Episode Summary:

In this episode, Maxine Minter and Cheryl Mack delve deep into the essential considerations of portfolio allocation, focusing on diversification versus concentration in early-stage investing. They explore the concept of portfolio construction, risk management, power law dynamics, and the importance of strategy in maximizing returns while mitigating risks.

Key themes discussed include the spectrum of diversification, the impact of concentrated investments, the role of informational asymmetry in decision-making, the power of outliers in generating alpha, and the influence of expertise and thesis investing on portfolio performance.

Key Takeaways:

• Portfolio construction is crucial in early-stage investing to manage risks and optimize returns.
• Diversification versus concentration impacts the average quality and performance of a portfolio.
• Specialized first and second funds tend to outperform, emphasizing the importance of focused investment strategies.
• The power law concept highlights the significance of outliers in driving fund performance.
• Investors must strike a balance between diversification and concentration based on risk tolerance and investment goals.

Notable Quotes:

• "Thinking about building your investment strategy and what is the right level of risk tolerance is essential for successful portfolio construction." - Maxine Minter
• "The power law is king in the investment landscape, emphasizing the impact of outliers on fund performance." - Cheryl Mack

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Episode Summary:

In this episode of First Cheque hosts Cheryl Mack and Maxine Minter sit down with the distinguished investor Ash Fontana to explore the intricacies of early-stage investing and the evolving landscape of artificial intelligence (AI). The conversation delves into Fontana's diverse experiences, ranging from his formative years building web-based marketplaces to his critical role in establishing the AI investment frontier.

Fontana shares a captivating narrative of his investment philosophy, advocating for the significance of first-check investments in shaping the trajectories of startups. With an emphasis on determining the long-term competitive advantages of AI ventures, the discussion uncovers the importance of specialization and the strategic deployment of venture funds amidst a rapidly transforming technology sector. Key themes revolve around adapting venture capital models, the intersection of network building, and the fortune of investment careers, providing listeners with a wealth of actionable insights.

Key Takeaways:

• First Cheque investments are critical in establishing a startup's potential and culture.
• AI investments should focus on companies that exhibit a sustainable competitive advantage, potentially characterized by data network effects.
• Venture Capital (VC) requires specialisation, especially in fast-evolving fields like AI, to keep pace with rapid advancements and make informed investment decisions.
• The traditional VC model faces criticism for its performance and lack of innovation; exploring models with lower fees and higher carry could better align incentives.
• Building and maintaining a robust network is essential for success and longevity in the venture capital industry.

Notable Quotes:

• "The existence proof of adding value is that you allowed the entity through which all subsequent value is created to exist."
• "As soon as you're competing, you're losing. You should just aim to be in non-competitive situations."
• "I invest in technology cycles, not market cycles."
• "I find it really hard to work for other people and in big companies, but I would have worked for a big growth stage or growth stage fund, like Insight, Summit, Bain, one of them."
• "The bigger the network you can build, the better, the more useful you will be, and therefore, the more lucky you will get."

Resources:

• Ash Fontana's book: "The AI-First Company"
• Ash Fontana's LinkedIn profile

Thanks to our sponsors for helping to make this episode of First Cheque possible:

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Episode Summary:

In this episode of the First Cheque podcast, our co-hosts Cheryl Mack and Maxine Minter welcome venture capital trailblazer Marvin Liao to discuss the multifaceted experience of early-stage investing, the evolution of global startup ecosystems, and the profound lessons learned from economic cycles in the tech industry. The conversation kicks off with stories from Marvin's background in Silicon Valley, including his first steps into the startup world, a decade at Yahoo, angel investing experiences, and defining years with 500 Startups.

Marvin delves into the intricate dynamics of venture capital, sharing his hands-on approach to international investing and offering a candid perspective on navigating competitive markets during downturns. With an emphasis on founder qualities, market-fit, and the significance of geographies like the US for ambitious startups, Marvin provides a remarkable guide for those looking to excel in the unpredictable venture capital terrain.

As the dialogue unfolds, Marvin's strategic astute observations reveal practical strategies for both investors and entrepreneurs looking to leverage opportunities within the constantly shifting sands of the tech landscape.

Key Takeaways:

• Successful early-stage investing requires engaging with 'unconventional' ventures before they gain popularity, often necessitating courage to oppose the crowd.
• The true test of an investor is how one navigates downturns, emphasising resilience and adhering to personal investment theses rather than market sentiment.
• The US remains a central hub for ambitious startup founders due to its unmatched network effects and competitive ecosystem that fosters excellence.
• Marvin advocates a founder-first investment philosophy, prioritizing the drive, capacity to learn, and responsiveness of founders over all else.
• Cultural capital, such as an appreciation for science fiction, is considered crucial for anyone investing in technology's future, as it helps shape one's vision for innovation.

Notable Quotes:

• "Chips on shoulders, leads to chips in pockets." - Marvin quotes Josh Wolf to describe the motivation needed for successful entrepreneurship.
• "How you do anything is how you do everything." - A philosophy Marvin adheres to when assessing founder diligence and reliability.
• "Steel sharpens steel." - On the importance of founders being present in high-impact ecosystems to push themselves to their limits and grow.

Resources:

• Marvin Liao's personal ventures and insights can be followed through his LinkedIn profile.
• Reference to Lux Capital and Josh Wolf's investment philosophy might be of interest to listeners who wish to explore further.

Thanks to our sponsors for helping to make this episode of First Cheque possible:

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Episode Summary:

In this thought-provoking episode of First Cheque experienced investors Cheryl Mack and Maxine Minter delve into the meticulous world of follow-on investment strategies. The episode serves as a beacon for those who wish to refine their approaches in early-stage investing, especially as they grapple with the decision of whether to follow on or not in subsequent investment rounds. The conversation explores the intricate balance between optimizing returns and supporting growing companies at various funding stages.

Cheryl represents the school of thought advocating for doubling down on winners, focusing on reserving funds for follow-on investments based on the company's performance. Maxine, on the other hand, takes a contrarian view, emphasizing the importance of an initial strong pre-seed commitment without reserving for follow-on. Together, they unpack the underpinnings of each method, providing listeners with an insightful analysis centred on investment strategy, fund management, and the implications of the power-law in startup investing.

Key Takeaways:

• A follow-on investment strategy involves investing additional funds in a company during later financing rounds, usually at a different share price.
• Traditional wisdom encourages investors to reserve funds to double down on winning companies, but Maxine challenges this idea, promoting initial, larger investments at the pre-seed stage.
• Discussion on the importance of pro rata rights and the potential signaling risks associated with not following on in subsequent rounds.
• Cheryl shares her angel investment approach, which emphasizes growth metrics evaluation, fund allocation decisions against other opportunities, and backing companies that have shown significant progress.
• The conversation highlights the need for personalized investment strategies that reflect individual goals and resources, as well as the potential influence of received wisdom on investment decisions.

Notable Quotes:

• "The conventional wisdom... you want to reserve follow on money in order to double down on your winners." - Cheryl Mack
• "If you want to maximize IRR, then it's deploying all of your capital in that first check." - Maxine Minter
• "The power law operates in our industry... it's not necessarily a one for one trade off... you need to make resource allocation trade offs." - Maxine Minter
• "I really have to believe that I'm still going to get outsized value from this valuation further on." - Cheryl Mack
• "The only thing that stops you from getting squeezed out over time is adding enormous value and having a great relationship with the founders." - Maxine Minter

Thanks to our sponsors for helping to make this episode of First Cheque possible:

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Episode Summary:

In the latest instalment of our podcast series, Cheryl Mack and Maxine Minter delve into the intricate world of early-stage investing, shedding light on the varied approaches to gaining investment conviction. This episode serves as a guide for both novice and experienced investors who aim to refine their decision-making strategies when backing new ventures.

As Cheryl and Maxine unravel the decision-making fabric of early-stage investing, listeners are taken on a journey through the critical thought processes that investors employ. From angel investing intuition to fund management rigour, the diverse strategies and considerations are laid bare. Key topics such as founder assessment, market sizing, and investment criteria are explored in detail, offering a valuable distilled wisdom that promises to enhance the listener's own perspective on startup investment.

Key Takeaways:

• Every investor has a unique process for achieving conviction in startup investments, which can evolve over time through experience and iterative learning.
• The consideration of factors like founder qualities, market potential, and existing competition varies between individual investors and forms the basis of their investment decisions.
• Portfolio construction and risk assessment play significant roles in an investor's decision to back a company, mainly when operating within a fund structure.
• Intuition and instinct also influence investment choices, sometimes siding with conviction even when faced with incomplete or ambiguous information.
• The balance between personal investment ethos and the structured approach required by funds highlights the complexity and art form of early-stage investing.

Notable Quotes:

• "It's a process...an invitation to iterate your way to a successful process and continue to measure yourself." - Maxine Minter
• "The nature of especially early stage investing is that it's risky." - Maxine Minter
• "For me, it's founder... I need to feel like this is the right founder for the...market problem space." - Cheryl Mack
• "It's really rare, if ever, that you get to a...definitely yes...always no questions." - Maxine Minter
• "The spectrum of yes to hell yes...there are so many different ways of doing it and so many different timescales to be considering on." - Maxine Minter

Thanks to our sponsors for helping to make this episode of First Cheque possible:

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Episode Summary:

In this insight-packed episode, Cheryl Mack and Maxine Minter sit down with Michael Batko, the driving force behind Startmate, to explore the intricacies of early stage investing and the power of community in the startup realm. Batko shares his journey, starting from his first investment to steering one of the most active seed stage investing funds in the industry. This episode offers a behind-the-scenes look at how Batko and his world-class team utilize a community-driven approach to identify, select, and uplift transformative business ideas across Australia and New Zealand.

Diving into the Startmate selection process, Batko reveals the operational complexities of coordinating a vast network of mentors and how their personal investment in the fund aligns interests and boosts engagement. The conversation also uncovers the evolution of Startmate's investment thesis, its expansion into diverse industries, and Batko's approach to encouraging non-consensus thinking to unlock extraordinary potential. The episode delves into the significance of carry in VC funds, the strategic role of a continuity fund, and the decision-making framework for follow-on investments, all while reflecting on Batko's philosophy of betting on the hungry rather than the proven.

Michael Batko began his career in corporate finance and consulting before contributing to the growth of two major Australian marketplaces, MadPaws and also played a pivotal role in Expert360's $14 million Series B funding round. After joining as Head of Operations, Batko quickly became CEO of Startmate which is now ANZ’s largest community driven seed fund raising ~$3 million from 100+ investors every 6 months.

Key Takeaways:

• Startmate's success is rooted in a mentor-driven model, where community engagement and personal investment are key to its decision-making process.
• Batko emphasizes the importance of looking beyond what's probable and considering what's possible when evaluating investment opportunities.
• The alignment of mentor incentives with fund performance, through carry, is highlighted as a significant motivational factor.
• A robust debate around investment thesis expansion led to backing diverse ventures, including non-software startups like non-alcoholic beer brand Heaps Normal.
• The establishment of a continuity fund at Startmate allows for continuous support of alumni companies, signaling strong belief in their ongoing success.

Notable Quotes:

• "I remember this entire thread coming up and everybody discussing whether or not we should invest in that non-alcoholic beer company. And it was at that time when I jumped in as start mate CEO and actually had to be like, 'Hey, we can't just rest on our laurels and do things the way we've always done them.'"
• "We've expanded the investment thesis a lot around, essentially always doubling down on people and what they care about."
• "One of my favorite questions is, and I always keep coming back to it whenever I critically assess a company for myself, is rather than what is probable... what is possible?"
• "One thing I love about being a microfund is that we only invest $120,000 into companies, but at that stage, it actually makes such a massive difference."

Resources:

• Startmate website for more insights into their accelerator programs. Startmate
• Michael Batko's professional background and contributions, visit LinkedIn
• Discussion of eucalyptus's ESOP primer and equity importance. Eucalyptus

Encouraging all curious investors and founders to tune in and glean actionable insights from Michael Batko's valuable experiences in this episode, as well as to keep an ear out for more enriching discussions in the upcoming sessions.

Episode Summary:

In this insightful conversation, co-hosts Cheryl Mack and Maxine Minter unpack the often misunderstood world of 'fund of funds'—investment vehicles that pool capital to invest in a variety of venture funds rather than in startups directly. Tailored for early-stage investors and industry observers, this talk reveals the nuances of fund structures and investment strategies designed to mitigate risk and maximize returns.

Diving into a no-nonsense explanation, Maxine elucidates the two foundational structures of venture funds—management companies and the standalone investing funds—and how funds of funds play into this ecosystem by investing in multiple funds. This episode shines a spotlight on the intricacies of fund growth, managerial sophistication, and the dynamic relationship between funds, funds of funds, and their limited partners (LPs). Cheryl probes into the motivations behind why LPs choose to invest in fund of funds, including access to top-tier funds and diversification that extends across emerging ventures.

Key Takeaways:

• A 'fund of funds' is an investment strategy where the fund invests in other venture capital funds rather than directly in companies.
• Most venture funds fail to return capital; however, emerging managers often are part of the top-performing funds, despite potential difficulty in scaling from one fund to the next.
• Institutions like pension and super funds, which frequently invest in funds of funds, face unique challenges such as VP clauses and monthly asset pricing pressures.
• Funds of funds can offer investors a lower-risk profile and a more diversified exposure to the venture capital market.
• There is a potential growth opportunity for fund-of-funds in Australia, which is currently a nascent market in this space.

Notable Quotes:

• "If you invest alongside, say, CoVentures, and CoVentures has a fund of fund that's invested in them, what does that mean for the potential success of the company later on down the road?" - Cheryl Mack
• "Venture funds being an indexation of the underlying assets... Our success is driven by, you know, an outlier in our portfolio." - Maxine Minter
• "Emerging managers consistently are in the top ten performing funds of every single vintage." - Maxine Minter
• "The venture funds themselves, their returns perform on a power law curve. So there's only a handful of funds, venture funds, that will deliver outlier returns to their investors." - Maxine Minter

Sponsors:

Thanks to our sponsors for helping to make this episode of First Cheque possible.

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Download the Turo app and book cars from $38/day. https://dayone.fm/turo

Episode Summary:

In this insightful episode of First Cheque, hosts Cheryl Mack and Maxine Minter have a raw conversation with Elicia McDonald, a venture capital expert renowned for her remarkable work at Airtree Ventures. Elicia's holistic approach to early-stage investing and her deep commitment to nurturing founder relationships are at the forefront of this discussion.

Opening with an introduction that paints Elicia as a superhuman in her work-life balance, the episode delves into the intricacies of venture capital investing. With Elicia's insightful anecdotes and experiences, this podcast provides an intimate look at the dynamics of the VC world, particularly in uncovering what makes an early-stage investor successful. The conversation spans various subjects, including the principles of investment, fostering resilience, and the importance of embracing constant industry change.

About the Guest(s):

Elicia McDonald is a prominent figure in the venture capital industry, mainly known for her work at Airtree Ventures, where she has made a significant impact through her skills in early-stage investing. Elicia is known for her keen ability to identify and invest in promising startups, contributing to various successful ventures. Regrow (formerly known as Fluorosat) is among her notable investments, reflecting her knack for spotting early potential in innovative companies. Besides her professional achievements, Elicia is recognised for her leadership in balancing family life with a demanding career, setting an empowering example for professionals, especially women in the tech industry.

Key Takeaways:

• Resilience and founder empathy are vital traits Elicia values in herself and the founders she invests in.
• Thorough decision-making and maintaining high-quality standards are pivotal points in Elicia's approach to investing and entrepreneurship.
• Building trusted relationships within the startup ecosystem significantly contributes to successful sourcing and working with founders.
• Parenthood and career balance is a personal challenge that Elicia navigated with bravery, setting a progressive example for others in the industry.
• The venture capital industry is marked by constant change, and embracing this dynamism is crucial for long-term success.

Notable Quotes:

• "Life is 10% what happens to your 90% how you respond to it." - Reflexive insight on the importance of perspective.
• "Everything is a multi-shot game." - Maxine Minter on the long-term nature of venture investing.

Resources:

• Elicia McDonald's LinkedIn profile
• Airtree Ventures website for more information on Elicia's investment firm.

Listen in to this enlightening episode to hear Elicia McDonald's full insights on venture capital, founder relationships, and building resilience amid industry fluctuations. Stay tuned to First Cheque for more captivating discussions with leading figures shaping the tech and investment world.

Sponsors:

Thanks to our sponsors for helping to make this episode of First Cheque possible.

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Download the Turo app and book cars from $38/day. https://dayone.fm/turo

Episode Summary:

In the latest compelling episode, we delve into the investment philosophy and keen insights of Trang Nguyen, a trailblazing figure in venture capital. Nguyen shares her journey from placing an early bet on Tesla to her current efforts in redefining the startup ecosystem. She outlines her criteria for backing emerging fund managers and underscores the importance of founders who aim to build venture firms that transcend personal branding and leave a lasting impression.

Nguyen advocates for a platform approach where venture firms offer scalable services to startups, akin to corporate giants like Apple or Amazon. She argues this is crucial for a venture firm's sustainability and ability to scale, detailing why simply being a good investor isn't always enough. Moreover, Nguyen provides a peek into the future of startups, highlighting the potential for AI to revolutionize the way companies are founded and grown.

Hosted by Cheryl Mack & Maxine Minter, First Cheque is a Day One show. Day One is the podcast network dedicated to founders, investors, and operators.

About the Guest(s):

Trang Nguyen is a pioneering investor with a bold approach to venture capital. She has made notable investments in transformative companies, including an early investment in Tesla. Trang is known for her long-term vision and commitment to supporting ambitious entrepreneurs in creating impactful venture firms and startups. Her work revolves around the principles of venture as a future-facing and influential asset class, embracing the role of technology in shaping investment paradigms.

Key Takeaways:

• Trang Nguyen made a pivotal early investment in Tesla, signifying her long-term investment mindset and dedication to visionary founders.
• Nguyen emphasizes the necessity for venture capital firms to build platforms that deliver scalable services to startups, not just make investments.
• The future startup landscape, according to Nguyen, will be heavily influenced by AI, possibly becoming co-founders alongside human entrepreneurs.
• Nguyen believes venture capital is deeply intertwined with technology and will continue to be a critical asset class for the foreseeable future.
• Despite current market sentiments, Nguyen is bullish on venture capital and its role in driving innovation across all sectors.

Notable Quotes:

• "Venture is in every single asset class."
• "In order to identify the future of venture capital, ... you just need to go and look really stupid in front of a lot of people for a long period of time."
• "Everything you do is venture. It's just whether you recognize it."

Thanks to our sponsors for helping to make this episode of First Cheque possible:

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Episode Summary:

In this enlightening episode of the podcast, co-hosts Cheryl Mack and Maxine Minter engage with venture capital veteran Craig Blair to unpack the intricacies of successful early-stage investing. From sage wisdom to navigating the ever-evolving VC landscape, this conversation is a trove of insights for aspiring and seasoned investors alike.

Craig discusses his journey starting from an entrepreneurial venture in the Czech Republic to establishing AirTree Ventures, which has shaped the Australian investment scene. With a particular emphasis on strategic risk-taking and intuition in investment, the episode dissects the balance between data-driven decision-making and the human element in evaluating startups. Craig also shares his pivotal ‘big cajones’ moment—a personal story of bravery and recovery.

About the Guest(s):

Craig Blair is a seasoned venture capitalist with an entrepreneurial background and a track record of successful investments in the tech industry. With a career spanning over two decades, Craig has become a distinguished figure in the VC market since 2002. He co-founded AirTree Ventures, a leading Australian venture capital fund dedicated to investing in visionary technology entrepreneurs. With his expertise, Craig has developed a reputation for making strategic and often contrarian investment decisions that have significantly impacted the Australian ecosystem. His risk-taking prowess isn't limited to investments though; he's also known for engaging in adventurous activities such as ocean sailing.

Key Takeaways:

• A founding partner of AirTree Ventures, Craig Blair emphasizes the importance of being contrarian in investment decisions.
• The discussion reveals the significance of developing investment theses and being prepared with better information about verticals or opportunities.
• Avoiding the herd mentality and challenging personal biases are vital for successful VC investments, underscoring the need for continuous learning.
• Craig shares a personal anecdote of tenacity, underlining the importance of dedication and resilience in the face of adversity.
• Discipline surrounding fund size and alignment with LPs helps maintain investment theses, ensuring the sustainability of both venture funds and startups.

Notable Quotes:

• "If everyone in VC, for example, is going into something right now, I don't want to be there. I want to be somewhere outside that."
• "It's a humbling experience to see a company and be like, oh, it's not going to work for these reasons, or it hasn't worked in the past, and therefore it's not going to work again in the future, and then it really works in the future."
• "It's very dangerous if you start morphing your investment plan to suit your LPs."
• "You might not work before, but why would it work now?"
• "I've done a lot of adventurous things. I do a lot in my previous...well, probably still do a lot of crazy stuff. I love risk."

Thanks to our sponsors for helping to make this episode of First Cheque possible:

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Summary:

In this insightful episode of the podcast, listeners are introduced to the world of venture capital through the lens of Sam Wong, a seasoned Partner at Blackbird Ventures. Delving into her journey from the early investments to scaling venture funds across markets, this conversation provides an intimate look at what it means to both contribute to and grow within a startup ecosystem. Sam shares her experiences in identifying alpha opportunities, scaling venture fund operations, and the unique challenges and triumphs found in burgeoning markets like New Zealand.

As the podcast unfolds, Sam recalls her first investment and the lessons learned from its considerable return, offering a gateway to discussions on angel investing, ecosystem building, and the dedication needed to manage venture funds successfully. She provides a clearer understanding of the nuanced journey from fund one to the subsequent funds, highlighting the responsibilities of fund managers to their LPs and the critical considerations leading up to successful fund raises. This episode is not just about past decisions but also the leveraging of opportunities, strategizing for long-term outcomes, and the bold moves that define a venture capital career.

Key Takeaways:

• The transition from angel investing to venture capital management involves long-term commitment and strategic relationship building with founders and LPs.
• The phenomenon of market asymmetry can provide disproportionate access to quality deals, creating opportunities for generating alpha in venture capital investments.
• Scaling a venture fund from one iteration to the next requires more than historical performance; it necessitates team growth, market positioning, and an alignment with LP expectations.
• Early-stage ecosystems, like New Zealand's, possess unique characteristics such as strong vertical SaaS and deep tech capabilities, influenced by successful local companies and founder backgrounds.
• Personal conviction and the ability to take calculated risks, as demonstrated by Sam's decision to relocate and spearhead Blackbird's New Zealand fund, are essential traits for success in venture capital.

Notable Quotes:

• "I think that [small checks] are actually more about the relationship. And can a founder be bothered giving you a line on their cap table when the money doesn't even cover a week of Runway?" - Sam Wong
• "You can't just profit from the ecosystem, you have to take responsibility for building it too, and building it in a certain way." - Sam Wong
• "That asymmetry of capital supply to founder talent is what creates alpha opportunities, right? And you just don't get many of those in a venture lifetime." - Sam Wong
• "It didn't really take very long before I only grew in conviction that there was a sort of Australia 2013 esque opportunity where you had...a real scarcity of quality options for capital" - Sam Wong
• "I think starting New Zealand has probably been the biggest, big cojones thing because I felt it at the time too. It did feel very risky at the time." - Sam Wong

Our Supporters

Thanks to our sponsors for helping to make this episode of First Cheque possible.

Scendar: Scendar is the OG startup accounting firm in Australia. Free 1-hour consultation about your Business' growth plans and finance needs. https://dayone.fm/scendar

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Summary

In this episode, Maxine Minter and Cheryl Mack discuss their journeys into angel investing and share valuable insights for aspiring investors. They highlight the importance of community and learning in the early stages of angel investing and provide guidance on different investment strategies. Maxine and Cheryl also emphasize the need for diversity in the investor landscape and discuss the changing dynamics of the startup ecosystem. They address common misconceptions about angel investing and offer practical advice for those looking to get started in the field.

Key topics discussed in this episode include the different paths to angel investing, the role of education and community in learning about investing, the significance of diversity in the investor landscape, and the challenges and rewards of angel investing.

Key Takeaways

• Angel investing can be approached through various paths, including direct investments, syndicates, and investing in funds. Each approach offers unique benefits and learning opportunities.
• Building a strong community of fellow investors is crucial for learning and making informed investment decisions. Angel groups and syndicates provide valuable platforms for collaboration and knowledge sharing.
• Diversity in the investor landscape is essential for supporting underrepresented founders and driving innovation. Investors should actively seek out opportunities to invest in diverse founders and contribute to a more inclusive startup ecosystem.
• Angel investing requires a willingness to take risks and a long-term perspective. It is important to be prepared for potential losses and understand that returns may take time to materialize.
• Continuous learning and staying informed about the latest trends and developments in the startup ecosystem are key to becoming a successful angel investor.

Quotes

• "There is nothing more powerful than being the 'dumbest' person in the room. Give yourself permission to ask all the 'stupid' questions and learn as much as possible." - Maxine Minter
• "Investing in startups is a riskier asset class, and it's important to have a stomach for potential losses. But it also offers the potential for outsized returns and the opportunity to support innovative companies." - Cheryl Mack

Resources

• The Council: An organisation mentioned by Maxine Minter, formed by a group of friends from a coworking space who started an angel investing group. It has scaled into a larger organisation now.
• Zeta: The first company Maxine Minter invested in. It’s led by a founder named Aditi.
• Aussie Angels: Mentioned as a platform for angel investing in various identity groups.
• University Programs on Angel Investing:
• UQ (University of Queensland) has an angel investing program.
• UNSW (University of New South Wales) offers an angel investor course.
• Wade Institute runs the VC Catalyst course.
• Southern Angels in SA (South Australia) is reportedly working with the University of South Australia on a similar program.
• First Believers and Explorers Program: Both Cheryl Mack and Maxine Minter mention participating in this program.

Summary

Anabel Lippincott Paksoy, partner at 43, discusses the importance of building communities and their role in early-stage investing.

She shares her experience creating the council, a female-first investing group, and emphasises the need for a deep understanding of founders and their motivations.

Anabel also highlights the value of professionalising angel investing and finding founders with a strong sense of purpose and followership.

She concludes by discussing her investment preferences, focusing on niche communities and founders with a deep understanding of unsexy problems.

About The Guest

Anabel Lippincott Paksoy is a partner at 43, a pre-seed fund based in the Bay Area. She is also a partner at The Council, a female-first investing group. Anabel has a background in people operations and has a passion for building communities and supporting early-stage founders.

Key Takeaways

• Building a community is about creating a space for like-minded individuals to connect and share deal flow.
• Investing in early-stage startups is a high-risk asset class and should not be undertaken unless one is aware of the risks and willing to lose the money.
• Angel investing can be treated as a learning budget, focusing on maximising learning and gaining experience rather than making immediate financial gains.
• When evaluating founders, looking for a deep, authentic “why” behind their venture and a strong sense of purpose is essential.
• The ability to pivot and adapt is crucial for founders, as it demonstrates a willingness to learn and iterate based on feedback and market conditions.
• Successful founders' ability to attract top talent and inspire followership is a crucial trait.

Quotes

• “I think the thing that I needed, and again, it’s interesting how trends have shifted, too. Even in 2018, five years ago, it was a little new for operators. These female operators were not already super independently wealthy, to think about deploying capital as independent investors into startups.” - Anabel Lippincott Paksoy.
• “I think the thing that I know that I look for in people is some kind of deep, deep, deep, deep why that they’re doing what they’re doing.” - Anabel Lippincott Paksoy.
• “I want to feel that conviction, and there’s no way to vet that. That’s where it gets super personal. I want to ask, could I fall in love with this founder, and I don’t mean romantically? I mean, would I go work for them?” - Anabel Lippincott Paksoy

Resources

• Anabel Lippincott Paksoy
• 43
• The Council
• The Assembly

Timestamps

0:00:00 - Introduction to the podcast and guest.

0:01:57 - Discussion about Anabel’s first investment.

0:05:04 - Conversation about nostalgia and fashion trends.

0:06:12 - Exploring the concept of building communities.

0:09:48 - Challenges and principles of community design.

0:10:30 - Constructing a community for sharing investment deals.

0:11:55 - Creating a learning platform through a consortium of investors.

0:13:14 - Frustration with lack of conversation about deals in the peer group.

0:15:15 - Directing new angel investors to be aware of high risk.

0:17:31 - Treating angel investing as a learning budget.

0:18:48 - Normalising lower entry prices for angel investing in Australia.

0:19:24 - Contributing to the founder’s

Summary

Cheryl Mack and Maxine Minter reflect on the year 2023 and discuss the challenges and trends in the startup ecosystem. They talk about the tough environment for founders and investors, with many companies struggling to raise funds and facing down rounds. However, they also highlight the resilience and determination of founders who were able to survive and even thrive in the face of adversity.

The hosts discuss the increase in funding for female founders, although there is still a long way to go in achieving gender parity in the industry. They also touch on the growth of climate tech and AI as key areas of investment, with these sectors propping up the funding ecosystem.

Cheryl and Maxine express cautious optimism for the year 2024, noting the need for continued creativity and resilience in the face of challenges. They also highlight the importance of addressing issues of behaviour and inclusivity in the startup ecosystem.

Key Takeaways

• Challenges in the Startup Ecosystem (2023): The year was marked by difficulties for many companies in raising funds, with instances of down rounds reflecting a challenging environment for the startup ecosystem.
• Resilience of Founders: Success in these tough times was often attributed to the resilience and determination of founders, who demonstrated the ability to navigate through the demanding market conditions effectively.
• Funding for Female Founders: While there was a notable increase in funding for female founders, reaching a historical high, the conversation acknowledges that more efforts are necessary to achieve gender parity in funding.
• Growth of Climate Tech and AI: Both climate tech and AI emerged as standout sectors, drawing significant investments and spearheading innovation despite the broader economic challenges.
• Outlook for 2024: The year ahead is approached with cautious optimism. The emphasis is on the necessity for ongoing creativity and resilience to address and overcome upcoming challenges.

Quotes

- "I think ingenuity was a real theme. I'm excited to dive in today, obviously. Tis the season to be reflecting." - Cheryl Mack

- "The founders that survive this are the ones that we are so excited to back as investors." - Maxine Minter

- "I think optimism and holding on to a sense of optimism won this year. Pairing it with creativity, also really effective." - Maxine Minter

- "I think 2024 is looking cautiously optimistic. Cautiously optimistic." - Maxine Minter

Chapters

00:05 - Introduction to the podcast

00:25 - Reflecting on the year and the challenges faced

02:02 - Difficulty of raising funds and the resilience of founders

04:32 - Founders' determination to survive and adapt

05:08 - Employment Hero becoming a unicorn

06:31 - Tentative re-entry of international investors into the Australian ecosystem

07:38 - Gap between top founders and average deals narrowing

08:49 - Overpaying in the early stages of funding

09:05 - Australian tech facing criticism from the media

10:46 - Turning point in sentiment with SVB collapse and Milk Run

11:18 - Discussion about the impact of FTX and Sam Bankman-Fried's sentencing

12:13 - AI and climate tech propping up the funding industry in 2023

13:56 - AI adoption curve and its impact on the legal tech industry

15:01 - Tight capital environment in Q1 and Q2 of 2023

15:32 - Increase in interest and funding for climate tech

17:10 - Rise of climate tech-focused funds in Australia

18:19 - Lack of AI-focused funds in Australia

20:06 - Creativity in funding and rise of professionalized fund management

21:30 - Optimism about more fund raising in 2024

21:52 - Increase in funding for female founders, but still low overall

22:33 - Matching population demographics

22:48 - Lack of data on women-led...

Summary:

Elaine Stead joins the podcast to discuss bravery and courage in the investing world, particularly as a woman in the Australian ecosystem. She shares her journey as an investor and highlights the importance of investing in education and building networks.

Elaine also challenges the notion of being a contrarian investor and emphasizes the need for a high tolerance for risk. She discusses portfolio construction and the importance of managing risk and diversification.

The conversation also touches on the challenges faced by women in the industry and the need for change in the ecosystem.

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About The Guest:

Elaine Stead is a General Partner at M8 Ventures and an experienced investor in the Australian ecosystem. With nearly 100 investments under her belt, she is known for her bravery and courage in making investment decisions. She has a background in science and innovation and has built a strong network in the industry.

Key Takeaways:

• Investing in education is a crucial investment that can change the trajectory of one's life.
• Building networks is essential for success in the investing world, particularly for women.
• Being a contrarian investor is about having a higher tolerance for risk and being able to see opportunities early.
• The Australian ecosystem needs more diversity in capital allocation and investment decisions.
• Wealth creation and equity allocation should be more inclusive to drive change in the industry.

Quotes:

• "Being brave is about being fearful of something, but doing it anyway." - Elaine Stead
• "Diversity in teams signals the ability to manage conflict and work with people who think differently." - Elaine Stead
• "Making room for others is a show of strength and confidence." - Elaine Stead

Resources:

• M8 Ventures: Elaine Stead, the guest on the podcast, is the General Partner at M8 Ventures, a venture capital firm. (Timestamp: [00:00:49])
• Day One Network: The podcast is part of the Day One network, dedicated to founders, operators, and investors. (Timestamp: [00:00:08])
• Elaine Stead: A prominent figure in the Australian investing ecosystem, recognized for her experience and insights into investing. (Various Timestamps)
• Alex Rampell: Mentioned by Maxine Minter in the context of investing perspectives. (Timestamp: [00:10:15])
• South by Southwest Sydney: Elaine Stead mentions she will be on a panel at this event. (Timestamp: [00:25:20])
• Aussie Angels: Discussed in the context of making investment...

Summary

Rayn Ong, an angel investor and founder of Archangel, shares his insights on early-stage investing in this episode of First Cheque. Rayn discusses his first investment in Blackbird Fund One and how he built his network in the Australian startup ecosystem.

He emphasises the importance of compounding value in both networks and investments. Rayn also talks about his investment strategy, including his focus on breakout companies and his approach to evaluating opportunities.

He shares his thoughts on portfolio synergy and competition within his portfolio. Overall, Rayn's entrepreneurial approach to investing has led to his success in the industry.

About The Guest(s)

Rayn has been an active angel investor since 2014. He has invested in the early rounds of Instaclustr, Propeller Aero, HappyCo, Morse Micro, Carbar, Eucalyptus, Vow Food and StepN which are all valued at over $100 million now.

Rayn is a partner at Archangel Ventures, an angel fund that backs founders at the earliest stage possible. Rayn made his debut on the AFR Young Rich List in 2022 as an angel investor.

Key Takeaways

• Cultivating a strong network and building relationships is crucial for sourcing high-quality deals in the startup ecosystem.
• Specialising in a certain vertical or industry can provide a competitive advantage in evaluating startups and making informed investment decisions.
• The ability to identify breakout companies and double down on successful investments is key to achieving high returns in early-stage investing.
• Investing in companies that have synergy with existing portfolio companies can help derisk investments and create value for the entire portfolio.
• Setting clear expectations with founders and providing guidance throughout the investment journey can lead to successful outcomes and future funding rounds.

Quotes

• "We want to align for a good founder experience. We disclose upfront if we have exposure to potential competitors and encourage sharing to benefit the entire ecosystem." - Rayn Ong
• "We minimise risk by starting with small checks and gathering information over time before making larger investments." - Rayn Ong
• "The ability to compound value in networks is as valuable for early-stage investors as it is for the assets we invest in." - Rayn Ong

First Cheque is part of Day One, the podcast network dedicated to founders, operators & investors.

Learn more by joining Day One's newsletter. We create content to help founders. https://dayone.fm

Learn about upcoming guests and new First Cheque episodes are available, join the First Cheque newsletter https://dayone.fm/podcast-network/first-cheque/newsletter

This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Podder - https://www.podderapp.com/privacy-policy

Summary

Judy Anderson-Firth, the Group CEO of Euphemia, shares insights into their investment strategy, including their focus on supporting diverse founders and making a positive impact on the Australian startup ecosystem. She emphasizes the importance of transparency and accessibility in the family office world and discusses the value of building a strong network and connecting founders within their portfolio. Judy also explores the concept of gracefully exiting failed startups and the potential for an "anti-accelerator" that rewards founders for pivoting and trying new ideas. She concludes by introducing the Euphemia Syndicate, a platform that provides access to unique deal flow and lowers the minimum check size for angel investors.

About The Guest(s)

Judy Anderson-Firth is the Group CEO of Euphemia, a family office that invests in fintech, climate tech, and women-led startups. She has extensive experience in the startup ecosystem, having previously served as the CEO of Startup Victoria, Australia's largest startup community for entrepreneurs.

Key Takeaways

• Euphemia invests in fintech, climate tech, and women-led startups, prioritizing founders from disadvantaged backgrounds.
• Transparency and accessibility are crucial in the family office world.
• Building a strong network and connecting founders within their portfolio is highly valuable.
• Celebrating and facilitating the graceful exit of failed startups can accelerate the growth of the ecosystem.
• The Euphemia Syndicate offers access to unique deal flow and lowers the minimum check size for angel investors.

Quotes

• "A failed founder is an experienced founder." - Judy Anderson-Firth
• "Australia is not doing a good job at the moment of celebrating and facilitating founders to gracefully exit." - Maxine Minter
• "If we make failing easier, more respectful, and celebrate the benefits, we'll move much faster as an ecosystem." - Maxine Minter
• "We've now built the Euphemia Syndicate... to share some of those deals and lower the minimum check size and share the love." - Judy Anderson-Firth
• "Cheryl, you're building an incredible platform, a piece of financial infrastructure for the startup ecosystem to unlock capital." - Judy Anderson-Firth

First Cheque is part of Day One, the podcast network dedicated to founders, operators & investors.

Learn more by joining Day One's newsletter. We create content to help founders. https://dayone.fm

Learn about upcoming guests and new First Cheque episodes are available, join the First Cheque newsletter https://dayone.fm/podcast-network/first-cheque/newsletter

This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Summary

Dan Gavel, founder of Black Sheep Capital Fund and the Flock Syndicate, shares his unique approach to investing and discusses the importance of understanding risk. He emphasizes the need for investors to have the capacity to accept risk and adapt their investment strategies to the changing market. Dan also talks about the benefits of running a fund, a syndicate, and making personal angel investments simultaneously. He explains how he decides which investments go to each channel and the importance of building relationships with founders. Dan believes that being a lead investor is more about post-investment support and guidance rather than pre-investment due diligence. He also shares a personal story of a risky investment that didn't go as planned.

About The Guest(s)

Dan Gavel is the founder of Black Sheep Capital Fund and the Flock Syndicate. He has a background in financial planning and has made numerous successful angel investments. Dan is known for his down-to-earth and innovative approach to investing.

Key Takeaways

• Understanding risk is more important than trying to fully comprehend it.
• The investment landscape is constantly changing, and investors need to adapt their strategies accordingly.
• Running a fund, a syndicate, and making personal angel investments simultaneously allows for a more diversified portfolio and greater exposure to the ecosystem.
• Being a lead investor is about building relationships with founders and providing post-investment support and guidance.
• It's important to have conviction in an investment and be willing to take risks.

Quotes

• "For us, the pre-seed stage is all or nothing. We're aware that it's a risky business, and we accept that." - Dan Gavel
• "The lead investor is the person who wants to build a relationship with the founder and do what it takes to get the deal across the line." - Dan Gavel

First Cheque is part of Day One, the podcast network dedicated to founders, operators & investors.

Learn more by joining Day One's newsletter. We create content to help founders. https://dayone.fm

Learn about upcoming guests and new First Cheque episodes are available, join the First Cheque newsletter https://dayone.fm/podcast-network/first-cheque/newsletter

This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Podder - https://www.podderapp.com/privacy-policy

Summary

Jessy Wu discusses the importance of having the confidence to speak up and share your opinions. She shares that her confidence comes from being deeply loved and supported by her parents, which instilled in her a strong sense of self-worth. She also discusses the role of building a personal brand as a small fund and how being a lightning rod for certain conversations can align with a fund’s strategy.

About The Guest(s)

Jessy Wu is an investor at Afterwork Ventures. She is known for her bold and thought-provoking insights on social media and is passionate about supporting early-stage companies.

Key Takeaways

• Confidence comes from a strong sense of self-worth and being supported by loved ones.
• Building a personal brand as a small fund can help differentiate and create a unique value proposition.
• Being a lightning rod for certain conversations can attract attention and align with a fund’s strategy.

Quotes

• “I’ve never felt like an imposter or like I didn’t deserve to have a seat at the table.” – Jessy Wu
• “There is a way to be known for something as a small fund and have an active reason for someone to want you on their cap table.” – Jessy Wu

First Cheque is part of Day One, the podcast network dedicated to founders, operators & investors.

Learn more by joining Day One's newsletter. We create content to help founders. https://dayone.fm

Learn about upcoming guests and new First Cheque episodes are available, join the First Cheque newsletter https://dayone.fm/podcast-network/first-cheque/newsletter

This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Podder - https://www.podderapp.com/privacy-policy

Summary

Maxine and Cheryl kick off the First Cheque podcast, a show dedicated to helping early-stage investors become better at their craft. They aim to open source conversations and insights from experienced investors to provide valuable information and education for emerging investors. The podcast focuses on the Australian ecosystem but also explores international perspectives on investing. They discuss the importance of understanding risk, the distinction between betting and investing, and the need for better decision-making processes. They also touch on the current state of the market, noting some green shoots and increased deal flow, but also expressing concerns about the sluggishness in the series C to E stages.

Key Takeaways

- Open-sourcing conversations and insights from experienced investors can help emerging investors become better at their craft.

- Understanding risk and making intelligent risk-taking decisions is crucial for successful investing.

- The distinction between betting and investing lies in the ability to control risk factors and make informed decisions.

- The current market shows some green shoots and increased deal flow, but there are concerns about sluggishness in the series C to E stages.

- This is a great time to be investing, especially in early-stage companies that demonstrate resilience and have the potential to thrive in the future.

Quotes

- "If you want to be a better early-stage investor, this is the show for you." - Maxine Minter

- "Being compensated for risk is the variable of return profiles in different asset classes." - Maxine Minter

- "Investing in startups is risky, but there are factors you can control and levers you can pull." - Cheryl Mack

- "Great investing is good decision process plus great information." - Maxine Minter

- "This is a great time to be greedy and invest in early-stage companies." - Maxine Minter

First Cheque is part of Day One, the podcast network dedicated to founders, operators & investors.

To learn more, head to https://dayone.fm and join our newsletter to be notified of new and upcoming shows. The only content we create is content that will help Australian founders.

If you want to learn about upcoming guests and when a new First Cheque episode is available, join the First Cheque newsletter https://dayone.fm/podcast-network/first-cheque/newsletter

This podcast uses the following third-party services for analysis:

Chartable - https://chartable.com/privacy

Podder - https://www.podderapp.com/privacy-policy