Founder & Managing Partner – Ripple Ventures
Matt Cohen - Angel Investor | Venture Capitalist

"I would continuously bet on founders who are so hell bent on building something great rather than a founder who has something that's decent but would sell it to the next buyer that came around for 10 to 20 million."

- Matt Cohen

Matt outlines what he looks for in a start-up

Talk Takeaways

Matt Cohen chats about his background and the awesome things that they do in Ripple Ventures. Watch the interview as he shares the process they take to help startups generate funds and how their partnership set their ventures up for better success.

About

Ripple Ventures was founded by Matt Cohen, an operator turned investor. Starting with his first investment in Turnstyle Solutions, he helped bring the company from idea in 2012 to exit in 2017 with more than just his cheque. Through hands-on operations, strategy, and business development guidance, the company sold to Yelp! in 2017. Afterwards, Matt went on to Street Contxt, a global communication platform for the institutional financial community, to help scale their enterprise sales team.

The full #OPNAskAnAngel talk

Jeffery:
Welcome. Today we’re with Matt Cohen, and, Ask an Angel and brought to by OPN. So what I’m really excited about today matters. I’ve gone through so much of your material, and a lot of you guys do a lot of stuff, which is very exciting. And you’re kind of a little bit on the little bit of a different interview that we do, because normally we go and talk with angels trying to figure out what they’re looking for. But you guys were like, the shopping basket of venture capital of what’s going on inside of it. So you guys got a lot of everything, which is really what I’m excited to dive into. So maybe what we can do to start off is if you could give us a little bit more of a background on yourself where you’ve come from, what you’ve been up to and then maybe a snapshot of where you right now and then we’ll dive into it. And then one thing about you that nobody will know.

Matt:
Sure. Um, yeah, Well, uh, maybe I’ll start with the one thing that people don’t know about me. As I used to be a pretty big, avid, barefoot water skier when I was a kid. And I love doing it still today, even though I’m a bit older. And I was able to barefoot water ski when I was a kid with 1 ft in the rope, no hands and was able to chug a beer all in one spell swoop. So that was pretty exciting. Probably nobody knows that about me. So that was a claim to fame for me. For me, I I didn’t come from traditional venture capital technology or private Equity World. I was on Wall Street for over a decade, working in New York and Toronto for RBC on the Merger Arbin Adventure of a hedge fund team. I spent a good part of my time in New York during the last crisis. You know, covering global hedge funds, working on the trading desk and dealing with the fast paced markets on a daily basis, so this crisis and the volatility in the markets is is quite familiar to me. Brought out a lot of mixed emotions from that time being down New York during the last crisis. I moved back to Toronto, Canada, where I’m originally from in 2012, 13, and while still working at the bank, I ended up helping start a tech company with a couple of good friends called Turnstile Solutions. I wrote the first check to get the company started and help grow that company to I think about 45 or so employees and eventually get the company acquired by Yelp in 2017. That was my first angel investment, very first time I ever took the chance to bet on people before they really had anything. It was very lucky that it worked out for us on day was a lot of lessons learned along the way, which I’m happy to get into. Fast forward, I left Capital Markets Finance. In 2015, I went to go work for a fintech company in Toronto called ST Context, which was run by Blair Livingston, still is. And backed by Formation eight and a couple other firms, um, to help them build out their enterprise sales team in In 2016- 2017. I ended up moving to Boston toe work on their enterprise sales team in the U. S market. And I got a lot of exposure hanging around the sort of Boston and Cambridge Harvard M I T Ecosystem. Anytime I could to see what was going on there as an angel, and it really started with me just sort of reaching out to founders and meeting companies on my free time in the Boston ecosystem and started writing checks as an angel under the name Ripple. I really loved the name Ripple on the Ripple Effect. And so I set up a landing page. I reached out to a couple founders and just started making angel investments under the name Ripple Ventures as an Angel. And some family offices noticed what I was doing and they said, you know, if you ever moved back to Toronto, let us know we’ll be happy to support you as a early stage fund. So that sort of came to fruition in 2018 with the launch of Ripple Ventures Fund one which was just over $10 million predominantly made up of my capital, my partners, my partner Michael, came from traditional enterprise SAAS operating world. He’d run his own bootstrapped company, which was a networking data hosting IP Company, that he was also as an angel investor in turnstile. So we connected through that and then we came together and launched Fund One and sort of been on the races since then.

Jeffery:
Well, that’s amazing and a great story. Is that — was the turnstile with Ryan Friedman?

Matt:
Yes. So Ryan was actually a good friend of mine. We grew up together. I brought him in as an angel. And he ended up coming. We finally convinced him to join three company as a head of partnerships. And he was a huge influence on the company for us because he was definitely one of the smartest guys we were able to recruit. And we had no money so we had to give him a good amount of equity and a fair salary, and it worked out well for everyone. So Ryan was definitely part of the team there.

Jeffery:
So this is a while back, and I don’t remember what year was but we were actually working with Ryan as I own a software company. We were working with Ryan on helping build out part of the platform. If I remember this story correctly, and we were just about to sign the paperwork and then Ryan called us and said, Guys, I don’t want to do this. I’m sorry, but we can’t sign the paperwork. I’ll tell you after, But it’s really exciting, but we can’t do anything. And then literally two days later, I guess that’s when you guys got acquired or something occurred.

Matt:
Maybe April 2017. I think it was

Jeffery:
So we were, like, so excited. This is so cool. And then also, we got acquired. I’m like, Oh, man. But then obviously very happy because you guys got acquired. So it was It was really cool. But that was with one of my still existing business. But I thought that was pretty exciting. So that’s how I knew Ryan and also Adam, I think Adam… Was Adam Levine part of that Somehow, too? Or?

Matt:
Sure. Yeah, Adam, Adam is another good friend of mine. Him and Ryan are kind of like cousin-in-laws. And Adam’s a very close friend of mine. He actually helps advise ripple companies, and he and his family were an angel investor in turnstile as well.

Jeffery:
Okay, man, small world. That’s pretty cool. Even though that was like four years ago, that’s still pretty cool. So No, that’s amazing. So all great things and I’m excited. I was gonna ask you about the barefoot thing because I attempted once before. I wasn’t very successful and get very far, but it was still fun. So but always curious is you have to build up so you don’t get foot burn or just actually just happened because you’ve been walking a lot. I’m trying to understand how that one works.

Matt:
Yeah. I mean, you could walk around with bare feet for a while to get some calluses built up, but it doesn’t really hurt that much. It’s when you’re going really, really fast and you’re you’re doing it improperly. Then it starts to burn. It shouldn’t burn if you’re doing it the right way. But if you’re doing it the wrong way, you’re probably gonna burn your face before you bring your feet.

Jeffery:
I didn’t even know there was a right way.

Matt:
Yeah,

Jeffery:
if you’re standing up, it’s the right way.

Matt:
It Yeah, yeah (inaudible)

Jeffery:
Interesting to know that. So I’ll try that next time. Noted noted. So if we go back to your RBC days, you obviously did a lot of different things inside of the RBC. But one of the things that was really interesting is that because you take the experience you had in the capital markets, you take the experience that you had on the trading desk, how much of that really benefited you today? While you’re making these investments in companies? It’s a whole different perspective, right? So did it carry through and really benefits you? Or is it something that you had to learn working with startup?

Matt:
I think it definitely benefited me in a couple of ways. You know, one having thick skin eyes, important part of the job you’re getting told toe f off and, a lot of bad words and, you know, no, a lot. So that’s part of the job that I’ve definitely grown a part of. Also just the ability to sell anything, to be able to do that in a very fast paced environment. Chasing deals, you know, trying to convince people to work with you really important, and then just understanding the mechanisms of capital markets. And you know, the ability to understand how to analyze a company and, you know, analyze the market and think about things that you could be blindsided by as an investor is really important. I think also understanding how companies become public is really important, even though, like, you know, majority companies don’t actually become public to understand how companies get there and how to talk, talk the talk and then walk the walk when you’re in early stage companies really important. You know, the one thing we try to really do it Ripple is try to put a strong corporate governance and structure inside the organization early on, even though they’re not ready for it necessarily. So, you know, reporting requirements, proper board meetings proper, you know, financial statements, things like that. So that when you do run into a $10 million investment check or you’re presenting to the former CTO or of Blackstone, you have the pedigree toe handle those conversations because, you know, we I had to do that with multibillion dollar hedge funds and stuff. So those things definitely help you when you’re meeting with strong investors.

Jeffery:
I will already agree with that, especially when you’re sitting in those meetings early stage. It might be your first company, and you’re getting hit with hard questions and you know, it might be like the Teflon Don, and you just think that it doesn’t matter. It just washes off if you don’t answer correctly. But those are trying moments where you could either break a room into loving you or have them walk away and not close that deal, especially when it’s pretty impactful to your business.

Matt:
Yeah, for sure. And I think, also like because how fast paced the markets are, especially when you’re dealing with hedge funds and stuff. You know, taking the raw emotion out of decision making is really, really hard to do, but it’s really important. Fortunately, in venture, it’s a very long period of time. But it’s also a very short period of time to make a decision. You know, due diligence and time periods to close are getting compressed every single day. So you have to make a commitment for 10 years in 30 days and and having the ability to separate your raw emotions from that decision making process is really important.

Jeffery:
And how have you taken that? I guess that piece of separating that emotion out of your decision making. How have you taken that into the context again of today? Because you do have. You don’t have to make choices in 30 days or in 15 days. You’ve got some time to work with a start up and decide if you’re investing. But how do you take that emotion out where you really get into the salt? Are they really solving a problem? And is this something we can get behind?

Matt:
Yes. So we’ve really built out our due diligence process since the beginning of when we started. It continues to evolve every day, but we have, a very clear to find process when it comes to sourcing deals and how they get into our funnel and how they make their way through the funnel with pitches to associates, principles and then partners. What are the criteria we need to see, like from a quantitative point of view before we even consider this investment, like we really stick to our investment thesis and our mandate and promise we made to our LP so we don’t get distracted. So you are weeding out 99% of the stuff that you typically do see. But when you do become excited and engaged, it’s really important to get excited and want to feel the energy that the founders were bringing to the table, but also stick to the due diligence process that we’ve set out, which is, you know, building a data room, getting all the, you know, the customer interviews and the raw metrics on the business into a data set that we can work with going through technical due diligence, understanding their tech stack and the gaps in their tech architecture and infrastructure they built around them. What is their tech debt look like? Doing a lot of like background research on the team. Background checks on the team. We do have a very robust due diligence process, even for the stage we’re investing when there’s not a lot of data to go on so that we don’t let emotions sway us one way or the other.

Jeffery:
Brilliant. So and you mentioned a couple of things there that really do stand out, which is that outside of going really into your deep dive and doing technical background and doing background checks and talking with clients and really understanding thing that meat potatoes of their business, while you’re doing that, there’s some of this — the first investment you made in turnstile and then being sold it up. How much of that plays into this process is? Well, because you’ve gone through something that most startups don’t go through or you know, they may fail. They may be successful. There’s all these maybes in there, but you’ve gone through that whole kind of process. So how much of that did you layer in and say, You know what, guys? No, no, we’re not doing it that way. I lived through this process and to make this easier for them, this is what we gotta do.

Matt:
Yeah, I mean, first off, let’s understand everyone that there is no shortcuts in building a startup or venture investing. If there were shortcuts, they just be called the way. Right, like there’s no way around the work that needs to be done building a company. But I think where, like the turnstile experience and some of my other angel investments have lent a hand, is in the ability to understand the team, the dynamic and this sort of what’s motivating the founders to continue to dedicate their life to this. Like I would continuously bet on founders who are so hell bent on building something great rather than a founder who has something that’s decent but would sell it to the next buyer that came around for 10 to 20 million. I mean, I always ask Founders if I offered you $20 million for your business right now, would you sell it? And if the answer is like, yeah, I probably we would then it’s not an outcome that we’re looking for. We probably wouldn’t invest. And that’s not to say that’s wrong the wrong answer. But we just know that the law large numbers, has to come into equation here. When we’re investing, we cannot put an investment in at a $10 million valuation. And after all that dilution and esops and all that top ups you know end up with, like, a 1.2 times return, that’s not going to really work for the fund that we have to invest with limited capital and the number of chances we have to step up to the plate. So that’s really hard. Especially knowing that, like, more than 50% of the investments are not gonna be fund returns, you know, like 20-25% is gonna return the fund. So we need to go into every investment knowing that the founders are committed to building something that’s gonna be a big outcome for everyone. And so, you know, we ask people, are you in it for the salary or in it for, like, the small exit? You’re going to continue to do this? Or is this your one shot of building something massive on those experiences from turnstile? Allow me toe kind of filter through the noise a bit better, because there is no data around that.

Jeffery:
No, I agree with that. And you’re and everything. I always relate everything to experience because you got where you are today. Because of the experiences you out of the banks, you have the experience selling and by a company investing companies. And then that hopefully transfers 100% into the company’s you’re investing in or working with. So it does really cross pollinate quite a bit. And I love the fact that you really do, because of the early stage that you focus on is that you focus on that CEO, Is there any kind of outside tips you shared? A few What? Any outside tips that really, um, get you excited about how a CEO works for me? I like a CEO that’s like almost psychotic in the sense that they know this market like you wouldn’t believe and they’re pivoting and shaking and moving, and they just gotta focus. They know where they got to go. They love input from people. But they’re just like, I’ve got to go down there and, you know, how are you taking that? And what do you look to try to push and and help your CEOs with?

Matt:
Yes, so there’s two kinds of CEOs in our mind. One. There’s the technical CEO. The engineering computer science background CEO is really good at building products and getting, you know, technology built and talking the talk of what they’re actually building. But they’re really bad at the sales part of it. They’re pretty bad at recruiting sales people, obviously and operations people, and they’re pretty bad at fundraising because they’re so focused on computer science engineering type work. Then there’s the sales type of CEO. There is the one who’s really good at selling the story, really good at recruiting, really good at fundraising. But not so good in really staying focused on the business and focus on the challenges of building a product that people really want in understanding the nuances that go into that. And so when we look at the CEO, we won look at which one they are. Are you technical or you sales CEO? If your sales CEO it’s really, really important you have a technical partner at the helm with you, whether it’s your CTO co founder or VP event, someone that is your right hand man or woman in that that seat that you can really default to. And then on the technical side, if you’re the one who’s fundraising after we invest, we make sure that they bring in a strong sales type of leader to bring the sales team the fundraising, all that stuff together. Because you know you can’t have one entrepreneur that can build the product, finance, and fundraise for the product and sell the product. It’s impossible to find that, and so we wanna make sure you have all your bases covered. So we found that at the early stage, technical CEOs are good, but they lose a lot of steam because they’re really bad at fundraising and recruiting and stuff like that. So you gotta make sure you know which ones you fall into.

Jeffery:
And there’s a there’s a good off balance to like You said On the technical side, you could really tell when you’re working with a technical founder there really head into the product, and they’re forgetting that they don’t have a business until they sell. So they just really build this super amazing product or service, whatever that might be. And there’s a whole other game that they haven’t even started to tackle yet. So it does become — I think it does become something that you really gotta bring to the game for them and help them out with it. Like a lot of the times, they may know their shortcomings on that side. But it’s also great for that founder to be also at a series A Series B because those things also help you keep that focus and drive going forward. But like you said, if you don’t have a great sales team supporting it or flip that you don’t have a great product team, you’re gonna get yourself stuck in a bit of a bind when you’re trying to raise those next round’s

Matt:
Yeah, I mean, let’s be frank here. Everyone calls themselves a founder when they start the company because they are the founders. But they’re not always the CEO. And that’s something I think people just sort of default to. It’s like, Well, I’m the founder. I must be the CEO. You kind of look around the garage and they’re like, well, who wants to be a CEO? And so I’ll be a CEO. I guess that’s kind of how these companies get started. And what they soon to realize is one, the founder title can never be taken away from them, and that’s the most important title. But you have to be humble enough to understand that you may not always be a CEO of the company, and that’s okay because that rule is very specific to a specific skill set and responsibility. But some founders have a hard time letting go of that.

Jeffery:
It’s true. I was actually asked that question today on a podcast that I was on and they asked, they said, How come VCs fire CEOs all the time? Well, it’s not that it happens all the time, like it’s kind of a rarity, but most of time. As you said, you have a founder and you have ah CEO. You have a president. You have different roles that people fit in and a different times to you might go to a Series A, and that founder might not be the right tool for that time period. So there’s gonna be a bit of a shift that goes on. And I think that becomes part of the investment group like you guys, where you’re evaluating and helping them better understand their skill set and where they fit. In this in this process you’re going through? You mentioned another piece that’s really fascinating to me, which is the governing govern inside. How How do you implement this governance side at an early stage when the companies are really just trying to keep their feet underneath them? So what are the kind of little things that you could tweak or give them as tools to help them kind of build into this process as they start to grow and get up to those different series of investments?

Matt:
Yeah, So even before we invest were pretty straightforward with a lot of the founders and tell them like we’re gonna be in your business, right? We’re not gonna be just here for a quarterly board meetings or annual investor updates. We’re gonna be in your business on a day to day basis, especially in the early days, right when really a lot of the work is getting done. You’re recruiting, you’re building things like that. So we put a fractional CFO into businesses right away. If they if they need a need for financing and you know, bookkeeping and stuff like that just to take the weight off their shoulders, especially a lot of CEOs they’re not really good at that stuff. But it’s really important that you have that done properly your taxes, your filings, all that stuff. So we do that with them. We put in templates on, like reporting updates, recruiting templates. We have a lot of recruiters that we work with that could take a lot of the work off of them. It’s really about building the framework early on, so you don’t have to rebuild it later. So a lot of companies like let’s say they start on, you know, hub spot or something for their CRM or some other like kind of cheaper system. That’s great. But realize that when you eventually moved to Salesforce or something, it’s gonna cost you a lot more time and money to rebuild it somewhere else. So you might as well invest now in the infrastructure that you may not be ready for, so that by the time you end up growing into it, you’ll be way farther ahead. And so we do a lot of that sort of infrastructure building with the companies to explain to them you can’t see around the corner yet, but we have seen around the corner and other companies. And this is the important stuff that you need to do on those kind of things that we try to help our companies with.

Jeffery:
like that where you can’t see around the corner and you’re bringing that experience it and helping them and guiding them through that. That’s ah, that’s pretty awesome. And what do you find? A take is on that because you guys coming on two sides, right? You’re coming in as an investor, as in cash. But then you’re also coming in as part of your think tank. If you will or your accelerator. So is it already structured that way? That, hey, when you come in, if we make an investment, here is the things that are gonna happen. It’s already they already see this. So they’re like a team of two or a team of 10. It doesn’t matter. This is the process they’re gonna fall into or are they coming to you saying, “hey we like your money, but we’re not really into this process”.

Matt:
Yeah, so in the fund one we were doing like, pre-seed early revenue or even know revenue companies. And of the seven Canadian ones we invest in, six of them were in the tank, which worked out really well. We were very open when we were negotiating with them on, like, you know, investments. We were you know, we let 80% of the deals and fund one, so we had ah lot of say at the table when we were going through the financing conversations. So they were really excited, right? Like a lot of the companies, if they weren’t excited to work with us like, why would we even invest? So it wasn’t really like pulling them into our world. It was like, Let’s get going, Let’s get to work which worked out well, you know, companies like voice flow and synapse and pit stop and tread. You know, they’ve all moved towards series A and beyond, and it’s been great to have them a part of that journey. And going into our second fund. Now we’re doing a little bit later stage investing. We’re doing more C plus early series A investments, and those companies are just bigger and they don’t need a space as much. And they also have, ah, good structure around them. So we’re not putting the tank around them per se right now. We still have a lot of like the virtual infrastructure that we’re supporting them with. But, you know, going forward, we still see the tank playing a pretty special role in the earlier stage. companies, you know, pre-seed and stuff, at the 5 to 10 employees size.

Jeffery:
Okay, well, that makes sense. So when you wrap the tank component around it, even if you do move to later stage, as you mentioned, you’re still taking the principles behind it, so there’s still the opportunity to provide them with the resourcing or the templates or the things that are gonna help them grow regardless. So it’s not like you’re throwing it away and just saying, Hey, let’s just focus on this this aspect of it, you’re still bringing that arsenal with you, Correct?

Matt:
Totally. Yeah, that makes sense.

Jeffery:
No, that’s great. So maybe you can share a little bit about your second fund and kind of the direction you’re going, whether you mentioned a little bit about it, but maybe give us a bigger, broader picture of how that’s looking and deal flow wise, and the types of companies and verticals that you’re going after?

Matt:
Sure. Yeah. So we way kind of came up on our two year anniversary this past September. So about a year and a half into fund one, we decided that we were gonna go and raise the second fund, probably in the summer time of this past 2020 year and then covid kind of happened. Everything was on pause on, then a bunch of our investors who were really supportive of us. They liked what we were doing in fun one. And they said, You know, we think you should go out and raise a fund now, instead of waiting to take advantage of some of the dislocation in the market when everyone sort of sitting on their hands. So we went out and did a first close in our fun, too, which was great. We had tons of support from our existing investors and brought in some new strategic investors. And that was awesome, like around 13 was an investor on some other family offices. And so we went out and did our first deal, which was Rose Rocket, which was a great trucking logistics company that I’ve tracked and followed for a very long time. And so we lead their C plus bridge round, which was awesome. And then we ended up doing another deal in a Vancouver based company that’s, you know, awesome bootstrapped company that we found. So a lot of our deal flow in this fund is coming actually from outbound sourcing, not a lot of inbound sourcing, which has been great. We have some proprietary data scraping models that we’ve put together to find companies who are not actually fundraising, who are, you know, kind of flying under the radar, and we’ve just found them and reach out to them and seeing if they want to get to know us and potentially work together. And that’s how we found our first two and soon to be third investment in fund two. So the thesis for our first fund and now our second fund is the exact same. We are B two b enterprise SAAS focused investors focused on two verticals, which are workflow automation software. So taking legacy paper based industries and converting them to digital, more efficient and sort of productized business models. And then the democratization of Data Analytics platforms for the non data scientists and non developer. So those air the kind of two buckets we focus on and examples of those in our first fund would be, you know, workflow automation would be a company like Bear Health Technologies, taking, you know, manual paper based medical records and then running them through a digitization process and using machine learning and AI to build like a medical summarization for the insurance industry or the paralegal or workers comp industry or tread technologies, which is taking the, you know, very paper based construction, heavy equipment industry and turning it into a digital marketplace for the exchange of use of heavy equipment in the real estate and construction space and then in the data analytic space is like a PTO, which is basically helping e commerce companies take their existing square and stripe data or Shopify data and helping them understand insights into their data sets that they don’t typically understand, like predicting churn for them or targeting better sales efforts or marketing efforts with the data they currently have, without having to be a data scientist. Actually manage that data set so those kind of areas were focused on.

Jeffery:
No, that sounds amazing. And of these companies that are in the second round and you’re going to continue to bring in, are they still going to be on that seed stage and above, or series A? Are you gonna go to seriess A or is it still kind of unsure?

Matt:
So, no, we’re you know, we’re moving in ah, direction that we think makes sense for our investors. So in first fund, we were kind of pre seed seed second fund, you know, we decided to go a little bit later stage C plus early series A and that was really a factor of just where valuations were at the seed stage. We were seeing companies doing 250 to 500K and are getting priced at 22-40 times revenue versus companies doing 2 to $5 million in air are getting priced at, you know, five times revenue. So it just didn’t make sense for us to get the same ownership, but with a much better company. So our companies now are kind of at that seed plus early series A stage. And that’s where we’re focusing right now, because evaluations, but we do plan to still go into the pre seed early series, or early seed stage world again, maybe in future funds.

Jeffery:
Okay. There’s a little bit about you guys have a fellowship program’s as well, this is where I saw that you guys got a lot of things happen. A lot of cool things. Can you give us a breakdown of how this fellowship program works?

Matt:
Yeah, So we have we have this platform approach to venture. We’re not looking at building a venture fund. We’re looking at building a venture platform. And the platform encompassed of a couple things first off Ripple Ventures is part of a larger ripple group that I started with my best friend and partner who runs Ripple development. So Ripple developments is the real estate commercial industrial development program that we run for investors to invest in real estate. And then we have Ripple Capital, which is the early emerging manager investment vehicle, that we put money into you, some early merging managers running very small funds to get access to angel deal flow and stuff like that. And that’s predominantly my capital. To go towards that in terms of ripple ventures in our republic’s platform, we have our Ripple X fellowship program, which my colleague and principal Dominic Lau runs, which is a four months 16 we comprehensive, education program that we’ve designed to help university college students learn about venture capital while they’re still in school in their college ecosystem. And what we do is we teach them how to find companies due, diligence them, analyze them and then eventually prepare them for pitched to the partners at the end of their semester. And, it really helps us create future founders and future funders. I mean, we’ve had three or four companies go on to be accepted toe y Combinator. We’ve got over 50% people of color, over 50% women representation. So very diverse, uh, group that we have bringing into the program. We get about 200 applications of semester. We only accept 10. So it is pretty competitive. And we’ve had students all the way from all the Canadian schools to Ivy League schools like Harvard and Cornell. And then we have m i t and N Y U. And you know even smaller schools in the middle of the U. S. So it’s been a great way for building out our network, and it’s a great way for us to find new talent and potentially new companies to invest in

Jeffery:
Brilliant. I love it. And how do you — what’s the 10 people that you bring in? How do you break that down? Is it socially (inaudible)? Got into it.

Matt:
So everyone applies, so we have an application process. We actually just closed our most recent cohort. I think it’s our fifth one on Monday, so we’ll be going through the resumes and applications now on and then even if you don’t actually get accepted into the fellowship program. We still have ah community slack channel, with over 300 people in it for everyone who’s applied. But that wasn’t accepted so they could still take part in the community and share ideas and insights and angel investments and things like that. So if anyone wants and they can check it out, it’s just fellowship.rippleventures.com. You’ll be able to see all of our content we produce for free, available, and you can join the slack channel if you want, as well.

Jeffery:
Awesome. I think I want to sign up for your core. This sounds pretty exciting.

Matt:
You gotta be in school.

Jeffery:
I’m going to sign up for school that I’ll take a class so that’s cool. I know it sounds like again you guys got a nice, full system that just kind of helping work on the base and make it all the way through so that eventually that student come back. It’s brilliant. I really like that. Uh, the last question I have on this before we shift over to the rapid fire questions is Tokyo smoke.How did that work out? What does that look like? Uh, I’m a fan of them I like what he’s done. I met him a few times. A good guy. I know they sold the business. But how does this all work out and what you guys have done with them? Are you still working with then or he still invested in them? Or how did that whole process work?

Matt:
Yeah. So I met Alan Gardner, the founder of Tokyo Smoke, pretty early on in 2014. 15. He actually was one of the first customers of turnstiles WiFi marketing systems because his office, his first coffee shop, was in the same office is turnstiles. So his dad, I think, own the building. And so that very first coffee shop there was above or below our office. So every day I was there, got to see it, grab a coffee chat with them. So we started building relationships. And then when he went out to raise his first financing around, I invested in the company and then again in the next round of investment. So it worked out pretty well when they got acquired. Well, first they got acquired by Daja when public, and then they got acquired by canopy growth later on. So definitely not involved in the company at all, was just a sort of a silent investor, but know Allen for for a couple of years and it was a great guy to work with. And then, funny enough, the, uh, one of my good friends, who I met through Turnstile was ahead of the retail group at Tokyo Smoke and one of the operators at Tokyo smoke as well Mimi Lam. They actually left and then started another company called Super E which I was one of the first investors in. And that is one of the up and coming top Canadian cannabis retail brands and retail stores. That I’m really excited and passionate about, so definitely check that one out. They’ve got a couple stores in Toronto now, and one head office or head store in Ottawa that one of the first ones they opened,

Jeffery:
What’s it called?

Matt:
Super Ed

Jeffery:
I think I met her at a speaking event one time.

Matt:
Yeah, Mimi Lam and Drum in Monroe to incredible founders.

Jeffery:
Yeah, I think it was Mimi Lam. I saw her. I was at a women’s event that she was speaking at. Pretty sure that’s awesome. Very exciting So you’ve You’ve really done a lot of great things in this community, so kudos. And that’s amazing. Glad you came back to Toronto.

Matt:
Thank you. Well, I definitely lost money on Angel Investments, so I don’t shy away from talking about those so happy to explain those two people the lessons I learned from that as well. But I’ll let you carry on with the rapid fire.

Jeffery:
Oh, there’s there is lots of lessons to be learned in lots of good and horror and bad stories, right that we work through as investors. So all right, we’ll do the rapid fire questions, and then we could go back to and share. You can share one of those stories, so all right, so first question, what’s your favorite part of investing?

Matt:
Um, seeing the hard work pay off for the founders at the very end, even though they can’t see it when they’re grimacing for the few years in between. Just seeing that pure enjoyment of their hands up when they finally get that –

Jeffery:
That success? I agree. How many companies do you invest in per year?

Matt:
Hmm, probably about 6-7

Jeffery:
Perfect. Any you mentioned some vertical schools but main verticals you focus on?

Matt:
B2B Enterprise, SAAS as long as it touches the you know, enterprise. We don’t do direct to Consumer. We don’t do hardware. We don’t do anything in, like the crypto cannabis space in the fund. That’s not where we play.

Jeffery:
Okay. Do you have any due diligence requirements that you look for before you make a full commitment? Everything that has to be there.

Matt:
Yeah. So, I mean, for us, we have to see in our current fund, 500 k of minimum ARR in the business on they can have raised more than $5 million today.

Jeffery:
Okay, I like it. A timeline for investment, like one month, one week, two days?

Matt:
You mean from first meeting to close? Uh, the fastest we’ve probably done. First meeting the clothes is like it’s a 60 days, maybe 45. But I think it’s probably like if it was like an early run. Like I think when we did the voice flow one, it was probably less than 45 days. But that was like an early pre seed round. So it becomes more complicated when you go in the later stage. But pre-seed we were probably closer to 30 days.

Jeffery:
Okay? Outside of D D. You guys have the tank? So I guess that’s probably some of it. But what are the things that you do outside of just putting in fund and money?

Matt:
Yeah. So we put a lot of, like I said, structural supporter on the business, and then we helped build out their future financing strategies. So we rebuilding their entire you know, seed or series a deck for them. Build their data room with them. We run the entire fundraising process, so we have a you know, a list of over 200 VC funds that we work closely with for strategic investors and so will compile the best investors for them to meet. And then we’ll help the introductions and help them pitch those investors for future financing rounds.

Jeffery:
I love it. Do you guys lead rounds?

Matt:
Yeah. So we lead 80% of our deals and fund one. We’ve led 100% of our deals in fund two.

Jeffery:
Okay. Any preferred terms on investing that you like? Pref shares?

Matt:
We’ll tell you what we don’t like. We don’t do safes if we do convertible notes They’re always a post money convertible note, but we prefer to do priced equity rounds on bond. Yeah, we always do, like preferred shares, common shares would leave for, like, the founders and stuff.

Jeffery:
Okay, take board seats?

Matt:
Yes. Or board observer. We’re not hard pressed on taking board seats, but if we do, if we can, we do. If not, we’ll take board observer.

Jeffery:
Okay. Percentage of reinvestments?

Matt:
In companies and fund one we’ve invested in reinvested, and I believe 80% follow on

Jeffery:
High. That’s good. That’s a —

Matt:
Yeah, Well, we’ve done four series A’s and three follow on. So feeling pretty good.

Jeffery:
Brilliant. What other ones we’ve got? Any companies that you have right now that you’re working with that you want to throw it as a notable company that you want to share.

Matt:
Honestly, I think some of the most exciting cos voice flow for sure. If there is anyone who is like a hobbyist out there or looking to get into the conversational design space for Alexa Google assistant, whatever, they’re by far the top conversational design platform in the world, they produce the most amount of skills or appss for any voice speaker. Smart speaker out there, So check that out. AppDio If you’re an e commerce company or, you know, e commerce startups that are really struggling with churn analysis, they should check out AppDio. We are about to close on a podcasting platform, so I will share that with you once we’re done. But it’s one of the best high quality recording and editing podcasting platforms in the world, in the U. S. So definitely happen to share that after, if there’s any podcasters out there, I know we are. We’re podcasters. We have the tank talk, so I love it.

Jeffery:
No, that’s awesome. Yeah, would be great to know what that one is. I was talking with one of the U S. They were more of how they were converting users into getting paid —

Matt:
Advertisers?

Jeffery:
Get paid. What’s that?

Matt:
Cool, like paid advertisers or just paid?

Jeffery:
paid get to get paid in general. So —

Matt:
Cool. Like Patreon or something?

Jeffery:
Yeah, just like that. We’re waiting for more traction on them, but they were also very a little more high priced because of detect in the space that they were trying to break into. So but you know, it is still good. All right, so we’re gonna get to a couple of personal questions in a second. But one question for you that, uh, what I love to hear about is throughout this journey, of all the things you’ve been doing in the space, we always come across that one story that just blows our mind that, you know, a startup did X. She was able to overcome Y, or he was able to do this. And it just turned into a great story. Is there any heartfelt stories that you’ve got that really, uh, um would peak the audiences interest I get as if you will in in our conversation.

Matt:
Yeah. I mean, turnstile is near and dear to my heart for sure. Like Devin, right? The CEO and co founder. He went through so much help to get that company to success. You know, he had no technical skills. He had no, like, private equity venture background and just the way that he beg, borrow and steal his way through, like the early days when we had no funding. I mean, I put the first check in to get the company started. It was a lot of money for me. But it wasn’t a lot of money in the grand scheme of things to get the company where it is. And just a lot of the grit and tenacity he showed he pitched probably over 300 investors and, God knows from most of them just continue to still go through that. I mean, eventually getting the company acquired was not only a huge testament to to him and what he was able to build around him, but the amount of people’s lives he influence was just incredible. I mean, that’s why I called it Ripples as well. The ripple effect of my investment into him and then what he did to change people’s lives. I mean, we had people that came on to the team from pretty like boring, nothing backgrounds. And now they’re like leading some pretty big companies and doing some really great things in the space. And we kind of always say we want to be like a mini PayPal mafia where we all come back together again, or we all go around and do stuff, and maybe that will happen. But like, you know Ryan Freeman, now head of Door Dash Canada, incredible story for him. We’ve got some, you know, customers success people that went over to Israel and and are running some pretty cool things over there. And there’s just a lot of great things that came out of that one decision I made to support a guy like Devin and the team and to get them to the next level. And that story will just, you know, very underrated. Not many people know about it, but it just had a huge impact on my life. So that one’s near and dear to my heart.

Jeffery:
Well, it help you create everything you’re doing right now. So it’s It’s certainly, uh, pushed you that. But you all the way through, right? The learning you took from that is what you’re feeding the rest of the ecosystem with. So it’s brilliant.

Matt:
Yeah, I feel that way. Thank you.

Jeffery:
Yeah. No, it’s awesome. Great story. Okay, so next part, I learned to do this not too long ago on the podcast, which was through another podcast of the company were working with, and I thought, man this brilliant. I gotta try and open up and be a little bit more personal instead of it’s all business. So I always like to start a conversation off with one thing nobody will know about you because I feel that we always have to have something that will remember about that person. So I’m always gonna remember you as the barefoot guy. Probably like 20 years from now, I’m gonna be like I remember you. I know you can’t have your name, but you have the bare feet guy

Matt:
(inaudible)

Jeffery:
Yeah, it’s somewhere there’s brain works, so But on the other side, the personal side is that quick questions? I guess. So what’s your favorite sports team?

Matt:
I mean, I gotta go, even though it kills me with the Leafs. Just because my family had my grandfather got season tickets, The first thing he did when he came back from the war was he bought season tickets to the Leafs, and so they’ve been in my family ever since. So I got to say that just to honor him.

Jeffery:
Oh, man, that’s amazing. What I was gonna be like. I can’t hear you. Something’s not working on this. I think we’re starting down. But then you went into a better story for it and now, I actually really have to ask some questions about this. It wasn’t going to, but now I need to know. So how does it work with season tickets when your grandfather bought them post war, this is the family owned them forever at the same price he bought them at that time.

Matt:
No. The one thing they did do, which was really cool for any Toronto fans out there. So when they converted over from Maple Leaf Gardens to Air Canada Center, they allowed at the longest tenor season ticket holders to come into the building and choose the seats they wanted first. So if you were up in, like purples and may believe gardens, you were allowed and you were the longest season ticket holder, you could go into a CC and pick your first seat, which was really cool, because if you were like golds and you only had goals for like five years before they switched, you had a weight to the back of the line, so our family chose to do reds, which was like a middle of the pack kind of seat. But we had like corner reds, and it’s just a great experience for the family. So me and my brothers, we all split them just to kind of honor my grandfather and and to give the kids a tradition that we had growing up his kids.

Jeffery:
Really? And the red feats are actually pretty damn good. I’m sorry, but gold. I really don’t like to see this right here the play

Matt:
Terrible

Jeffery:
Who likes watching a game like that. I’d rather be up here looking at the game, not hey, I wonder what he’s doing.

Matt:
Exactly. What? Yeah,

Jeffery:
it’s brilliant. Good choice. Alright. Favorite movie. And what character would you play in that movie?

Matt:
Oh, man, A like a stupid answer has gotta be like Matthew McConaughey and dazed, confused, uh, just cause, like, he’s so out there and just having the best time. Yeah, I don’t even know that answer. That’s good. That’s good. Sometimes, though, like when I really feel feel like a little bit like, you know, I want to get out of this world sometimes into the wilderness.

Jeffery:
Uh, its a great one

Matt:
yeah, it kind of makes you put everything in perspective someday. So I don’t really have ah movie that stands out forever. But those were a couple

Jeffery:
all right man. That was brilliant. I liked it. Both are good movies, good choices. I might actually have to go watch one of them again. It’s good. I’ve actually been getting some really good insights into movies from the fifties and a whole bunch of things all over the place once I haven’t seen. And once I got a look at, so these were good. I’m gonna have to—-

Matt:
Into the wild, Into the Wild.

Jeffery:
Into the wild is a good one. Yep I like that. Well, I think, Matthew, that comes to the end of our time. I want to thank you very much for all your insights as I always do. It took lots of notes and I’m a big fan. I appreciate all the information you shared. And the last thing that you like you and in all of our events of podcast is that I like to give you the last word. Anything you want to share to a startup or to an investor, the floor is yours. But again, thank you for joining us today.

Matt:
Yeah, I’d say is, you know, never judge a book by its cover. You never know where founders come from and where they had to get to where they are to be able to even take the opportunity to pitch to you. So, you know, be humble, let someone pitched you. And if they have made some mistakes, you can give them constructive feedback. But don’t knock the mother down. They’re really trying their best here on. It’s really important for you to understand the context of where founders come from. So I always like to ask them to tell me, like, why they want to dedicate their lives to working on a project, not just like, how much money are you looking for? And why should I give it to you on? I think that’s really important. So just make sure you know that when you’re meeting with founders these days.

Jeffery:
I love it the open minded and give everybody the time of day because they all deserve it. Well, come from awesome, Matt. Well, great advice. Great feedback again. Thank you very much for coming on today, and we’re gonna update you and let you know when everything is ready to go. But again, appreciate your time.

Matt:
Thanks very much. Thanks for having me, Jeff. Take care. Jeff: All that was brilliant, man. Matt and the team. Those guys were doing a ton of stuff. So many notes, a big fan of everything that they’re doing. They really built up a great strong community of way of helping founders. They’re on their second fund, as they mentioned on I. I really love the fact they talked about. There’s no shortcuts to building a company. Doesn’t matter how you look at it, how you skin the cat. There’s a process that you’ve got to go through, and they’ve structured a nice way of doing it. So I really liked how he built that out. Great, that we’ve got some great connections that we’ve crossed paths at some point in time on just love the background and everything these guys have done. So it was great chatting with them and just to his his last words as an investor give people the the time listen to what they have to say, see where they’re coming from and where they’re going and seeing if you can give them just a little bit of a nugget of help. And that could make a world of difference for that start up. But at the end, thank you everybody for joining us.

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