Jeffery:
well just like we always do in in everything that we run here at OPN we love to just jump right into it, brian, super glad and excited that you were able to join us today at O. P. And ask an angel. And uh you know, the best way for us to kick this off is it’s a live not that was live now today. We we just run it and then we get to edit it after and make some great things out of it. But the best way to start is if you can give us a little bit of background on yourself, where you’ve come from, where you are today are the things that you’re working on. And then one thing about you that nobody will know.

Brian:
Oh Jesus. Uh well okay, I’ll give you the sort of the business background. Ivey MBA. Uh coming out of business school, joined Ryan at the capital in downtown Toronto first. Canadian place and jumped right in, feet first into lending to small and medium-sized companies. I have led to virtually every industry. They’re typically term loans, financing, real estate, equipment purchases, acquisitions, debt, leasing, a little bit of equity. It was there that I met my current business partner, I helped him by several businesses and kept him out of bankruptcy.

So we had a really great trust relationship there and his business prospered did really well. So I retired from Roynat about 12 years ago and the two of us said, let’s do something together. So we decided to start a private equity fund, North Spring Capital Partners. So we have two other partners. So there’s four of us. We invest our own capital. And we started out just doing traditional industry because he had a manufacturing background and distribution and they were comfortable with that. And the rule was no startups, You know, they’re too risky, you know, they’re so prone to failure, we don’t want any of that.

So we, we did a lot of acquisition financing and that went well. But living in Kitchener, I certainly saw the angel investment community starting to take off and the tech boom was happening, um, you had the rise of the accelerators like community tech and you had government funding coming in for the Angel for the early-stage companies. And I just said guys were sitting on a gold mine here, we’ve got to get into investing in some startups, and, uh, they reluctantly agreed.

And that was about seven years ago and we started to invest in early-stage tech companies. It’s gone quite well. So something you guys don’t know about me, I was were we joined a Golden Triangle Angel network in Kitchener Waterloo and I was named Angel of the Year for 2018, so I’m really proud of that. I’m also a member of the kitchen, constable rotary club in the past president there and shared a number of big fundraising projects that they have, like uh we used to have a dream home that would raise up to a half-million dollars a year and uh a lobsterfest and Turkey drive or raise money for people to get a turkey and a food hamper for christmas that raises almost $400,000 a year. So that’s been fun to do on the side. And then my other side is my sports background, I’m a triathlete. My uh top race would be number 13 in the world, that the Madura World Championships boat to 15 years ago.

Jeffery:
Amazing. Yeah, huge. Well, I was gonna ask you about the biking and the track lead side because I’m like, come on, there’s something we gotta dig into this one thing, nobody on would know. That’s great, so appreciate the sharing of that. And it sounds like uh you were made to invest just the background that you have the M&A work and all the things that you’ve done, the debt financing side. You really understand that space. So it’s really helped kind of uh the curiosity, but also allowed you to really dive into that early stage startup world. In that debt side of things, once you said that when you started to work in the space and you know, they didn’t want to go into early stage at the time, what was kind of the reason that people were afraid of it at that time? And I think even in my end I was looking at it and healthy startups back 20 years ago and it was, it was so pushed away, people didn’t want anything to do with it. And it was high fail, high everything, but I think it just was so unsupported that it kind of brought that negative connotation to it. But what was the reason you guys looked at it then and said, this isn’t going to work? And then what was the change to it? What got you guys after you said you found a gold mine? But what was the real change that started to do? It was the government funding that said, hey, if they’re going to come in, there’s gotta be something here. Like what was that change that created that?

Brian:
Well, I think it was the angel network that I could sit in a room with a dozen other angel investors and look at a deal. And some of the guys, some of the Angels were ex Blackberry people. So we’re looking at a software company and they know the questions to ask and they just know the industry really well and I can piggyback off of their experience and knowledge.

So that was very comforting. And then we would be investing alongside some groups, like from Mars who have an excellent track record. And so that gives you a lot of comfort. And then they’ve gone through an accelerator program. So they’ve received some coaching, they’ve got some government funding, maybe they want to pitch competition made, you know, 50 grand or things like that so that you weren’t investing at that really early startup.

They had matured a little bit. Some of them have some revenue. They’ve got the product that’s already been um, pretty much developed. You can talk to a customer and some of the ideas we’re seeing just makes so much sense that we said, let’s let’s try it. And we started small and just sort of grown into it. And now now we’ve pretty much stopped doing traditional industry deals and really just focusing on startups.

Jeffery:
That’s awesome. And can you share a little bit about what you’ve kind of learned in that seven years? Because before that you were doing different types of lending. So you can kind of see where these companies were coming from. And that could have been a company that was 5, 10 years old. And now we’re coming to you for lending in a bid to your size. But what have you seen this really changed a lot in the industry of early-stage companies?

Brian:
Well, certainly it’s just the number of deals that are out there. If you’re trying to do traditional finance deals, I’m relying on a referral network guys from Capital will call me up and said, I’ve got a deal, I need some equity to go along with it. We help them out. There isn’t many deals out there to choose from. But if I look at the start-up world, well, I’ve got a choice of 1000 or 2000 deals in the Toronto Waterloo Tech corridor.

They all need money. It’s a matter of saying which one suits our criteria and which one we like, Do we like the management? And so you’ve got a great pool of selections. So if you’ve got a good deal flow, you’re going to be able to make good choices. And being a member of Golden Triangle Angel Network, we were seeing pitches of three half-hour pitches of three companies a month for 10 months of the year. That’s 30 deals right there. And then there were other deals that we’d see through them. So you’ve got a really good deal flow from just that, that’s source alone.

Jeffery:
And I wholeheartedly agree with that, that the deal flow really does pick up on the investor side. And it’s, it’s interesting that you said there’s one thing that they all need, which is financing and money and which is quite common in start ups. And I think that might be one of the things that’s really changed a lot in the industries that, um, a lot of these companies when they first started, it wasn’t that easy to find investment, it wasn’t easy to get. There wasn’t a big network of angel investors, so you really were going to friends and family and that one uncle that just seemed to always have the money and asking him for it.

But now that’s changed and there’s, there’s money everywhere. So it’s probably a lot more competitive. But what are you finding that in this deal flow? Are you seeing things that are affordable? They’re in a good spot to jump into? Like, what’s the, what’s the look coming from the outside into these people that are all looking for money?

Brian:
Yeah, there are deals that are very affordable, but more often than not, they’re priced very high. The evaluations can be, uh, very excessive. There are ways to get around that, but that, that is somewhat an issue. Lost my train of thought, here it is.

Jeffery:
And what do you find that when you’re, when you have this type of company that you’re looking at investing in and you’re looking at different vehicles? Are you specifically focusing on equity or you’re looking at the same thing? M&A, debt, trying to find ways for acquisitions? Like do you still go to that side of the brain and say, you know what, I want to help these companies? This is how I’m going to look at it. Or if you guys really refined it down and you’re like, no, we’re only doing money in equity and we’re going to take our money out and hopefully 10 years. And that’s how we look at this.

Brian:
We’re a little unique as funding that will do both debt and equity. So I’ve done shred financing for tech companies for example. Uh, so we’ll do some secure debt, some unsecured debt and then, uh, convertible notes and prep shares, common shares. Our strategy always was that we wanted to have some debt in the portfolio because we could charge an interest rate that gave us an income that covers all our operating expenses as opposed to other funds. They just do equity. There’s huge operating expenses that they run at a loss for five years until they get that exit. We don’t like that strategy.

Jeffery:
No and that makes sense. So on this side that you’re working through the debt scenario, do you structure it so that their shares that you build into it? So you’ll reduce your interest rate, you go in at X on $100,000 or $200,000 loan. But you’re getting warrants that you can buy into at X amount so that at the outcome, you know, year one, they’re paying their bills, everything’s great.

They’re using the equity, they’re growing, you execute on warrants and you’re basically converting those dollars that you’re using to run the business which again is operational dollars. You say, you know what let’s invest. This company is doing well.

Brian:
We’ve done um straight debt that are straight interest rate deals anywhere from 12 to 20%. And then we’ve done lower interest rate deals where we got some warrants or some kind of sweetener tied to the future value of the company. And then we’ve done no interest for it deals where the return is all warrants or you know getting right into equity. So we’ve been pretty flexible depending on the situation. So we’ve also done some debt for some of our equity clients. We did a Perry pursue loan with B. D. C. a couple of years ago to one of our investments in Sequoia Life Science.

And they needed capital. They were growing nicely but they wanted to add on a layer of debt that was non dilutive. So we we struck a nice deal. They paid us back when they raised a large series A.

Jeffery:
okay so they can do that as well. So you do have clauses where they can be in and out uh like a standard loan where it’s four years and you’ve got to pay it in four years.

You can’t make it happen faster, anything like that. So you don’t have any quick outs or anything to that effect. Very interesting. And what are you finding the types of companies that are interested in this debt structure? Is it heavily focused in on companies that are in a growth stage? Like looking for high growth? Is it pre-seed companies that are like, you know what?

I don’t know. I’m not 100 sure. I’m not getting any money from angels. I just want to jump in and get some money in the books to start running the business. Where are you finding your sweet spot is? Well, you know, companies would love to get debt because it’s less dilutive, but debt is not appropriate to all companies. You really should happen and be at the stage where you’re generating some income to pay to pay the interest cost and pay the debt back. So we’re selective as to who we choose. You know, if it’s funding a shred claim, we know we can get paid back when the, when the claim is paid by the federal government. So there’s got to be a source of repayment.

Jeffery:
And what are you finding uh, with the timelines that you’re getting in there? So let’s just say you’re focused more on seed and series a series A probably because it’s going to be raising funds quite frequently, or at least they’re on their way up to a series A um And are these companies more product-based?

So you’re are you doing deep tech uh like how do you, how do you decide what company is gonna fit? Because products are obviously easy to manage debt from, but can you do the same thing off of a platform build that doesn’t have assets, It’s maybe e-commerce based or SAAS model where they’re just doing throughput or resourcing or something to that effect.

Are you able to still work the same debt structures for?

Brian:
Yeah, I guess you could on a SAAS plate, you got a source of income coming in. We haven’t done that much in that area, We’ve sort of focused more on products. So MedTech is a, is a sweet spot for us. We like to see the, you know, the product investing at the stage when the product is nearly developed or you know, close to getting approvals to sell. We prefer not to get into that very early stage just because it takes, takes too long. And when you look at the age of the partners and the fund, like do we want our payday when we’re 80 years old?

I don’t think so. So we’re kind of shortening it up. So we’re avoiding maybe some of the preseed rounds and going late seed and some series A. We don’t write checks to be in the series beer series C or series D. Stage. So and we prefer to get in at a point where we can maximize our leverage and get that top tier return.

Jeffery:
What are you finding for? You mentioned MedTech, what are you finding as being kind of the up-and-coming spaces that you’re getting a lot of attention for debt financing?

Brian:
Well, this was would be just, uh, could be convertible notes. Yeah, or but or equity, that doesn’t matter. Uh, it’s patient capital that were in there generally on a C stage basis. So, um, you’re seeing lots of exciting companies that have going after huge markets that got great technology coming out of the universities.

And we don’t like to be the only investor in a deal. So, uh, we’re finding that there are other investors that we like to co-invest along with, um, and they’re there, so we can, uh, some of the races are, are large.

Jeffery:
It almost makes sense, like in our case from a funny perspective, if we’re lining up to do an equity investment or leading around, it, almost makes sense that you want to have somebody in there working, uh, like yourself, working on the equity side, sorry, on the debt financing side, almost in every deal, because really at the end of your gonna, um, you’re going to work through your system and helping them structure operation dollars or growth money in product inventory and things like that.

Um, while the equity is going to support the team, the growth of sales and there’s a really good fine mix there between the two.

Brian:
Yeah, there isn’t a lot of data law around in deals, You know, often it’s just a bridge to uh, the next fund round. You know, they’ve got to get them to hit a couple of milestones so we can attract that larger VC.

Jeffery:
And when you’re talking with the startup, what kind of things are you looking for from them to kind of line them up into your model? Like is there, are you like a BDC and your, you need everything and everything that they would, or is it more based off you like this vertical? You, you’ve got a hunch, they got a good idea. So you’re willing to work a little bit differently with them. How does that work with the startup? Especially for the audience, which are mostly made up of startups and uh, investors looking to have these discussions. So kind of start up would be, what would they be approaching you with and what’s the best way to make a deal?

Brian:
Well there they’ve got, you know, they’ve got an information package. Hopefully, they’ve got a, you know, a drop box or some, some database online that we can get into the information that it’s handy up to date.

Love to getting a business plan. But you know, 1st blush is a teaser. And usually we’re listening to a pitch at an angel investment meeting or some pitch competition. We get interested in companies and you know, I want to go talk to them when we see what they’re doing. So they got to attract our interest when we think the management team looks really solid and they’ve got a great idea and there it’s a big market. I was reading Medtronic today, you know about Medtronic vision because they buy a lot of companies and uh, their uh, their vision is to alleviate pain, restore health and extend life. And I kind of like those three criteria for the deal. So we look at certainly MedTech uh, as opposed to a SASS deal that helps some company get more eyeballs to their website and you know, just just doesn’t stir me to action. But some of the deals we’ve done in the MedTech space, they are saving lives are really enhancing their lifespan.

Jeffery:
So you are looking for some sort of um what’s the term for the funds that are coming out now that are more beneficial to the world and helping support growth and health — social social impact funds. So is that

Brian:
We’re not a social impact fund. But it’s if you can if you can invest into a social cause, why wouldn’t you do it

Jeffery:
Agreed. You know, now that’s you have to have some objectives and your thesis has to support it. So that way, you know, you’re least staying on the right path. And it sounds like a lot of a lot of funds and a lot of groups are going towards this because it is in the forefront of on the media side and helping with health tech, and Environmental Tech and all of these other areas. Right? So being able to take a piece of those are some of those into your method is going to help, Right? Is there a specific thing that you look for when you’re working with startups, founders coach, like the team or the things that you look for in a criteria around, around these groups of people?

Brian:
Obviously a preference for uh, existing management that have done it before. This isn’t their 1st 1st start up now, we have we break our rule, own rules all the time, but uh, you know, that that’s a preference. We had one recently where we did the deal just because this guy was, had a tremendous background and had done a couple of successful startups, weren’t that excited about his idea, but lifts said let’s invest with him and uh the idea went nowhere, he was failing but he’s pivoted and to the point where we think there’s gonna be a sale of the business that we’re going to get our money back plus a little return and it just shows you the benefit of going with really strong management.

Jeffery:
That’s a good point. A lot of, a lot of the podcast interviews that I’ve done a bunch of times it’s been brought up or at least that I would people would rather invest in A Team with a B product then invest in an A product with a B team. Yeah. And it does carry a lot of weight and value because like you said, there’s always the opportunity of realizing that things aren’t working and then you’ve got to pivot and make the right changes And if you’re not really in tune with your team, your business and understanding of what you’re doing, it’s gonna be a tough time for you to rotate or shift that boat? No, Fair enough. So going back to your background now on this M&A side one. I love M&A, I just think that being able to spend time ripping through companies and understanding kind of how to pull these boats, all these different boats together and build one big ship, it’s pretty fascinating when you’re doing your debt side. Are you still kind of looking at that?

How can I tie these three companies together? And is there a way of doing it in the world that you’re in or do you just tend to kind of push that away now because it’s not really sad every day.

Brian:
One of the things I do every morning is I read the press releases that come out, just scan them, and usually every day there’s some, some press release that some company issued that relates to a client that I’ve got an investment in.

And so I’m keeping track of who, you know, they could be competitors or they could be acquirers of my clients. So I’m watching that to see whether there’s an opportunity, it could be an M&A opportunity and um, you can learn a lot from that. I pass that information on to our clients all all the time, you know, did you see this, are you following this company because you should, because you’re in the same industry and hey there public and you’re not, should you be merging in with them? Should they be acquiring you at least look at their, their products and, and, and you see how they’re valued? And because how do you value these private companies to have a public example that you know, hey, they’re trading at five times revenue. So that’s a fair evaluation for you or point of.

Jeffery:
And you find this educational stuff helps the entrepreneur kind of better position themselves and where they want to go because I think sometimes, there is a lack of understanding of where am I really going and is this really trying to help hone that in for them?

Brian:
Well, too many of them, it’s heads down focused, they’re focused on the product and they’re not looking at the global situation. So maybe that’s where I can add some value saying, hey, look, look at these other companies in your industry, this is where the industry is going. Could you not go there as well? Could you not extend your products into that market? Because that’s where it’s headed?

Jeffery:
And you find with that side of things like the entrepreneur with their head down and trying to build their company and as their business starts to grow, are you finding that the founder becomes more comfortable with the position to grow the money coming in, that they tend to forget that their goal was to sell in five years or seven years. And that’s something that needs to be kind of brought back into the environment again, because sometimes you see a good amount of returns happening, they get too comfortable and maybe they don’t look at that as an exit anymore. They look at this as I have been doing this for five years, this is kind of my baby now and I don’t know if I can really part with it. Do you find a lot of that first? We’ve only been doing these deals for six or seven years. So we don’t have a lot of data to say, you know this is where everybody goes. And it’s really an unfair question to a startup.

You know what’s your exit strategy? Uh You know I think I’ll IPO. You know like when you’re you have not revenue yet, That’s yeah that’s a okay speculation. But on the other hand there are some companies that you know I’m really building this to sell, I know who the big guys, you know in the MedTech space, you know I’m going to sell them at Medtronic striker, johnson and johnson, Zimmer Biomet, they know who the buyer could be. Those guys pay top dollar, they’ll pay it 10 or 15 times revenue. So why wouldn’t you want to build a company to sell to them? You can do very, very nicely. And we, on the other hand, we have, we do have some companies that do not want to sell. They want to, they want to build it in Canada and keep it here and they want to run it and make it into something great. And I’m fine with that too.

Jeffery:
Everything is an opportunity. It’s just how you work with them. But um, I would think again on that with the M&A background that it’s kind of that coaching and trying to get them to realize the potential to, and sometimes, you get to stuck in the weeds of building something that you forget what that outcome was. And as VCs, angels, everybody has their own directive. So how do you keep that startup focused? But also looking at the bigger picture, like they can be in 20 years, be the conglomerate in this space and be the owner of the space, but what do they got to do to get there?

And, you know, sometimes it’s coaching them on acquisitions, it’s coaching them on better positioning yourself and maybe you’re not getting acquired, but maybe you’re getting investment from one of your larger competitors or owners in the space because they know that you’re growing so they want to be part of that growth opportunity too, so that one day they could take you over. So there’s so many different ways to look at it. And I what I like about what you guys do is that you got to think about all these different things because startup isn’t going to and somebody needs to be there to help them.

Brian:
The problem for us is we’re minority investors, uh, rarely are we on the board We might have visiting rights to observe the rights to the board meeting. Perhaps we like to get the material and read it, but I don’t have a lot of leverage with the, with the CEO, once I’ve given them my money. I’m along for the ride. So hopefully we only deal with, you know, entrepreneurs that like to communicate back to us and are willing to listen to our suggestions. It’s a gamble. It’s a risk.

Jeffery:
Oh for sure. And you’re bring in a lot of wealth of understanding and knowledge in the background in the space of financing. So I can’t see any startup, not wanting to take that information in those insights because it’s going to benefit them in the short and long term.

Brian:
Well, you see a lot of deals where, uh, they don’t want to give you information rights, which I just find baffling, they want to restrict it to the major investor, the guys who are putting the big checks and own five or 10% of the company. And I think that’s a big mistake because if you’ve got small investors… We reinvest all the time in companies when they’re doing follow-on investments. So if I don’t get any information, I’m not going to follow on invest. Uh, so they’re hurting themselves there. And, um, sometimes these small investors have expertise in the industry, you know, things that can really benefit the company. So you want to build that raport between the investor and the angel investor and the management.

Jeffery:
No, that makes sense. And how do you define a team or a business that really fits your model from a financial standpoint? Are they looking for millions? Are they looking for thousands? Like what kind of area do you focus in on? And is there rules that you have structured, it’s payback in two years? It converts if the payback doesn’t, it goes into equity? Like are there things that you guys really look for in your ideal opportunity?

Brian:
We do a lot of convertible notes that eliminates some of the valuation debate when you’re buying equity at a price, that’s, you’ve got to make sure it’s the right price, you don’t get a second chance, whereas a convertible note, we’re gonna, we’re gonna buy it at a discount to the next round or a cap and if they do really well, I’m very happy to pay the cap if they do poorly, hey, I’m not paying the cap price, I’m paying something less or I’m not converting at all, it’s dead. I’m going to get my money back at maturity. So thats an easy easier way to raise capital at that seed stage than trying to say my equity is worth $2 a share. Which is 40 times revenue. And you know, that’s, that stuff,

Jeffery:
that makes sense. And value amount that you guys usually look for. Is there a set amount of revenues that they have to have? It could be pre-revenue or do you…

Brian:
We do certainly do pre revenue deals and prefer they have some revenues, but sometimes you, you don’t get that, um, deal size. Generally we don’t see that many deals where they’re looking to raise less than a half a million dollars. We’ve participated in deals where they’ve raised up to, you know, uh, seven or eight million are, are check size is usually between 50,000 and a half a million on a startup type transaction. Often it’s less and we leave room to do follow on investments. So we can be with that check size, we can be a lead investor for on an angel round of, you know, half million, million dollars. And hopefully we can bring in some other government money like MARS or Sophie or FedDev. And you know, there’s all these programs out there, O C E B D C. And you can get the, that, you know, we’re say we’re doing 2 50 well we get some MARS money and now we’re at a half a million. And then we can find a half a dozen angels that are putting in 25 or 50,000. And before you know what, you’re up to that million dollars. But it takes a lot of players, it takes a lot of coordination to get there.

Jeffery:
And if, if their end goal is that they’re only trying to raise a million and you get half of that in non-dilutive financing, then it’s uh it’s certainly a pretty good opportunity that you just created.

Brian:
Yeah.

Jeffery:
I like it. I like it brian I think we’re gonna have to bring you into some of more of our deals. This uh sounds pretty good. And what are you finding the outcome is for the companies that you’re working with? Are they, you know, if they do move on and sell, are they, are they interested to keep doing this route? Do they tend to try and say, you know what, I don’t want equity, I don’t want to raise money anymore. I have lived through this. I’m just going to build a company myself without getting any money because I found it too difficult for the first time you had to go through those experiences. Or do you find this just like I want money and I want to grow?

Brian:
I would say everybody wants the money. Very, very few situations do I see where they’re really bootstrapping it themselves without capital. They want to grow quickly. They’re onto a good opportunity if they don’t see it, you know, somebody else is going to come up with the idea. Rarely are you the only one with the idea. And lately, I’ve seen, we’ve had some deals which have been pretty popular and they’re, they’re oversubscribed and the CEOs are saying, yeah, I’ll take it, I’ll take it. Because it just defers that next series A round or series B round raise because we can got longer runway and we’re, you know, anybody that had capital going into a covid19– boy, were they happy.

And we were really fortunate three of our biggest investments all had large races of $5-10 million January and February. So they rode through the pandemic without any capital issues.

Jeffery:
Oh, that’s good. Uh, all of those risk factors come in on any type of investment, right?

Brian:
Yeah.

Jeffery:
And Covid has been a tough one to kind of mitigate. But I think a lot of people found their way through about mid year and I think they’ve either pivoted or turn the corner and if they weren’t able to, they failed fast and then just kind of jumped into the next opportunity. And it seems that I think you mentioned earlier that there is a lot of opportunities out there. And just like back in 2007, 8 financial crisis. It started off slow. And then there was a massive boom of startups that came out of nowhere. Are you seeing that same thing happening now in the investment world?

Brian:
Yeah. If you ask me last March, you know, things really dried up.

My partners’ didn’t want to do any more deals. The stock market was down 40%. Uh huh. The start up valuations had didn’t have that drop. You know, people wanted to hang on to last month’s valuation and it was clearly, you know, something’s gotta give. So uh we we did we we sort of paused for a couple of months but we got right back into it investing. And the market came back just more and more investment opportunities sort of came our way.

Jeffery:
No, that’s good. And I completely agree with you that there was about two weeks where I thought what happened and then just all of a sudden it went from that two week of slow down and I thought, man, I’ve never Experience the least amount of emails in the day in my life, and then all of a sudden it was 10 times that and I thought, okay, now I guess everybody just decided it was a holiday for two weeks and now it’s back to business.

Yeah, that’s good. Well I think we’ve got a really good understanding of kind of where you’ve come from and the journey and the things that you guys focus on and really a lot of your background on how you operate and look at companies. I’d love to jump into the rapid-fire questions, but just before I jump in the rapid-fire questions, I’ve got one kind of more um deep-dive kind of question and it’s, we’re always looking for that one, heartstring-pulling kind of story where you’re working with a star startup and she or he kind of went through some turmoil or they were awesome and then Covid hit and then it just killed them. Just kind of looking for that war story that really kind of puts an emphasis on what startups really go through because I think there’s a lot of um ideas out there that everybody’s Elon Musk and Tesla, they’re just gonna sell companies for billions every year. And it’s so easy that you got to be an entrepreneur versus, you know, what are the tackles the things you’ve got to really tackle in this environment to, to really become thick-skinned and grow.

Brian:
That’s a tough one, tough question. Trying to think who I can, who I could talk about their…

Jeffery:
Well you don’t have to give names or business names or just uh contexts to, I guess what it what it really shows it takes to be an entrepreneur, right?

Brian:
Yeah. Not coming up with any great stories at the moment. It’s this dogged determination. We’ve got companies that in a MedTech space, it takes so long to get your FDA approval and costly that they’ve got a continuously raise capital.

And if one company we’ve invested in that, it’s been like 6, 7 years, and they’ve stuck with it, they’ve now got their FDA trials underway. They’ve got one of the major uh, companies in their industry has made a minority investment in them. And we can see light at the end of the tunnel we’re going to, it’s going to be a success. The product works very well. It’s the best product on the market, but it’s still going to be two or three years from now until it actually gets the market with the approval process.

Jeffery:
So it’s a long ride and you gotta (inaudible)

Brian:
Very long ride. Much longer than we ever expected, much longer. So we have to be patient.

Jeffery:
No, that’s good. And I think sometimes, again, companies don’t see that right? They think that everything moves pretty quick. So it’s good to know that a lot of companies have to go through the long duratio, the long push and a lot of time raising funds and lots of times during the year. They’re not doing it just once every few years that they’re always out hustling for new dollars to keep that business afloat.

Brian:
Yeah.

Jeffery:
And keep the business driving.

Brian:
Yeah

Jeffery:
No, I love it. So rapid-fire questions. Some of these we’ve already talked to, but again, it just puts it back around it all back in context. What’s your favorite part of investing?

Brain:
Oh, I enjoy meeting the entrepreneur, hearing his idea, figuring out whether that’s something we’d be interested in. That’s a blast.

Jeffery:
Okay. How many companies do you invest in per year?

Brian:
Probably at the most recent stage, maybe 5, 6 deals.

Jeffery:
Okay. And any verticals you like to focus on?

Brian:
Definitely medtech healthcare.

Jeffery:
Okay. Do you have any due diligence requirements that you look for before you make a commitment?

Brian:
Yeah, the normal due diligence that, you know, any angel or VC would look at, obviously VC be a lot more detail, but there’s, uh, your listeners might be interested. There’s a, a group called Saraf and they have a really good document that they do on due diligence requirements by angel investors. So if you’re a company and you want to look at something, it’s, uh, S C. R A. F. Dash investor dot com, you can go online and probably find it. It’s a good resource

Jeffery:
Done. I’m going to look that up. Thank you. That’s helpful. Okay. Uh, outside of the DD Requirements, is there another focus you mentioned the team. Is there other things that you look for that really wrap up this, this, uh, investment for you

Brian:
Always concerned about competition. Either new technology coming that may affect the company or, you know, existing competitors. I was worried that, you know, there’s somebody over in China that’s doing the same thing with far more resources than the little companies we’re dealing with here.

You got to be aware of that often. I get around that by, uh, you know, the other investors that we’re dealing with. Hopefully, you’ve got somebody that has a little more in-depth knowledge of the industry.

Jefery:
Okay. Uh, do you lead? You mentioned it, you lead rounds. Do you have any preferred terms that you like to invest on?

Brian:
We like convertible notes. Just that we’re not faced with that pricing decision where there’s a little more flexibility there and we can do structure a deal that works well for the company and for ourselves. Generally more at the seed stage, not at the series A stage. Most of those deals, usually preferred share transactions.

Jeffery:
Okay. Uh, do you do and follow-up investments and what percentage of investments do you do follow on?

Brian:
Yeah, we’re doing, just did a proposal on one today. We’re looking at doing a follow on for a deal. Although there are almost as many deals are follow ons as, as new deals that we’re finding, we’ve got a mature, more mature portfolio. Now we’ve got 22 or 23 investments, so keeping it keeps you busy.

Jeffery:
I can imagine. I can imagine. Um, is there anything outside of, um, money that you guys also provide to the startup to help them? Um, I don’t have a technical background, so I’m not going to try to tell them how to build the product or things like that, but I’ve got a network of contacts.

Um, I can help them with. Who should they be talking to on, you know, raising capital, Maybe bring in some other investors that I know from other transactions. I can help them. Uh, you know, what’s the best way to structure the financing that you’re looking for, whether it be debt or equity. I can liaise with other investors on their behalf. That’s sort of where I play maybe some strategy ideas on what I’ve seen in one company that hey, you should be thinking about doing the same thing.

I’ve got two right now that are kind of similar companies and I, I love to put them two together and then go public. I think there would be just a dynamite investment. So, um, that’s, that’s the l in a dream.

Jeffery:
Yeah, exactly. I love it. Yeah. But that was interesting that you say that, but that was the whole reason when I create Opie and it’s called the open People Network was because it drove me crazy that I would have 10 of the same company pitching the same fixes and builds and your job is to figure out which one of the 10 is going to be more successful than the other nine.

And I always thought, man, does anybody collaborate? And none of them knew their competition. So I thought I’d be a bit more open about this, and maybe all 10 companies can solve it together because they’re all in the same boat, probably hitting the same revenues and you got to figure out which one is going to make it forward. So I think that because as they get going further ahead, you’ve got great companies building two streams and there’s a great way to kind of collaborate them together.

Yeah, sometimes pride gets in the way, but again, at least it’s worth opening up the door to see what happens. No, I love that. Uh well, brian, we’re gonna, we’re gonna jump right into kind of the last little segment, which is a little bit more personal side of things.

Um I would uh I would say that today I did something a little bit different. So since I sit here so much now, compared to how I used to uh run all over the place dropping and doing what I needed to do. I’ve started to take digital notes versus taking everything on paper, because you can see, because I find that I need to share them with the team so that they can rip through the show the notes and things like that to kind of move forward. So, I thought, well, taking a picture of my chicken scratch is probably killing people. So maybe if I start doing some real kind of quick typing in the background, I can keep that flow going and just taking the real key metrics of the conversation. Well, they’re going and watching the video anyhow, to take out the information, they need to push it out. So then uh an interesting experience. I’m not sure if you can tell but I’ll be better at it. I’m getting better at it. But being my first typing while chatting, I was trying to be as quiet as possible and getting what I could out. So what you did a great job.

Brian:
I’ll put a plug in for one of my startup investments, a company called Yourika. Y. O. U. R. I. K. A. And they’re in educational software market and they’ve come up with video transcription service that the lecture can be automatically transcribed. And then searched if you’re doing a science class and you want to know about hydrogen. Well, it’ll type in hydrogen and every part of the video where hydrogen is mentioned, it pops up and you can quickly study what, what happened in the class.

Jeffery:
Awesome.

What’s the founder’s name? Why do I. I know that? Okay. No, it’s the same company rob Henderson? Yeah, I know rob. I worked, we did we did development work for him throughout my other companies. Um when he was part of another network, it was an education network and then Rob then pitched I think GTAN maybe a year and a half. Yeah. A different grouping of PhDs that are running on their business. So a big fan of Rob regardless, but certainly like the company as well. So that’s awesome. Well, thank you for sharing that. All right, so the last little pieces, three questions. Favorite sports, team.

Brian:
Favorite sports team. Okay. Buffalo Sabres.

Jeffery:
Sabres. Nice.

Brian:
When I was growing up, my dad had season tickets to the Sabres. So well we used to go to the games together.

Jeffery:
That’s awesome. We used to go to the games as well back in the day in Buffalo because we couldn’t, well, we weren’t big fans of watching Toronto play. So we would go there the atmosphere is a lot more fun. So, awesome. All right. Your favorite movie. And what character would you play in the movie?

Brian:
Okay. I do like comedies. I’ve always a favorite with planes, trains and automobiles with John Candy and Steve Martin, jeez, that’s a tough choice.

Do I want to be steve martin and john Candy?

Jeffery:
That’s a good question. I can’t answer. You gotta tell me because it, yeah, it defines more about you and your background. So I find that it actually works too because you always picture yourself as somebody or the way the character plays. So I’m just curious as to how that defines.

Brian:
Yeah. Yeah. Okay, John Candy, I like John Candy.

Jeffery:
Awesome. I think they both played brilliant roles. I’m not gonna lie. So I watched the movie literally probably a month ago.

Brina:
Oh really,

Jeffery:
yeah, I’m a fan of them as well in that movie. So yeah,

BrianL
I can see myself selling shower rings, you know, earrings. Yeah.

Jeffery:
Totally. And just the lines he had that you just felt compelled. I buy one anyway. So you’re like, he just was good, good with people. So All right.

Brian:
Yeah.

Jeffery:
No, I love it awesome.

Well brian, thank you very much for your time. Today. We learned a lot. I would show you my notes, but I can’t, I was like, can I turn my camera to show them? But regardless, thank you very much for your insight. Today. We learned a lot. It’s great for the community. Good old handshake there to. And the way we like to end things is we want to give you the last word. So anything that you want to share to the startup community or to the investors out there, we’ll give you the last word and feel free to take mic and say what you think is best.

Brian:
Okay. I’ll just uh, I’m always trying to help our clients with their businesses and promote them.

So we’ve got an investment in a company called WorkWolf.com and they’re building a digital vault which will hold a person’s credentials, their education background checks and things like that, employment records.And that could be shared with an employer and it’s totally secure. So it eliminates resume fraud. For one thing you can’t fake where you got your degree because the data comes in by the educational data provider, not the individual.

And they have a website, WorkWolf.com and they’ve got a personality uh, career planning tool on it called Packfinder, and you can take that and it will tell you all about yourself and whether you’re really suited to be an entrepreneur, whether you’re good to work on your own or you’re a team player and what your strengths and weaknesses are anybody looking to be an entrepreneur might be wise to just take that test and or maybe there’s a couple of you guys or girls that are thinking you’ll join together and build a team. Why not take that test and see if how your characteristics and skills sets are do you mesh together? Or is there going to be conflict that you’re all the same type a player?

And it’s, it’s totally free. They’ve got it free and it’s worth 100 bucks. It takes about half an hour to answer a bunch of questions and you get a great report back.

Jeffery:
What’s it called? I’m looking on this site right now.

Brian:
Pack Finder, you’re gonna have to scroll down near the bottom of the landing page and there’s a little boxes, pack finder so you can take that and then if you like that, you can also sign up for their service, which is storing your credentials. That’s gonna be big in the future.

Jeffery:
I’m gonna try this out and try my look and see after 15 years if I should get out of being an entrepreneur. Yeah, exactly. But I think for the, uh, for the community, that’s great. And I’m uh, thank you very much for sharing that along. So, um, okay, but again, brian, thank you very much for your time today and sharing all the insights that you did and uh, all the best on your ride if you’re going out for one now and you better get another watching on the Candy movie because it’s, it is pretty good and it’s always a good laugh.

Brian:
So always yeah. Right on. Okay. Thanks Jeffery.

Jeffery:
Okay, that was awesome. Hey. Pretty big. Work changed by doing this all on Excel and while working. But I think it worked a little bit easier, have my head down less and less writing. But the other day worked out pretty good.

So provided some really good insights on how investing works with debt financing looks like totally different than all the other interviews we’ve done. I think there was only Jeff Messina, which was one of the other investors that we talked to that did more later-stage debt financing. So really cool what these guys are doing. And we worked together at the GTAN screening committee. So really big fan of Brian and what he’s doing. So if you guys are interested in that style of investing, it’s a great podcast to listen to. So thanks again for checking in guys and have a great day.