#153 - Gale Wilkinson | Demystifying Investing, The Path to Inclusive Venture Capital

[00:00:03] This is the Lets Grab Coffee Podcast and I'm your host George Khalife

[00:00:07] I uh it always helps by the way when the person you're having on your podcast has done a lot of these already

[00:00:12] So I spent like all of yesterday going through a lot of your YouTube short scale

[00:00:16] So I feel like thankfully I know you for one, but you're using force help. I've done a few George

[00:00:24] You're like a seasoned podcaster by now

[00:00:26] Thanks for being here. I appreciate you formally being on the podcast

[00:00:30] This is actually you probably might not know this but it has been a long time in the making

[00:00:34] Meaning I've been wanting to have you on the podcast for quite a time

[00:00:38] Awesome for folks who don't know you as intimately as I do in the Chicago sort of startup ecosystem

[00:00:43] You have a quick buy which you've thankfully laid out on LinkedIn, which I'll go through very quickly

[00:00:47] But 10 years in VC. You're a work tech expert mainly through your work in

[00:00:53] Vitalized capital so you it's an early stage VC and Angel font primarily focus on work tech

[00:00:59] You're based in Chicago. I know you do a lot in the startup ecosystem here. You're involved in a bunch of

[00:01:04] Boards you just finished Kauffman Fellows, which we will get into loosely

[00:01:08] But you've been investing for quite some time gale

[00:01:11] So

[00:01:12] What I actually wanted to start with is how does one formally one day say you know what this is gonna be a career path

[00:01:19] Especially if it's not one where you have them

[00:01:21] Let's say a massive exit because that's where I've seen investors quote unquote either you have like a massive exit

[00:01:27] Family passes down a chunk of money or you join a VC first you kind of grow through the ranks

[00:01:32] But it's an odd career path

[00:01:33] Honestly speaking for someone to get really seasoned in this space is not your typical day-to-day corporate fortune 500

[00:01:40] So what was it for you? Like when was that day when you woke up me like, you know what I'm gonna be a VC in Chicago

[00:01:46] Well that day it never really happened. So when I left business school in 2012, I

[00:01:51] Knew I wanted to be running a company. I was very much a founder. I still am a founder

[00:01:56] But I had the opportunity back in 2012 to start Irish Angels, which is my first VC firm that I started and

[00:02:03] I hadn't really thought about venture

[00:02:05] But I love to build companies and I love to help other people and I loved I love challenging things

[00:02:10] I love learning about a lot of stuff. So when I took a step back and really thought about that opportunity

[00:02:15] it was an interesting fit and I

[00:02:18] didn't have

[00:02:19] Any background in it and then gentlemen that I met who were founding board members

[00:02:23] They were like, hey, we don't have money to pay you and we don't know how to help you

[00:02:26] But you we think you could be good at this

[00:02:28] Do you want to try it? And I happened to have three months of money left

[00:02:33] Which I got in a scholarship at the very end of booth

[00:02:36] Luckily and that money gave me three months to try to figure out how to get it off the ground

[00:02:40] And it took me three months to find 40 people to give me a little bit of money

[00:02:42] And then I got my credit card out. Wow, this was for Irish Angels. Yeah, that was for Irish Angels

[00:02:48] So I honestly just stumbled into

[00:02:51] The opportunity to start Irish Angels

[00:02:53] It was not my idea

[00:02:54] But I was in the right place at the right time and my background was a good one to

[00:02:58] You know give it a go and then I ran that for nine years and I started vitalize in 2017 and ran them in parallel for a few

[00:03:04] Years before just going straight straight about it vitalize. Well people here Irish Angels

[00:03:08] I thought this as well. I don't think there is a heavy connection to Ireland

[00:03:11] This is a well, yes and no I guess because this is under the Notre Dame University batter, right?

[00:03:16] Yeah, so this is a hiding Irish. Yes. Yes, exactly

[00:03:20] So all of our investors have some kind of a tie whether they're a grad parent student or faculty member of the University

[00:03:26] By the way, this is a very you might know this because you were in that space

[00:03:30] I didn't know this as someone who came from Canada to the US four years ago

[00:03:33] I realized for number one your alumni here are insanely strongly united

[00:03:38] You know, there's like a force behind that alumni is interesting not odd but interesting

[00:03:43] I don't think it's the same extent in Canada let alone the investing

[00:03:46] You know circles that you all create here, which I find like I know Kellogg has it through like alumni

[00:03:50] Well, it's Lake Shore a partner's purple arch. That's all through alumni Irish Angels Wharton has an angel group

[00:03:57] It's much more common in the US than it is in Canada. Yeah, it's an it's an interesting observation

[00:04:02] I this was new to me when I came here like because these are real funds

[00:04:04] This isn't just like a club at the University

[00:04:08] Yeah, I think one of the things that is the big learning of mine over the last decade is that this is

[00:04:15] A way for people to have fun and when you think about an affinity towards something

[00:04:19] University makes a lot of sense. It might be a geo

[00:04:21] So you see a lot of local angel groups that still exist, you know, I'm a member of Chicago early

[00:04:27] All we do are invest small amounts in Chicago

[00:04:30] You might it might be a specific industry you hear of former Google employees having their own group former uber

[00:04:37] There's a lot of that and it's because people feel a connection and actually that a connection is really really important to keep people

[00:04:44] wanting to come back our time could be spent so many different things that I

[00:04:49] Think moving forward we will continue to see strong affinity based in best day

[00:04:54] In fact, I think we'll even see smaller groups of affinity based investing where it's you know

[00:04:59] It's almost like your old Tupperware parties

[00:05:01] So if you go to somebody's house and try to sell your Tupperware

[00:05:04] You might go to a restaurant with four or five people once a month and that's your investment circle

[00:05:10] Yeah, I think that's that's a big part of it is like you kind of have a team right like almost an alumni base

[00:05:16] With the general wording right that you can share deal flow

[00:05:20] I can also learn from someone like gale who's an expert in work tech

[00:05:23] And maybe I'm an expert in fintech as an example

[00:05:25] We can share ideas and I can get you up to speed

[00:05:28] So I think that's cool. I feel like for a lot of people doing that for the first time

[00:05:31] It's a bit less intimidating. I might not have no idea how to do this. So me investing alongside someone who does

[00:05:38] Leviates the paint even though I might have money

[00:05:40] Yeah, and that's how a lot of people get started angel investing and I think that's a great thing

[00:05:44] It's how I learned was working with a bunch of other people because it's very likely

[00:05:49] You're not gonna get into the best deals or do the best deals if you are just coming at this completely

[00:05:56] Green so having that support network and being able to leverage the expertise of the crowd is

[00:06:02] Absolutely a good strategy another good strategy is to invest in small funds because you get built into diversification

[00:06:08] Let me ask you this when you got involved with Irish angels and remind me it was seven eight years total

[00:06:13] I ran it from 2012. So I started it then and then Caroline gash came in in 21. So nine years

[00:06:20] Nine years

[00:06:21] Did you learn the trade first and then start investing yourself or did you invest first and learn by virtue of?

[00:06:27] So I never invested myself. I would consider

[00:06:31] Myself not to come from very much money

[00:06:33] so I actually didn't even think about personally investing until 2016 when Liz and then Touladi from

[00:06:41] Is it that came up to me and said hey, will you put $5,000 in my company? And I thought well

[00:06:46] Yeah, actually well, so I wrote my first check in 20 this 2016 and I love you Liz, but it didn't work out and

[00:06:54] You know that but I credit her for getting me started because then in

[00:06:59] 2017 I did a couple of deals and actually those deals are both doing really really well

[00:07:04] So I did to that year and then 2018 I started to do a few more in 2019

[00:07:08] And I've slowly built up a portfolio personally about 50 companies all small checks

[00:07:13] So between one and ten thousand dollars typically one or five thousand is what I put into these deals nice

[00:07:19] Yeah, but I resonated a lot with that as well. I've only written one and only so far

[00:07:25] Proper angel also a smaller check

[00:07:27] But it's also in a friend startup a friend who I've known for quite some time

[00:07:31] And it was one of those to be honest

[00:07:33] And I think I've either heard you or Chris Toich talk about this

[00:07:36] But it's not a bad strategy to invest first

[00:07:38] Let's say in a friend so long as you both have the understanding that this is money

[00:07:41] You're comfortable losing and it won't sour the relationship, but it did get me kind of excited

[00:07:46] I'm like wow this is one. I'm supporting a friend. I actually care about whose business

[00:07:49] I'm also fond of but it's kind of neat like it gets your

[00:07:53] Yeah, I guess you're going so what you said is really important. It's things you care about its people you care about

[00:07:58] It's things that you like

[00:08:00] That's what's really important with angel investing because in back to what why a lot of people really love these affinity based groups

[00:08:06] It's fun

[00:08:08] So I think that's great

[00:08:10] That you know you have that lens and you want to make sure that those boxes are checked before you write the check

[00:08:17] Interesting. Yeah, I want to come back to this. There was one thing I really wanted to touch on which is so the

[00:08:22] You've written almost 50 checks so far one thing I found in myself is I get really excited and then I get

[00:08:29] Nervous again about it, you know, I don't know if

[00:08:32] You sort of

[00:08:34] Tear or daughter between the two like you can get this at red island high from investing and then I found myself at some points

[00:08:40] I go shit. Is this the right thing? Is it the right asset class the opportunity cost?

[00:08:44] Do you go back and forth even as a seasoned angel now and a VC? I'm the wrong person as George

[00:08:50] I have your the right on the junkie or open and help you have a lot of my

[00:08:55] net worth in

[00:08:56] This asset class. I mean I invest a lot to my funds

[00:09:01] So I take very low salary. I put a ton into the funds that we have so nearly 2%

[00:09:09] In terms of the angel deals that I do

[00:09:11] My strategy is this I figure out before a year happens how much I

[00:09:17] Can responsibly deploy and then I know that I want to invest in

[00:09:21] I typically do I would say about 10 deals a year

[00:09:25] And so I take that number that I want to invest and I divided by 10 and that helps me understand

[00:09:30] How much I can invest so for example what this year looks like is I expect to do all of our vitalize angels deals at

[00:09:36] $1,000 each and we'll probably do seven or eight of them

[00:09:39] And then I'll probably do a Chicago early deal here or there and I'll probably do one or two other things

[00:09:45] So I've already done my two other things

[00:09:48] Um, and I've done one vitalize angels deal. But now I'm going forward

[00:09:51] I know here and there only have a thousand so even this morning somebody from

[00:09:56] Chicago emailed me and said hey, I hope you can invest via Chicago early and because I know I'm already overpaced

[00:10:01] I told her it's like I would love to let me see if I'm gonna scrape money together

[00:10:05] But I have to really stick to that

[00:10:08] Because I've already decided I can light that money on fire

[00:10:11] And if I never get it back my life is exactly the same and I'm so lucky to be able to say that

[00:10:16] But that's why I'm writing $1,000 checks

[00:10:18] And a lot of I mean I have truly had this happen where other angel investors have looked at me

[00:10:22] Like I was crazy because I'm running such small checks. I don't really care. I mean all I want is access to these deals

[00:10:28] I will tell you

[00:10:29] Any of us would have rather had a thousand dollars in one of these big winners like facebook or uber versus being like

[00:10:34] Oh, I missed it because I was waiting until I had the perfect check size of 100,000 or 50,000 or 25,000 to invest

[00:10:41] That's silly

[00:10:42] You have to start and I guarantee you if you're in one that goes 100x or 1000x

[00:10:48] You're not gonna care what the initial in was

[00:10:53] Hmm. Yeah, that's part of I think that's another very difficult thing

[00:10:56] Especially when you're doing it individually and even though they're smaller checks

[00:11:00] That's the one thing that I always uh have to fight with is the

[00:11:04] You just literally you just invested 2000 bucks in a company that you loved

[00:11:09] Three weeks later and you shining, you know startup comes in and it fits exactly the mold of what you're looking for

[00:11:15] And you're like, are you serious?

[00:11:16] You know now you come it's three weeks in and I've hit my criteria. I might not have capacity

[00:11:21] That's hard to say no to yeah constantly, you know, and maybe it's a good problem to have

[00:11:26] Probably a good problem to have but that's it's just like gambling

[00:11:29] You know anything is good in moderation angel investing is good in moderation

[00:11:33] And if you can figure out your strategy and you can stick to it

[00:11:36] And you're not going to adversely impact your life or your family's life if you never get anything back

[00:11:41] But you have to be willing to say no or you can sit at the blackjack table and you can keep throwing money into these deals

[00:11:48] And after a while you can't pay off your credit cards

[00:11:51] And you don't have your three to six months

[00:11:54] Savings umbrella there because you've gone way too deep into this risky asset class. Don't do that

[00:11:59] So that's why

[00:12:01] That upfront plan is one of the most important things any angel can do

[00:12:04] I hear

[00:12:05] The devil's advocate listening to this including partly my voice even though this is that the strategy

[00:12:10] I'm trying to follow is well gail a thousand

[00:12:13] But what is a thousand bucks really going to do and I hear i'm in public markets

[00:12:17] Is you know, but I hear the same thing even in public markets and I know that that's not

[00:12:21] A good mindset to have that a thousand deployed is better than a thousand not deployed

[00:12:26] For obvious compounding reasons for example, but when you hear that objection like gail

[00:12:30] What is a thousand bucks really going to do versus me waiting and deploying something more material?

[00:12:36] What is the answer to that? But what's material to you? I mean, so if I

[00:12:41] If I love business school with 130 thousand dollars of debt

[00:12:44] Let's say as an example

[00:12:46] and I needed

[00:12:47] And I've had a very low salary for many years because

[00:12:51] I needed to do that to

[00:12:54] I'm in i'm in v school. Yeah, right

[00:12:56] Okay, so it takes a while to

[00:12:58] Pay these things off and to start to build up some kind of savings and you know

[00:13:03] You have to be very prudent

[00:13:06] And so for me and my financial situation

[00:13:10] A check between one and ten thousand dollars is definitely material

[00:13:13] So like I don't have millions and millions and millions of dollars

[00:13:16] Maybe yet

[00:13:18] But when I think about

[00:13:21] My financial situation, I don't know how much cash I have in the bank

[00:13:24] And I know how much I have in the stock market. I don't know how much I have in real estate

[00:13:28] And then for me angel investment is kind of my

[00:13:31] other

[00:13:32] Bucket I've just done the math myself on

[00:13:36] I know how much money I have in these other things and I'm pretty set on that for what my goals are

[00:13:43] Because I actually don't spend a lot of money to live

[00:13:45] Like I've always done this. I don't spend a lot on rent and I'll spend a lot on mortgages instead of own

[00:13:49] Like it's just a way for me to keep my living expenses really reasonable

[00:13:53] So I'm able to put a really high percentage of my

[00:13:56] Investible cash into this asset class

[00:13:58] So to me it's like I don't want that just to sit there in a bank or in

[00:14:03] Some kind of safe security and wait till I have a ton of money

[00:14:06] Because then how in the world am I going to pick? I have great deal flow

[00:14:10] And anybody can get great deal flow now because there's so many groups

[00:14:14] So if you're in chug early and you're in vitalized angels and you're in

[00:14:18] Like a Hyde Park angels or an Irish angels or a hustle squad

[00:14:22] And you're seeing hundreds of deals a year and you like 20 percent of them

[00:14:27] What are you gonna do? I want to get into the your

[00:14:31] Aside from your personal interests seems like obviously you love doing this. It's clear

[00:14:35] Uh, the second piece is what is the the financial objective? Like do you have a specific?

[00:14:40] I know you've talked about this

[00:14:41] I'm not going to say the answer for the sake of this conversation walk me through but

[00:14:46] Walk me through what what does that actually look like like you?

[00:14:49] Aside from okay, this it meets your vertical it meets your stage

[00:14:53] When you're actually deploying throughout the year

[00:14:55] So you have 100,000 assuming Lee and you're deploying it over let's say 10 checks. What financial

[00:15:01] Objective are you going in with for my fund and my personal deals is different?

[00:15:05] So for my fund I'm underwriting to a 30x return

[00:15:08] The reason that I do that is because you know, we're going to have around 30

[00:15:13] Maybe 35 deals in our fund and I want any deal that we do to be a potential

[00:15:18] What's called fund returner?

[00:15:20] Which means that that one deal can give me back every dollar that was

[00:15:24] committed to the funds that is a key

[00:15:28] You know strategy that any VC is going to have

[00:15:31] And I tell founders, you know VCs you take VC money

[00:15:36] You're going to either blow up. You're gonna blow up to zero

[00:15:40] And not be anything are gonna blow up really big because VCs they need those 30x if they need the 100x

[00:15:45] They need the really big returns. That's how they stay in business

[00:15:50] It's a little different on the angel side. I actually

[00:15:53] Like that when I do personal deals, I don't have to think about a 30x

[00:15:57] I have to think about a bunch of attributes

[00:15:59] Do I think that this is at least a 10x in a few years?

[00:16:02] Like I did a deal one of the deals of 2017. I mentioned that I did

[00:16:06] I put $10,000 in it we invested at a

[00:16:09] Very low valuation

[00:16:11] So I won't give the exact valuation most say it was somewhere between three and six

[00:16:15] post money

[00:16:16] And they have not really had to raise more money

[00:16:19] And they're killing it. So when they sell in the next few years, I may get a check for $200 or $400,000

[00:16:27] That's not a VC deal

[00:16:29] That's a great angel deal and what I did there was I invested in

[00:16:33] A situation where the valuation was low. They're already making revenue

[00:16:36] I believed in the team and I thought that you know, I could at least 10x this

[00:16:41] So I should be able to do that off of that deal

[00:16:44] If they get a 30x

[00:16:46] I would be shocked. That's probably a little bit outside of the reach of that deal based on the industry that it's in

[00:16:53] And all of the attributes and economic drivers that we know

[00:16:57] So I really think about them differently

[00:16:59] But it is good to your point that everybody goes into angel investing knowing what they are underwriting to

[00:17:04] Understood. I'd like to get into that to that criteria

[00:17:06] But just because that would have been a beautiful segue, but I'm gonna just one question before I get there

[00:17:11] It is um, I know you mentioned like the the deal flow groups

[00:17:16] Right. Some of them you're a part of like Chicago early. I sometimes have a bit of a

[00:17:20] friction with the whole accredited versus unaccredited investor

[00:17:24] You know, especially in always make a joke of this too is whether you're in the u.s. or Canada

[00:17:28] It's like, you know banks will give you a $400,000 mortgage to buy a house

[00:17:33] I also can I live right across the casino that they just built in downtown river north in Chicago

[00:17:37] I can literally walk in there tomorrow and

[00:17:40] Spend like 50 grand 100 grand and I don't think anybody would tell me unless I'm missing something

[00:17:45] But if you want to invest in let's say a private deal

[00:17:48] Officially and formally and legally you have to be an accredited investor, which means your net worth has to be a certain number

[00:17:54] Which also means that then on paper that is accessible to a few people not everyone else

[00:17:59] Just walk me through like as I make this comment what observations come to mind

[00:18:04] Does that upset you? How do you tackle this?

[00:18:07] Well, I think historically it was there

[00:18:09] For good reason, but as information has become more accessible to people

[00:18:15] And as opportunities have become more accessible to people

[00:18:17] I really think that the sec should revise it and revise it downwards

[00:18:22] And also think about other ways to allow people to be accredited

[00:18:25] So today there are a bunch of ways but the two primary ways are

[00:18:28] Wine at your income and you've made over 200k in the last two years or 300k with a partner

[00:18:33] Or you have over a million dollars of assets

[00:18:36] Net assets excluding your primary residence

[00:18:39] So if you are accredited by income or wealth, that's great

[00:18:43] But what about people that go to business school?

[00:18:45] So George when you finish business school

[00:18:46] I would argue that you've proven that you can analyze stuff

[00:18:51] And if you can analyze stuff, you should be able to invest in whatever you want

[00:18:54] And I do think at some point in our lifetimes we're going to see that

[00:18:57] It's just that they're such a slow moving regulatory body that they don't know how to do it easily

[00:19:03] And so today there is a way for non-accredited people to invest

[00:19:07] And that is through crowdfunding

[00:19:09] The JOBS Act allows you to go on sites like WeFundr and Invest

[00:19:14] Which is great but I would argue there just like in the casino

[00:19:18] You know, there's not really safeguards

[00:19:20] So we partner with WeFundr

[00:19:22] And we have a group of angel investors who are both accredited and non-accredited

[00:19:25] There's 540 people and vitalized angels

[00:19:28] And we use our huge pipeline and we pick the best 2 deals to show our investors every month

[00:19:33] And I think of that as training wheels and a safety net

[00:19:37] We have seen so much that we're leveraging our VC background and our VC network

[00:19:42] And our VC deal flow to get deals in front of our investors

[00:19:46] And we help them with education and we help them

[00:19:48] With thinking through their strategies

[00:19:50] And we help them to be able to invest at least $1,000 into the deals that they want

[00:19:54] So we'll start to see more access for non-accredited investors

[00:20:00] It's just that today primarily it's still all accredited

[00:20:03] It's a real shame, it's keeping a lot of people away from a seat at the table

[00:20:07] When I think we should be bringing more chairs out

[00:20:10] Yeah, I'd agree

[00:20:12] I mean especially when there are other asset classes that are

[00:20:16] I mean risk is very subjective too

[00:20:17] When you say something is risky on what basis and what criteria are you defining

[00:20:21] That as risky versus not

[00:20:23] But like crypto as an example

[00:20:24] Again, no guardrails

[00:20:25] I can open Robinhood tomorrow and invest my entire net worth into crypto if I wanted to

[00:20:31] So I think that's just the that's what's odd about it

[00:20:33] Is it's a specific asset class not everything else?

[00:20:37] Nonetheless, it's good to

[00:20:39] And I like what you're doing with Vitalize Angels too

[00:20:41] And I think that's a stepping stone to provide access

[00:20:44] And I know that's a big piece of your I would say focus

[00:20:48] But also your motivation is how do you bring

[00:20:51] And how do you bring more people into the angel investing scene

[00:20:53] And probably reducing those misconceptions

[00:20:55] Like the fact that you need a lot of money and that it's only accessible to a few people

[00:20:59] Let's change now we can segue change hats, right?

[00:21:03] I know you're an investor but you also deal with

[00:21:05] And you speak to many many founders on a daily basis

[00:21:09] You're probably flooded with you're with inbound requests and

[00:21:13] Hey look at us. Can you invest in us? Can we get on a call?

[00:21:17] A lot of founders are probably listening to this and they're wondering what

[00:21:21] Criteria do you look for in a founder? Let's start with just the qualitative

[00:21:25] So we get on a call. What is an A plus call with George?

[00:21:29] The CEO of XYZ startup look like I'm looking for a couple things.

[00:21:33] The first is a big and growing market

[00:21:34] So if you're going out to a niche totally fine

[00:21:36] But probably not to be a seebackable business

[00:21:38] So I would use your time accordingly

[00:21:40] So I still see a lot of small markets

[00:21:42] Make sure it's you know, three or five billion or plus

[00:21:44] Or you shouldn't really be talking to BCs

[00:21:46] Next is is there some traction?

[00:21:49] And this is I think a sticking point with a lot of founders

[00:21:52] They and I see this all the time

[00:21:54] I need help to start so can I talk to you?

[00:21:56] And unfortunately the answer is no

[00:21:59] Because it has become so inexpensive to start a business today

[00:22:04] Versus what it ever has been in history

[00:22:07] That you should be able to get somewhere on your own

[00:22:10] And what that does is it proves that you know how to go and seek

[00:22:15] Resources, you know how to find information

[00:22:17] You know how to synthesize a bunch of inputs

[00:22:20] And then actually execute to get an output

[00:22:23] And it allows me to see how you're thinking

[00:22:27] So those steps are actually really really really really important

[00:22:31] There are other programs that can help with the start phase

[00:22:34] So there are some grants out there

[00:22:35] There are accelerator programs

[00:22:37] There are even just

[00:22:39] Co-working and incubator spaces like mhub and 1871 in Chicago

[00:22:43] That really serve a need that I don't think

[00:22:47] VCs like me should be answering calls

[00:22:50] Or trying to help people when they're at net zero

[00:22:52] What I want to see is a founder that has their product live

[00:22:57] And they have customers using it

[00:23:00] Like that's really ideal for me

[00:23:02] Like that's the minimum for vitalize angels

[00:23:05] And then the minimum that I need to see for there are fun

[00:23:08] Which is a seed fund is that they have a couple hundred thousand dollars of revenue

[00:23:11] And so I really focus on the founders who can prove that execution

[00:23:17] Biggest pet peeve I can do to destroy this call

[00:23:20] The biggest pet peeve you could do

[00:23:22] Say gail, can I pick your brain?

[00:23:25] Hey gail, can I pick your brain?

[00:23:26] I hate that phrase

[00:23:27] Everybody please stop using that phrase

[00:23:29] It makes me like think about a like a pick hair pick in a brain and it's disturbing

[00:23:35] Yeah, I wonder what mine is trying to think

[00:23:37] Maybe like it's a big hairy goal

[00:23:38] I don't like that word

[00:23:39] Yeah, but pick your brain

[00:23:42] Yeah, because I think I saw it once on like there's like an like a VC panel

[00:23:47] I'm like out of every word you could have used

[00:23:49] It's a bit of an odd one

[00:23:50] But yeah, and then there's the old a bird in the hand is better than two in the bush

[00:23:55] That's one in these

[00:23:57] Okay

[00:23:59] But what are you gonna do with the bird in your hand?

[00:24:01] Like I don't want to think about that, you know

[00:24:03] That's my point like out of all the analogies you could use this is the one

[00:24:06] You know you're speaking for the 400 people

[00:24:08] Some of these analogies anyway

[00:24:09] So pick your brain

[00:24:11] I heard you I think this is an important one

[00:24:14] Even though I might have to restate it but

[00:24:16] You talk about interruptions a lot

[00:24:18] Like a founder not giving you enough space to reply either maybe and I think that could be because they're

[00:24:25] Not confident enough. They're a bit insecure

[00:24:28] They're nervous so they over speak

[00:24:30] But something worth mentioning right to navigate the conversation carefully, right?

[00:24:35] It's not something that bothers me

[00:24:36] I probably am not going to invest in a founder though

[00:24:39] Okay, that's a great example of I am ingesting all kinds of information in a call with founder

[00:24:44] It's not just listening to their answers. It's how they say it. It's what the energy exchange is

[00:24:49] How passionate are they about this business?

[00:24:51] Are they willing to say they don't know something?

[00:24:53] Are they really good and diligent about following up with things? Were they on time?

[00:24:57] All of this stuff is an input to help me understand how this founder thinks and how this founder operates

[00:25:03] And believe me everybody has bad days and I don't I'm not gonna disqualify somebody

[00:25:08] But if you're having a bad day, I would absolutely tell the investor

[00:25:11] Hey, I just had a really bad day and here's why and some of the off my game right now

[00:25:15] And I'll give somebody maybe a second chance

[00:25:17] But if I get interrupted a bunch or if there's some negativity there or

[00:25:22] You sometimes there's two founders on and one dismisses the other I'm out. I don't want any part of that

[00:25:27] Yeah, I mean it's a fine balance, right because I love how you're saying it

[00:25:30] It's like I'll give you grace because we're human and things come up

[00:25:34] And that could have come up literally 10 minutes before the skull. It's fine

[00:25:37] But also it is your first impression. I can't have 10 30 minute intro calls with gale either

[00:25:43] So if this is your first call

[00:25:45] Much kind of like an interview. I mean you do have to put your first your best foot forward

[00:25:49] Yeah, totally and it helps me understand how you're able to sell

[00:25:53] Because you're right now you're selling investors and it's not necessarily exactly like selling your product

[00:25:58] However, it is similar enough that it gives me insight into

[00:26:03] Are you actually able to execute? Are you actually able to

[00:26:07] Run me through a process and sell me in the end in a way that is going to work

[00:26:12] Has there been a creative like the most creative approach that someone

[00:26:15] has tried to get in

[00:26:17] To an intro with you versus just like a LinkedIn outreach or you know

[00:26:21] Waiting outside your door with cookies. Not that I recommend that but no, I actually haven't seen too much

[00:26:27] one VC that I know said that a

[00:26:30] Founders sent the head of the fund some kind of

[00:26:34] very rare

[00:26:36] Steering wheel from like an old Porsche or something because that VC liked to collect old cars

[00:26:43] And they spent a little bit money. Um, so I've heard of some crazy stories, but by and large

[00:26:49] Either try to get an intro or send an actual good

[00:26:52] cold email

[00:26:54] Most emails are really really bad that I see and I don't even I don't even read them because I can tell that

[00:26:58] It's a canned thing and it's super long

[00:27:00] If you want to get in and VC to read your stuff make it personalize and make it two sentences

[00:27:05] And make sure all of your valid

[00:27:08] Points about what traction you have are front and center because I don't want to read

[00:27:13] Text even for 20 seconds. I get thousands of emails a day

[00:27:17] So you're trying to fight with that and I absolutely have invested in cold emails

[00:27:22] It's rare because most of them are so bad

[00:27:25] You're gonna get a bunch of really really solid cold emails after this

[00:27:28] What I want though and here's why because most people don't don't actually follow through

[00:27:33] Like I've spoken to tons and tons of classes over time and you know all these students like oh, I really want to work

[00:27:39] But I want to work for you on it. And I'm like here's exactly what to do

[00:27:43] and in

[00:27:45] Almost 12 years doing this

[00:27:47] I've probably only gotten

[00:27:50] three to five

[00:27:52] Really well written emails from students even if I already told them

[00:27:55] Like you can go online to find all this stuff right now that I'm saying

[00:27:57] But people don't spend the time on it because they want everything to be hand said to them

[00:28:03] And that's never going to work in entrepreneurship. It is hard

[00:28:08] I had a founder yesterday

[00:28:11] Who's almost had a cash get really upset

[00:28:13] About everything it's like and I told him I was like listen

[00:28:17] Entrepreneurship is it's all BS all the time

[00:28:20] Sure, there's highs and lows

[00:28:21] But like you have to be able to handle

[00:28:24] A lot of BS and if you can't don't even get into this space

[00:28:28] Yeah, and also maybe be careful of airing your laundry on a 30 minute call

[00:28:33] That's happened to mean a pass with also a founder actually in Chicago

[00:28:36] Same thing like 30 minutes of just like venting and this my wife's like clinical psychologist

[00:28:42] Everything everything you can possibly imagine

[00:28:45] Yeah, the ecosystem people the conferences. There's no startups. There's no capital

[00:28:49] There's no that for 30 he you know, he spoke for like 28.30 seconds of the of the 30 minute call

[00:28:56] And at the end I was like that's great catching up and I hung up

[00:29:01] Like what are you there's nothing for me to do what I actually first of all I left and this was an intro call

[00:29:07] So I left not even knowing anything about the business. It was actually sad like I was I oh, I had like a 30 second

[00:29:13] That was a bummer for you

[00:29:15] Because I could have maybe made an intro

[00:29:16] I could have understood the business and tried to profile it somehow like we could have found one opportunity out of this 30 minutes

[00:29:24] Definitely better than you know a 30 minute of just like venting and

[00:29:28] And again, sometimes I okay

[00:29:31] It's a bad day for sure

[00:29:31] But maybe just save that upfront and say this I just want to vent then I'll have like my wife's psychology hat on

[00:29:36] And maybe I can hear you out. But yeah, I make I don't know you got to be careful with that stuff

[00:29:40] This happens more than anybody would like

[00:29:44] but

[00:29:45] It's forced me over I used to take every single request that came in and help every single person and today

[00:29:50] I hardly help anybody and I

[00:29:53] They'll kind of add saying that but I can't do it anymore

[00:29:57] Because most people aren't actually prepared and aren't

[00:30:02] I can't even help them. They're literally just going to waste both of our time

[00:30:05] And that's the sad state of affairs and so to stand out really doing research

[00:30:11] And figuring out how to connect in a personal way with somebody that you really want to meet with

[00:30:15] And I still do this if there's somebody out there where I'm like, oh my god

[00:30:17] I would love to meet with this person. I actually spend some time thinking about it instead of just

[00:30:22] shooting off some stupid canned email that it's never going to do anything

[00:30:26] Like a lot of founders a lot of people waste time

[00:30:30] Trying to reach out to folks without really thinking through that connection

[00:30:34] Yeah, I wonder if part of it too is this it's a bit of a metric game

[00:30:38] You know, I hope that's not the case

[00:30:39] But maybe for those canned emails that don't get any responses back

[00:30:43] It's almost like if you're in a sales org and you're pressured to

[00:30:46] Let's say hit like a hundred, you know emails on Salesforce

[00:30:50] And so you're just sending it out for the sake of just meeting that metric

[00:30:54] Instead of sending 10 emails

[00:30:56] But those 10 emails took a month of your effort to actually do the research

[00:31:00] The diligence because that's really what takes time. It's easy for me to reach out and be like, hey gail

[00:31:05] I'm also in chicago would love to grab coffee

[00:31:06] But you're like who the hell is this guy versus going to an event takes time

[00:31:10] Putting any effort maybe to stay longer at the event. So after you speak on my k-gail

[00:31:14] What's up just wanted to say great points

[00:31:16] Uh, heard you out third if possible investing

[00:31:20] Let's say like having a formal connection between us where I'm backing up my words and fourth saying now

[00:31:26] I reach out with a subject line be like, hey, I'm one of your very small investors

[00:31:30] Big fan

[00:31:31] Can I take you, you know for a coffee just because I'd love I'd love to bolster my angel investing game

[00:31:36] I guarantee you're probably gonna say yes to that fourth piece

[00:31:39] But that took like six months

[00:31:41] Yeah, I'm in this business because I love people and I wish I could help everyone but it's truly just it's just tough

[00:31:48] And that's that's why anybody that's interested in starting fund or starting

[00:31:53] Uh business the networking piece is real

[00:31:57] I mean when I first started in 2012 2013

[00:32:00] I would go to every single event in chicago every single founder event

[00:32:03] And I probably did that for three or four years and now I just kind of pick and choose

[00:32:07] But I tell anybody that's starting in a new ecosystem go meet everybody that you can at events

[00:32:13] Create relationships and then keep going the ones that you really like and that's really how the magic starts

[00:32:19] What about chicago is appealing to you like out of anywhere you could i'm assuming you can just live anywhere

[00:32:24] That's just hypothetically. Let's say you could which you can

[00:32:27] Whether you want to or not but I'm in national now that I tell you um, so I'm splitting

[00:32:32] I'm staying in chicago in the summer

[00:32:34] But nashville is my my winter you're still wording in that and nashville. Yes, dear

[00:32:39] I turned 40. I have my prices. I made this little cabin vision a reality. So yes, I'm a snowbird now

[00:32:46] Love it. I hear great things about nashville. So yes makes sense. Yes, it is and I love chicago

[00:32:51] I love nashville some very very very fortunate

[00:32:54] Um, are you there now? Say it again. Are you there now like this is nashville?

[00:32:58] Yes, I am gonna go to some events in downtown nashville in about an hour

[00:33:02] Cool. How does it compare by the way like startup ecosystem nashville versus chicago?

[00:33:07] Same it's similar. Um, really good people in both. I think nashville just by population is a little bit smaller, but

[00:33:14] You know similar size funds lots of great founders in both

[00:33:17] um, really kind of open networking at events, which is nice very welcoming

[00:33:22] Atmosphere in both places. So there's not too much difference except for maybe size

[00:33:27] Size of like volume market, I guess

[00:33:28] Yes, size of like so number of founders number of vcs and then in nashville it really there's a lot of

[00:33:36] healthcare here and

[00:33:37] A lot of entertainment music in chicago. I think we're a little bit more finance and some of your your standard enterprise tasks

[00:33:46] Got it

[00:33:47] What uh, I guess looking forward to 2024 what excites you about

[00:33:52] Chicago and now nashville let's say the midwest startup ecosystem the investing ecosystem

[00:33:57] What excites you and what makes you a little bit more

[00:34:00] uneasy in terms of challenges

[00:34:02] I think we're going to continue to see capital be tough for founders to get

[00:34:06] Which means that we as investors have to really really really work hard to help them

[00:34:11] That's just gonna be a challenge. The m&a markets haven't come back

[00:34:14] My guess is that they're going to come back next year and we should see an upswing in 25 on the positive side

[00:34:21] I think right now

[00:34:23] those who are starting companies

[00:34:25] On average have more experience than I've seen in a long time. They have more passion than I've seen in a long time

[00:34:32] And I think the reason that is is because there aren't a lot of just kind of fair weather entrepreneurs out there being like

[00:34:39] Oh, I guess I'm going to do this because the economy is so good and I want to do the next ai for x business

[00:34:46] It's really people who are like I have wanted to do this for a long time

[00:34:50] Now is the right time. I'm going to take advantage of this

[00:34:52] I'm going to downsize my lifestyle and just go for it

[00:34:55] And those fearless founders have I think a really cool opportunity right now to make big businesses

[00:35:02] Yeah, that's a great point. Why work that I forgot to ask you this but speaking of building great businesses like why that specific niche

[00:35:09] Was that always a thing for you?

[00:35:11] kind of I personally am kind of a process

[00:35:14] geek nerd

[00:35:16] I just see things in operations in process and

[00:35:20] So business to business to me makes a lot of sense

[00:35:23] Consumers are way more fun. Don't get me wrong

[00:35:26] And there are very few consumer businesses that go nutty and if you're in one awesome

[00:35:31] However, business to me makes a lot of sense

[00:35:35] And I've always been interested in kind of organizational development and

[00:35:38] Uh learning and development and helping people so the HR side of the house is a historic interest of mine

[00:35:45] The two companies I started one was in learning and development and one was in hiring recruiting

[00:35:51] So I have a background in it personally

[00:35:53] When I look at the 180 to 200 companies that I've done historically

[00:35:57] A lot of them would fit into work tech

[00:36:00] Which we define very broadly as B2B software that dramatically improves work outcomes

[00:36:05] So it's a lot of general B2B SaaS

[00:36:08] We just want to make sure that they're really big ideas and then either the employers the employees ideally both

[00:36:14] Have a much better experience and outcome because of the new tech solution that we're investing in

[00:36:19] That makes a lot of sense. So back kind of flies into the intro where we were talking about investing in what you love

[00:36:24] Maybe what you have experience in also what you have a strategic pull into

[00:36:28] Yeah, you know, yeah, and then from the consumer side

[00:36:31] You and I and everybody listening we all use this stuff. So it's not just productivity. That's maybe a slice of what we do

[00:36:37] But you know

[00:36:39] We invested in stylo, which is a customer support platform, which is super cool

[00:36:44] And every almost every company everywhere has a really terrible customer service

[00:36:50] system

[00:36:51] And I as an end customer would love to see that become better

[00:36:55] So that that kind of stuff is very relevant and tied in all over the place in work tech

[00:37:00] Has there been one golden goose like one startup that's done really really well that

[00:37:05] For my portfolio or just in general

[00:37:08] In general could be yours irish, whatever. Oh, um, well my three biggest

[00:37:13] companies out of

[00:37:15] Historically out of both portfolios would be chime trading view and placer. Ah trading views big. I didn't know

[00:37:21] Aren't these chicago based?

[00:37:23] They went through chicago tech stars

[00:37:25] They did right? Yeah, I mean I use them a lot because I have a finance undergrad

[00:37:28] Yeah, so use them a lot even early on like they've been around for for quite some time

[00:37:33] Yeah, irish angel's invested in 2013 wild. Yeah, that's awesome. Um closing thoughts

[00:37:39] I have one kind of a rapid fire and then maybe just less lessons learned

[00:37:42] Uh, you enjoy being more of an investor than a founder or founder investor as somebody who that runs a small fund

[00:37:49] I have to think like a founder because we don't have a huge budget

[00:37:52] We need to keep our team small and uh, there has to be magic there. So that's just like a

[00:37:58] Uh startup team and then on the investment side, I think of that as our offering

[00:38:03] So that's our product or service just like, you know founder might be building a tech company

[00:38:08] We have a people-based product offering and it

[00:38:11] Is surrounding founders and investors so it's I think very similar to being a founder

[00:38:18] It's just that the thing that we're building is very different than what your typical founder that we think of and the tech world is doing

[00:38:26] And then not to go into the last piece as an investment advice, but more so I have a little bit of disposal income

[00:38:33] I'm interested after this conversation to do something with it

[00:38:36] What's what's the first thing you would do if specifically let me specify if you're looking to be an angel investor

[00:38:42] And just start with one company

[00:38:43] But you're not like you and I are very involved in the startup ecosystem by virtue of what we do

[00:38:48] Let's say you're not you have no connectivity

[00:38:50] What's the first thing you would do if I have five thousand bucks and I want to invest in a company?

[00:38:54] What's the first thing gail would do? Well, I would ask first if we were having a conversation

[00:38:58] why is the startup world because

[00:39:00] Everybody assuming that they have this which I know it's lucky that we all do

[00:39:05] cash savings for problems

[00:39:08] Then we want stock market

[00:39:10] And then from there it's um something to hedge

[00:39:14] So it could be real estate holdings. It could be some kind of credit. It could be

[00:39:19] VC or angel

[00:39:21] Or some combination of that and there's other stuff that's at south or two

[00:39:25] Let's say you want to do angel I would ask why and if you tell me okay

[00:39:28] Well, I would just really really really love to learn about new companies

[00:39:31] And that's super exciting

[00:39:33] And so I want to be investor because I want to be close to it

[00:39:35] This is an answer that I get a lot are a great go and do research on a bunch of groups

[00:39:40] And find one so gaingels is free. We are very inexpensive at vitalize angels

[00:39:45] We have a free membership for students if you're a grad student

[00:39:48] You can join for free and then there's other ones like josephine collective in chicago is very inexpensive

[00:39:54] That's for women that want to get started and kind of a state environment chicago early also very inexpensive

[00:39:59] That just does chicago deals run by jeff and brian

[00:40:02] Um and then all over the country got other stuff

[00:40:04] So the council by amber elig is also very good and inexpensive and the prices kind of go up from there

[00:40:11] So you can find anything

[00:40:13] But do research on angel groups

[00:40:16] That you feel drawn to and reach out to whoever runs them or the membership coordinator and say hey

[00:40:21] Can I have a call and then do your research online have the call and see which one feels right

[00:40:26] And then see if you can sit in on a meeting and find one and join it

[00:40:30] And then once you're in there

[00:40:33] Part of what you're looking for is already done

[00:40:35] You're around the founders. You're in the room. You have the excitement and the next step is back to what we talked about

[00:40:41] How much money do you want to deploy in the space?

[00:40:44] And how many deals do you want to do a year? Most people should do at least three deals a year minimum two

[00:40:50] um, so if you're not accredited

[00:40:53] The some people can only do 2,200 max per the sec. That's kind of the

[00:40:58] The maximum the smallest maximum level

[00:41:01] So in that case you would be doing two deals a year one at a thousand dollars each and that's great

[00:41:06] But if today's thing you can do three or four or five

[00:41:09] Deals per year, that's great. So now you've got your strategy of I know I'm doing x number of

[00:41:15] deals per year at about

[00:41:17] X dollars each and then you've got your deal flow and you've got your strategy

[00:41:21] And you want to just start writing your check and the first one could be a little scary because you're like, uh

[00:41:25] I don't know. I like it, but I'm scared. You just have to write the check

[00:41:30] you just have to do it and then

[00:41:33] Remember it's lit on fire. It's gone. You just don't think about it anymore, but

[00:41:38] You're really going to pay attention now

[00:41:41] The company not to really the money you're going to pay attention to the company and the excitement of okay

[00:41:46] wow, this founder's doing really good things or oh, no this founder's

[00:41:49] In trouble and the learning that happens after you have set the wire and after you have

[00:41:56] Sign the check is very different than if you're sitting in a classroom

[00:42:00] Or if you're a member of the angel group and you're just watching everyone

[00:42:03] So I really encourage you if you do have the income to invest and you're interested in it

[00:42:09] You got to just write your first check and once you do then it becomes a lot easier. Love it

[00:42:14] Go Wilkinson. Thank you. This was straight fire the last piece the last piece could be

[00:42:20] Could be something special. I feel like

[00:42:23] I like it a lot of sound bites. Thanks again for being here. I really appreciate it

[00:42:27] You're close for I regard you as a close friend in the Chicago and Nashville now

[00:42:31] Ecosystems and just uh come on down and kudos to all the work you do

[00:42:35] I want to say it before I stop recording. Thank you

[00:42:37] Well, you as well really appreciate you bringing me on today and thanks everybody for listening

[00:42:44] Make sure to share that with your community if you haven't already done so subscribe to the podcast

[00:42:49] I'll see you next time