Partner at Digital Horizon VC
Vlad Tropko | Partner at Digital Horizon VC

"95% of the founders fail because of the psychology"

- Vlad Tropko

Vlad Tropko on how VCs work

Talk Takeaways

Vlad Tropko, the managing director of Digital Horizon VC, joins (JP) Jeffery Potvin to share his perspective on how VCs work. He shared great insights on board compositions, board roles, and venture builders. He also talked us through what VCs look for in a company. Market size, traction, team valuation, and founder ownership are key identifiers if the company will make a good investment. He also shared his investment process and how Digital Horizon VC helps startups.

About

Vlad Tropko is the managing director of Digital Horizon VC, focused on immigrant founders who established startups across Europe and Israel. Vlad has 15+ years of experience in investments and has closed more than 30 deals, 6 exits, incl. 2 unicorns (Quantenna, Zipline)

The full #OPNAskAnAngel talk

Jeffery:
Welcome let’s get started. We’re gonna jump right into this just kind of as we as we normally do but welcome to Supporters Fund ask an angel. I’m your host jeffrey pavin and let’s welcome our investor today which is Vlad Tropko and you are in Russia. So i’m going to say thank you very much for joining us today very excited to dive in and um welcome.

Vlad:
Yeah. Jeffrey thank you, thank you very much for having me her and it would be it’s my pleasure to chat here

Jeffery:
I like it. well the way we like to start vlad is if you could share a little bit about your background and there’s a lot of great things in there and i know we’ve chatted a bunch of times so i’m excited to kind of dive into this but share a little bit about your background kind of where you’re at today and then one thing about you that nobody would know

Vlad:
Thank you thank you jeffrey. So uh, I was born at siberia. And after and when and grew in moscow. So and after i finished my economical degree, i started to be investor. So for the whole my life i i was a professional life i was an investor. So i started in to work in a couple of family offices and investment companies and was focused on acquiring mining companies some some airlines companies etc etc but after the market crash in 2008 i moved to the to the russian fund which is for which was focused on gross technology investments. So and from that time from 2008 i started my career in high-tech investments. So during that tenure i invested in couple of companies which are large right now. So for example i invested as a growth stage investor in company called quantana which was a silicon valley based company backed by sequoia and a bunch of other VCs and it was sold for 1.2 billion around three years ago. And well while i was writing the checks of gross gross investor you know 20-30 million bucks i started to feel that i wish to be part of this uh family of investors so in and right and i started to invest my own capital as a business angel. So around seven years ago i started to write my my personal checks and one of the my my best deals for now this company called Zipline. It’s a drone delivery company, it’s helping and saving lives around the globe. And and right now they’re they they were starting their activity
in Africa in in rwanda and ghana Now they’re moving back and and probably until end of this year they will start providing they will deliver a COVID fact signs around the US. As well so and from that time i decided to be focused personallyas a business angel on social impact and happiness startups so so when doing doing this currently so and and around three years ago i moved from the from previous funds to my current fund and where i am partner, a fund called Digital Horizon. We are focused on fintech and b2b software companies in on A-rounds mainly in europe and israel and we love to invest into immigrant founders. We are truly significant part of our team are immigrants, so and we love to invest in the immigrant because we see them they have a mojo and willingness to to build something big.

Jeffery:
i love it! That’s a great initiative and an awesome background and we’re going to dive into some of that shortly before we do one thing about you that nobody would know.

Vlad:
Probably the most of people don’t know that i was born in Siberia, in one of the coldest places in the world. So in in the winter and at place where i grew, it was minus 42 celsius. so it’s it was quite cold and it was very interesting to go into the school on winter. So that’s —

Jeffery:
Well that is pretty fascinating and i can just imagine the uh those cold walks to school in the morning i grew up up north where it would get cold and lots of snow but it certainly didn’t hit -42 so uh that’s pretty uh pretty exciting but i know that uh in a lot of rural areas in siberia too it’s very communal based so it’s a lot of community helping each other out is that is that a fair assessment?

Vlad:
yeah yeah yeah it’s true it’s true so you know in such a tough environment you could not live alone so it’s very it’s very community based type of environment there. People they’re ready to help each other and that’s how they live through tough times.

Jeffrey:
well we’re going to bring that back one back to your uh your investment theories but before i do that but i’m going to try this new segment this is going to be something a little bit before we get to rapid fire questions around the business side. i have some other ones that i wanted to add in and the
the questions are going to be really basic to kind of get things going so they’re uh a new new thing we’re trying something different here all right so

Vlad:
Sure

Jeffery:
First question is book or movie? Pick one or the other?

Vlad:
A book or a movie?

Jeffery:
Yeah. Which one would you take?

Vlad:
right right now movie

Jeffery:
All right. Sport. To play a sport or a board game?

Vlad:
Play sport

Jeffery:
Okay. Tech. invest in tech or cpg?

Vlad:
Invest in tech

Jeffery:
Unicorn or a five-year exit ?uh

Vlad:
Let’s put unicorn here but it’s it’s tough question because you don’t know the return on in both directions.

Jeffery:
Yeah exactly exactly that’s why they’re called unicorns. Founder or co-founders?

Vlad:
Co-founders

Jeffery:
Brand or tech? Would you go for a big brand something that’s building a brand or someone that’s building tech and doesn’t have a brand yet?

Vlad:
Tech. Tech for now

Jeffery:
AI or blockchain?

Vlad:
AI

Jeffery:
first time founder or second or third time founder?

Vlad:
I would not block the first time founder but definitely if the price is reasonable would take a second, third, fourth time founder

Jeffery:
First money in or series A?

Vlad:
We are series A

Jeffery:
Okay. Very cool. All right those are a good starting point, very good starting point. Trying something more rapid fire and a way to break the ice but i like that you’ve got way better questions

Vlad:
And by the way if we’re returning to the last question it’s funny but uh sometimes i feel that i have uh uh two people inside of my first person because as an angel i could be a first money, but as a VC i have to be around A and be focused on around A guy

Jeffery:
No that makes sense. Totally. So to kind of go back a little bit and we’re going to shift back in time to
on your profile side what i love about kind of where you’ve come vlad and the things that you’ve done is that you’ve been purely focused the entire time in your whole career on investing. And investing in seriesA or even early stage and up so i think from all the things in the materials that i’ve read and learned excluding the stuff that was in russian that i couldn’t understand but i wish i could because it would have been interesting a lot of it goes back to i think pigeonholing yourself as an investor and going down this funnel that you’ve always been in and investing in things that are comfortable And i think you try to get people to say hey stop investing in what’s comfortable and start looking at things that aren’t comfortable and start kind of taking your view and opening it up a little bit more so if we go back to being born in siberia and all the things that you’ve done in the investing side really based around community you’ve started to invest and look at only investing in immigrant founders so you really are so focused around this community based how much of this learning came from that early stage investing when you first started working in this realm what types of things did you learn about it maybe there’s one or five things that really stand out the most but what things did you learn about founders and how they run their companies that got you to today only looking at this certain vertical there were there some big instances that occurred back in time that really shaped the way you wanted to invest

Vlad:
Yeah yeah yeah. So the first point is that 95% of the founders fail because of the psychology. So they they they didn’t choose the right job or or they they can’t agree about something with the co-founders of the or or the investors and there and from my side if we’re speaking about precedence he then maybe sometimes around a psychology is the key differentiator and and key topic to to think about uh founders. And the and and that’s why i like to to to chat with my with my wife about each of the founders and she she’s assessing sometimes those guys. She’s a psychologist and you know there are a lot of founders but only the the most focused in most and energetic guys who could build something big. So and uh and it gives its moves to the second stage so we are speaking about the immigrant founders, i think uh i as i said a lot of my friends are immigrants so they’re immigrants in Canada, US, Israel uh UK et cetera so when i see and i saw how they how they try to find their way you know and how hard it was. So that’s why for example uh one of my key learnings here is that you could not start your new company in an area uh before you solve all your your common problems uh so and it will take two to three years from from your immigration process. Because you have to your child should go to school to write school your wife should be should be happy et cetera et cetera. So and uh that’s another another point so that’s only after a couple of years of living in the current environment you can start your new company not you could not start started before. If i speaking about the first time founders versus second third etc founders i really i really like both but the key question is valuation. So and i recently was a couple of times was burned by high valuation but still the the founders were so incredible that they grew more money with the higher valuation very rapidly so and on couple of deals i passed only because of the valuation and the now i call this uh sometimes valuations are high and it’s it’s reasonable high, reasonably high. So in the if it could be on even around A, it could be 30 to 50 million but those companies can grow rapidly to couple of billions easily. And then and some of them show it to me but if i speak about the first 10 founders most of them could not grow so fast they don’t have experience but if we’re speaking about the fourth point i really like the file the the first time founders which find their gray hair mentors. so it’s some sort of tandem between gray hair let’s say mentor or coo and and and ceo and founder which is bright enough and very powerful. uh you can you can look on facebook with mark and and and his ceo or etc so there are a lot of such tandems on the market right now and or or eric schmidt with the google co-founders so et cetera et cetera and some sometimes uh those guys will appear on A round sometimes earlier but i really like when they come to the to the board, to the management board or the board of directors and it’s it’s funny to see this kind of situation oftenly in the uk and in the uk it’s quite common that the grey hair guys are independent board directors. So and i i really like it and it’s it’s uncommon in the US but in uk it’s it’s quite standard when the you know 50 plus uh or 45 plus uh person with the two three four uh companies uh under his hood is joining the board and helps with operations and with the part with all this kind of uh paranoic stuff and uh and all the problems of the young founders which just don’t have enough experience. So probably this this are there are four points which i learned from my experience.

Jeffery:
Can you explain a bit more what you mean by independent board seat versus a standard board seat? That would be taking place say in a in a normal i’m assuming you’re talking from series a and above once the board is created is there any other structures that your that you guys look for from a VC perspective on putting people on board seats, is there a whole different um look do you like to reshuffle boards when it comes to a series A if a board has already been created maybe we can dive a little bit more into that because i think this is always the fear of any founder is that when they start working with a vc that VCs come in and want to change their world change the board up and then take over the company and there’s this big fear of i’m going to lose my company once i go to vc world. Maybe we can talk a little bit about that as next steps

Vlad:
Yeah yeah i agree. So if i speak in general mainly on A rounds the founders are still still have a controlling stakes of more than 50 percent. So in this case it would be tough to any investor to take out there any kind of founders. But if if there were not diluted significantly previously. So but but in general if you are speaking about the board composition as always most of the board investors are investors in the company so the representative of the file of the VC funds in UK, it’s quite common that a company is hiring independent board chairman and then and instead of just you know visiting company you know one time per quarter or one time per month this particular person is is helping in a day day job to the founder he’s mentoring him or her oh and he is helping uh to build relations with the with the VC funds of or with the employees. Because they know how how those kind of operations are doing. And that’s why i like this kind of approach. Because there are there are lack of founders who build it really scalable and big companies. but people who don’t want to be operator anymore but can help significantly help without any kind of restrictions it’s it’s it’s a good point from from my perspective i really like when those people are also investing into this company. So personal personal money and uh because it’s it’s i always uh propose to any founder to if they wish to bring on board any kind of advisor not to pay him but but ask to er to put his advisory money into into the company. So as a somehow so and it’s it’s a really good point because any any advisor would be much more useful if he has a skin in the game.

Jeffery:
And is it common or true that sometimes you’ll have an independent board seat that won’t be an investor in the meeting into the bor into the company, specifically so that they can push against and they don’t have as much waiting or is it always that you want to make sure that everybody on the board has heavily invested in the company?

Vlad:
Some again sometimes it happens when when there are some some some people without investments but on A rounds it’s quite uncommon i would say okay and i think that’s good because as you mentioned when you have skin in the game you have more reason to push and ensure that the business moves in the right direction so everybody should be well vested by the time it gets to a series A exactly and how common is it where you see in the news you’ll see it a couple times where the CEO has been outed by the board and things like that how often do you see this and is it something that is common or only because the media pushes it that it seems common that um and we can kind of break the barriers here so that founders don’t have this fear that when you’re raising funds and you’re going to venture capitalists that when you get to that stage that you know find the right investors to invest in your company but just know that they’re there to protect their interests your interest the company’s interest and all of the investors at the same time so there’s an equal balance of supporting this and it’s not always looked upon that they’re trying to take you out as a founder yeah from my perspective uh the media is trying to you know to increase the scandals and the number of scandals are around the VC and then again from from another point of view most of those scandals are having are taking place in on the in this park so which which are just recently grow significantly so and and and as always when there are there is a huge demand on some some instrument like sparks it should be some uh some jeffrey meadows a guy who who are trying to trick this this kind of topic uh if i’m speaking about the a rounds or seed rounds i don’t see a lot of audits from the board of directors sometimes it’s happened but it’s quite uncommon but in any case uh during the new round each of the new investors more in most cases if we’re speaking about b or c rounds. Investors are asking for financial and legal due diligence just just a general one and we will also are not speaking about any kind of uh any kind of harassment or etc because the the whistleblowers sometimes and you have to make tough decisions on the board even earlier or later of the life cycle of the company

Jeffery:
Which i think is a a great segue into taking the this type of learning and why you create a board to help form from a fiduciary responsibility and the governance around the business can you maybe give the listeners a little bit of an understanding of the types of problems that people would face in a board in a series A or series B company? What are the kind of things that you may not think could come about that do get tabled and have to be resolved and can create a lot of panic and can create also maybe dissidents where people just don’t want to be part of the company or find that things are going in the wrong direction, is there maybe you can give us a couple pointers or some use case ideas just to explain the types of things that you’ll face once you start to grow your company?

Vlad:
Sure sure so the most common discussions which we have on board is how to grow. So and should we fire the whole or the whole our money and grow as fast as possible or should we do it a little bit steadily and on A round you you’re not sure because most of your your clients are just you know on A Rounds probably you’ll have around 1 million. So uh it would not be a lot of customers so who are using you and you have to choose right direction where you where you should spend your money and then hire the right people. So the there is a key question which we have should we grow fast or should we steadily build the product and continue iterating? And each direct in each company we’re choosing the different it could be different solutions. Another point as always is hiring so if we’re speaking again it’s subject to growth but or product building but should we uh so priorly a round b we should we have to hire more senior level guys. Probably it could be chief marketing officer chief biz dev officer etc sometimes even cto or chief engineering etc. So and uh to be ready for to the scale of the b round you have to uh to build your you you have to start building your operation operations as well because sometimes if the if the growth occur but the operations is not so good it can crash in a company from inside because just uh customer success doesn’t have enough uh power to to work with with so many number of clients etc etc so uh another point could be that speed hike and fundraising again so when we should go and fundraise should it be do we should we put any kind of uh KPIs and and have a north star of the of those and then subject to to achieving them go and fundraise or should should the founder take some time to chat with the with the uh possible investors during the time after the round. It’s all it is quite often questions from the founders, founders asking for for mentorship about this, because uh you know after any any announcement of your A or seed round it would be a lot of people who will come and uh and ask you for some time to chat about the future and the current situation and the founders have to build the product at that time so you know this kind of balance between the fundraising and from one side and then the product building uh it’s it is quite tough and and people just don’t have more than 24 hours in a day

Jeffery:
And how frequently do you have board meetings at a series a level is it that’s in series b is it quarterly is it monthly weekly?

Vlad:
In most cases on c level and a rounds uh we would have a monthly meetings, on the b rounds it’s moving to to the quarter meetings mainly, but sometimes if the if the company is in crisis then we could we could have a chat once per one or two weeks.

Jeffery:
Okay so you guys kind of move based on how the company’s working and what they’re going through at the time?

Vlad:
yeah

Jeffery:
so in there like on any board and once you start setting up a board in an earlier stage you know you’re getting treasurers and um you have all these different roles that you kind of fill at the beginning from a secretary board chair is there any specific spot that you like to fit in? do you use because you’ve been investing for a long time and working as a VC do you take a board seat and come in as a treasurer or do you try to push that to maybe a CFO style type person is there recommendations that you have and how does a startup even though they’re at a series A? How do they make sure that the right people are in that board supporting them and not supporting themselves or breaking out to support some other initiatives is there certain ways that startups can board the build these boards early on that become very supportive of their direction and supporting of the growth of their company?

Vlad:
So i personally helped a lot with the fundraising and with the business development because i know i know a lot of funds and angels and and advisors and corporates. So i just and i and my idea is that i open the doors and the founder could choose. Which door he will need say my approach. If i speak if i speaking about board and board composition it’s it’s it’s quite hard question and my suggestion would be uh to ask the investor and receive some uh suffrage some references on him on her. So and it’s it’s worked quite well and right now i i recently asked my founders what they’re thinking about me and and they sent me a lot of good quotes so and i think any investor should have couple of founders uh which which gives him gives him those kind of quotes and they could chat with the with other founders and and say pluses and minuses pro and cons of the particular person. Because you know on a round it’s it’s uh it’s a journey with the 8-10 years time frame so and you it’s it’s on average it’s even longer than the average right right now in marriage right now. So it’s you have to think uh carefully about those people who will be on your board and who will be your investors and i know that a lot of uh my my first check companies they’re sometimes asking me that i i’m russians for example but right now a lot of my founders who are not russian and they they could give a lot of sense to the — and a lot of idea how i can help outside. So in Europe or US so and that’s the case.

Jeffery:
No that’s great and it’s it’s also good to know that when a company is building their boards they can look for outside experience, and bring in that experience and in your case bring somebody in that’s in other countries where they may choose to expand their product and their offering so they have someone that can head up in that market and that brings a lot of value back to that board seat as well.

Vlad:
Yep

Jeffery:
no that’s great and i find that once that first money gets in and you start to build up this board it becomes very important to the company. Again not just from a fiducial stand standpoint but just in general that the founder now has a team of coaches that can benefit and help them grow and i think sometimes maybe founders forget that that is important to the potential growth and if they get into that right away at the early stage speaking to these this group that as this grows they’re going to be able to work through more problems quicker and faster and those problems as you alluded to they can be anything from growth sales it could be from being sued there could be a lot of things that take place in a business that we don’t expect to ever happen. Patent infringements you name it and then you end up having to deal with those and having that sound board of people that have been there done that and gone through these can really help you move through this ecosystem a lot quicker, faster. And as you said you might be doing this on a weekly basis depending on how crazy things are going and you might be meeting weekly with the founders in your board meetings.

Vlad:
Yep yeah exactly

Jeffery:
No that’s valuable and great information too. So now what types of things as a VC in the stage that you’re coming in at and again not from the angel side because that’s a lot earlier in a whole different mindset like you mentioned but from a vc standpoint it’s not i’m not going to say that it’s not common or uncommon that vcs will go in earlier stages but let’s just say that most venture capitalists tend to look at that seven five to seven year exit window so they come in at a series a that seems to be where they play the best they want to come in be aggressive make their investment and go forward, what types of things do you look for in a series A company that you feel really fits the criteria outside of being an immigrant based founder what other things really do you put emphasis on is there like a top five list of they have to be able to hit this number, they have to have this many employees, uh like is there a certain structure that will get you to at least at the table and then is there other things that kind of put you over the edge and get you to
invest?

Vlad:
Sure so if you’re speaking about the list of main let’s say qualification list. yeah so first we’re looking into the size of the market for the product so it should be quite significant. and in most cases we are we i would say some some in some sense we’re conservative investors so we we do not invest into the uh into the markets which which are not uh which are not uh yet here, i would say. so and those markets if we’re speaking about the market size it should be minimum 500 million bucks uh a year. So it should be sizeable to build some sizable company and this market should grow and not decline. So the rate of the growth could be different but but still it should grow second point is the traction of the company so on air
we don’t like to invest into the company without revenue so we are mostly focused on company with the uh with 700 or 1 million ar or even higher. The idea underneath this is to avoid technical mistakes so we don’t want to spend a lot of time on technology due diligence, and if there are several customers who are paying for the services this uh this shows us that uh that the product is here so any and you just need to figure out how to sell it and just help to find right people to to build this kind of funnel to the sales. Third point is is the team it’s it’s not you cannot quantify this but you have to look on the founders and in the sea level guys so are they uh are they first time founders or second time yeah what kind of architecture did they build inside of the i really like to to chat with the founders about the culture, so in what kind of culture do they have inside of the company because sometimes sometimes yeah they’re you could have quite bad culture in three to five years it could you could have a lot of problems with the with the growth and hiring. Number four would be validation, you can calculate it quite easily and it’s for me it’s in most cases it would be easy pass if i see on a round foliation of something like 10 million or 100 million premium valuation in both cases it’s something wrong here. So additional point is the the size of the round and if again it’s it’s really depends from the from industry to industry because if you right now look on on the grocery delivery you will see that after one year company is raising i don’t know 1 billion with the 6 billion post money valuation. It’s from my perspective it’s it’s still a little bit crazy but we see they are ready for this and they wish to scale it fast and they understand that the founders should not be diluted significantly. And by the way if we should move to the last point for now about the founders stake uh on on air rounds it should not it should not be lower than 50% if i see that below 50% it mainly a red flag for me because uh if on after a round they have such a small stake then after two or three rounds more they would be somewhere around i don’t know 10 to 15 percent and that would not be sizable enough to to build really big a big company in most cases it’s mean that they will be ready to sell the company for a couple of hundreds and then do it faster and to start build the next one, next company which they where they will have a much bigger stake, and earn much more money.

Jeffery:
Well that’s a good point and i i like that uh way of thinking and do all VCs think this way at a a series a like are they all trying to ensure that their founders have a significant stake in the company even at that series A or does some of them look at it as a potential takeout if they can see them owning and running and operating this company?

Vlad:
So sometimes i’m i’m seeing that in recently it’s new and quite uncommon situations when it appears when venture builders can come to the place in venture builder uh company after after the venture builder most of the followers have only around 25% – 30% pre-order A round but and sometimes i’m seeing the situations where the uh quite standard A round investors decide to cancel those founders, sometimes i i saw that uh if the growth the growth of the company is very high VC could could accept even small stake of the founders. But the venture builder model is still quite uncommon so there are a lot not a lot of venture builders but it’s interesting to see and the evolution of those later on. The idea i don’t know just just uh to give you an idea that the idea of for venture builders is to give some sort of safety place for the founders they will earn the salary like incorporation, corporates, and have a 20 30 percent stake so yeah if they fail they still their childs will still go to the school so when they don’t have and this this kind of salary will still pay the mortgage.

Jeffery:
Okay. Nope that’s interesting. Well so some more uh great points there. And i guess the last question before we jump into more of the rapid fire questions that i have is that throughout the journey that you’ve been working in the angel and VC space do you have a preference that what you like better do you like the high risk and going in as an angel or or do you find that’s more of a feeder to your real meat and potatoes of being a VC that you know you’re kind of eating the risk and hoping that they’ll get to that series A but you really love coming in at a series a because you’ve got a lot of great successful companies that you’ve had grow and build up so do you find that you play better in that series A and above world that you find that that risk level is just a really good position for where you like to invest?

Vlad:
yeah you know i really like both. So and but but the risk profile for both are different. So i’m still quite aggressive but aggressive and conservative if if i may say tell this mainly i could not invest in the the markets which are which are not here right now so but but on on agile perspective i i’m fine to take this risk if i believe in the team. So on angel perspective i’m looking on into the mainly two aspects the size of the market and more possible market and the team. The product will change a lot through this lifecycle so on.And on a rounds i don’t think that i’m sure that it would be lack of pivot on i’m trying to avoid pivots after a round even before i’m i i really like when the founders make a pivots before A rounds because it’s it gives me a sense of that they are they know they can learn and and make right decisions sometimes it’s take time but but again in from the general perspective i like when the founders are ready for four people quite early. So if we’re speaking about the A rounds i like what i’m doing and it’s it’s fascinating me is to invest into this stage and help to followers to make it’s it’s just a little bit another type of decisions where which founders have do on the A round rather than (inaudible)

Jeffery:
Now those are all great points and i love that you shared a little bit about the things that you look for from an angel side around team and marketing because the rest of the things will fit in. Where you have to scrutinize a lot more as you mentioned on the VC series a side where you kind of have six things that you really look for and focus on and i think those are all very uh very valid. Is there and i guess i’ll i’ll ask one last question in this whole space is there i guess in the end goal for you is that you’re looking to have an exit, we talk about unicorns we talk about the potential of companies going all the way, in the ways that you validate from an angel and from a VC side do you have your mind set on always looking and trying to find that unicorn in any company you pick? Or do you look at companies and say this company’s got as you mentioned they’re sitting in a 500 billion dollar market they’re probably going to exit in eight years and they’re going to exit at this amount and that’s your target that’s what you’re going for they’re not really looking for unicorns if they happen to go further than amazing that’s just a value add but you’re really focused on more of that call it um one step below unicorn and that’s kind of your goal is that you’re trying to look for companies that just can grow big fit into a market and be taken out at some point?

Vlad:
So as a VC i am focused on companies which can grow in in 10 times if in accordance to valuation let’s say from the entry point. So for us it’s mean that if if we entered the company with 85 million valuation let’s say post money then then they should grow only for until 150 million. And and for us it’s fine so after this we can we can sell or if we were part of the rocket ship to continue our journey so but in general if our approach is to look tantanics everywhere and if we will see that the company continue growing and steadily growing we will continue uh help them with them with the follow-on financing.

Jeffery:
Nope that’s great i love it 10x that’s uh that’s a good number to strive for and it keeps you sane and not shooting just for unicorns

Vlad:
Yeah yeah exactly so unicorns it’s a great marketing trick but you should earn your money quite fast.

Jeffery:
Agreed and i think founders and everybody can be reasonable on the fact that if you’re looking for a 10x exit but that’s a reasonable growth period and just like anything else that you try to build in 10x you’re going to do all the right things to move that company in that direction because it’s important that you guys support them and you work through the ecosystem the community side and build that company up to get to a 10x and i think that’s reasonable.

Vlad:
Yeah yeah exactly and what i’m seeing recently that a lot of great companies new possibilities on the on the market is coming from my founders so they they bring me a new deals and you know i i like the the wording of pay it forward so because we help someone sometimes later they they could pay back him somehow you never know how and it doesn’t matter am i a board member or just pure investor in in all the companies it’s just a way of thinking to give the opportunities to the founders

Jeffery:
well i like it in one of our recent companies that is going to the markets in two weeks the founder would always remind me from the past and all the way through the journey over the six years that we’ve been with them always said to me that i’m working hard to make sure that i bring my investors at 10x that’s what you always would say. And uh i i like that i felt that was a very respectable number and that his goal was to continue to do that and uh they’ve succeeded quite well so it’s it’s a good thing i think as long as the back your mind from a venture capital or from an angel perspective is that you have to have targets and goals on each side and hopefully you could meet in the middle on all of them.

Vlad
yeah yeah exactly

Jeffery:
very cool all right we’re going to transition now into uh our rapid fire questions but just before we do I always like to ask one kind of question around in the journey of all of these things you’ve been doing in the vc angel world is there one story that really stands out that you can share about one early stage company if she or he just blew your mind when what they took to be an entrepreneur just kind of the not so much always the struggles but just some example or an example of what they had to go through that just kind of really blew your mind that this is what it takes to be an entrepreneur and this is why you’re excited to be a vc and investing in these types of people because they’ve just got resilience and drive and passion and it just blew your mind what they had to go through is there any type of story that pops up in your mind around that?

Vlad:
So i recently heard the story about the the founders, the lady she was pregnant during the fundraising, and i was amazed that a lot of VCs cancel meetings or decide not to invest in into the into her business only because she was pregnant. Another story i will i heard that it was a man and lady which which were married and one of the reasons why they didn’t raise my a lot of capital was that they were family so and the they were co-founders and uh and it was one of the risk for a VC but the funny story by the way if about the families is the i heard story about one israel company where the co-founders are mother and son. And in in jewish communities it’s like a legend.

Jeffery:
I can imagine i work with a company that is exactly that it’s uh mother and son and they’re fantastic. amazing people do they do a fantastic job. So i think that sometimes our biases get in the way of where something is going and the potential of what something can be because we think that there’s problems that oh they’re too close or they could have other issues but i think at the long along the journey as long as you can understand who they are what they’re about and what their common goal is i think it actually can be a real positive to have people in the same family or people part of the same relations that they can build a company and grow successfully.

Vlad:
Yeah i agree i i researching a lot the biases of VCs and angels and founders and when we can chat for for a couple of hours about biases of of each of them so yeah and i i fully agree that it’s they’re not helping to the to any any side of this equation.

Jeffery:
Not at all not at all uh okay so rapid fire questions we’ll start. What is your favorite part of investing?

Vlad:
i think close closing the deal. The the first deal i mean the first investment

Jeffery:
I like it how many companies do you invest in per year?

Vlad:
From five to ten

Jeffery:
okay brilliant any verticals you like to focus on?

Vlad:
Fintech b2b software, social impact,

Jeffery:
Social impacts’ good. Do you like to lead rounds?

Vlad:
Mostly we are followers and we are investors okay some sometimes rarely whether we are in grounds

Jeffery:
Okay any preferred terms prep shares safes common

Vlad:
Any anything quite quite standard approach equity preferred stocks and sometimes we’re ready for convertibles or saves okay if you’re speaking about the british round

Jeffery:
Okay. Do you do follow on investments?

Vlad:
Yep we what is your for additional capital, for follow ons for for each of our investments

Jeffery:
Okay. Board seats?

Vlad:
Mostly observer seats or or or we don’t have any sheets if we have investments a small piece of the round

Jeffery:
Okay and final question uh do you have a minimum or a maximum that you choose to invest?

Vlad:
From if i speaking about VC it’s from half a million to 2.5 million per deal and we reserved for additional up to 5 million in follow ons

Jeffery:
Brilliant. i love it. All right that was good okay now we’re gonna ask some quick personal questions

Vlad:
cool

Jeffery:
All right what is your favorite sports team?

Vlad:
Liverpool football club from liverpool

Jeffery:
all right

Vlad:
yeah it’s the uk soccer team

Jeffery:
Yeah premier league yeah yeah the english premiere that they’re good, they’re good. i’m an arsenal fan so but i do like i do like liverpool they’ve got a strong team they’ve got some pretty fantastic players.

Vlad:
Yeah hopefully arsenal will be sold to Daniel Ack

Jeffery:
Soon. Well Arsenal has a few things they need to make changes on but we’ll uh that could be like another three four hour conversation. So all right so favorite movie and what character would you play in the movie?

Vlad:
Favorite movie, i think it was it’s batman. One of one of the batman’s and what was the second question?

Jeffery:
Which character would you play

Vlad:
Batman of course

Jeffery:
i like it, i like it. That’s good. All right, what is your superpower?

Vlad:
i know how to find any people in the world and and chat with him or her. So and i know networking is my superpower

Jeffery:
i like that. i don’t think anybody has uh answered with that as their answer so that’s brilliant. i’m going to come to you now for everything i need to do on the networking side.

Vlad:
It was a funny story a couple of years ago i asked one of my my friends to to tell me to find any people in the world i was trying to test this kind of superpower, and we at that moment we were in moscow and she was she asked me to find the c level guy in a canadian tv station or something like this i find for her

Jeffery:
Nice. Well now i’m thinking in my brain there’s a few people i need to find so i’m going to rack my brain and come back to you on this one. But either way vlad, i want to thank you very much for joining us today as i always do i take lots of notes i’m a big fan thank you very much for all of your time today and for sharing. Lots of learnings and but the way we like to end our show is we like to leave you with the last word so anything that you want to share to the startup community or to investors i leave it and turn it over to you but thank you again for all your time today

Vlad:
Thank you jeffrey for having me here and it was a real pleasure so and if i speaking to the founders i think just just work hard and and find a way and and build a great product. it’s it’s too uh standard but still interesting words which i should tell to any founders and i would i would be pleasure to to chat with any of you so and then could help to anyone uh if i can if i can help somehow.

Jeffery:
Awesome well we’re gonna make sure we share this out to everybody and uh hopefully everybody reaches out so you can help lots more people but fantastic what you’ve been doing thank you again for all your time vlad and we wish you the best. Well that was fantastic i love the fact that vlad gave us some really good insights on the things that vc’s look for from the size of market tractions team valuation size of round and how much the ownership of the of the founders have in the business having to be over 50 at series a and then on his angel side team and market size all great insights loved how they work on the board and how they make sure that that’s implemented great insights again um and then he was from siberia and he had some really great choices there too on answers so fantastic again brilliant to have vlad on thank you for joining us today if you enjoyed this conversation please subscribe to our youtube channel or follow us in spotify apple podcast and or stitcher you can also check us out at supportersfun.com or for startup events visit opn.ninja thank you and have a great day.

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