"You're betting on the people, you're betting on the team because they're the ones that are going on the adventure and they'll probably make the same source on the stage and they're gonna stumble a few times, so are they going to be the ones that are quick enough to realize it quickly and can pivot and change course when needed."

- Bernie Li

Bernie outlines what he looks for in a start-up

Talk Takeaways

For this interview, Jeffery Potvin sat down with Bernie Li as they went over his exciting entrepreneurial stories, his investment journey, the things he looks for in a startups, how the CEO and the startup team matters in angel investing, the investment types one can make to round out one’s portfolio, due diligence, and the trends and permanent changes brought about by COVID-19.

About

Over the past twenty years, Bernie Li has been an entrepreneur, an investor and community builder.

In 2010, Bernie co-founded PURE Energies Inc., a leading provider of residential solar solutions to home owners in Ontario and the USA, driven by a tech-enabled customer acquisition platform and through educational content. PURE and its subsidiaries helped thousands of home owners become producers of renewable energy. PURE was ranked #2 on the Profit Hot 50 (2013), was named a top project by the Clean50 (2015) and was acquired by NRG Energy in 2014.

Bernie is currently a Venture Partner with Revel Partners, a NYC-based VC fund that invests into Enterprise Software/SaaS and Marketplace start-ups at the Seed – Series A stage. He is also a Board Director of Vizetto Inc., a software start-up whose solution helps enterprises collaborate on work in a profoundly new way. Earlier in his career, he was an investment professional with iNovia Capital and Carrot Capital. Bernie was a board member and treasurer for the Centre for Social Innovation, a non-profit organization whose mission is to support organizations that put people and planet first.

The full #OPNAskAnAngel talk

Jeffery:
Why don’t we start off and I know you’ve got some very exciting stories. You’ve shared a lot of good things about how you’ve done, what you’ve done, but maybe you can give us a little intro on Bernie. What’s all about Bernie, where’d you come from, which you’re yeah — what kind of moved you down this path of investment, what was your career like?

Bernie:
Sure. So I’ll take it back to the beginning. So I’m originally from around the area here. You know after chapter one of my career after school, I got into a venture at a pretty early stage of my career. So this is down when I was in New York City, ended up joining what became in essence an organized family office, with a particular interest in early stage investing and supporting entrepreneurs. So really that was year 2000 with the emergence of internet let’s call it 1.0, kind of the media side of you know what the internet could become. And spent about 10 years doing early stage investing that was with that group in New York called carrot capital. In 2004 I moved up to Montreal, joined a firm now known as I know Inovia Capital so also during an early stage investing companies across Canada and the US and early stage primarily in IT. After spending about 10 years on the investment side at a pretty young age, just felt that inner need to kind of sit on the other side of the table and try to become an entrepreneur. And so I moved back to Toronto and work with a couple of co-founders and we created a company that was called Pure Energies and this was a company that helps homeowners find good solar offerings for the households. We ended up growing that into becoming you know one of the leading solar provider in the province of Ontario and then acquired a company that was based in San Francisco, and then ran another company that was down headquartered out of there, where we also helped up homeowners across 13 states in the US, all fine deal good solar solutions for the rooftops. Had a really you know kind of like the real roller coaster ride of what I would say is like initial exuberance and success with crushing, you know crashing down of realities, as we went through our tough period. But over the course of that you know, raised you know an amount of venture financing so I went through that route with institutional VC’s, venture debt financing and culminated into getting on the radar of a large public company and ended up becoming a strategic acquisitions for them. So I spent some time doing the merger, and integration of our company at that point was about 200 employees into an organization that was many times larger than us, that itself was a short chapter which was kind of interesting to go through and kind of is like a classical Harvard Business case on what happens with startups they get absorbed into larger organizations. And then you know since that time have had the chance to spend some time you know paying it forward and helping out entrepreneurs in some cases have done it as an investor often it’s like as what we call an active investor, or you know an advisor as well but also you know had the opportunity to help out organizations like Mars the Mars Discovery District. And currently and helping as a coach with the group which is associated with the we charity which is the we social impact accelerator. A new accelerator that is designed to help accelerate the performance and success of startup companies that have a social impact lens to them.

Jeffery:
That’s amazing. So I like the fact that you said you tried, I think you pretty much succeeded in running an entrepreneurial business. I’m not sure how much effort was the try part, I think the try might have been for the first few days and then you took it off and turned into to an amazing business so that sounds like an awesome journey from venture capitalists to entrepreneur to coach venture capitalists again so it sounds like a full rounded investment studio there and I think that’s brilliant. So you kind of went through all these streams and you started off on the other side of investing first before he went into a business have and felt the urge to give back so what was the real driver that got you into this? Even when you were doing it back in New York, what did you really like about it? What made you really think, man I gotta stay in this space, I’m never leaving I love this.

Bernie:
You know I’ve probably, a little bit, was a product of the time. You know in the early 2000s well 1999-2000, it was really you know this exuberance that was in the air -Internet 1.0. But it was kind of like a story of possibilities, we’re starting to hear about this new kind of layer that’s coming out which is gonna kind of make information free for all. You know remove kind of some of the barriers to access education information, contents, new forms of contents — there was so much excitement and you know someone that’s 23 years old — you feed off of that. And I probably helped kind of like set the tone just for the next you know 20-some odd years of that followed that and that was where the initial catalyst was. You know in terms of like my entry and foray into the entrepreneurial world.

Jeffery:
Oh that’s brilliant. When you are going through this stage and getting into it did you have a mentor? Did you have somebody that you kind of looked up to? Or somebody that kind of helped coached you through this, because, again, you’re in a whole new space, you said you’re young, you got this new internet thing you’re like this stuff’s amazing — did someone kind of help you work your way through that because that’s your capital is completely different then than it was 20 years before it and then it is even today?

Bernie:
Sadly no. I would have tried to find one, I think. The state of the market in the industry is it’s very different, much more evolved now than it was 20 some odd years ago or 20 years ago. I think you know I was in the New York market at that time — there was a handful of venture firms that were out there, but the amount of content that was being produced — they can find now the number of stories that you know were being transferred and handed down that didn’t really exist. I mean there was a lot of activity that’s happening around Silicon Valley, you know in California, but that still was its own region. In New York you know a Silicon Alley and it was had its own crew of companies that were kind of coming out for that time period. So a lot of it was trial of experiments, trial and error. That’s how we kind of like stumbled and worked our way through it. You know they often say that you know to be in the venture industry, it’s like I think they say it’s like a four or five hundred thousand dollar cost and the reason being is that your first couple of deals that you end up doing, they all kind of like blow up because it takes a couple of mistakes you know before you have some sense of what you’re actually doing. yeah

Jeffery:
No I can see that. I’ve made a few mistakes in my time, so I’m not even sure they’re mistakes. I think it’s all part of the —

Bernie:
The learning experiences, yeah. It’s all about learning right, your whole goal is that you’re trying to help move other businesses to go forward and your job is to kind of coach, utilize assets or financial assets to move something forward, so you’re kind of all working together to move this ship forward and sometimes the ship’s too early, sometimes the ship doesn’t have the right material and they don’t weather the storm. So it’s a learning process. And it happens maybe too often that you can’t weather the storm but I think you get better at figuring out what tactic ways can get you through some of these and and a lot of it’s probably getting a lot more people involved in what you’re doing than just obviously a small group trying to help float a lot of boats right.

Bernie:
Mm-hmm, yeah. I mean venture is a very kind of interesting asset class. In stage you know there’s so much uncertainty at the early stages of things. Look it’s hard enough in life to predict 24 hours out as opposed to 5 to 10 years out. So there’s a lot of fuzziness right there’s a lot of things that aren’t clear ahead of a company, and you know I’m sure we’ll get to it later on but you know it kind of like boils down to you know what are some of the key success factors that I’ve probably learned at least in my belief during the course of investing at different stages. And you know from the early stage side that’s why so much of it you hear that comes down to like you know you’re betting on the jockey not the horse. You’re betting on the people, you’re betting on the team because they’re the ones that are going on the adventure and they’ll probably make you know the same source on the stage and they’re gonna stumble a few times so it’s just are they going to be the ones that are quick enough to realize it quickly and can pivot and change course you know when needed. So you know different features I’m sure if you spoke to ten different investors you get many different answers on on their kind of take towards how they like to invest the things but you know at the early stage side of things it’s very much a people person.

Jeffery:
And that’s a you know what you’re a bang on. That’s really a lot of investors really take it to the leader at that stage because so many unknowns are there. So they really do have to focus in on end, and belief, and get behind the the jockey in this case because really they are the ones that are gonna lead the way and hopefully they’re gonna get around a couple of beds and get more people interested to get part of that race and that takes time right. So you’re right it does come down to the people and that’s a very valuable valuable point. Do you think that, to deviate a little bit, do you think that a lot of investors look for when they’re making an investment that the startup or the founder has a mentor or if they have some coaching behind them or do you like it if they’re early enough but they don’t have any of that so when you come in you’re like perfect I’m jumping in I’m gonna help pull on this is a perfect kind of startup for me?

Bernie:
So I’ll paraphrase a question. As said you know is there an importance towards looking for founders that have mentors in place which is a separate versus looking for situations where I can lean in perhaps as being that mentor. You know as a personal case I’m not necessarily looking to become a mentor per se for the companies that that I have been involved in as an investor, so certainly having founders who have built a network, a support system around them of people that trust them that are willing to give time and energy and attention towards you know helping them succeed and want to see them succeed those are those are definite positives just to establish that mentor you know connection itself is a win. It shows that you likely have a founder that is humble enough to listen to someone that’s gone through a different experience set, they’re ambitious enough to try to find those sorts of people and are willing to learn probably you know speaks you know and signals their ability the whole kind of coachability that people like to throw around in terms of you know is this a founder or a set of founders that are willing to be coached .I think those are all positive signals. So I certainly, you know, I’ve looked at it – look positively at those types of situations.

Jeffery:
That’s great so it does help be risk to the business overall then because it looks like they’re doing a lot more to help themselves so if that’s the case then you’re a little bit more comfortable to kind of gear into that. So that’s great! What’s your favorite part of investing or what have you found to be your favorite part of investing from over the last you know 20 years of working in and out of the space?

Bernie Li:
So in my past experience because I don’t consider myself an investor per se. You know I don’t like to call myself an angel investor although made a number of angel investments. But can we even though…

Jeffery:
(Inaudible) you don’t want to call yourself that because you fit the criteria

Bernie:
Sure but you know I think that the one of the really great features about kind of you know playing the investor in a sense and you know taking that rule is really is the energy that you get speaking of a lot of incredibly bright people. you’re chatting with people, you’re talking about effectively what they think their dreams are going to be. You know there’s a lot of excitement, you know that comes or you know comes along with that and you know if you’re a person that kind of feeds off of that — that is thrilling. Now I’ll kind of like continue on the conversation which is like what is the tough part about being an investor? In a sense I think you know, a lot one of the key hard things about being an investor is the frequency of what you have to say the word “No”. You’re getting pitched a lot, getting pitched frequently, and many times you’re just saying you know there’s not a fit. There’s lots of different reasons but ultimately you know you’re trying to — I believe actually do justice by giving a fast no as opposed to a prolonged maybe. I think as you know on the entrepreneur side, you rather you want to know where you stand it’s like hey we may be interested if dot dot dot or yes we love what you’re doing, we’d love to continue the conversation dot dot dot or just a fast no. Don’t think it’s for us thank you – great you now time to move on. As opposed to that — you know sounds pretty interesting, you know let’s keep in touch and not really and there’s not really a lot of action or momentum happening I think those are kind of the harder situations.

Jeffery:
No I like that and I think it’s a it might be a Canadian thing versus other countries or you take a little bit longer to say no when it could be blatantly a no. But I think maybe we’re too nice somewhere but I do agree that there has to be a lot more formative action to take place because the startups need to move quicker. And a lot of the times we’re trying to move the startup through that if you want to call it a funnel but you’re moving them through and they’re trying to pick up things along the way and it’s easier just to be able to hear that no one move forward than to burn time and to get high hopes, you’re on that rollercoaster ride, I think the roller coaster ride gets a bit bumpy when things get a little too tight and people are dragging along instead of just giving you that firm no. So it has to work on both sides too. I think the startup needs to say no a lot more – right you’re wasting my time so thank you but I’m gonna move on and I think it kind of works both ways.

Bernie Li:
Yeah I mean to carry on and all kind of like let’s go on a tangent a little bit I think that entrepreneurs you know it’d be good for entrepreneurs to enter these conversations to think about these all less establishment of relationships though. So you know you may have a good conversation with the investor that ultimately doesn’t go somewhere. But through the course of the conversation they might ask a few probing questions that you actually haven’t thought about, they might view the opportunity in a different way that just helps broaden your own thinking. Maybe they can even make an introduction that’s helpful even though they’re not going to invest. I mean it doesn’t just have to be yes or no I think that there’s a lot you know that to be done if approached in the right way is that kind of like mindset. The second thing you know to to maybe chat a little bit of kind of the difference between Canada and the US — and I’m not as you know as not as up to speed on what that difference is these days I think that you know when I first came back to the Canadian market 15 years ago what I saw in Canada was different from what I saw in the US. I think there’s an evolution for how the Canadian VC industry kind of came to be versus how the US market came to be and also the length of time that they’ve been in those markets. But my impression is that the gap is narrowing, it’s narrowing, and it’s narrowing quickly. I think you have more investment professionals that are kind of like more steeped in the way that it’s done. Down in the US he probably spent more time in the US market be themselves may have been operators, as well as happens run successful companies in the past. So you know I just know in terms of the colleagues and people that are within the industry that I come across that you know I think there’s a high caliber of investor base that’s out there.

Jeffery:
For sure. And it gets better every year right. You always want to be like your big brother or your big sister so you’re gonna work as hard as you can to be like them so I think we’re pretty close if not in most cases the same we’ve all got the same end goal so there’s a lot of good collaboration there. now a lot of the investors have plans that they put together and they say every year I’m going to invest an X amount of companies I’m gonna have some reinvestments and this is kind of how I got a map make my portfolio work I’m gonna find companies in this vertical how do you kind of approach the investments that you make?

Bernie:
Yeah I wish that I could say — so the question to paraphrase it again is what’s my approach towards the construction of a portfolio and how do I put that together. I would love to be able to say that I was as methodical as you’re saying and that I went into it with a thesis for how to put something together. That’s not the case. You know in in my case, in my story was we were lucky enough that when we you know we built and sold the company that I had the chance to you know allocate, take the portion of the funds and put it towards really early stage investing. I love early stage given that the beginning of my career you know was in that so probably geared a little differently than perhaps some other you know early stage investors that are in Canada or perhaps in the US. So my approach was actually more you know as I said earlier, I’m a people person more most of the investments that have done at this early stage have been just through personal contacts. So it’s entrepreneurs that I know people that I’ve known for many many years probably you know done business with them or have known them personally you know for for a long time in different contexts. And it’s really those opportunities where you know I have the belief, you know, the person and kind of what they’re trying to build. And that’s been the approach that that I’ve taken what interesting thing I would say is that although I spent you know a decade doing early stage investing when I moved out and it was building a solar company, you know coming back out of that five and a half six years later was I was surprised but realized just how fast the technology world and the evolution of technology has just surpassed me. And you know coming out six years later I wasn’t on top of everything anymore right and you know it’s part of that you know also made me question whether I wouldn’t almost be the right person to do my own assessments of technology-based companies. It’s probably worth noting that you know some of my investments that I’ve done have not been technology-based. So I’ve done a number of investments that have been in the brand and CPG space as well. And then for the technology side of it the one thing that I thought that was kind of smart was I was smart enough to realize that I probably wasn’t as smart as I as I should be and so in that case I ended up becoming an LP in a VC fund because I just felt that they were much more you know on top of the market, they have way better deal flow access, they’ve just been in it for so much longer. So you know you kind of like willing to say okay love you know you deploy the capital in a sense and for that you know you’re paying the management fee and the potential carry the nice stuff that was the way I wanted to go.

Jeffery:
I promise we won’t soundbite that part and use it everywhere okay? I promise we won’t do that.

Bernie:
Great!

Jeffery:
No that’s great man, we’re done. The interviews over that’s all I was looking for I can’t believe you said that. That’s great yeah so you’re right. It’s interesting that the space moves so quickly now from five years ago, from 10 years ago that the key concept is that it’s not just tech. There’s so many sectors out there that everybody is now vying for. You know they’re rehauling anything to do with aeronautics to everything that’s in science areas, you’ve got fintech, you’ve got 8 million verticals. So is there a vertical that you now say you know what I really enjoy this space — you talked about CPG and because all these things are moving quickly it doesn’t always have to be about tech? Is there a certain category or verticals that really interest you more now than you’ve ever been really looking into in the past?

Bernie:
Well I mean I think that one of the areas of interest of why there’s kind of this through the lens of the social impact. So that could be tech that could be non tech. But it’s just this kind of like dual purpose of hey let’s build a business but that’s not just out to maximize profits or in the case of venture and much more growth but we’re also like the outcome of what we’re building here is something that we think actually pushes the world in a positive direction. Then you also have the other side which is how you actually conduct business which is you know internally and the people and how they conduct themselves and take it about you’re being thoughtful about your supply chain and those sorts of things. Those are areas that that I am interested in. But generally you know I guess that’s part of the curse of being in the venture industry is you just get too interested in too many things, sometimes you have to try to you know ignore that new shiny thing that’s out in the corner of your eye and instead of like going down in cycles and chasing those down but no I mean I’m not I would say much more of a generalist in a sense than any sector and specialist (inaudible 22:23).

Jeffery:
That’s great and you’re right the shiny penny syndrome is everywhere because there’s so many cool things that are happening. And sometimes you kind of got to weed through the cool stuff because cool stuff is that flashy shirt that you wore twice and you never wore again because you really didn’t think you look good and bright banana orange so kind of half or yellow sorry. So you kind of have to really take a step back and think is this going to be able to stay and make the duration of time and grow as a business versus just being a band-aid fixed or for right now. So very valuable for that…

Bernie:
Yes there but that being said, I mean I think that it’s useful for people and entrepreneurs to be aware of VCS and investors that in a sense there are sectors where there’s you know exuberance and even in a market like this where we think the world has slowed down clearly I think that you’re seeing trends in the area of digital health being transformed, tool sets that help enable work from home, when we’ve all kind of most of us have felt it. And you know they’re well probably at least in my estimation be a more permanent change in the way that enterprises run themselves so it has very interesting implications on what happens with real estate, it has implications on productivity clearly you know the way that we engage and communicate with ourselves with each other new tool sets that are going to be coming out to help that sort of thing. I mean you know all I think it would be you know very interesting areas that where there is momentum so that is kind of like sometimes that’s sparkle but you know I think you can historically see that in the venture industry is that there are these waves you know in the past of course you could think about mobile as a wave, we’re still in the middle of artificial intelligence as a wave, you know going back further you probably had the content layer of the internet that’s a wave than it before that yet the build-out of the backbone. So there are these these waves that come out..

Jeffery:
And that may help for improvement right like you said like you’re taking an instance of something that’s occurred over the last five months, and you’ve now turned this into a whole new industry of change. And yeah you’ve lost a few players and startups along the way because they couldn’t pivot into change to adapt but then you’ve got a whole new grouping of businesses that have come out that are going to make the rest of the world survive. So the business is always changing and shifting and you’ve got to really have your hand on the pulse as a start-up because you don’t want to be missing the boat and falling down and obviously failing when you could pivot and make a change in the right direction and there’s been a lot of companies in the last in a while that we seem that have made the pivot and they’ve just skyrocketed they were like man I thought we were doing the right things in the right spot but then we made this change in boom everybody loves us and we’re or solving a real real-life problem here. So you know sometimes it takes a bigger problem to find your own pivot and change right.

Bernie:
Absolutely

Jeffery:
You’ve kind of gone through this journey from where you’ve come come from on the investing side, the things that you like about the startups and the CEO and and types of ways of investing now is there, on your due diligence side, is there something that you expect to really look for at the beginning when you’re diving into a company to make the investment?

Bernie:
So what do I look for when I’m looking at making an initial investment. I mean first and foremost for me, it does come down to the people and the team that’s there. and so let’s diagnose its kind of deconstruct that a little bit. One, do you trust the person, can you after you have good rapport in the sense that this is someone that you think is going to act as a InnoCentive fiduciary or you know you know spend your capital well. You know two, you look for relevancy in terms of their background or prior experience. Second is how well does that match up towards this new endeavor that they’re trying to repeat, more trying to build. If you’re building something in the telecom sector is this an entrepreneur that spent the last twenty years coming out of that sector therefore has a you know some unique insight into the opportunities at hand and already has an established network of of players who could be potential partners or collaborators and those are added benefits. But do they also have the mindset in terms of recognizing opportunity and being able to build towards that so that’s on the people side of things. You know from a preference standpoint, I think, intellectually, I get very interested by business so it’s you know sometimes it’s an indicator of just where the world is going, how we operate so I personally like to try to understand a little bit you know what’s the nature of the industry, where are the opportunities emerging, why do we believe so? So I’ve almost tried to build my own investment kind of thesis when I look at these opportunities. I’m trying to figure out what are the key drivers, you know what are the assumptions that have to pull together and be true of something like this were to succeed. And then kind of flip the bottom line instead of be like okay what are all the different things that could happen that could take you know a company and derail them from their business plan. And I’ll admit you know up to this point I never thought of something like a pandemic you know coming out. And that’s clearly you know change the nature of many businesses in the handful of cases for the better, and in many cases for the worse but you know this is all learning. This is this is how we build experience.

Jeffery:
It certainly helps you prepare on your next investments and look at things a little bit more constructively and balance out your portfolio to make sure that your businesses can survive anything. It may not have been in the forefront of your mind two years ago to say I gotta have a company they can survive any single occurrence that it can happen or is it more bucketed into short mid term and long term companies. And you know just on our end when we make investments we look at saying is this company something that can be taken out in three years versus five versus 10. And as a VC you look at those things because what’s the reason they’re gonna take it out well they’ve got a really unique tech or they’ve got a really unique proposition that has a fast turnaround rate and people are gonna want in it right away or they’re gonna get taken out by a bigger player. So you’re always kind of looking at streamlining that process to make it as convenient as possible for your LPs or your investors but at the same time you gotta find the right companies that are coming in got a pivot and change to be able to adapt to that environment so a lot of that is a great analysis of how you would look at that business and decide should I make an investment or not.

Bernie:
So I think we should go on on that concept of duration even a little bit more because you know in particular from other investors I mean I’ve seen some angel investors who are doing the first type of investment and haven’t really realized how long it can be, just how many risks are involved. You know angel investing are really super early stage investing. You know it can be an extremely long road. Like you know it may not be two three four years, I think a short duration is probably more like 10 11 12 13 and even then it might not be an exit. So you know it could be that could be along but I think I like your idea you know thinking through like what that potential duration may be you know. The second thing is categorically is thinking about just you know what the nature of what makes kind of like a VC-ish type of investment in. You know I think that if one were to look at the numbers, I’ve read different reports on the numbers, I mean it’s just such a small or something VC is such a specialized type of asset class. So they’re looking for very particular circumstances right where companies have high growth, extremely large markets, have exit, you know potential value. That doesn’t mean that other investment opportunities are bad like real estate. You know I know something for the topic of this discussion but just being said that there are different companies that may have a different type of investment and risk profile right. There may be investable opportunities that are designed to spin a dividend to provide yields as an example I would say is you know things in the area of infrastructure or renewable energy projects the world that I kind of lived in. You know that’s much more akin towards this production of yield. Some investors really like yield, they’d like to know that I put out this amount I’m gonna get X amount percent for a year and for X number of years and make money that way.

Jeffery:
Yeah you can agree with that you have to diversify, portfolio wise it doesn’t make sense to put all your eggs in one basket but how you’re going to diversify that mix is really going to be dependent on your risk factor of course. But if you are looking for ways to bring in different yields in different markets there’s also, again we go back to that time duration. I’d like to have something that’s gonna mature and come out in ten years versus something that’s maybe gonna be a quick turnaround and maybe gives me a little bit of bump in three years but is it really worth it can I hold on to something that’s gonna be built up in a longer 13 year period and come out with a bigger win well how do I support that all the way through and can I support that all the way through as an investor. So there’s always different angles you got to look at it for sure and great insights to that. When you’re deep diving with your teams, you know you’ve started to learn a lot about them, you’re really into the CEO, do you lead the rounds? Is that something you look at doing or is that kind of you leave that up to the rest of the investment crew and you just jump right in and kind of keep working your way through the different investments?

Bernie:
Yeah so as an individual investor I have not led rounds in the past usually there’s two circumstances for the opportunities that I’ve come across. Either one you have a company that’s in a sense the company said it’s set terms and they’re saying here’s what we’re raising, here’s the instrument that we’re raising it against you know it’s kind of like are you in or out sort of decision. In other cases there may have been one investment group that’s acting let’s call it as the lead or the anchor investor and they themselves and you of course of negotiations in that or set the terms themselves. Of course you know you’re also leaning on them and saying okay well are they providing a signal, do they have relevant insight and expertise into that sector, is there a reason why you’re almost kind of like piggyback off of them and know that if they’re going into an opportunity that you might add some more credence to why you want to make an investment (inaudible 33:03). So two different circumstances but you know often that’s where institutional investors often you know get involved which is like you know they’re writing the right checks sizes, they’re bringing institutional knowledge, let’s say call it right expertise – in quotes you act as that lead for all the investors are kind of like follow on.

Jeffery:
No and that’s a good way of looking at it for sure because you’re gonna have people to come in with different experience on both sides that can come up with money, they can come in with knowledge, they can come in with coaching. So advising and leading can be across any of those spectrums it tends to fall to the one that puts the terms together and puts the money on the table but at the same time there’s others that can lead through other examples because they know the sector, they know the space, so those things really do help as well. And you kind of have to have all of them in order to make a really good DB and a really good investment opportunity for you to put your money into it doesn’t have to just be my money and I’m gone. So I guess in that process it kind of leads up to the next question is that do you like taking board seats? Do you enjoy the follow-on investment that those things all kind of work together for you in this trajectory of investing?

Bernie:
Typically no I don’t take board seats. I have, I’m currently on a board right now of a company that invested in but typically not.

Jeffery:
Okay all right I guess if you’re already doing coaching and you’re helping along the way you don’t have to do everything, you got to find little pieces that work best and that company grow right. Is there other ways that you mentioned coaching you’re doing that a lot of is there other things that you look at to help the startup that you’re investing and outside of just being finance?

Bernie:
I mean I think that’s kind of like usually a case by case example. So number one most of the people again early-stage investments I’ve made are people that I’ve known for many years and so you know our personal on casual conversations can often just kind of a turn and gravitate towards business. So you know they will have discussions about strategy, we’ll have discussions about customer acquisition, we’ll have discussions about thinking about financing and what the financing plans may be and how to approach that, and you know when is the right time to do that, how should we be approaching. Those are different ways in which I’ve helped companies out sometimes on a formal basis but many times on a kind of like an ad hoc informal basis so you can kind of like say an informal coach at times or just soundboard but a lot of it is just you know the entrepreneurs themselves they’re the ones that are inside, they’re living it day to day, they’re really fighting the fires. They have all of you know the market insight the best from the outside is to listen and to perhaps just recognize sometimes you know we all get can sometimes get caught up in the weeds and so to have someone it’s on the outside that it isn’t caught up in all the detail and try to pull back and say well hold on here’s the bigger picture that I’m seeing because I don’t have a thousand things on my mind like you do. What do you think about this and then yeah you’re kind of like exchanging ideas. Every now and then you try to make a good relevant introduction whether that can be to a potential future investor, whether that can be to a potential employee, perhaps even a customer user, so I think you know most people or only know myself certainly I’d love to kind of like cheerlead the companies that I’ve invested in. That’s just one guy everywhere I was saying I think they’re great, I think they’re great try it.

Jeffery:
And it all helps. There was this one investor that we work wit and he does very much that. He’s their biggest fan. I’m the biggest fan of every investment I make as well. Yeah but he says every week he’s posting stuff for each one of the companies and it’s relevant to get people talking about it and I find that it’s just an extra layer that you weren’t gonna get that gives you some eyeballs and gives you some attention to the business and you got to make those strives to do it and if you don’t have investor supporting you that way then you’re kind of working against the grain again. You need as much support as you can get when you’re this early stage right. So I love that you really think about these things and you’re trying to make intros and do other things that help boost them up because that’s the key to not only supporting your investment but helping that startup.

Bernie:
And sometimes its as much as like you know giving them a supportive word. Because having been an entrepreneur and having gone through some tough times I saw, like being an entrepreneur is really difficult and you know odds are stacked up against you in terms of like levels of success. And so you could get so much energy when one of your investors he’s find them they’re tweeting it like hey this is an amazing product you should really try it or you know just hearing some positive words that encourage them, to me sounds simple but it can really go a long way and it really helped that founder psychology.

Jeffery:
And it’s a good point you brought up there on psychology there’s been a lot kind of coming out about this and especially in the early stage side we did a panel not too long ago on mental health with Jerry Rose and a good group of startups that fit into mental health and it’s interesting how many people don’t ask the questions and don’t reach out for the help but it’s interesting that from your side while you’re doing this, you’re kind of giving that approach by even if it’s a random phone call and saying hey Teresa maybe I want you to meet this person. You know maybe they didn’t expect it but it opened their day up and it helped that up-and-down curve, the roller coaster, it helped level it out a little bit and make a little bit more exciting that day because you put a few minutes of time into helping them or talking with them. And I think a lot of that goes a long ways because sometimes you think it’s a long dark journey when you start off because you really don’t know all the things to do and all the levers to pull and it takes a lot of time to get through that so any of that extra help can be helpful.

Bernie:
Well I’m glad that you had a panel session on something that’s an important subject and it’s one that I think is being raised and being more understood now which is great but I think there’s still a long way to go. And yeah there’s a lot of you know oftentimes a lot of hidden thoughts that run for the brains of entrepreneurs and a lot of fears whether they’re warranted or not warranted. I mean you’re always on the verge of being bankrupt in a sense right. Like you just raised around it’s just like how much time do you have before you’re back down to runway zero. You’re always fighting that time and there’s a lot of pressure there. So you know it’s an important subject. It’s great that you’re doing that work.

Jeffery:
I love that line because I always tell everybody that I’m on the brink of bankruptcy every day. That’s my run. But that’s how I have to run in my head I have to always feel that I’m under the gun to make that movement because if I don’t — I have to create a drive somewhere and if you don’t have somebody that is always on you got to create that urgency so every morning it’s like “I got to get these things done because if I don’t I’m gonna fail tomorrow. And I think if you find your pressure points and what helps you move then nothing feels like stress. Every day you’re just moving it forward a little bit at a time and you always feel you accomplish something so in your mind you’re like today I gotta make this list and everything else is good as long as I get this done and the next day I gotta get this done and every day you’re moving that needle a little bit further but you have to keep putting your mind into that direction because that’s what’s gonna help you overcome those darker hardened moments because you’ve made an achievement and those little achievements helped a bigger picture.

Bernie:
Yeah.

Jeffery:
So there’s a couple more questions left that I want to jump into and I guess one of them is because of COVID there’s been such a big shift and change. The market seems to be taking off which everybody’s like “what? well I thought we were in a recession? what’s going on?!” But then on the other side you’ve got all the investment, early-stage startup investments, and things have changed a lot. There’s been no like brakes have been slammed on and VCs are still kind of dabbling in the market, what have you seen and as it changed anything around how you’re investing?

Bernie:
So two different spectrums there and the question being what have I seen in kind of the current marketplace right now? You know on the public side yeah it’s a head scratcher on why that was increasing but I mean you know there’s a couple of stories that have kind of been released in the past few days where you know we the market seen an increase the number of almost like day trading you know stock accounts. Number of retail investors that have begun trading for the first time so you know there’s I saw one headline today that’s just talking about how there’s a lot of people that just traditionally like to gamble on sports and now there’s no sports to be gambled on and hey they started moving towards gambling on the stock market! So who knows, I don’t know if that’s the greatest signal for the soft market. In terms of the venture industry you know since March here in Canada, I think there was a period of a couple of months where people were just digesting what this all meant. Trying to understand how this would impact portfolio companies and I know and in several conversations you know different funds have made concerted efforts to really understand the existing states of their portfolio companies, particularly from a financial standpoint. So exercises were went through where effectively most any new deals were put on pause, put on hold, we need to period here we can look at our portfolio, and start to do some triaging or categorizing you know of the portfolio companies. So it’s an exercise like one goes through and says okay well here’s category that probably are gonna be fine, here’s a category that may have been irreparably harmed you know they’re put in two different bucket and then here’s another bucket here which we might have to provide more assistance on. And so that’s that’s a lengthy exercise to go through so I think that you know different funds have been doing that. And now given that we’re about three months out, we’ll begin to see just what that appetite is for for new investments. I mean if you follow kind of like the Twitterverse, you hear people like to say that they’re open for business. But we’ll see, I mean it’s very interesting that there’s some of the conversations and questions that are coming up right now is you know, in this in this year where we aren’t meeting face to face like how does an investor invest in a company where they’ve never actually met the founder or the leadership team in person? And you’re doing everything over video? Some people — how comfortable are you with it? I guess some investors are saying it you know yeah they’ll do it but others are just like you know now I need to be able to really look at someone’s voice to the eyes and and understand you know what’s happening to get comfortable to make that investment. So I still think its kind of early, it’ll be an interesting summer to see you know just how much activity transpires in the venture market.

Jeffery:
No I agree and I think you’re bang on it. That there was a lot of pullback, there’s a lot of VC’s — everybody trying to reassess to support their portfolios and what’s going on and now are they going to push it forward? I’ve heard lots of things where the markets are gonna keep everything slow until September and then that’s where things are gonna open up. I’m not sure because you have the Ponzi scheme of a stock market that’s going crazy and then you have the other side where you don’t know that imbalance that’s going on where the money that’s sitting on the sidelines personally that’s gonna come out but I completely agree that there is interest in risk and it’s just how well that risk is gonna be packaged up and I think if the startup is packaging it up in the right way they’re gonna get interest. There’s people that want to put money and they want to help a company grow and if it can support this ecosystem I think you’ve got a really good position. One of the questions that was asked was on an investment side do you look at balance between MRR or an ARR for making an investment? do you look at what that might be and say yeah you know what you’re at a good stage I would be more interested to dive into a company if you’ve got 10,000 MRR versus a thousand MRR?

Bernie:
Certainly having revenue helps there’s an indicator that you have a customer set that’s actually you know spending real money. So it’s a proof point and you know that it’s always you know a useful thing. So absolutely like you know revenues aren’t good and you know it’s also then the radio which revenues are increasing but you know at early stage side of things I’m gonna have certainly done investments in companies that you know are pre-revenue I’ve learned that there’s a lot of risks that come along with that but you know that’s part of like understanding the risks but also the reward you know so that could be reflected in the valuation as well.

Jeffery:
No that’s good and then a lot of that will come back to that CEO how drivan that person is to make that work when it’s such an early stage so yeah more risk more reward but that’s a great way of looking at it and you know why you de-risk your business by having MRR and being able to grow that and getting more clients and whatnot that’s great. So we’re gonna kind of round it up with two last questions so the second last question I have is so of all the investments you’ve made and all the time you’ve spent in start-up land and investing in pre seed, seed round companies is there a couple of things that really stand out that you really think that if a start-up puts this into the mix they’ve got a better chance of survival and winning? And maybe you’ve got a great story to support it where you know this company went after they were doing trying to shuffle around they found the the Golden Nugget and they were able to take off. Like maybe it’s your own business like is there some advice that you can share and some really good learnings that you found that these types of companies did and it really won everybody over.

Bernie:
I mean I’ll speak more from my entrepreneur hat but I’ve seen this with with my the investor hat, you know I think a lot of it comes down to tenacity. And looking at founders that when they are gonna run up into the wall and they will run up against that wall how do they react, and how do they change and do they have that inner strength to just keep going and saying okay you know this path that we’ve run into it’s a dead end. We’re gonna refigure this out, we’re gonna go a different direction. And I don’t think that’s a skill that can really be taught I think it’s hard to even detect to people so you’re trying to make a gauge on if they have that but I’ve seen you know quite a bit of companies that have come you know had success where yeah they didn’t get it right when they came out of the gates and they ran into a wall, but they quickly figured it out. I think right now is a very interesting time where you have a wall it’s called COVID you that’s that’s changing everyone’s business plans and now we’re beginning to see how some people react. That’s not to say (inaudible) that I mean that’s not you know what I’ll leave there.

Jeffery:
Alright. No tenacity is a good one and I do agree you need that passion, there’s a lot of I guess words you can use but I do like the tenacity. You know we hit a wall, you gotta figure out how to move and move quick. And that takes a lot of key knowledge but maybe asking questions too so I think that’s a good way to wrap that up. Now on we’ve gone through this whole journey, we’ve gone through from talking to companies learning more about them, going into deep dive figuring out how you like to invest verticals, some good stories that kind of fit around there so I guess the last question I have and it’s a two-part question I guess is what do you see using the crystal ball, what do you think the environment or verticals that are gonna really take off in the next 12 months and then where do you see us all landing in the next three years, just to kind of give the startup world a kind of a peace of mind on maybe I should shift my business now because we’re gonna go this way so is there any kind of a worldly view that you wanna you want to share.

Bernie:
Wow I don’t know if there’s enough if I have enough insight right now on where things are going to be three years. I think the things that I keep my eye on are clearly you know the back steam and our ability to get back to get the getting the economy moving and then what does that really look like how much fear is there of (inaudible) contagion you know death rates and that’ll give us a sense of you know what the economy is going to, how it might be able to move and so you know what extent over the next couple of years. Personally I don’t think it’s just three months, I think we’re gonna have a little bit longer for us to go. You know for that in terms of like the areas of opportunity, I think I’ve heard Mark Cuban said that it’s interesting and that what COVID has done is it’s forced you know such behavior change that some things that might have taken five to ten years to naturally evolve in terms of consumer behavior have shrunk down to two months. So like the rise you know of e-commerce as our way of purchasing right now. The way that health care is what he deliver that could be an entirely you know new things so you know areas I think that are in a sense benefiting, you know kind of bringing it back to where we were in our earlier conversations. Online health segment, I think that things in terms of remote working work from home tools that allow people to be more productive from their own homes I think that that’s going to be in a large area that’s continuously evolving there. And then you know the e-commerce and everything around that ecosystem, that’s probably already there I mean we see what’s happening with Shopify. But yeah I think that’s another segment.

Jeffery:
Well that’s great and you and I fully support those I think that that you’re bang on on how you can look at these different verticals of where they’re gonna be exceptional growth. Because there is going to be a shift and a pivot to how companies are functioning now. There might not be as many in the office, maybe more people at home. There’s gonna be a lot of on demand. I can’t remember the name I’ve been fighting it in my head I think it was consumers distributing distributor…

Bernie:
could to consumers distributing

Jeffery:
Yes that one like feels like we’re going back to that company which was like 1982 or something where the online magazine and pick it and then they deliver it wait a sec we’ve already been doing that everywhere so the world is really just retracting a little bit and going back to the warehouse model where you just drive up and there’s someone sitting at a desk you tell them what you want to hand it to you you go. The least amount of interaction and in one of our interviews with Diane, she’s an investor, she said no I think there’s gonna be a big shift for people that are gonna work from home and they’re gonna go back to this nine-to-five work whenever that is, but they’re gonna be going out and spending more group time with friends and they’re gonna spend less time grouping in business. And I kind of like the total reverse of that I know it’s like you know what that’s actually kind of fascinating, they, we, still want to flock together maybe we don’t need to do that in a business context. we can do business behind the scenes but let’s do something together and that’s how we’re gonna formulate. So maybe there will become startup opportunities in how you get more people to socialize and collaborate outside of business. I guess there’s a whole market of things that can happen and who knows what’ll be there but I enjoyed hearing the crystal ball and I super appreciated getting the time to chat with you and go through all of this as I always do lots of notes. I’m not sure if you want them but they’re all these great things that you shared and said so I appreciate that. Thank you very much and if there’s any final things that you want to share. we’re more than welcome to open the platform for you to give us your last thoughts. There’s some questions we did try to answer the best we could, so thank you everybody who joined us and if you got any last words you’re more than welcome to steal it and take the show away.

Bernie:
No I’m saying everyone that’s there thank you thank you for this fun conversation. I just want everyone to stay safe and be well.

Jeffery:
Perfect. Well Bernie, I appreciate it again. Thank you very much. Have a fantastic day and we’ll follow up with an email and look forward to continuing our discussions.

Bernie:
Great. Sounds good. Take care.

Jeffery:
Take care. Have a great day.

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