"I'd rather have someone fully committed, who is less talented than someone, who is very talented but not committed. A commitment to the cause can compensate for a lack of talent, if you're not committed, no amount of talent can compensate for that"

- Permjot Valia

Permjot outlines what he looks for in a start-up

Talk Takeaways

Jeffery Potvin sits down with Permjot Vaila to talk about what got him started in investing, it’s challenges, and what excites him about it. They also discuss his hesitance to investing in a superstar board, what he looks for in a startup, and his preferred terms and vertical. Permjot explains his own personal startup stories on integrity and offers insight on the investment landscape in the current COVID-19 crisis.

About

Permjot S. Valia is an Economist by background, and the Founder & CEO of Mentorcamp, co-founder of Flight and Partners Ltd. (a U.K.-based FCA authorized fund), the Executive Director of Innovacorp’s MentorConnect, the Entrepreneur-in-Residence for Innovcorp’s Momentum project, and the go-to pitch trainer and advisor to numerous business and economic development collaborations throughout the world. He is also an Angel investor, having invested in over 30 startups in four countries (Canada, U.K., South Africa, and U.S.). In 2016, three of the companies that Permjot invested in were bought for a significant premium. The three companies were based on three continents, reflecting the global nature of his work.

Permjot serves on the Board of several companies, including Wooshii.com, and as a Director at Bluelight Analytics and Flight and Partners. Permjot has been nominated by TechCrunch as “one of the best mentors to startups in Europe” and as “one of the very best pitch trainers in the world”. He regularly leverages and mobilizes his business connections from around the world to bring them to a region or entrepreneurial companies requiring start-up expertise. He lectures globally about Strategy, Business Modelling, Investing, and Sales.

Permjot lives in Halifax, and he enjoys classical music and travel. He is passionate about contributing to the region’s economic development and success. He is actively involved in the Stephen Lawrence Charitable Trust.

The full #OPNAskAnAngel talk

Jeffery:
Well, welcome everybody! We just go right into it, so we’re already live, we’re already recording so and I’m gonna – I guess to start it off Permjot Valia, I’d like you to kind of give and hope, films saying your name right and I’m not missing it, but I’d love for you to kind of give us a background about yourself. So a little bit about your – maybe what you’ve been doing for the last 20, 30 years some good things like that and then we’ll jump into the questions.

Permjot:
Sure! So, the last 20 years or so I’m from London originally and been doing various things but then – the – I really got involved in angel investing as a consultant. I was working at a large – one of the large four accountancy firms as a sales guy. And then got involved got the entrepreneurial bug. They’re invested in a company, the company did very well and then I just started doing more angel investing and 2007, in the midst of the financial crisis, we launched a fund – a recovery fund called “Flying partners,” that is still going and it’s been running now. We’ve got about 20 million Canadian under management, very very small fund, but is very active. We actually buy the whole company we don’t find equity we buy the whole company turn that around and for the last 20 years, I’ve been really working my passion which is economic development. Working within rural areas across the world and really just identifying and helping lots and lots of startups. So that’s brings me to where we are today.

Jeffery:
No, that’s awesome! And we’ve had some good discussion around your background, and all these great things you do, and I can say that of all the people, I’ve interviewed I really loved a lot of your background and the stuff that you’re doing. So we’ve aligned quite well there, so David’s good for putting us in contact.

Permjot:
Thank you! Thank you!

Jeffery:
So you kind of touched a little bit on that, when you put an investment into a start-up. Maybe you can give us a little bit of an idea on what got you started like – what was that driving force that really puts you into the driver’s seat on investing and got you more excited to keep it going?

Permjot:
So what got me started with investing was initially I was working as a consultant to this business which manufactured lasers for skin treatments. And having first-hand knowledge of how well they were doing what the order book looked like, the value proposition, the customer
feedback, I thought the company’s going to do very well and then I found out that the company was raising money and I didn’t know anything about angel investing. I didn’t know what it was called or anything I just said “Oh is there a chance for me to put money in this?” and then I did and I enjoyed it. And then there were other opportunities that came about. I mean most angel investors, it’s a close-knit community, people tend to know each other. They kind of tell people about deals at Center etc., so I just could evolve that way and then I got involved in more angel groups. I didn’t really enjoy being involved in angel groups but I got involved in a few but then I really – for the last I’d say 10, 15 years, we do my own investments. I have invested in angel funds. So I’m an investor at a large fund here in Atlantic Canada, a fund in Arkansas, and a fund actually in Eastern Europe but angel fund. So I’ve enjoyed that but yeah, that’s what got me started in angel investing.

Jeffery:
No, that’s pretty good and you kind of jumped into a lot of things like you didn’t just go into investment. You’ve tried kind of a mix of the whole thing so it’s giving you a good flavor of angel investment funds going direct. So you’ve got a really good learning there which is super helpful for any startup to have you participate and help them because you can carry a lot of knowledge on where to go to get other investors to join in, but at the same time you get a good view of the landscape of what’s going on pre and post Covid and obviously all of the other things that occurred. So that’s really great, so when you made that first investment what was the excitement about it? You said that you were really excited, you really liked it, what was that piece that you really enjoyed about it?

Permjot:
Actually, it was just being a part owner of a business, so one of the last investments have made the investment that brought us – connecting us was in a company called “Crib Cap” which is run by a CEO called David How based in Atlantic Canada and what was really nice about this was if A: it came through a recommendation of somebody a very successful business guy, Kyle Rocky, who runs a phenomenal business called “Proposal Fly.” It was in the media, actually yesterday because they raised a truckload of money and very successful business. So he recommended David How from Crib Cap which is a great thing. And then what really impressed me was, David was a seasoned entrepreneur. He really knew what was doing and often I think what the ability to pitch is overrated and I say that as a somebody who makes a living, training people how to pitch but I think the ability to pitch is overrated man David was not only a really good picture but what I saw in him and what I look for in other people i investing is that command over the operational detail but can you actually operate the business because most people can with a lot of training and maybe I’m in a unfair position to know about this because I’ve trained people and I’ve trained some people to do great pictures but they’re still not good businesses. Whereas what you really want to do is look for people who can really understand the landscape of an of running a business and have domain expertise and that was something that was very impressed in this particular entrepreneur. So that that gives you an idea of actually, just using him as an example because he’s a common thread we have that was what I’ve looked for and now increasingly I look for people with an operational experience and people who actually can run and make business decisions rather than just pitch.

Jeffery:
No, that’s great advice and a great way to look at it and I agree David’s a very detail-oriented. He gets things done, I think a big thing about early-stage companies or early – any company is how well can they organize and get things completed? How can they move that needle every day if that’s a little objective here to the next, to the next, to me I’ll close it off. And I found that a lot of entrepreneurs, sometimes become too much marketing and not about function and they’re – they think that that’s the only way they’re gonna be accomplishing something. But when you gotta where five, six seven hats you’ve got a lot of things to juggle and you be dropping balls because you can’t complain you don’t have enough money or enough resources. It’s how well can you pick the ball up move it forward go to the next one move it forward and keep everything moving. So I wholeheartedly agree, I think that’s a great point very valid to how startups can really focus better on accomplishing their goals. So you’ve got a got this good little mix going, what’s the favorite part? What do you just love the most? What’s your favorite part about investing? Like you were talking about operations you got all these little cool things that working but what’s the real thing that you wake up in the morning you’re like I love this?

Permjot:
I enjoy the getting it right, I mean sadly we get it wrong, just the numbers we get it wrong more often than we get it right, but I love the – it to me it’s an intellectual exercise. I mean you don’t you don’t ask investors to invest in your company with the attitude that they want to become rich. If my primary motivation was to become rich to angel investing I would probably do something different. It’s a different thing, it’s an intellectual thing that can you see the pieces, the person, can you figure out what you think is going to be successful, can you understand what the growth hypothesis is, what the value of hypothesis is, and most of my investi companies will tell you, I’m an extraordinarily passive investor. I don’t like getting involved, I think I just hate it when investors say you know, “the number one thing for me – the number one thing is team.” It’s all about the team and then they want to get involved in the team or they want to get tell the team what decisions to make. But if I wanted to run your business, I’d be running your business. I wouldn’t be investing in you, I’d be buying your business. I don’t want to buy your business, I want to invest in it and I want you to run the business. And I think sometimes you need to have that conversation as well. Now I do have some skills and stuff, and sometimes companies use them, sometimes companies don’t but I don’t actually want to get involved in companies to deploy my skills, if their areas I can help, great. But, you know, that is not what I want to do. So the most exciting thing for me as an investor is just the intellectual challenge and seeing if you can actually help with typical problems and help them see a way through using your experiences and insights. And I really like it to be a kind of a one-way communication, maybe people say you should have two-way communication. I like it to be one way, I like the entrepreneur to ring me up rather than ringing the entrepreneur up and say “hey, what’s up? how can I help?” I want the entrepreneur to say “hey, I’ve got this issue..” Well how would you tackle this, how would you tackle this, I like – I will only contact entrepreneurs, if I feel I’m really not getting a sense of where they’re at etcetera. The worst thing I can do is never call an entrepreneur because that means I’ve just written them off. Even though – even after I’ve invested in them because I can’t control the amount of – I can’t control the amount of money I’ve invested. All I can control is the amount of time I invest in them in the future. So sometimes you just have to cut your losses and money comes and goes. I don’t worry about the money, I worry about my time. So if I decide yet that’s gone I will just not spending my time on it.

Jeffery:
No, and that’s you got a valid you got, to put some value to what you’re putting into it was well right? So there’s a – there is a value exchange and it’s interesting but the companies that are doing really well, they’ll update you, and they’ll you know – you’ll see the growth, see things happening. The ones that are struggling, they may not come and talk to you, they may not ask the right questions, and those are the ones that probably could really use your help. And your – I really like the idea of where you’re saying that “I’m not investing in the team, I’m investing in you to build the team, build the business, and I’m gonna be over here to help you, on you know, if it’s big-picture stuff or things that you’ve got problems with, love to help but really and I’m investing in you to do those things, and I gotta find the right people that are gonna take this business and move it forward.’’ And that speaks volumes to an investment portfolio because when you grow that portfolio, people will say to me they’ll be like “how do you have so many companies?” Well I’m not babysitting thirty companies. They’re basically updating it, right? So you got to be able to feed them when you can, and I think you’re a sales engine, I’m just gonna feed you contacts, help you grow figure out this, meet that but really that’s our job, and then taking information, and giving our updates but-

Permjot:
I’ll say-

Jeffery:
-be broader than that

Permjot:
And we, one of the things I’ll do is I read, I love reading and I read certain magazines and publications. regularly, and what I will sometimes do is just – if I see an article that I think is relevant, I’ll send them articles and stuff, I’ll do that to my portfolio. Other than that, in terms of active engagement, it’s very passive for me, very passive it’s one of the things I do. I’m not an angel investor, I – my identity is and if somebody said what you do, I’m never going to say I’m an angel investor, that describes – it’s like if you go running once three times a week, you don’t describe yourself as a runner, it’s one of the things you’d like doing. So I wouldn’t say I’m an angel investor, it’s just one of the things I do. So my identity is not that identity is all the other things, so I like to do lots and lots of things, angel investing just one of the things I probably do four or five investments personally a year and then through the funds do another three or four.

Jeffery:
No, that’s valuable and that’s good to know as well. So, I guess on that side of things, on the amount of come easy investment, is there – do you also bake in there some more a percentage of reinvestment?

Permjot:
No, by that, so you asked me if I bake in something for reinvestment, and by that do you mean that, I’ll put twenty five thousand into a company and then leave twenty five thousand allocated to support the company investment?

Jeffery:
Could be another 25, it could be ten percent of that, it could be I’ll put our ten grand in six months when they do another investment for me, kind of just make your investments, I’m good I’m one of the next ones, I don’t like to reinvest in a company twice, I just let it go, is that kind of the idea?

Permjot:
I’ll reinvest, I mean personally, I’ll reinvest in companies if I feel the story has changed again. I think I’m really moved by the concept of sometimes and cost and I think with lots of things you have to – you have to look at things as they are today. I actually had a deal that I had to do this morning on a business I’m involved in and the deal was very different from the deal I’d enjoyed over the last ten years, very different deal. And the deal looked bad and then I think if you look at historically how you’ve been rewarded, that’s a really bad way, what you have to say is saying, forget the past if I was off of this deal today, would I take this deal or not and it was a great deal, it was a phenomenal deal, so I took the deal. But then you have to let go over the legacy of past expectations. Past expectations should not inform what you expect for the future. It’s and yet loads of people make that fantasy, loads of people will reinvest in a company despite knowing that the company has probably not gonna, you know, achieve the promised returns, but they just can’t let go because not investing, means you’ve definitely lost your investment. Whereas I kind of think every time I look at a reinvestment opportunity as – and there lots of companies that I have reinvested in continuously, but it’s because I approach it saying what does the deal look like today would I invest at that valuation etcetera. And there are some times, when you turn around and date reinvest because you think actually the companies are great, and the amount of money I’d invest is, I just wouldn’t invest the company of that valuation range. So if a company gets to 10 million plus, that’s not where I typically invest, so it’s not a statement that I don’t believe in the company nor support the company, I am, but it’s just not if I would I rather invest in a 5 million cap company, now all they invest in a 10 million company, now I’d always go for the 5 million.

Jeffery:
And that’s great! We fit on the same lines like if we’re going to reinvest, we reinvest only it up until the 10 million mark. Anything over that it’s not worth it to us because we’re trying to help see and we’re hoping and maybe it’s not hopes not the right word, but we’re working with a company per se, to say that when they get to that round and they’re going to raise, we’re we know there’s a lot of other collective group species that are gonna come in and support it because we’ve helped to get that far. So we can help that hand off and that’s what we want to do it’s a very clean way of doing it and that might be one or two investments before that and sometimes it helps with others to come in because they see that you came in at their early stage, maybe at the two million, and if you do come in at five million, it actually shows that you’re just as supportive of it. And if it comes up another one, you can step away from it.

Permjot:
The only – Jeffrey, the only thing I would say where we may be aligned or we may not be, I don’t want – if I’m gonna – if I’m on the board of a company and I very rarely sit on boards. I’ve done over 50 investments and I sit on about three boards or I have totally sound about three boards or companies I’ve invested in. What I don’t like though is when board members are part of the fundraise and don’t personally put money in. I think when you are on the board you have to invest, you have – unless it’s a big institutional race, so there are two exceptions to that where there’s a big institutional raise and the institutions don’t want to water down. And it wasn’t the case that – but if you’re doing an angel round or if you’re doing a pre still doing individual investing, and you are on the board, you kind of have to invest.

Jeffery:
Agreed. In it that shows very well, it shows that you support it and you’re not in there just taking and you have to give.

Permjot:
Yeah and if you’re in a leadership position because I think the same thing of all leadership positions that you can’t ask others to do what you’re not prepared to do yourself. I can’t stand behind the CEO and go to others and say you should invest in this company, you should really invest in the company, “well how much are you investing?’’ or “not me,” you know, so you can’t do that.

Jeffery:
Yep and you know, what that shifts a little bit when you’re when you’re bringing people in to support your company. I think you have to start looking at those aspects as a founder, but because the investors are also looking at that, they’re looking to see who is on the board, who is supporting this, and are they going to make that investment because it does speak very strongly to the company. And if they’re getting people that aren’t then maybe they’re not the right – they’re not the right people because you want all hands on deck, when you’re growing this company especially at that early stage. And you mentioned that you’re on a couple of boards and that was a really interesting component to it because you’re probably going to handpick the ones that you really feel that you can make a benefit for, and you really can get behind to be on that board. Is there a time frame that you put on that? Is it the same idea that they get ten million? You’re like “you know what you need to get a growth or a high-growth board member and not myself and take that step back,” or are you game to keep going with the business?

Permjot:
So, the longest I’ve ever been is about nine years and I think that is probably about three or four years too long but the company went through certain challenges that I think it made sense for me to just stick around. Others I’ve transitioned from being a chair, to be a board member, and there you stayed because there was a value in the transition and making sure you know there’s a probably smooth team and because it’s not a corporate history that’s tied in with being on a board. But I think five years, three to five years is good times set and it’s all about are you adding value, and I really don’t like being part of something we’re not adding value. And I think when you look – when you’re – I want to hold myself to the same standards that I hold other people who are on boards of companies I’ve invested in too. So, if I see somebody taking getting paid and I have nothing there’s nothing wrong being paid for being on the board. I want to know that they’re aligned, and they’re adding, and they’re contributing, they’re creating value, for the for the imagined team. I don’t like to see their – it can’t be a one-way street.

Jeffery:
Yeah, no, I like that very valid an agreed and this is super helpful for start-up CEOs because they probably don’t think any of this, and you can tell them, and you can share them but when they hear this, I guess on a different context, it starts to trigger and they start to think “man this person’s been on here for three years and haven’t – doesn’t – hasn’t delivered anything.” And I think sometimes, we forget that they’re not there, sometimes they’re there for a picture, but really at the end of the day, you need to utilize them as much as you can because they’re helping you build and support your business.

Permjot:
So, one of the things I’ll do and this is just everybody’s weird, everybody’s a bit weird and all angel investors have this. There was a investor I worked with in London called John Perkis, great guy, you can google him. He’s written many books and he had this theory that he won’t invest people, always ask you what do you want you invest in, he would not invest in a CEO who doesn’t have siblings. His theory is that if you have siblings, you’ve learned to negotiate, you’ve learned to share, you’ve learned to do all kinds of stuff, so he has done, he’s got that theory. Now it was great working with him until we went to China and then we just couldn’t find any deals in China, but the guy has this weird theory about that and that’s fine. I won’t invest in companies where you have a superstar board, so if it’s a start-up and you’ve got board members who sit on more than say six or seven boards, I’m not interested in investing because I know that those people cannot possibly devote the time, energy to the company. You know, I just need to – I’d rather have and I’ve seen this happening in sports, I’ve seen this happen in all kinds of arenas. I’d rather have someone fully committed, who is less talented than someone, who is very talented but not committed. A commitment to the cause can compensate for a lack of talent, if you’re not committed, no amount of talent can compensate for that, so I will not – I don’t like investing in company and some companies will say “we’ve only secured this person on our board and we secure this person,” and they think you’re gonna go “WOW” and actually it has the opposite effect on me. I like – I can tell you now they’re not gonna – so they sit on your board and they’re certain a board of a ten out of a 100 million dollar company that’s paying them a hundred thousand dollars and you’re gonna pay them options worth ten thousand a year. Which cool are they gonna take? You know, which company minute, so they’re not gonna read until they get to them I mean, how rude is it when you go to a board meeting and somebody hasn’t read the minute, you know, I really – yeah that’s a long-winded point.

Jeffery:
No, that’s brilliant because what you’re talking to experience and that is super valuable because again a lot of CEOs and entrepreneurs have never been through this. So they don’t always look at all of these other elements, and what I love about what you’ve gone through and then what you’re sharing is that it’s detailed, and you’ve found what works and you stick to it. It’s versus I’m trial and erroring right now and I’m airing more than I’m getting out of the value, you’ve kind of gone through this and I think that that’s awesome. So, I’m glad that you’re sharing this is good. In your investments, do you take leads and will you lead an investment? Is that something that’s an option?

Permjot:
No, I don’t have the time, energy, commitment, attempted to detail, the ability to deal with lawyers, not what I was brought on the earth today. It’s not what I do and I think it’s a very valuable role, I think somebody needs to do it. It’s just not me.

Jeffery:
No, fair enough. Inside of this, on the DD side, when you’re doing the deep dive, we’re gone through, so you started with the company, you like the CEO, you like what they’re about, they’ve got a board that you enjoy, that you’ve structured – nice it’s structured nicely, you’re working it through, is there on the paperwork side are their must-haves like in a DD you need to see these things and what are they?

Permjot:
So I won’t very rarely will I invest alone, I’ll invest with other people. Normally I’m part of the round of people I trust no more competent who will do more to due diligence than I will, and it also depends on the size of the investment. So for example if I’m doing at my average investment size about $25,000, if I’m doing a $25,000 investment I’m not going to spend you know 20, 30 hours on the due diligence because then I put a cost to my time. Although, the investor – although the company’s only received twenty five thousand. I’ve given them an additional fifteen thousand dollars of my time, you know, so straightaway I’m not going to make money out of that deal because that I’ve now invested fourty thousand and not twenty-five. So I think you’re the due diligence, the level of due diligence, I do – and this is probably the wrong answer, but the level of due diligence I do reflects the amount of money I’m putting in. And Jeffrey I always find it strange that there are all people I know who put more due diligence in a $25,000 investment than they would on buying a house, and I’m like you want to buy a house, it’s probably the biggest financial product you’re ever going to buy, and I’m not just talking about due diligence in the house, we’re talking about due diligence because the most expensive thing isn’t actually the house. The most expensive thing we’ve ever bought is the mortgage because the house might be 250 but the mortgage is going to be 400 by the time you’ve done it over 25 years. And well due diligence on the house is it pretty house, is it nice, is it this, what does it look like? We’ve done no due diligence on the mortgage. You know, have I shocked around what does this tell me so I will shop around and I will do the due diligence but it has to be in relation to the scale of the money going in because I’ve got – I have this time value of money thing that I really – I just have this hierarchy for how I want to spend my time. I was in front – I was influenced by somebody very early on my career who told me that the only thing money can buy you is time but the definition of rich people’s and poor people, the rich people have more time. The reason why you would travel business class is because you’re buying yourself time because you can sleep on a plane that gives you more time. You will stay in a nice hotel because you have a better experience, that better experience gives you more time. All of these things you pay for is so you have more time. So, therefore, don’t past the time away by doing stupid things, that actually, you know, you’ve done what you’ve done. Approach each day new, each day gives you a new bank balance for 24 hours.

Jeffery:
No, that’s great and I like the fact that you really equate that money and timepiece because when you look at the new diligence that you said on a smaller investment, or a company that maybe is two-three million valuation, there’s not a lot of metrics. There’s not a lot of data, so you are taking a higher risk, you’re going on a limb so when you’re doing that there’s other elements that you can look at, there is some due diligence, the lawyers will take care of all the back paperwork to make sure that’s all taken care of, so I hundred percent agree with that. But as you start to work your way up you’re gonna start to dive into more detail, so you know the first time you bought versus the last time you bought you’re gonna get into way more detail-

Permjot:
Yes

Jeffery:
-looking at areas locations, how the sun hits, how big the front is, those are all optical things but on the back end it comes about the money. It’s always about how you make money and when we make an investment into a company, it’s about money, how is that company gonna grow, how are they gonna hit their numbers, how they gonna hit their targets, what are they looking to, who’s their client, where’s the MVP? There’s so many other elements to tie in to make this a really investable opportunity and some of those a lot of those can come out just through that conversation or through that DD side of things. So I do appreciate that and you’re right, you know, money and time is – it’s pretty important when you do any of this type of deal.

Permjot:
So and Jeffrey, a lot of investing through other people might be the supporters fund or be it through other investment groups, the whole thesis is that you’re outsourcing the due – the requirement of due diligence. You’re outsourcing the you know, the detail that people would have to do. You’re actually outsourcing that because you do place a value on your time and I know that if I’m investing through someone else they’re gonna do a whole amount of due diligence and all the appropriate paperwork that needs to be doing, it needs to be done.

Jeffery:
Yeah, I completely agree with that. And that’s why you’re paying to get somebody else to do that job and you want to make sure to do it right, and so hardly agree with that. So you did mention and touched on a couple pieces, of course, you mentioned the CEO and making sure that this person like in the case of David, they hit that opportunity to strength of values that you’re looking for is there anything else that you look at from a company perspective during the DD or post DD that you really want to emphasize today that is something that is important?

Permjot:
It’s not DD but it’s likability. It’s – and everyone has their own – everyone has their own as I mentioned about the John Perkis, not investing people without siblings. Everyone has their own thing, I just to me likeability is a big factor to our light person because it’s about do I think I did enjoy and this sounds very strange and I don’t think a lot of the entrepreneurs will get this, so sometimes I get a lot of emails, as you can imagine from people who I don’t know saying, “hey we’re looking to raise money, would you be interested in the answers?” Always no and the reason why it’s always ‘no’ is I started thinking if you invest in something, you’ve lost the money. It’s just a lot easier way to cope with, was it there’s a great quote to spare I can cope with it’s the hope that kills me and so you write off the investments are there for you going to ask yourself, “are you willing to invest $25,000 on this thing because it’s going to be fun, because it’s going to be, you know, enjoyable, because if you don’t even have fun on this, why are you doing it?” So I know that’s not a – it’s not an answer that helps entrepreneurs because entrepreneurs, “so well how do i make it fun for you? How do i?” and I’ll be like, “well, we don’t. It’s either it’s gonna be something that I want to get involved in or don’t.” So, I’ve met lots of people and I spent some time with them and I think is this a sector that I find interesting, is this – and it doesn’t have to be a sector used. So we mentioned the example of Kripke, as you can tell it’s not a service I’m gonna be using frequently. You know, because it’s haircuts and clearly I’m follicly challenged, but the idea here is though will you have fun on this journey, are you investing with good people, are you gonna enjoy catching up with them, and if they lose you your money, would you still call them up and say “hey, how you doing?” And if the answer is yes, great invest in them. If you think you’re gonna lose a relationship with somebody, you know, it’s probably not worth investing in.

Jeffery:
No, I I love that’s awesome. You’re right, if things go sour, am I gonna be pissed off and never reach out to that person again? or do I like them enough that I would still reach out because I know that we could have a good deep intellectual conversation about something and maybe then they started the next company or they would have interest to come back? I think that’s brilliant because you’re right, it you can’t live your life being a frustrated and annoyed about something you did. So a good way to look at investing is that if I can see them in ten years from now or I can see them into regardless of the outcome and they’re still gonna be happy, I’m still gonna be excited for what they did and it’s worth jumping in and investing. And that carries through very well, so I’m now thinking in my head all the investments we’ve made and I’m saying, is there anybody in there, you know what, a company called me today we had had many discussions and they were from Panama and they’re doing crypto business and there was a company that I had, and it was one of my first – sorry crypto investments they ended up having to fail they got hit by a million things with this – with the securities exchange with SEC and ended up just decided to fold the company. And all I could think of was I gotta call this guy who fooled the company, lost the investment and all I kept thinking was I gotta call my CV thinks about this company. So there is no negative, no nothing, it was they worked their butt off to build this company, and at the end of the day could I still have that conversation? 100%, still thought they were smart as hell, fantastic, and what they tried to do, but these things happen, so you’ve got to be able to gauge that and be able to move forward. So I love that advice, that’s fantastic.

Permjot:
Yeah and I’ve never been into ‘let’s just make money for the sake of making money,’ so again there are certain sectors. Ironically, the investment that I’m still hasn’t exited, so it could still go horribly wrong, but one of the investments I’ve enjoyed the most and the business has done – has it is doing very well at the moment so let’s hope it goes all the way through an exit. And I invested in the CEO three times prior to and every time it failed, and what was interesting was again when you talk to entrepreneurs about, so talked about due diligence and one of the due diligence questions I always like asking is, “why did you fail in a business?’’ and what’s really interesting is, great entrepreneurs will tell you what they learned. There’s reflection, there’s genuine humility, there’s you know we got this wrong, I got this wrong, I should have done this, I should have done that, this is some reflection. What weaker entrepreneurs will do is blame something, or someone, or a customer, or something, it’s like sales, you know, you talk to salespeople, “oh how did – you got a great sales order there, how did you get it?” “Oh I’m brilliant.” “Why did the customer not buy this time?” “Oh the customer’s an idiot.” You know, it’s never them. It was if they were successful was all them, if it went wrong, it was all because of someone else. So, one of the things I loved about this guy was, every time he didn’t succeed, the learnings were incredible and what I realized was that, I’d invested in his education and I didn’t want to be the guy that enables someone else to benefit from the huge investment I’ve made in his education. That’s why I continued investing with other people, a few that they behave in a way that you didn’t expect them to behave you so you’d never invest in them again ever.

Jeffery:
No, I love that someone told me a story, and I remember how long it was but very similar to that. And it was they had screwed up on an order and it was pretty bad, so they came in to the CEO with the resignation, and said “you know, I just lost you ten million dollars, and you know what I’m not worthy to be here anymore, so I’m resigning.” And they said “I’m not accepting this, I just invested ten million dollars in you, you better get in there and make something happen.” And you’re right it’s the exact same mentality there is that you work with them, they’re building, you’re building, and then there’s gonna be this point where they’re gonna be – they’ve got it right this time. They’re gonna ride – the find the right formula and you’re paying and that. And we have one company called “Scout,” and he told his story he said the same thing. He’s like, “Okay, I failed this company, we did okay in this one and failed it and you know what, this is how we’re doing this one,” and we were going through all the stages of what he was doing in his investments, and he’s like, “I’m only taking this much no more.” And I was like I love this and he’s like “And then I’m gonna take this much and no more.” And everybody’s like, “You need tens and thousands of millions,” he’s like “No, I just need this. This is gonna get me to here, I’ve learned this.” He goes, “I screwed it up so many times, he goes now I know the right formula, that’s gonna make us driven to get it done and they’ve been executing, they’ve been hitting every single one, and moving along and it’s been fantastic. It’s great to see and you know I did it was that learning that he had to do to get there, so it’s appreciated. I think that’s a great way of looking at it and I love the blame someone else, you know that they’re still not matured enough to get through this, they’re gonna have more learning and the ones that have taken it on.

Permjot:
We all make mistakes and recently I’ve been organizing these training courses and what’s interesting is who turns up and who doesn’t turn up for these voluntary online training courses, and you have to stay committed to learning, you have to stay committed to the idea that you can continue to learn, and what one of the things I really look for is people who are really interested in learning and I think a – as we move, you – somebody made this very interesting point, that the slowest period of change you will ever experience in your lifetime is now. It’s right now. He won in the pace of change is going to go one way, in one way only so every day is the slowest day of change you’ll experience. And therefore, the whole way we think about acquiring skills and deploying skills is becoming increasingly redundant. So therefore, it’s people who don’t have a particular set of skills but people are able to quickly grasp and learn and enjoy this learning new stuff. There are lots of things where a lot of my thesis is a lot of my thinking is challenged. You know when you read Adam Grant, we talked about the book Adam Grant’s “Originals,” that challenge is a lot about thinking about angel investing. You read other stuff and your thinking is constantly being challenged, and I like that and I find there were a lot of people, they reach a stage where they think they’re successful or whatever. I think that’s it I’m done, I – there’s nothing more the world could teach me, that’s the moment you’re done that’s the moment

Jeffery:
Agreed, and he does have a great book and I think a good story to line that up to your point was when I started converting and renovating homes from single to duplex.The first home took me a year and a half on weekends, the second home took me a year, the third year the third home is – and why? Because you keep changing your format, kept the same template, but you kept learning ways to be more efficient, and you kept reading more things and figuring out how to tie things in, so your learning abilities sped up and then you started to see problems before the problems came, you started to engage things quicker than they would happen, and we’re able to juggle more things, and before they happen, so I think it kind of fits in that same context right as you’re learning as an entrepreneur or an investor. The more information that you take in what you did the first time, it’s gonna be way different than the last time. And it actually comes to a question that I’m curious on is that in your investment portfolio side of things, do you look at terms like do you want to do it is a safe, do you like it as convertible like you have a certain criteria that you look for in investment is suited for you?

Permjot:
So, Jeffrey you asked me how I like to invest their particular types of terms I like to invest in etc. and I think again that is an evolving thing. So, originally in the UK, I started off angel investor in the UK, and I had to invest in a certain way to get to benefit from the equity tax credit so doing convertible loan notes as such didn’t work. I’m increasingly investing through safe notes because there’s a best practice. I think a lot of investors and these are the amateur investors, you haven’t, you know, and I always hate investing alongside people who’ve been doing their first ever investment because they all want to do a Gordon Gecko impression and do the whole, you know, gotta beat the underwriters just like that. What you find is there’s actually more money than there are good deals and as an investor you want the good deals to allow you to invest in them which might sound a very weird thing to say. I am very lucky that I get to invest in certain companies, I am, and again a lot of entrepreneurs listening to this might find that’s a very weird way of thinking about this, but good companies get chased and one of the things you have to do as – so what differentiates me, what other things you have to do is you have to have a good backstory, which says that you are a good investor, you’re an investor with integrity, that you have connections that can help the company, there are things you can do passively to really help the company and that you are a good investor. One of the things you can do is offer terms which are friendly to the entrepreneur. One of the things I – you gotta think about this is a war, where you are working together over the long term this isn’t a battle because I think a lot of people, if an investor approaches it as a battle that they’ve got to win, they’ll win the battle Jeffery, but they’ll end up losing the war. And what I mean by that is if they have very onerous terms, if they’re really screwing the entrepreneur in terms of their investment deal, great you’ve won the battle! But then don’t be surprised that the entrepreneurs are doing everything they can to, you know, not deliver the best they can for you. They will use legal arguments, do all kinds of things so it works both ways and I think being very clever sometimes works out to be a very stupid thing to do, so in answer to your question, I tend to go for entrepreneur friendly documents, normally do a safe, as now I think become established as best practice. There are a few issues with it, I know and it we’ve revised and again, if there’s innovation going on and we do safe and then we find problems and normally Silicon Valley finds those problems first because it’s where, well I think was textile in Boulder bit originally started doing statements. So, then they’ve identified some problem so they adapt. So we continue to learn, so what does the investment vehicle, what does the investment now look like five years from now, I don’t know probably is very different from what it looks now. Providing its tax friendly been an entrepreneur friendly that’s what we do for.

Jeffery:
I like that and you’re right. It’s got to be entrepreneur friendly because as they grow their business the last thing you want to do is find out you own three-quarters of it, no other investors want to come in, they have no desire to build it, and they fall apart and your stock with the business or no one is, so being friendly as possible is certainly helpful and everybody’s got their likes and dislikes, but I think if you make it valuable enough for the entrepreneur, everybody wins and you move it forward that way and we look at different things from putting in warrants so that you don’t have to do another raise in eight months. There’ll be a few dollars that might come in, so that’s one option. There’s other things that you can look at it can help you benefit on both sides, but sometimes a cap on a safe works just as well as you want a convertible note, and as long as if it’s really early, then a safe is perfect. It doesn’t need a cap, it’s so early you’ve got a long runway and a lot to build. It’s the next investment where you can come back in and put some more value so there is a purpose for everything. So I love that, that’s awesome. Is there anything that I guess based on the current environment that we’re in, is there anything that you look at and say “Yeah, I’ve seen some pull back or I’m not really driving as many investments,” or is right now just as flavorable in the investment community as it always has been?

Permjot:
I think it depends enormously on what’s what sector you’re in. Clearly, if you’re in malaysia travel industry, you’re kind of, you know, you’ve been hit hard. My fear was again Krpike would be hit hard but again I think the CEO had some very good plans and resiliency built in but I think the reality is, if you look at bank deposits in the US and the UK where data is available and well, I don’t see the Canadian data, people are sitting on bigger cash balances and they’ve ever sat on before. There are negative yields being offered in the UK and in Germany and a lot over the world, you buy government bonds, you have a negative rate of interest on government Treasuries. So, and the stock markets are a record high which nobody understands why, it seems to defy in common sense, so I think if I look at the fundamentals and I look at the bank balances, the cash balances that people are sat on, I think now’s a very good time to be angel investing. I really do, you’ve got a tax regime which is going to be very friendly to you I think we’re going to have huge tax bills to pay for what governments globally have been doing, so if you can get a tax benefit now, that can be used in the future years that that’s going to have a bigger benefit for you. So, I think now is a good time as any I really do. I just feel companies that haven’t adapt it, they’re gonna struggle and I hadn’t had a person organized at all until last Friday, it was Alastair Campbell who used to be Tony Blair’s right hammer, and he was talking about strategy objectives and stuff and he said a lot of companies that had bad strat- had bad strategies going into Covid 19, and all the Covid 19 is done is accelerated a bad strategy. For some companies clearly have had to adapt, of course, but a lot of companies haven’t adapted. They’ve just literally accelerated or taking advantage of it, they’ve seen this as a – as right, this is the bad thing, this is the good things, how do I adapt quickly? There’s a company I invested in Canada which does food delivery service. Not actually doing the last model but doing the merchants and the tren- the transaction. They’ve been doing very well because they are they cost about 4% of the transaction not 25, 30 percent like other companies do, so even in that there was huge opportunities for them. So, I think there are always opportunities available, you’ve got to look at and again this comes down to the entrepreneur. Have you invested in someone who can take advantage of changing circumstances? It’s the adaptability.

Jeffery:
I like that. You’re right, it’s the shifting and adapting to the environment but being able to foresee it as well it’s gonna be helpful, so that when it does come you’re ready to act on it or you’ve already made the shift into the right positioning. You mentioned vertical side, is there verticals that you prefer to invest in? or verticals that you think are ones you’re looking to add into your portfolio going forward?

Permjot:
There it depends on, I mean, I don’t like investing in things that require a large capital because it’s just not, you know, given the size of my investments, I’ll get water down so much it’s almost painful for the company to actually have you as a investor because you know having 3,000 shareholders before you’ve got an exit, is just not appropriate. So I tend to stay away from verticals that require large amounts of capital. So although I’m in Atlantic Canada which is very big in oceans and we’ve got lots of economic activity run oceans, I’ve stayed away from investing in that sector just because of the way they deploy capital. So, I think the verticals I remain on are very heavily technology focused or technology solutions to existing problems. But that’s more to do with capital rather than I like this vertical I don’t have that vertical we all have our things that we wouldn’t invest in. I won’t invest in any of the same things just because I just don’t want to – I’m not making any aspersions and what people should do with their money. It’s just not what I want to do but other than that I’m very agnostic. I don’t know enough about industries to say I invest in this vertical, this vertical, this vertical.

Jeffery:
Okay, no fair enough. And that’s good insights as well, people always are curious as to if there’s a vertical but when you’re a generalist and you just look at best fits and best markets and as a heavy reader, as you mentioned, those things are valuable because you’re always researching and learning things, so I’m gonna see a new space and take that risk so that’s amazing. So we’re kind of getting near to some of the last kind of few questions that we have and before I ask you the the last two questions, we’ve kind of gone through this journey, right? You start looking at deal flow, you figure out why you’re in here, and what type of things you like best about it, what things are good about the DD, and then why you’re making that investment and going forward, so you kind of got the verticals. You’ve got this figured out, there’s one kind of highlight question that really kind of takes all of this into context, is all of the learnings that you’ve got from all of the investments you’ve made, is there one or two things that really stand out in your mind? And you’ve mentioned a bunch of things throughout our discussion, is there something that you would give as a story of a really cool thing that’s occurred in one of the startups that you’ve invested in? They know- they had a tough go, you talked about one where they failed a couple times and now they’ve got something that’s really working, is there a really good story that sticks out in your mind that kind of gives that context of what it really is about investing in what makes that entrepreneur really unique and exciting?

Permjot:
It was an entrepreneur invested in and the business failed and then they reached – they – the entrepreneur and few of the people not the entire Mountain team a few of them started another startup and because they had this idea about this new startup, whilst they were working for this business that failed. They restate, they started their game and they gave shares in the new business to the investors in the old company because they thought that was the honorable thing to do and that company is actually doing very well and I just thought what I loved about that was, it proves that I was right to invest in them because of the integrity they demonstrated. Now, I’m not saying that companies need to do that or indeed there is an expectation but they would do that, but you now know that if that company ever fell on hard times again they would have a whole ground – a whole raft of investors supporting them. I just love it when you have stories of integrity. There are stories I know businesses that have that the entrepreneur saw that the business was failing and then that she closed the business before they had to, so they could return some money to shareholders because they – and that I’ve seen happen, and those kinds of things make you realize that you would invest in these people again and again and again because fundamentally, they get that you are risking your money for them and they don’t have this in title mastered. There are some horrific stories I had where I invest in the Silicon Valley startup, and I can tell you the entrepreneurs treated the investors terribly like terribly, the (inaudible 49:51) was unbelievable, so I now only invest in people that I know very well. I don’t – that was just, I wanted it on my resume that I’d invest in the Silicon Valley startup. I don’t want that anymore. I want to invest in good companies wherever they are.

Jeffery:
Oh, that’s awesome and that’s actually a really good story. I like that were the – where this startup realized that there is more to just the investment and just to the company was about the people too. So just like you were investing in the people, they were investing in the people. So they went and brought that back in and you’re right that opens up the market hugely because when they’re starting to grow, they can go and say “Hey, you’ve got shares. I’m glad I brought you back,” and you’re gonna be like “Hey, i wanna invest in this too.” So you’re gonna reinvest because you love what they did.

Permjot:
And every investor, every single person that had grown and chairs to ended up investing in the company, as well every single one of them.

Jeffery:
That’s brilliant man! That’s an awesome story. Well, I’m glad that you knew you’re able to share that, so now we’re gonna kind of go into this, the last couple questions, so is there – in your crystal ball, is there what you can see happening in the next 12 months versus the next three years, is there something you can envision that the entrepreneurs could be looking at it? Could be a vertical, it could be startup, they should look at anything you want but just share a little bit about what you’re seeing in the next three to 36 month?

Permjot:
Jeffrey, I wish I could say something intelligent and I just can’t. I think I love that quote “It’s very difficult making predictions, especially about the future,” and I just think it’s I genuinely don’t know. I think one thing we do know is that supply chains are going to become less efficient. We’re gonna have huge, not to our GDP globally. England is expected to decline by 12%, Canada by about seven and a half, eight percent. These are huge knots in GDP huge and we’re going to be saddled with huge debts, so then you won’t have a huge amount of debt over a smaller GDP. So we are going to be in for a very rough period, I think we are going to remain an extraordinary low interest rate environment. So I think from an economic point of view, it looks like it’s gonna be bleak but if you have a job and if you have debt you’re gonna do well. Now is a good time to have debt, now is not a good time to be relying on a fixed income, now’s a good – because of the what’s gonna happen when interest rates, now is a very good time to have debt and I went into the 2007 financial crisis with a huge amount of debt and actually, it was the crisis that say I mean it was horrific for a lot of people but it personally for me it was very good because the interest rate on my debt went from 7% to one and a half percent, and on a lot of debt that is a huge saving. So I think all you can look at is what are the circumstances walked through people’s budgets look like. I think this social distancing thing is going to be permanent or it will fundamentally alter the way we behave. I think Starbucks today, announced that they’re closing 20 percenters of there’s 200 stores in Canada and 20% of their stores across North America and they think that is a big reversal for something like Starbucks has something reversal. A lot of landlords would have been over the moon that they signed Starbucks, now they were nervous. I think we’ll have more the crudity events where companies have to exit leases and arrangements and the only way they can do that is through bankruptcy and all restructuring, so I think there’s going to be a lot of opportunities. The opportunities for startups, I think will be in the recovery phase in the companies with strong balance sheets will do well. I think lots and lots of companies will look for “How do I reduce my – how do I reduce my fixed costs?” And there’ll be huge opportunities for companies that can somehow help big corporates reduce their fixed costs.

Jeffery:
Now, that’s good and you’re right, we can’t look at – you can’t look at this as this micro ecosystem. You have to look in this – in the bigger picture of it and what are all the other countries doing, are big business is treating this, and with like you said, with even the biggest coffee, Starbucks, changing their platform and reducing their footprint and they’re the ones that we’re building up all of these other spaces. If they’re taking a step back, they know they see the impact that’s happening and they see if the recovery is gonna be a lot longer which means that the markets are gonna start to see this because you’re gonna start to see some more fallout, and when that happens you really have to look at the focus of your startup. This isn’t gonna be like 2007, where you had a one or two years of slowness and that’s where I started my first – one of my companies at that time because I could fill a gap, fill the fix, and it was on the software side. But now, you’re gonna see that this is even crazier, so but we’re not looking at everybody’s maybe too optimistic, and too positive, they’re not really focused on what’s this gonna look like down the road, but now that Starbucks and everybody are chipping away at the problem, you’re gonna see that people have to really try to focus their startup and say, “Okay, how can I make small incremental wins here?” “How can I be competitive?” Because even big business, I’ve been wanting to post this on LinkedIn for a while now is, does this mean that the world’s gonna be competitive again because for the last 5-10 years nobody’s competitive. They’re just like I charge $200 for this cup of coffee, accepted. What? Why? Why isn’t there any competition? So now it seems like people are gonna have to compete because they’re realizing that they’re not getting the traction they were getting in some instances.

Permjot:
Yeah, but Jeffrey I think one of the things that will be interesting about this recovery is, it’s really gonna hurt young people. So if you have if you are over the age of 40 and you’ve made it to middle management or above, you’re still getting paid, you have got your debt, you’ve got – your your at peak mortgage time, your peak at that time, you know, things are really good. Whereas, if you’re very young and you have job uncertainty because of the gig, you can’t let you borrow money even if you wanted to, so I think we’re going to see an increasing generation divide and I think we’re going to end up having – we have to have generational based taxes because I think so I’m looking at more from an economic point of view, but then what does that mean in terms of what young people do. I think then move towards the sharing economy is going to accelerate because young people will give up on the idea of accumulating assets, because they’ll be outside of reach, so they’ll enjoy more and more of experience-based products so if you can deliver experiences like I think a AirBnB are going to come back strong. I really do. I think staycations are gonna come very strong and I think people exploring their own neighborhoods etc. So, I think there’s lots of new opportunities at a micro level that will be unleashed but I think we’ll do very well, so it’d be interesting to see what happens. Be very interesting.

Jeffery:
I love it and that’s a pretty good prediction. I think there’s a lot of things we can noodle around there, so we’ll have to reconnect in a couple years on this interview side and come back and look at the crystal ball and see how we fare it out. But I do want to thank you very much Permjot, for providing this insight.

Permjot:
My pleasure.

Jeffery:
It was brilliant, I took lots of notes which I always gotta show everybody, so – but I’m a big fan and I’m sure we’re gonna chat after this 100% but I thank David for sharing and joining us and everybody else but I want to say thank you very much

Permjot:
My pleasure.

Jeffery:
Keep sharing and be well and we will connect soon but thank you very much.

Permjot:
Thank you very much. Thank you for your time. Thank you!

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