

And that's been really amazing to me. Likewise, I think it's going to be easy for students to find founders just because.

On many of these campuses that Sanders or are so starved for.

For access, I mean, you know, the, the resources don't it for them.

We're, we're trying to kind of be a 1 stop shop to create that change for them and their campuses and.

I think that's that's valuable and leads us to stand out.

Absolutely, that's really that's great. So now, let's actually talk about the value to investors.

What's the major value? I actually, nevermind nevermind, not value is obvious here. What's the major problem working with these university founders or student? Founders? Those are fresh.

But those have numerous benefits of working with them, but also numerous downside. So, can you name, like, 3 major downsides of working with student founders?

Um, I don't know about 3, but the 1 thing that comes to mind off the top of my head is that student founders.

Are really hard to get a hold of and hard to find compared to other kinds of founders. Right? Student founder, regardless of how fantastic their tech is how fantastic. Their, their businesses.

Often, it's just not going to know as much about venture capital as someone who has an MBA, or or even, you know, has been graduated and out.

Working for a while to finding students.

Sometimes students don't even know they would benefit from investment. Right? Sometimes they don't know that. Now, is the time for you to, to take on some investment really grow.

Just because they don't, they don't know that they don't know that VC like that. So, the big challenge for any.

Is finding student founders and I think that's absolutely the problem. The undercover VC intends to, to address for investors.

Um, and, um.

Yeah, and I think that's kind of why it's been so so easy for for maybe not easy, but easier than expected for for me to to identify these investment partners and for our partnerships team to, to grow that network.

Next that's really cool and great work with that. By the way, I'm not really surprised that investors are willing to spend some time helping out to you and your scouts. That's just.

That's awesome. And that's why I love star worlds and VC specifically. So, um. Now, let's go to 2 last questions of today's episode 1st of all.

What's your advice specifically to students trying to raise money right now while they're still in the university and let's pretend that they're raising their Pre seed round Pre revenue.

Sure, yeah, so I think in every business school.

In in any business school worth, it's worth that's solid across the country where you're going to find these kinds of students.

You're going to find a professor somewhere that has intimate experience with.

Venture capital that might have been on the investing side, or or might have raised money and growing a startup and then sold it. And is now a professor.

I think it'd be really hard to find a school that didn't have at least 1 professor that had been through the full VC process on either side.

And I think finding that person is super duper important here at you. It's a, there are 2 that come to mind for me and right. I've been here.

Not 3 semesters. I am not a fundraising student founder myself, and I still know who these people are.

Had you it's David and Jerry Hayes.
Who's sold multiple startups.
And, yeah, it has collected venture money for for those.

And then, hey, who's the I'm not sure what his title is. It's something, something distinguished professor emeritus of entrepreneurship and venture capital or something along those lines, but he teaches all the VC courses we have here.

And has a really interesting outlook on VC. Anyway. My point is find those professors on your campus, because I guarantee to exist.

And ask them, you know, could we spend an hour?

Looking at my deck and helping me understand what investors are looking for, because I find a lot of times the pitch decks I see from students are very much pitching their products to the customer.

And often not to the investor and so I would say to be careful that the.

You're pitching to your correct audience for the correct time there's obviously and growing a business the time to be to be pitching to your customer but when raising money,

that's not necessarily the right time for that but that's a hard nuance kind of for students to figure out and for founders generally to figure out and I think finding that that professor that on your campus.

Is going to be a big help for you hopefully, 18 months from now I'll be able to answer that by saying, find the undercover VC Scout on your campus.

And don't know how to talk to you through pitching and.

You know, we can, we can do our best to help you raise some capital. That's not where we are right now just because we're still kind of, in the, in the process of building out our network on both sides. So, I'm hesitant to to make that offer yet but but but that's our intention.

100%, I'll make sure just stay in touch with Wade by the way. So, once that network is built out, which I'm sure, well, I'll definitely update all my listeners on that progress and.

Pretty sure so we might be good scouts for you. So we'll see.

Yeah, and to that, do that end if if you're a student that's interested in venture capital at an American University, or some Canadian universities, that's kind of a work in progress. I don't know.

The, except we're going to pursue that, but if you're an American or Canadian university, and you're interested in venture capital.

Please do apply we'd love to meet you and get to know, you.
And figure out where you fit in our program at undercover, dot, slash, apply.

Likewise, if your if you're an investor, you're interested in investing in students at the seat and preceded stage and the occasional series A.

Do do look us up at undercover dot BC and shoot me an email. My emails there on the site. Will be we would absolutely love to.

To to have you in our network and to be able to both have our students learn from you and your experience but also.

Be able to to really create value for you in the form of, of kind of our scout and work in a box.

Um, we can, we can get access to campuses across the country and and refer some, some awesome student deals up to, you.

Perfect, I'll make sure to leave the links to the resources you mentioned, in the description this episode, so definitely make sure to check out the description of this episode. So, wait, now, we're

moving on to the last question of the app is, which is a call to action.
So, what's the 1 specific thing you want to do? As soon as the app is over?

And keep in mind that most of our listeners are, should we start? Founders are really early stage startup founders.

I'm not sure I'm qualified for that would include that in the.

Let's see. Okay. Yeah. So my, my advice here, here's the cut back in my advice to startup founders today would just be to to move.

Out of blistering pace as as fast as you think you can can iterate and develop your products and. Try new strategies with your, your marketing in, with your product development and.

Try and test them, get the numbers on them. See how they work adjust them the faster. You can be completing these iterative cycles.

The fast the, the better position you're going to be in, right? Because regardless of circumstance, if you can react to that circumstance quickly, you're probably going to be okay.

Um, my, my anecdote for that is, I.

Built and quarantine something called events or I built it in from, from inception to launch was 4 days from inception to 100000 users was 30 days.

Yeah, because I had us not because I had a superior product off the bat. Not because I was in a a really specific niche, but because I reacted.

Really quickly right? Someone said, hey, it'd be really useful if we had a status page since all these internships are getting canceled.

Status page was that 24 hours later? Nice stuff like that being able to move. Incredibly quickly responding to customer needs and adjusting your strategy.

Um, we'll, we'll only help you. Perfect. Yeah, that's a great call. Be fast. That's all. That's recording the 3rd world. Okay. Not everything, but that's 1 of the important things you need to do.

My call to action is usually is going to be make sure to check the description. If this episode I'll leave willing to both Andre cover VSI and 1 pager.

If you're curious, I mean, if you want to present yourself to the investors, 1, pager does a pretty good job at that as well and yeah, just go there. You'll find decent information in there and as usually have.