Jeffery:
you know what? Today we’re going to chat about startups and all that good stuff, so I’m excited that we’re getting to chat and learn a little bit more about yourself and what you’re up to today. And like we like to do, we just jump right into it. So welcome to the Supporters Fund and the OPN ask an angel and today we’re getting the opportunity to chat with you jim. And at the best way for us to start is if you can share a little bit about your background, kind of where you’ve come from, where you’re at and where you’re going. And then one thing about you that nobody will know.

Jim:
Oh boy, I’ll come to that later, I’ll do the easy part first. Let’s see. So I grew up in the northeast of the United States, was born in New York city, raised the burbs and did all my school in the Northeast and um followed a lot of different paths.

Got married very young, uh really hung and and we had a little boy little then and uh ended up in banking really because of necessity I was really more interested in the arts, but you know I had the mind for it, so I just decided that I was going to bankrupt myself, my family was going to starve unless I did something more practical, so became went straight to work with the savings bank and then went to work at AIG a subsidiary of AIG And then went to business school at night. So I went to Stern school, I got my business degree, was a banker for a while and then kind of hit a bad timing, wrong place wrong time. And um you know, having had a pretty good career, I was doing latin America, which was very, things had to be right. And then um instead of like sticking with it, actually did a little startup work for some different companies, not really from the bank of perspective. And then instead of just staying in and went back, moved down to Florida, just kind of packed up, I was divorced, moved down to south beach Florida and was managing some money for my family.

So I was in the investing side of things and then fell into really the wrong way into startups and I say the wrong way because I wasn’t doing it directly. I was listening to other people and made some big mistakes early as a lot of angels do. I’m sure you’ve talked to a lot of people and you know, some people will make a mistake and run and others will say, shoot, I gotta figure this out and I got to make it back. So that’s what I did. And this is a long intro, but I’ll finish it in a couple of sentences. So basically what happened was I decided that, you know, having done more, reading that the way to do it was to make lots of smaller bets, which is still our strategy at Barrister Ventures.

And then, um, I found some other people like me um, after I tried the angel group, which I didn’t like and then I found people like me is that we formed, we formed this, um, this company and so that’s it. We’ve invested in 103 companies so far.

Jeffery:
Awesome. Yeah, that’s brilliant. Uh, and what’s the one thing about you that no one would know.

Jim:
Oh my gosh, can I come back to that? Little occurred to me. I don’t, I’m terrible at like recall. Um, I’ll tell you one that’s venture related and actually some people do know this and he probably would hate to hear me say it.

But I played on the JV baseball team and the varsity football team at Andover phillips academy and over with Tim draper.

Jeffery:
Sick.

Jim:
Yeah

Jeffery:
That’s pretty cool.

Jim:
That’s a good story for you here. I mean, you know, we weren’t like close buddies or anything, but you don’t know, we got that close to those days, but um

Jeffery:
Anything that you remember from then, like a story that you’re like?

Jim:
Yeah, I do actually, I’ll tell you one story that’s kind of fun and the reason I’ve always remembered it, but it was actually in his book. So his dad was a famous, look, I don’t want to be, you know, comparing myself to Tim Draper. Let’s just get that clear.

But Tim is super successful, has been doing it for decades, is where billions of dollars. Um But you know, I’m I’m very much an amateur by comparison, but you know, I I did I did go to high school with him and so I did read his book and his father’s book and his father was actually one of the original venture capitalist in America and he worked for the XNM. Import bank. I was actually when I was a banker did work with them. Um so I understood that and he, you know, he was a big deal in the Bush senior, you know whatever HW Bush administration and elsewhere and so um and so I read his book and Tim’s book, which is you know, it’s a little different tips book, but he mentioned an anecdote from football in high school about his friend, I forget his name, but his best friend growing up, they were inseparable how he went to Deerfield and when Deerfield was playing Andover, his friend broke his nose because they were opposite each other.

And I remember being on the bus going back and Tim had left the field with a broken nose and he was on and he said to us, I think he was a little bit woozy, you know? He said um I asked the doctor if I’d be able to play lacross the spring and he said sure. And he said that’s amazing, you’re amazing doctor because I played baseball there, but neverplayed lacross my life. So it’s stuck with me. It’s not that’s hysterical, by any stretch. It’s not exactly, you know, I comedy, but I do remember that.

Jeffery:
And did you remember because he became famous or just happened to be?

Jim:
No, no, it’s stuck with me. No, no, I, you know, I don’t really have so many distinct memories from high school. It was a long time. I hate to tell you we graduated in 1976. Long time ago. So no, certain things stick with you and I don’t know why that did. I couldn’t tell you anything else about that day.

Jeffery:
Amazing. Well, it’s still pretty cool. Um, well, I love to, to kind of go back and talk a little bit about, um, down the investment side where you said you ran into the problems and the main things that everybody seems to face and I’m not sure everybody faces them, but they face the, and what you did mention, which is that they usually bolt. Um, and that’s because I think that there’s this perception that I’m gonna fly into this new category.

I’m going to make a couple investments, make some big money and then fly out. And it always seems to be the opposite of that. Maybe you can share a little bit about that experience. And what was the downside that you came across and how did you overcome it? Because it sounds like you were doubling down. You’re like, you know what? I screwed up and no one’s taking my money, I’m going back and I’m gonna find a way

Jim:
I’ll answer question number two, and the easy answer is stupidity, right? I mean, stubbornness and stupidity is why I double down. You know, there’s nothing really I’m not really proud of of anything.

You know, I can say on, on your podcast, I’m afraid, but definitely, uh, there’s definitely, you know, it was that, you know, it wasn’t like I knew any better. So what happened early was, um, my first investment came through a friend. He didn’t really advocated, he wasn’t in the business, but it really wasn’t a startup. This was something closer to home and I’ll tell you the mistake I made it, because I was lazy. Um, I didn’t do enough diligence, I kind of just looked at it.

It was actually a green power company. You know, it was a solar company and now, you know, knowing what I know, um, you know, the structure was horrible. I mean it was like a cram-down. I was like invested with this retail group of investors that we’re bailing out the early investors. And it was, it was upside down because the early investors had preferred and we were coming in with common. I mean, it was honestly, I’m not gonna say the name of the company so they could sue if they want to go out of business. It was fraud. There was fraud all over the place. So the mistake I made was I wrote a big check. Things look good, actually re-upped, didn’t follow on and um, so that was a lack of diligence, but I thought I knew what I was doing because it was basically utility played.

I kind of understood the utility business to some extent. So you know, not to a great extent. So that was number one, number two was a friend acquaintance of mine, I have to watch what I say. You know, I knew from Miami was a smart guy, worked at a good institution, came to me with a deal and I wrote a big check, like a pretty big check I would never write today ever. Things look good and then I, I followed on because the indication I was getting back was it was great and I’ll tell you it was in the space, it was competitive. We worked, which is not a good business, frankly. So, um, but it was a competitive, we work. And there was once again, I mean with a small f fraud, I won’t go into it.

I’m not gonna say any names, but so that one would have been hard to uncover. It certainly looked great at the time and a lot of people made that mistake. But PS, but you know that they went my shares because they were we got crammed down by the company’s still exist that we got crammed down by later investors.

The original management was kicked out under Questionable circumstances and I was out $400,000, no more. I was out $450,000. My first two pets. Now I didn’t know that at the time. It took me a long time. You know, these things dragged on for years. But I was, I was down a lot. And so the conclusion I drew was do it yourself. You’re relying on other people, don’t be lazy. I hate due diligence, but do the diligence and get out there. So, you know, and then I started, that’s a whole other chapter and I still stumbled a few times.

Jeffery:
Well, it’s it’s some good advice on the do your due diligence because I think I’ve pretty been pretty adamant about that and it stuck to the same line that you just said that it’s, you know, it’s not the favorite thing, but it is the only thing that’s going to protect you and your funds is that you really do dive into these companies that you make investments on.

And a lot of the times it does get overlooked and sometimes it’s because it’s early in first few investments, you’re excited, You’re part of a new group of excitement and maybe you just follow along with the rest of the gang and just jump in because these other people went in. Are they supposed to do the due diligence, whatever that might be, but really doing your own due diligence on anything that you’re going to invest in when it’s your time and your money makes a big difference is there is there are ways that you now look at it. You’ve made 100 and 100 plus investments, you’ve got other investments you made before that we got into the consortium, you kind of lined up things that said, you know, here’s the 10 step process that I follow every single time, but I don’t —

Jim:
actually, I have and I hate to disappoint you and sort of contradict the advice figure listeners, but I’m still not big undue diligence.

And, and let me tell you how I’ve sort of gotten around it. Um, the big thing I want to make sure is that there’s no fraud because I’ve suffered from fraud three times different degrees, one was out and out fraud, I got my money back and the other two were, as I said, these other ones were, you know, never proven there was certainly a degree of it, but like I said, small out front.

Um, so the main thing that we do, because we do write a lot of checks and we don’t have, um, you know, we don’t have outside money. One thing about our fund is we’re a ledger fund, there are seven partners, So it’s not like we have $20 million of, you know, a little bit of background checking, but they checked the deal docs, they checked the corporate docs and then really what we’re doing is following other people. We never leave because we don’t really big enough checks. It’s sort of by the necessity. So I hate to say this because I said you don’t want to hear this, but we really piggyback on other people’s diligence for the, for the large extent.

But let me say this, if someone is not really keen on doing a lot of diligence, let me just give one piece of advice. Check your founders on linked in and make sure that they list the company that they say they’re running as on LinkedIn as the employer that they’re at. If they’re not, you call them, don’t write them, call them and say what the hell is going on here. And if you don’t like the answer move on. That is a really easy one.

Jeffery:
Yeah. No, for sure. That’s a fast way to, to detect that. And and like what you said is there’s nothing wrong with not leading and participating in rounds. You get to know the founder, you’re still checking on the company to make sure that it’s 100% legit and not fraudulent. And you’re doing some small checks, but you’re small, um, checks into the company and then you’re making that decision to make an investment. And I think that those are still standard pieces that you have to follow because you’re trying to adhere to the seven people in your own group.

And the last thing you want to happen is that, you know, you didn’t follow a couple of those points, and again, you get defrauded again and find that —

Jim:
yeah, we haven’t suffered from fraud in 102 deals. I mean, all the fraud in my life of his early I’m in 130 deals Or more. But there’s a lot of overlap between my deals and are fund deal deals. That’s why, um, you know, it might surprise you that I’m not more, but probably 10 or 15. There’s overlap. But you know, it all came kind of early. And the reason that we, you know what happens is if one of my partners has a question, then don’t call up like one of the customers, you know, and then we’ll get a couple of say to them, you know, can we talk to your customers?

So it’s not like we never do that, but it only comes up when we feel it’s necessary. But remember, you know, I say remember because you know this about me basically spoke before but you know I’m involved with um two really great accelerators. One of them is in Canada, which is CDL created structural ab I mean you get to know the company as well, so technically it’s not diligence, but those companies have been screened by scientists, you know at you know, you know at your version of the National Science Foundation and then by professors, you know at the universities and then we meet with them.

I mean you know these companies are vetted before I even say hello to them so you have a high degree of comfort.

Jeffery:
Well, they’re also putting it they’re investing in them as well right there, putting a few dollars in behind them.

Jim:
They’re working on CDL. No, not CDL but other other other other mentors.

Jeffery:
Correct So but what I still like about this and only because we actually never actually have had the conversation yet about the fraud side and I think there’s a lot of —

Jim:
Great… Jim Horowitz. Fraud. The victim of fraud.

Jeffery:
No, but we’ve gone through it as well. So that’s the thing is that um it comes in all shapes of of sizes and forms that you don’t believe are possible in uh in our case that actually came through, not through a startup, it came through an investor that was leading a startup to get investment.

And what they ended up doing is they dragged the company on to a point where they were ready to make investment, they gave them a date, they wanted to break ground. So there was an opportunity to do a bridge round to get into the to the structure of the business. The founders were awesome. The IP was great and it ended up turning into a massive draw note, um real fiasco mess. And it all came down to an investor that was literally wasting two years of time on the startup. Had no intention of probably ever investing.

And the end of the story was that the company ended up having to file bankruptcy.

Jim:
Oh I see. So it wasn’t like the investor embezzled the money. That has happened clearly in publicly traded companies on big private companies. But what happened was he was basically strung along the startup,

Jeffery:
Yep. Got it to a point where they signed off on all the paperwork, everything was done. Deal hold co put the money here will be here until this date.

The company lined everything else up. They had four months to get running and building. And then at that date, big major accident happening. All they couldn’t deliver eight months later. Uh, there was never probably any money there and everybody had to walk away fold The company we lost on the deal because we were the bridge round it was a great IP, great company. And then what the worst part of it is is that the founders ended up having to not only bankrupt the company, but they split ways and it was tough because they’ve been together five years building this all out. And it was pretty exciting and all because one person outside and

Jim:
that’s the real tragedy.

Jeffery:
Yeah. And when you start to look at these things and what you went through due diligence at any form makes a big difference. But now, even on our side, we’re looking at, man, we even now have to go to the extent of looking at investors to make sure that they’re not leading

Jim:
the investors themselves.

Jeffery:
It’s crazy. So, um, it’s interesting that you bring that up and I think a lot of the times we all think that always see on the media is these great stories of how exciting early stage investing is, what no one realizes, that there’s —

Jim:
Are you kidding? It’s a nightmare!. Don’t get me wrong, I mean, I love what I do, but you know, everyone says, oh, it’s the greatest job in the world and believe me, I have exhilarating moments sometimes and I do love it, but it could be very trying.

It’s a ton of work and requires a ridiculous amount of patience. There’s not a lot of positive feedback for years and years. So I think, you know, I think people should go into it a understanding the risk, understanding how to mitigate the risk, which is what we’re all about. Not withstanding what I said about diligence and, and, and then um, you know, understanding the ups and downs and, and the patients that’s required.

Um, you know, I think if, you know, I come back to that word because I think, I think it’s the most essential quality in an investor in this, in this field is patience, but it’s not all fun and games. Um, and you’re not gonna get that traders rush. Um, but you know, I think some people go in, we have like a trader mentality. It’s like, hey, seven years, 8 years maybe. Yeah.

Jeffery:
You bet those things started fast, right? Yeah. I think the immediacy, you know, and you make a good point because when you start now as you continue to roll this, move this forward and roll the ball forward, is that eventually in that seven years from now and five years from now you’re gonna start to get a lot more action happening as long as you continue to do this every year. Then in year five and year six you should have companies that have started —

Jim:
Absolutely. It’s like an aging schedule. You know like a you know an inventory or aging schedule or receivables.

You know if you took your accounting um what we call it uh forget it was called CFA, Credited a financial analyst. Remember from that stuff? And yeah it’s like that you basically have this you know like the first few years is nothing and then you expect things to roll off one. And unfortunately personally I’m at that, you know, I hit that as I started before the funds only three years old but we’re actually starting to get, you know, we’ve had one exit.

We have, and then two more have been, one is unofficial. I really should be talking about both of mine official, but it looks like we may have two more before the end of the year. So You know, if every 12 months we’re starting to get three exits, that’s a pretty fast pace. I don’t anticipate that, but if we do, that’s satisfying. Yeah. You just have to wait till you get to that stage.

Jeffery:
Yeah. And that’s all part of that planning. And when we look at things, you look at short, mid and long-term investments, but it’s that cycle to keep it all going.

So in your case, you now have a fund where you’re building in that in 3-5 and seven years in these increments, you’re going to start having companies that are going to cycle in and out of your process. Some may fail, some will win. But the thing is that as you keep investing and you get tp year five, you’re going to have another five year more years for some other

Jim:
Absolutely. We keep going. You know, we’re only three years in as a fund. But we yeah, we, um, You know, we’re moving at the same pace. We’re doing, you know, somewhere around 30 deals a year.

Jeffery:
That’s incredible. And when you guys are working on these deals and you, you mentioned a little bit about, um, you know, the types of diligence are doing, what are the types of companies are going into?

Is there specific vertical? Is there an area that you liked looking at what these accelerators that really pique your interest or have you kind of just left it generic? And you guys just through your consortium decide you know, what, here’s five companies, pick two and we’re gonna invest.

Jim:
Of course, um, you know, it’s really sort of what catches your fancy.

You know, our goal here is to make money. So, you know, we were going to be drawn to something that, you know, we think there’s a lot of upside and, you know, we’re early stage because our checks are small, so we have to be early, which means that in order to justify the risk, we, for the most part have to feel that if it hits, it’s really going to hit. But as far as sector goes, you know, I always say that our specialty is early stage, so we’re sort of pattern recognition for what an early-stage company looks like.

That means understanding the issues to do with boards and cap tables and, you know, sizing their pre-seed or whatever it is and you just get good at that. People are always asking me to help them with like there, you know, they’re VCs and like the B round, I’m like that’s like that’s not my territory. I don’t know that world asked Tim Draper, you know, ask someone at Sequoia, that’s not my world, My world is rough. You know? It’s like, it’s often a science project, you know, and it’s like how do you get a company from a science project to um you know, to a real company? And there’s a lot of that at these accelerators. So now I forget your question. Oh sector Yeah. So but you kind of figure out what you like and it changes. So um I would say that our we have like five funds. It’s crazy. But we used to say the first fund once they hit 25 companies I couldn’t fit in my file drawer.

So I stopped and then then we went to google drive. So it didn’t matter anymore. But I still like that kind of size so that one is a hodgepodge stage and sector. Um And it’s our best fund like that fund you know if I could kind of brag and you know I’m predicting I don’t know but it’s probably gonna be like 12x. And I know it sounds crazy but that’s pretty informed 12x. Not including a carry because we don’t have to carry we invest our money.

So um what’s happened since then is I like science more even though I was an english major at an NBA. Um And it’s partly because of the accelerator. So I’m really drawn to science because to me it’s the most disruptive and it’s the best moat so it doesn’t really matter um whether it’s in life sciences or um, something else. We actually created a fund called DeepTech and another one called Bio Tools um, to be able to put these things.

So we have a sort of quantum ready company going into deep tech and in bio tools, we have companies are basically helping pharma biotech companies accelerate the process. So like drug discovery or a company that makes peptides, you know, if you know twist, like if I was lucky enough to invest in twist, twist would have been in this in this thing. So I mean I kind of know what I don’t like. I don’t like to go into super crowded spaces and try and pick. Like I would never do scooters, even though I know people have made millions on scooters. I’m not going to cut scooters or just plain drones. You know, it’s just not too crowded. I love robots though.

Jeffery:
No, I love that. And it’s it’s good though that you’re you’re finding these niche spots going after them. Now there’s the rest of your team on the consortium side of the seventh is how do you regulate that? So that if you’re all over robots and everybody else is like, you know what, I just go into deep tech —

Jim:
Happy you asked that question And it’s really it’s such a great structure and I didn’t even appreciate how, you know how lucky we were.

Let me let me answer that. So we’re a ledger fund, which means that we only, we literally passed the hat on liberal, but we past the hat on each deal. So if I bring in company X, Y. Z. And you’re in our fund with, you know, let’s just pretend this, you and me and I say, look Jeffrey, I gotta we gotta do this deal, I’m gonna put in $25,000. What do you think? And you say zero? Well that’s it. And now I got to see if the company’s gonna take 25.

But if you say, yeah, I would have put in 50, we go back at 75. There’s no rule. There’s no commitment upfront. You vote with your feet each time. And here’s what’s wonderful about it is that our best deals we actually go to a when we have a high conviction deal will go to outside like friends. We have like a group of friends and family that we bring into certain deals when we go out and people pile on and we write a bigger check.

Those are our best deals. It’s like, it’s not an investment committee. It’s like where for what companies are people willing to get their check book out and guess what, when they’re when they’re willing to do that, they tend to be the best companies,

Jeffery:
Yep, go with your money, I like that. So when you do it that way, is it still based off of a 2 and 20 structure or is —

Jim:
No, no, we don’t have, we don’t have no 20. As I said, there’s no carry, we just invest our own money and our friends and family don’t pay 20 we take a fee upfront, we take a 5 to 6% fee, depends on the fund upfront and that’s it. And I, you know, I basically run administratively with, you know, with help, we’ve got consultants all over the place,

Jeffery:
like an SPV for each investment?

Jim:
No, no, no, that’s the beauty of the ledger fund. What it is is a one goal. Each fund. We set up different funds like I said they get unwieldy.

Um but for like Barrett Adventures, which is our first fun 25 companies. I think we wrote 27, checks. Everyone who invests, we keep a ledger and then your percentage, so we know which deals you should get economics in. If you invest in deal two, six, and 8 You only get the economics from deals blended, then it is based on blending. No. No but but the there is, if there’s ever a vote or anything legally your percentage in the fund as a whole, let’s just say we invested $2 million 200,000, you have 10% of the shares of that fund. But what really matters to you is the economics of each deal. So you get one K. One american term, you get one K One per fund even though you might be in 12 different companies.

Jeffery:
Okay, that makes sense. And that’s a good balance to then you’re you’re actually getting paid out on the company’s you invested in versus all of them uh blending for no reason.

Right? When you had no interest in five of the seven companies.

Jim:

no one’s complained about the structure. Its were actually I’m looking to apply it to uh an accelerator that I’m involved in so that the mentors can invest in the companies

Jeffery:
I like it.

Jim:
Beautiful.

Jeffery:
Well it’s unique. It’s the first time I’ve got to hear this structure outside of doing S. PVS and but hearing that structure in the U. S. Or in Canada. So that’s pretty cool. So how much and I always like to shape this around this because I I really think that a lot of people tend to sometimes not understand or utilize their background and their initial learning that they’ve taken to exemplify the role they’re in now or the role they want to go into.

So how much of your banking background really helped you in what you’re doing today?

Jim:
Okay. Um I think I would just say how much of what the person I was sort of brought up to be, you know, got exercise as a banker and then exercised here.

Um I would say a lot, I mean as a banker you have to be, it’s like going to college, you know, or uh you know to say to college, you know, you go from class to class and you know in the United States actually i heard some very, very good Canadian CEO take a blasted Americans for not coming out of college with any specialty and I, you know, I wasn’t being necessarily, I mean, I’m very pro-Canadian, I didn’t take exception to it in a chauvinistic way, but I, I just, I just disagreed because I’m that person, you know, I mean I and I I think I’m, I think I’m doing really good job, but what I’m doing and I think it serves me really well.

Um there’s actually a book about generalists, you know, but let’s talk about, you know, 10,000, you gotta do something 10,000 times, but there’s also a book talk about generals and also if, you know, I read and also listen as I take my walks for exercise to our books on audible and I’ve listened to a lot of science history and a lot of the greatest scientists have an artistic, you know, side to them.

If it wasn’t them, it was their parents, you know, like, you know, they played violin or the mother played violin, you know, or something like that. And so I think it’s important to have a mixture. It’s not a requirement. So anyway in college I had that mixture as a banker.

I had to move from company to company. I wasn’t a specialist in any one field, I was a I I was a product specialist but I had to you know, meet with companies and what I what you had to be with a banker or doing what I did had to be is a quick study and I’ll tell you a quick annecdote.

Er I mean I um I went to interview for a job with a a kind of a small like NASDAQ um you know, otc type bank in new york and I wish I had gotten that job because they literally, I don’t think David wanted me to, but I was like going into meetings with clients like companies were pitching and I was like there and like and it hit me like this is what, this is my strength. Like I can understand like anything that someone is telling me, I don’t care what the sector is and I can get to the bottom of it and kind of like see the possibilities in it.

And I would I honestly, I really, I mean I know it sounds you know very un Canadian-ly and pompous of me, but I really think that would be good at that job and so it’s that capacity which I think was developed in me from you know, day one, you know, as educationally and then you know, I applied as a banker um and was being unutilized for a good part of my life, came back to me here and so later in life, I just, I was home.

I just like, wow, you know like I’m good at this, like I’m like made to do this, but I always tell people I’ve got no PhD, I’ve got no specialty, I just bring, you know, my experience.

Jeffery:
But that experience that you that you did gain through the banking side of things and your generalist mentality allowed you to build a pattern or at least build an exercise your mind around how banking works, how startups worked in banking, how big business worked in banking, so that when you did kind of find your way into the startup realm again, you have a pattern in your brain that’s been built around how all of these things get executed, how finance has a huge impact in any business. And you can kind of help steer companies through the experiences you’ve had on the fraud side through how banking is structured. So that becomes a lot of things that we don’t think are actually learned what they really were in that process. That as you’re going through, you’re hearing about stuff that the average person may not have ever learned.

Jim:
And I was also reading, I mean it’s from the the Wall Street Journal every day for decades. And you know uh it’s you know, it’s a it’s a breath of experience, you know.

Yes. You know look I mean I visited lots of plants, you know and I met with executives. You know, it just kind of all sings in, you learn a lot business school but um and you also I learned as an investor um not in the early stage stuff, you know just, I mean I’m a limited partner in a lot of companies, a lot of the VCs, a lot of funds and, uh, I don’t know I’ve learned on the job. I mean, I’m learning every day and that’s, you know, that’s, that’s the fun part. I mean this is work and I, you know, I enjoy it. That was saying everything I said. But it’s what really, what makes it besides hoping to make money. Um, fun and worthwhile is the education. And so that’s what kind of gets you out of bed every morning with a, with, you know, what’s today going to bring? You know,

Jeffery:
I love that. 100% agree with you. It’s the, it’s the, what motivates you and you can find a million things.

And I always, uh, I set early meetings with startups or with companies and or investors because one, it forces me to have to be on page and ready to go. But it also forces me to think beforehand, what do I got to achieve here? Why am I doing this? What do I got to get out?

Jim:
Oh, I see. So you’ll have a call like at 8:30 just to like start your day with a–

Jeffery:
But I’ll book it at seven and I’ll do it just because it forces me to make sure that I’m on my game by seven a.m. And people like, man, that’s early.

What are you doing? And I’m like, you know what? I got a busy day, but I might not have that 7:30 meeting. But by the time that meeting comes up, if it’s two days or three days from now, that’s 7:30 will be filled and I will be booked until whatever time.

But it forces me to make sure that other person is just as serious about what we’re doing and then we’re gonna close the deal and that they see that I’m just as interested no matter what, that I’m gonna be there and I’m gonna make that happen

Jim:
I like it because, you know, you want to make sure that your founder is serious and committed and uh, you know, I actually have to like point, I have to point out to some founders that this is not, this is not for fun. You know, we’re not here for fun. And I don’t really, I need to hear about how much they enjoy their job or anything like that, you know, to a degree.

But um, it’s, this is about executing and, uh, and, and it’s just serious, you know, when you’re dealing with other people’s money, it’s really serious. And that’s, that’s the way I feel when I feel like a steward of other, you know, I can rub people the wrong way, my own team because I’m so serious about this.

Jeffery:
Well put it this way to that. Who can’t be at a meeting at 7:00 AM? What do you have that you can’t attend?

Jim:
Well I’ll tell you but I wouldn’t necessarily take a meeting at seven because I can’t sleep. So my sleeping pattern is so unpredictable That my best hour or two of sleep might be starting at six or 5. I might be up for three hours in middle of the night. But that’s age related. You know I’m in my sixties. So yeah if I were in my forties or thirties which I imagine you are. Yeah. Yeah. I mean the shoot I had to get to the bank At seven for a long time. So yeah, I hear you remember when you get older just think back to what you just said.

Jeffery:
Well agreed. But I also think that what it does is it lines up your seriousness too, it shows the startup that you’re willing to adjust if your schedule is busy, you’re willing to slot somebody in early just to make sure you’re fitting them in because you want their success, you want to make sure that like you said, you’re investing other people’s money that there’s serious on both ends. And I think —

Jim:
That’s what I’m saying there, you’re aligned in that way. For me, it’s more of the weekend because I work, you know, seven days a week. And so if I’m if someone’s willing to call me later, you know later in the evening, then I take that as a good sign.

Or you know, I’m often saying, look, I don’t schedule as many calls on the weekend can you talk? And if they take that when I understand that people have kids and stuff, but it’s a good sign to me.

Jeffery:
Yep. Agreed. Yeah, all those things help right, Every little bit brilliant. Well, I think now what we’re gonna do is we’re gonna kind of transition into our are questions which are rapid fire. So we’ll ask a bunch of them and then we’re going to get into some more personal stuff. Yeah. We, we like to learn everything about you. We want our community better to be able to really dive into learning about how Jim thinks, and what Jim does and that’s, that’s the way we like to roll.

So, okay. Um, and you talked a few about already have mentioned a couple of these answers. So some of them might be just re-emphasizing them again because it’s all in that quick segment. But, so what is your favorite part of investing?

Jim:
This kind of investing? Um, Like I said, it’s the education and then those aha moments when it’s more mentoring. But when you really help a company, sort of understand their own business better. It’s usually strategy. That’s usually where most helpful.

Jeffery:
I love it. We’re, we think alike. Same way. It’s that excitement you get at the end of it all to how many companies to invest in per year?

Jim:
Per year? Well, I only invest through Baresford Ventures. Like I said, we’re sort of around 30. Um, I mean, I’m in 130 whatever and then, um, you know, I, I invest through an angel list for the education of it, you know, just kind of know what’s out there. So I’m in and if you include my LP investments through funds, so they’re not direct, but I’m in probably like 350 companies.

Jeffery:
Amazing, huge. And you mentioned a bit on the verticals again, but just to re-emphasize the verticals that you, you like and focus on.

Jim:
I enjoy life sciences. So therapeutics to be specific. Um, we don’t invest a lot in therapeutics, but I really like, you know, I’m literally reading janeway’s immunology. You know, I, I read books on the classes I didn’t take in college and you know, in science. Um, so I enjoy those the most but I’m really, I’m sort of, you know, I’m, uh, I stumble around in those. Um, what do I like best? Like I said, I would just say the science, but look, we have direct to consumer.

We have apps too, I mean, I like it when they do well. I like it. I like, I like when they grow fast. And one thing I have to say, I would say this to a lot of people. I’m sure on the phone, you know, the valley venture company firms, you know, they can basically limit themselves to fast growth companies because that’s what’s there. They can be very picky. Don’t be disappointed. If you can only invest in companies that are grinders, they’re going to grow slower.

It may be that they’re selling me to be in long sales cycles. People say, well don’t do that. But that’s guess what? Unless you’re in the valley, that’s, that’s a lot of what you’re going to see. And so you should take the best of those and that’s where the patience come in.

Jeffery:
I like it. What’s your timeline for investments from the first time you have a conversation to the end?

Jim:
To the end when it exits? Or tothe end until when we write a check?

Jeffery:
When you write a check.

Jim:
Well again I mean I should be embarrassed but I have to get to our strategy to explain like why we do what we do. But um I mean we have done deals in like two days where um like I’ll meet a company etc. Dlr and I’ll be like oh my goodness, this company is great and you know, maybe not two days, four or five days and then they gonna watch your time like oh we’re closing whatever we got like 50,000 left or whatever, it’s great. I go to my team pitch remember there’s one company we did that. I was so proud of my team. We got on the phone, Everyone loved it. You know, I think we wrote a $75,000 check and we turned it around we wired the money out like you know, six days later.

It could be that too. You know, you’re it could be a year. I mean it really, it depends not so much on us as it does in the company and on their round.

Jeffery:
Okay. Love it. Outside of your quick DD that you guys um go through. Is there any factors that really shape and prepare the investment that you think really stand out? They need to have a shareholders agreement were in like is there something that really stands out?

Jim:
We’ll documentation wise are lawyers? They are like our, you know, our investment committee. Really think so. Um They’ll tell us and like I’ll tell you like, you know, it’s got to be, we don’t do common. We’ve walked away from a lot of deals.

There are common. Just want to common want to uncap notes and then the, you know, the company doctors have got to be good and the deal doc, you’ve got to look good and that’s where we walk. We are easy. It would kind of pushover is when it comes to investing in a company based on its, you know, on the face of it. But we’re really strict on, on the documents and we, we point out to better bigger funds than us. What’s wrong sometimes (Inaudible).

Jeffery:
Perfect. Now I wholeheartedly support that. And you mentioned before that you don’t like to to lead round. So that’s good. And you mentioned a little bit about the preferred terms. Maybe you can emphasize a little bit more on that strategy that you were just mentioning how that works and how you guys get through companies really quickly and then end result if it’s prep shares or if it’s just pure equity, what is that favorable terms that you guys go?

Jim:
Well, we’re not looking for special terms. I mean, I’ve been in an angel group and I’ve seen the other angel groups who basically try and, um, you know, play, I guess, I think it’s a weekend and overplay it and ask for ridiculous thing, you know, 50% warrant coverage and you know, two times liquidation participating.

You know, you know, like, no, we don’t want that. We’re not, we’re not saying the terms, we just want to be preferred. So we want our safe to be post-money if possible. And that’s something that we’re insisting on more often. And I can, you know what that means? But I can explain it if necessary. So we want post money safes. We want them to say that they’re going to convert to preferred. Um, and you know, the y Combinator safe that people are using these days that were okay about safe. Well, we did kisses to as long as they have this in. There were a note that converts to prefer with a post money cap.

Um, and if it’s, if it’s a price round, it just had three price equity. So, um, you know, that means it’s gonna, I mean usually they have one times liquid actually liquidation preference. We’re not looking or expecting more. I’ll tell you this is if a deal has two or three times liquidation preference or lots of warrants, that usually means that the issue or the, you know, the startup is, is desperate. And I would say that that’s a pretty obvious red flag and you should probably walk and I can say, I haven’t listened to my own advice several times. I’ve been burned.

Jeffery:
I will highly agree with that. And I think that’s just diving in a bit more like you said and trying to learn more about what the hustle is for.

Like why are they trying to close, what’s the reason? Sometimes it could be that they’re trying to grab inventory. They have other issues that they’re working through. But a lot of the time it’s just trying to buckle through a bigger problem that you don’t know about.

Jim:
Yeah. Or a lot of times it’s basically the earlier investors. I mean it could be a recap and it’s okay if it’s a recap, just tell me to recap.

And I got to understand what, but a lot of times early investors who are desperate to keep the company afloat and are telling the founder that he’s got he or she’s got to sweeten the deal to get them in. I would say a lot. But I’ve definitely seen that that scenario

Jeffery:
that makes sense. And then outside of, and do you take board seats?

Jim:
No, Okay. No one asked us to. And you could say it’s because, you know, we’re not, we’re nothing special and that’s fine. Um, but there’s a liability issue and, uh, you know, we don’t have insurance for that. And then, um, it’s really just the tail wagging the dog. If you’re writing smallest checks, you know, it’s not right to have a board seat. That’s a whole other conversation. I mean boards and founders, to me is like, it’s such a big part about being an early-stage investor.

I actually would like to be on the board because I think I would be because a lot of board members are, they’re protecting their own interests as opposed to all the shareholders’ interests.

And a lot of board people don’t really understand startups.

Jeffery:
True, yep. Well, we, we, uh, we tried to, in our case, because of a fund, we try to put our investors into boards and we do that so that one they can in the board or adviser, and so they can provide, um, coaching, goal setting and drivers back into the startup, but also at the same time because their investors, they’re angels or VCs, but at the same time, they also can report back into the fund, so they kind of work with them to work with us and it provides a nice level of management, but a lot of the time, it’s usually self fulfilling boards and it’s unfortunate, but we do it to benefit them, but also support what we’re doing, and we tell them that uh we don’t want to be in your board after two years, so you need to be growing so that you’re not talking to us, if you’re talking to us in two years, we’re not doing all right.

Jim:
Yeah. How big are your checks?

Jeffery:
Uh, They vary anywhere from, we try to make sure we’re putting in 100,000 as a minimum in a preceding seed. So we’re trying to push that target higher so that we’ll be doing 100 and 250 on each check. So we wanted to have more of an impact because of the area of focus that we’re in. So we we try to push that a little higher.. So outside of your investment strategies and all these great things you guys are doing, is

Jim:
There a lot of bad things too, don’t go wrong. We’re only right, 30% of the time in this business.

Jeffery:
That’s still, that’s still, uh, You know, 10% or 20% better than most. So that’s a good thing. Um, do you, do you look at other ways to help the startups too? So once you’ve made that investment, what other kind of carrier –?

Jim:
we only try and help where we think we can help. So I try not to over promise and under deliver though, I will confess sometimes it happens. But you know, when you have 100 over 100 companies in your portfolio and you know, a lot of mentors, you know, through these different accelerators, there are usually some ways that you can connect people often its founder to the founder.

So, um, you know, we’re sort of connectors, you know, more than anything and every now and then help on business development and, and look, I’m, you know, when you have so many companies, you can’t be on boards, you know, you know, even if they wanted us, we couldn’t be on a lot of boards, but I am sort of the founder whisper for a few companies, I mean some of them I’m just friends with and we just talk um and I think it’s just like when they’re winding down at the end of the day, they might talk to me or whatever um and you know, but I’ll throw some advice, but there are a couple of cases where like there was one company, remember like you said, like I was sort of like on that early board until like the next round and then I got replaced, but I was like someone who was there, you know once every month or so to just kind of talk to the founder, there’s another founder I talked to every week and it’s serious stuff actually, much closer to banking, um but like I’m helping them make serious decisions, so it really depends on the founder if they seek it out, I’ll offer a lot of times, there’s someone to talk to and just someone who’s just got some experience, and once, you know, they just want to double check their math, you know, you’re helping them check their math.

Jeffery:
I love it, and I wholeheartedly agree, again, that’s some great advice. So we’re gonna kind of shift a little bit now into the personal side, and we built this segment in because I found that I was having these amazing conversations and I’m not myself very uh personal, because I always tend to wait for someone to ask the questions that need to ask the questions, but through some of the startups to work with, I actually learned some real easy ways to kind of segment into these things, and yeah segue right in.

So it was brilliant. So I started to come up with my own kind of questions that really opened this up and I felt, man, this is great. So I’ve been in the last, I don’t know, 20-30 segments I’ve been using it. And I probably explain myself because of the shock that I go through every time I have to ask personal questions. So this is me working my way into it.

Jim:
I won’t answer if it’s too personal.

Jeffery:
Oh no, no, it’s nothing crazy like that. But, um, and one that I asked to when I was teaching, I asked a lot of students and some of the startups are last on this. So, and you made me think of it. So now it’s going to become one of my questions going forward to all of the investors I speak with. But what is your superpower?

Jim:
Mhm. Um, well, I don’t know that I have one, but I would, you know, it’s sort of like, you know, if you name it, it’s probably not right. I think it’s the, but I think it’s the ability to quickly grasp what the company does as I said earlier, and then kind of in a very optimistic way imagine where the company will be in five years. It’s sort of a visualization that makes sense, like seeing into the future.

Um, and I don’t mean to say, I know what the future is going to be. I’m not crazy, but it’s just like, what could it be? And believing in it? It’s like, because I believe in it more than the founder, which is a little bit nuts.

Jeffery:
No, no, no, that’s perfect. You need that. And that’s the whole reason why these founders are calling you because they need that support.

So that’s brilliant. Uh, favorite sports team.

Jim:
Oh, the Miami Heat. That’s the easiest question you’ve asked yet. I’m like a sick stupid fan. It’s disgusting. And I have ashamed. I behaved very badly at games.

Jeffery:
Fair enough they’re okay. I wouldn’t say they’re the best team in the league. I didn’t either. But uh, they’ve certainly pulled, you know, some great teams over the years. So I can say with Bosh being uh, sent over there a long time ago and uh, stealing some of our prime players.

Jim:
Yeah I know, I’m sorry about that.

Jeffery:
It’s been it’s been a good runner.

Jim:
You guys got your championship and I was pulling for the Raptors big time. I was I was just sick of the sick of the Dubs winning all the time. So I wasn’t happy that all those injuries happened. But I was I was really happy for Toronto and the city because you know, I was spending a lot of time there.

Jeffery:
Yeah, it’s really pulled it through. So, but Miami has always had a great team. So always competitive in all sports. But especially —

Jim:
I wouldn’t say we’re competitive all sports. You go too far there.

Jeffery:
You guys try, you’ve got your football, You guys are football.

Jim:
Well, it’s been a long dry spell. It’s been hard and baseball, I don’t follow the marlins really. But the marlins have been pretty pretty much in the basement for a long time. But the panthers have been —

Jeffery:
They were up and down too

Jim:
Yeah the marlins won twice. But that was before I lived here. I was in new york. You know, in those days I wasn’t pulling for the panthers. Okay, for the marlins?

Jeffery:
No, fair enough. All right, so the next question, favorite movie and what character would you play?

Jim:
Oh my God. You know, I stacked, I talked about theater, I said actor acting. Right? So like, you know that’s another thing, you know, I I acted with some good people um in high school and college like Jim Spader James Spader one um you know, he’s in something called the Blacklist and though she would completely deny it. But okay, I’m just I’m having a senior moment. It’ll come to me, but an actress in a TV show Dana Delany was naming, we probably won’t know but big tv actress in her day and stuff.

So um which movie is my favorite movie? I don’t know. I’ll tell you what I’m going to answer the question and in a different way the tv show, I love best the series is Madman, I would definitely play Jon Hamm’s
character

Jeffery:
Nice. Alright, that works the same way. There’s still uh still a good good movie or a good vibe.

Jim:
People don’t go to movies anymore because of Covid. So if you haven’t seen Mad Men, you know, go watch it on Hulu or Netflix, whatever you guys have a

Jeffery:
All right, I’m going to watch that and I haven’t actually seen it yet, I’ve heard great things about it. But what I like about it is the character that usually you pick usually somewhat defines the character who you kind of represent yourself. So I get to learn a little bit more about you by watching that and there’s been some great suggestions.

I’ve got ah — it looks like I’m doing this just so I can figure out what movie to watch next. But it’s worked out quite well. So I won the indiana jones series right now so I just put through all these different vehicles to figure out how people are inside of them. So it’s pretty cool.

Jim:
Well, Mad Men, Jon Hamm and Mad Men is uh, Jack Ham. That’s a football player. Um, but uh, Jon hamm, I think he’s a problem. The main character Don Draper is a character. Yeah, he’s messed up. So don’t, don’t go too far with the parallel.

Jeffery:
No, fair enough, fair enough. Well, I want to say that it’s been a pleasure chatting with you. Jim. I’ve learned a ton. I’m sure the audience has um, you’ve got a lot of great ways of doing things. I love the way that you’ve taken what you’ve been through and turned it into a fantastic investment firm, your superseding all the investments that most groups make in a, in a year.

So you guys are hustling hard and I think that’s awesome.

Jim:
And we have a good portfolio. I don’t think I stressed out enough. I mean, you know, we’re not specialists are geniuses, but we, so far it looks like we’ve got no one would trade our portfolio, so —

Jeffery:
I love it. And and that’s important. So there’s one last question I’ll ask and then we’ll wrap it up. And the question is that, you know, throughout the time that you’ve been working with startups and you’ve been in this space, is there a story that just pops to mind that you really think is amazing? That, wow, I can’t believe these guys did x or y? And do you want to share with the, with the community?

Jim:
Oh, okay. I said I’m not going to recall, help me out. What would, what would you like to hear? Give me? I mean, I’m sure I can think of 100 but —

Jeffery:
Well there’s usually, I don’t know that story where the startup was just trying to find market fit. They were on the verge of —

Jim:
Oh you mean like a serious one? Like a good story? Like a business story.

Jeffery:
Yeah and they just pull it off and you couldn’t believe they made it and uh

Jim:
Pull a rabbit out of a hat

Jeffery:
Exactly.

Jim:
Golly, there’ve been a lot of good pivots lately. There’s a couple, I don’t know that very well there in our portfolio but I can tell their story. Just because it’s a pivot story and you know a typical thing that angels and and and V. C. Says you know we like we like our founders to be scrappy. Which is another way of saying tenacious they’re not going to give up. So again just not I don’t have a lot of detail. But this company was in the travel space, it was a young woman is a still a young woman who actually one of my partners really, like he just said she’s got it. And so I said, okay, you know, I’m willing to bet on this, it was through an incubator or you know, fund incubator um that we’ve done a lot of deals with, so it was vetted and all that. So Covid hit, they were literally at a conference for like a 500 startups for travel companies in Europe and our techcrunch or something and they immediately ever say immediately, but they just quickly decided to jettison the whole travel thing.

And they created this sort of office, it’s for office managers. It’s sort of like a one platform that come back. It’s like a, it’s like keeping your to do list like your tasks and it brings in like every single, you know, app or a program that you would have either one and, and, and, and they, you know, they’re slowly building the business, um, you know, building it out.

And so, you know, it’s not really a personal story for me, but it’s just an example of, you know, two young founders just pivoting on the fly and I actually have a call with them tomorrow, they’re doing a raise and I can’t wait to hear more about what they’re doing. So —

Jeffery:
I love it. You know what, it’s, it takes those moments and the big ones that hit you like a ton of bricks to figure out.

You got to make a little bit of a change or a big change. But it also comes down to investors believing in them and knowing that the founder is the driver to all of this. And if they’re a good founder, then they’re gonna be quick on their feet and they’re gonna make the change they need to.

Jim:
Helps me young because even if this failed, they knew they could come back and start a new company before they were 30. Right? So

Jeffery:
awesome. Well, jim again, thank you very much for your time. And what we love to do at the end of our segment is we like to give you the last word. So anything that you want to share to the audience, to investors, to startups, founders, anything you want to share from advice, I turn it over to you.

Jim:
But man, I don’t have much advice. Uh, just don’t, don’t be too full of yourself, I guess. And you know, I probably sound like it.

You know, we try and leave with humility and you know, we’re a probability investor. So we think luck plays a big part. So I guess maybe it’s just realize when you start to, you know, things are going away or not. You know, luck, luck is playing a big factor. Don’t be hard on yourself.

Jeffery:
I love it, awesome. Again, thank you very much for time. That was awesome. Jim was fantastic, shared a lot of great insights and uh, I learned a ton and I think that’s what the key is that we all have to learn a little something every time we talked with someone. And I think, you know, going forward, I think Jim made a lot of great, a lot of great points and, and even from minimal to a lot of deep dive information, it’s always gonna be helpful as an investor.

Um, I love the way that they do, they’re investing using the ledger side very cool way of doing it. And I think, you know that superpower question I’m going to have to ask that going forward. So thank you everybody for joining in today and listening to Ask an Angel. And we’ll see you guys soon. Please like share ad, all those great things on social media and looking forward to seeing you guys all soon.

Thank you.