This episode uncovers Adam Struck's transition from law to entrepreneurship and his impactful approach to venture capital. With insights into automated talent acquisition and the success of his venture studio, Adam shares valuable lessons on building and investing in startups.
• Adam's journey from law to founding Long Island Brand Beverages
• Building a proprietary talent acquisition engine at Struck Capital
• The effectiveness of special purpose vehicles in fundraising
• Insights on cultivating a strong network for deal flow
• The role of relationships in supporting portfolio companies
• The investment strategy behind Strzok Capital's venture studio
• Key metrics and signs of product-market fit for startups
• Advice on resilience and transparency for new founders and investors
All Links: linktr.ee/startup_recruiting
LinkedIn: www.linkedin.com/in/riecekeck/
Twitter/X: x.com/tech_headhunter
Recruitment: www.mindhire.ai
Youtube: https://www.youtube.com/@seedtoexitpod
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Adam Struck (00:00):
So we have literally built our own
proprietary in-house talentacquisition engine where we can
get a JD.
We can essentially scrapeLinkedIn for attributes that
correlate to that JD.
We've built out full emailautomation so we can literally
reach out on behalf of the CEO'scandidates and the next thing
you know, within like 48 hours,we've got 10 highly engaged
(00:22):
candidates that match theattributes perfectly of who our
CEOs are looking for, and thenwe give them to them.
So it's almost like top of thefunnel, fully qualified sort of
talent acquisition pipelinecreation in an automated manner.
Riece Keck (00:37):
Today, I'm joined by Adam Struck, founder and
managing partner of StrzokCapital, a leading early stage
venture capital firm.
Of Struck Capital, a leadingearly-stage venture capital firm
.
Adam's portfolio includescompanies like Postmates,
nutanix and Mythical Games, andhe's a recipient of Forbes 30
Under 30 in venture capital.
Beyond Structurally VentureInvesting, adam has also
co-founded and runs StruckCrypto, as well as Struck Studio
, which has cemented hisinfluence across multiple
(00:59):
emerging technologies.
So today we're going to talkmore about Adam's investment
philosophy, how he got startedin venture capital, his
entrepreneurial ventures and hisvision for the future of
venture capital.
So with that, let's get started.
Welcome to Seed to Exit, thepodcast where we uncover the
stories, strategies and insightsthat power the startup
ecosystem.
I'm your host, rhys Keck,founder of MindHire, a talent
(01:22):
acquisition firm specializing inhelping startups build
exceptional teams.
Each week, I sit down withfounders, investors and industry
leaders to explore the journeysbehind iconic companies and
game-changing ideas.
Whether you're building,investing or just curious about
what it takes to succeed in thestartup world, I want this
podcast to be your go-toresource for actionable insights
(01:42):
and inspiring conversations.
Now, if you enjoy the show,please don't forget to subscribe
, leave a review or share itwith your network.
Your support means the worldand really helps bring more
incredible conversations to life.
All right, adam, thanks forcoming on.
Glad to have you.
Thanks for having me,absolutely so I'm excited to
chat with you.
I had a chance to look over alot of the portfolio investments
(02:03):
that you do.
You've got your hands in a lotof different spaces right now,
so just excited to dive a littlebit deeper into everything with
you and learn a little bit moreabout how you invest.
Sounds great, awesome.
So before we get into StruckCapital, you, of course, had
your own start as anentrepreneur, not in the tech
space, in the CPG space.
(02:24):
Tell me a little bit more aboutthat and what led you into
venture.
Adam Struck (02:27):
Yeah, so I was originally a big law attorney at
Kirkland Ellis in their M&Acorporate practice group in New
York.
I worked on the Skinny Girlacquisition by Jim Beam and I
think that kind of inspired meto just look at sort of you know
, the ready to drink categoryand see if there were
opportunities for innovation.
Initially wanted to sort of dowhat Skinny Girl did for
(02:50):
margaritas to actual like LongIsland I see meaning like Long
Island like the alcoholicbeverage.
And then actually I decided topivot because there's a
three-tiered system associatedwith manufacturing alcohol.
That just makes it verydifficult from a distribution
perspective.
And when we did a bunch of sortof market research we saw that
(03:11):
Arizona Iced Tea was the sort ofmarket leader.
It had like 74 grams of highfructose corn syrup and we sort
of just sort of entered themarket at the perfect time where
people wanted to be healthy.
But there's definitely agreenfield opportunity.
So we used reverse osmosisfiltration to preserve the
integrity of the tea leaf.
We had organic cane sugar andpeople were just really
attracted to the brand along theEastern Corridor, ended up
(03:34):
getting into 17,000 mom and pops, costco, shoprite, 7-eleven.
Petitioned the USPTO for thetrademark to Long Island IC in
the RTD category and won andthen found a PE firm that wanted
to acquire us and then theyactually ended up taking the
company public under our brandand rolling up a bunch of other
assets.
So while it's not a typicaldirection in the sense of
(03:57):
starting a software tech company, it definitely, from my
perspective, was very sort ofgritty.
You know, going from zero to one, productizing every motion,
getting yourself ready for scale.
And I thought, um, given thatexperience, maybe I could be a
strong strategic advisor toyoung founders.
You know, really trying to hitescape velocity.
And I was lucky to have, youknow, a bunch of friends on
(04:19):
sandhill road and uh, um, I havea cousin as well that that's
had very high up positions at abunch of tech companies.
And I was able to sort of, youknow, find founders and just say
listen, you know, open up someallocation for me in a round and
I'll put up, you know, moresweat equity per dollar invested
than anybody else on your captable.
And I definitely got lucky, hada few early wins with companies
(04:42):
like Nutanix and Postmates andsort of, after doing 18 special
purpose vehicle opportunities, Ithen felt like I had enough of
a track record to raise adiscretionary fund,
(05:08):
no-transcript.
Create a track record withouteveryone 100% betting on you.
And it was sort of scratchingand clawing my way, spv through
SPV that then allowed me to sortof create you know what struck
is today.
Riece Keck (05:23):
So that's super interesting.
So you started out was it yourown funds that you were
investing that?
You got through the exit fromLong Island and then, once you
built that track record withyour own funds, then that's when
you said, okay, now I can goout and raise money from LPs.
Adam Struck (05:35):
Yeah, so it was my own funds, but because I had
access to companies that peopleknew about, people maybe wanted
to like talk about on the golfcourse or something like that.
It was also funds from externalinvestors as well, and what I
would do is I would structure itas like zero and 20.
So I wasn't taking anymanagement fees.
I would only sort of win ifthey won and I would purposely
put, you know, as many people inthe SPV as I could.
(05:57):
You know, sometimes like 7080people, and I did that because I
just wanted as many people aspossible to have, you know, sort
of strong brand equity with meand what I was trying to create.
This is also like before theAngelList days.
So I was doing all like the youknow, structuring the legal
documents, the subscriptionagreement, operating agreements,
myself like handling the K-1s.
It's like a lot of admin work,but that wasn't the best way to
(06:21):
get started.
Riece Keck (06:22):
Cool, awesome.
So you had a really interestingbackground.
So were you doing the Kirklandand Ellis?
Were you doing that alongsidefounding the iced tea company,
or was it one and then the other?
Adam Struck (06:34):
Yeah, yeah.
So I started Long Island BrandBeverages with my brother.
So I was sort of working likecrazy at Kirkland but also very
passionate about this sort ofexternal side gig.
And then, once it startedgetting very material traction,
I left my day job.
But you know, kirkland also islike a day and night job.
Riece Keck (06:53):
I was gonna say big law is not for the faint of
heart.
Adam Struck (06:56):
It's not, it's not.
Yeah.
And then, and yeah, then Ijumped in.
But even when I jumped in, thebusiness was still super early,
had a lot of risk, and Iremember my mother was very
upset with my older brotherbecause she thought it was
influencing me to leave law.
But you know, I tell everybody,you know you have to think
about the totality of yourjourney and when you're able to
(07:17):
take risk and really sort of youknow swallow and come back from
failure.
So for me, you know, as a youngperson, you know I didn't have
you know swallow and come backfrom failure.
So for me, you know, as a youngperson, you know I didn't have,
you know, a wife yet or kids oranything like that.
So it was a great time to beton myself and I think I got very
lucky that, you know, I wasable to be successful and then
propel me into, you know, sortof not only investing in
(07:38):
companies, but now we alsocreate companies through our
venture studio.
Riece Keck (07:41):
When was the inflection point?
This isn't really the point ofthe this overall podcast, but
for you know, but for those whoare thinking about starting
their own entrepreneurialjourney, when is the inflection
point?
When you felt leaving K and Eto take the plunge into your own
thing?
Full-time Is it when?
Replaces your full-time income?
Is it something else?
Yeah, yeah, Great question.
Adam Struck (07:59):
So for me it was like the way I interpret that as
like what does product marketfit feel like?
And for us it got to a pointwhere there was so much demand
that we couldn't get enough linetime from our co-packer to sort
of fill that demand.
You know, we would expand into,you know, 15 stores, 20 stores,
no-transcript.
(08:35):
So it was almost likeenterprise-esque, where we would
land and expand very materially, materially.
So once I got to the point thatwe could see the velocity in
which these sort of single unitpacks or six or a dozen were
sort of flying off the shelvesand then we got to the point
where we outgrew our co-packer,then I was like, oh, this is
really serious.
(08:56):
But in terms of it still wasn't.
It was an equity game.
I wasn't paying myself nearlyas much as I was making it at
Kirkland and Ellis.
I can game.
I wasn't paying myself nearlyas much, you know, as I was
making it at Kirkland and Ellis.
Riece Keck (09:07):
I can imagine.
So it sounds like you've hadsome really strong influence.
You had your brother, you hadyour cousin, who you'd mentioned
has worked in big tech who havebeen some of your overall
biggest mentors or influencers,and what lessons have you
learned from them that you stillkeep now?
Adam Struck (09:20):
Yeah, you know, david Blumberg from Blumberg
Capital was, you know, veryinspirational to me.
He was an early investor inNutanix and you know also sort
of started out with sort of SPVsand sort of created a large
fund with a ton of you know sortof a ton of wins through that
process.
I think that was was definitelyone that you know sort of
(09:43):
inspired me.
That was definitely one thatyou know sort of inspired me.
But when I was really reallyearly thinking about venture and
entrepreneurship, I rememberreading Ben Horowitz's the Hard
Thing About Hard Things.
You know, obviously he's awell-known name, but what I
loved about just sort of theethos of how he was writing is
you almost felt like you were,you know, in the room with him,
you know, having a coffee andreally just talking.
You know, you know, sort ofhonestly and truthfully about
(10:06):
not only all the amazing thingsassociated with entrepreneurship
but you know, the concept oflike eating glass and swallowing
it and continuing to go.
You know, I've also been verymotivated by just the story of
my, my grandfathers.
Both of them respectively, youknow, were immigrants and you
know both actually came to SouthAfrica and started with
(10:27):
absolutely nothing and in theirown way, created large companies
and unfortunately they thendealt with things like
hyperinflation and all thesethings that can come with maybe
trying to scale in South Africain sort of the 70s, etc.
But you know, from myperspective I kind of always
felt like I came from verystrong entrepreneurial genes and
(10:49):
I felt like you know, if theycould do it, you know I think I
can do it.
So I think that that memory andthat story also was very
influential for me.
Riece Keck (10:58):
I love that.
I mean you clearly have thescrappiness, both with starting
the beverage company, as well asthe SPVs and Struck, which
we'll get to in a minute, bothwith starting the beverage
company as well as the SPVs andStruck, which we'll get to in a
minute.
I'm really curious how does theSPV vehicle that you mentioned
work?
I mean, I know what a specialpurpose vehicle is, but you
mentioned getting 70 to 80people in there.
So are you then functionallydoing almost like syndication or
small level crowdfunding from,call it, 70, 80 investors and
(11:21):
saying taking maybe three to5,000 and then going to a seed
fund or a seed level owner andsaying I can write you a
$250,000 check?
Is that your model?
Adam Struck (11:31):
Yeah, so typically what we would do you know what I
would do is I would firstsecure the allocation with a
portfolio company.
Cause what we don't want to dois sort of promise an allocation
and a hot startup and then allof a sudden you, you raise the
capital but you get everyone tosign some scripture agreements.
Then you can't get into thedeal.
So so I would try and securethe allocation, but then the
minute I would secure it, itwould create fear Cause it's
(11:56):
like oh my God, now I have tofill it.
That's not so easy, but yeah, sotypically like what I would do
is I would secure like 250, k,500k, you know, million dollar,
you know allocations and variousstartups.
I would then create you knowsort of proprietary materials,
you know sort of our investmentmemo, you know financial model,
all those types of things.
And then it's really about justsort of you know pounding the
(12:19):
pavement with people in yournetwork that you think would be
attracted to sort of havingexposure to this type of you
know to venture as an assetclass and maybe this particular
company taking lots of calls.
And you're really being asalesman, right, you're sort of
selling your ability to sourcethe deal but, most importantly,
you're selling what you believeare going to be the future
prospects of the company.
So you know there were timeswhere I would lock in like a
(12:41):
250K allocation and that wouldbe heavily oversubscribed and
then maybe the founders wouldgive me more allocation, or
sometimes they didn't, and youknow we've had times.
We had times, I remember, wherethere was like a deal where I
had like $7 million of interestbut my allocation was only like
a million dollars.
So then what we would do is wewould lower every lower,
everybody per RADA and then givethem their, their allocation.
(13:03):
So that's kind of the thing,right is you push really hard by
adding value to the founder tohave them be like, hey, I'm
going to give you some of thisallocation.
And then you have to go out andsort of raise the capital and
just hope that all the duckssort of fall in a row prior to
closing, because you also don'twant to be that person that is
(13:23):
delaying a closing or having tocome in on second close.
You know you could ruin yourreputation really quickly.
So yeah, I mean, basically wewould get the allocation, you
know, prepare proprietarymaterials and then you know,
just run a good process to geteverybody coming in at the
appropriate time to then notdelay the company's closing with
other institutional investorstime to then not delay the
(13:44):
company's closing with otherinstitutional investors.
Riece Keck (13:47):
I mean, it's really fascinating because it's a
little bit opposite from how thetraditional venture model works
, right, where you raise a fundand then you go and you deploy
that capital.
It's like you get theallocation, now shit, now I have
to go raise the money.
Did you ever run into asituation where you got the
allocation but you weren't ableto raise the capital and then,
if so, what happened?
Adam Struck (14:01):
Yeah, if so, what happened?
Yeah, so, luckily, you know,knock on wood, uh, that has
never happened.
Uh, now what I will say?
there have been times where,like the closing is happening
tomorrow and I'm like hadn'tfilled it and that's very
stressful, um, but but generallyI think we did a good job.
You know getting sort ofindication of interest from
different people.
You know having having um.
(14:23):
You know various.
You know lps.
You know various.
You know LPs that have deeppockets.
You know we're excited byvarious opportunities and you
build a lot of trust.
You know, one of the interesting, interesting things for me is
one of the family offices thatcut me like a 50k check for like
my first SPV ended up anchoringmy first fund, which is a $32
million fund.
So that was really just overyears of growing with them and
(14:46):
then respecting my lens and howI conducted diligence and again,
my proprietary access to dealflow.
But you are right, it is sortof backwards and you're sort of
forced to do it backwardsbecause you know I didn't go to
Stanford and sell a SaaS company.
You know it was a differentsort of background.
So I thought the way that Icould get people to invest in me
was not having them underwriteme but underwrite the company.
(15:08):
But that meant that I had tosecure the allocation to the
company, you know, beforeactually making it happen.
Riece Keck (15:15):
I love that approach .
When you mentioned theproprietary deal flow, what does
that mean?
Is that just because you have alarge network Did you have
access to some data sources?
Adam Struck (15:27):
Yeah, I mean.
So now, like at Struck, we haveextremely proprietary access to
deal for plethora of reasons.
You know.
We've got, you know, incredibleconnections with downstream and
upstream VCs that want to dodeals with us and share
everything.
We've got a really strongfounder network.
These founders, you know, arenow leaders in their fields and
when employee number 10 fromtheir company leaves and does
something else, they're going tosend them right to us because
they had such a good experienceat the seed round.
We have, like, early access toa bunch of accelerators like the
(15:50):
Y Combinators of the world, andthen, most importantly, we have
our own venture studio wherewe're actually creating our own
companies.
So that's as proprietary as itgets.
The way I would have defined it,you know, sort of early in my
career from an SPV perspective,was basically just being, as you
said, well-networked.
So the cousin that I mentionedjust as an example was global
(16:10):
head of business development atSpotify, then chief strategy
officer at Snapchat, chiefstrategy officer at Chime, so
that's a pretty incrediblenetwork, right.
So being able to tap into thosepeople, meet founders and, you
know, go to someone like BastianLehman, you know founder of
Postmates, and say, hey, likeI'm just looking for like 100k
in this series A or series B andlike tell me who you're looking
(16:31):
to hire, tell me, like whoyou're trying to talk to and I'm
going to show you what I can do.
So it's all about sort ofunderstanding the totality of
your network and your socialgraph and just being super
gritty with founders and ideallyright reminding them of
themselves, because no founderhas gotten to series A or series
B without having to send themto do the non-scalable gritty
things to find product marketfit, and I still believe that
(16:54):
the bar for value add andventure capital is super low.
So I think I was able to standout by leveraging my network in
front of the right people andthen like literally pestering
them with value add until theylet me into the round.
Riece Keck (17:08):
I love that.
Okay, so you did really wellwith the SPVs.
You then raised your $32million first fund.
What has happened from raisingthat first fund to today?
Yeah so definitely a lot.
Adam Struck (17:21):
So that first fund is what we call struck capital,
and that's basically like ourB2B closed ended software fund.
We are now investing out of anew fund, struck capital, fund
two, which is $75 million.
We're going to be going out for$100 million fund three in
January.
I'm just waiting for thoseinterest rates to drop a little
(17:41):
bit more.
Just waiting for those interestrates to drop a little bit more
.
One of the things that we alsodid that was very opportunistic
was one of the SPVs that Iinvested in.
I ended up selling to Bittrex,which, at the time, was one of
the largest cryptocurrencyexchanges, and I was actually
approached by a relatively largefund in the LA area that said
we want exposure to crypto.
We've heard about your exit.
You have proprietary access tothese exchanges, and that was
(18:09):
during, like the ICO craze.
You can get these projectslisted.
So we're going to you know,essentially amend our LPA, turn
ourselves into a fund to fund,cut you a $5 million check and
then that can anchor a cryptofund.
So we did that as well.
That was a 2017 vintage.
That fund today is sort of likea hybrid open-ended fund, where
we, you know, can invest inearly stage venture capital
deals, but then we can alsotrade those tokens after a sort
(18:30):
of token generation event.
There's around a hundredmillion or so in that fund that
the NAB changes, you know,essentially daily.
And then the third leg of thestool, so to speak, is our
venture studio and that was sortof born at the height of 2021,
where I would find founders,develop strong relations with
them for six months, add a tonof value, and then I'd write
(18:52):
them a term sheet and thenthey'd call me and say a junior
partner at Tiger Global that Ijust met yesterday is offering
3x what you're offering and theydon't even want a board seat
and they don't care about any ofthis.
That's like I'm just taking itas easy money.
And it happened like numeroustimes and I kind of just felt
like gosh.
You know, even as a venturecapitalist.
You know on the you know sortof forefront of innovation, all
(19:13):
early stage, real sort of valueadd.
You know sort of sweat equityintensive investor I still find
that because of the macroenvironment, I have like no ball
control and I can't really getdeals done according to my sort
of investment criteria and youknow sort of valuation framework
.
So I said you know what?
Like I'm an entrepreneur, I'vegot a lot of entrepreneurs
(19:34):
around me.
Riece Keck (19:35):
Why don't I just?
Adam Struck (19:35):
launch a studio so I can be master of my own domain
and create my own companies.
So I teamed up with MichaelMontero, who was my CTO
operating partner at the time.
So I teamed up with MichaelMontero, who was my CTO
operating partner at the time.
Mike's incredible because hebuilt Resi.
So I'm sure you've used Resi tomake a restaurant reservation
and we's been really cool aboutthat is we raised it.
(20:05):
We raised the capital from abunch of tier one VC funds.
So we've got like Andy Weissmanfrom Union Square Ventures, rob
Chesney from Chicago Ventures,revolution Liquid 2, great Oaks
US Venture Partners.
So these funds have allinvested in us because they view
it as a way for them to haveproprietary access to deal flow.
And then what's great is we canleverage their information
(20:26):
asymmetries to be like, hey,where do you see greenfield
opportunities?
Where should we build?
Obviously, I also created a lotof cross pollination between
the struck investment teams andthe studio, because it also
helps to understand what tobuild.
And yeah, for me we're now liketwo and a half years into the
venture studio.
We've created four companies todate.
You know they've been funded.
(20:47):
They're real companies.
It is a really fulfillingsituation for me.
You know, I just find that for alot of VCs out there and I'm
sure a lot of them are greatoperators If you create a
company 20 years ago, before theexplosion of Gen AI, and before
having to deal with, likehybrid teams, like it's just not
the same, I don't care whatanyone says.
So for me, for me, you know,with the studio it's sharpening
(21:11):
my pencils and sort of keepingme strong on the investor side.
Because you know, if a foundertells me like oh, we can do PDF
extraction with LLMs and likethat's how we get, you know, get
through integration, and I'msitting there saying when we are
fine tuning LLMs and trying todo PDF extraction, it's abysmal.
I know that they're BSing me.
You wouldn't know that unlessyou're like building today.
(21:33):
So you know, I think the studiohas made me a sharper investor.
And then I think being able tomarket, map and understand where
things are going from theinvestor lens, that impacts what
we're building at the studio.
So it's become this really sortof virtuous, like one plus one
equals three.
Riece Keck (21:49):
Yeah, totally, that's fascinating.
Can I ask what the fourcompanies are?
Adam Struck (21:54):
Yeah, yeah for sure .
So one is called Gibson AI.
It's a dev tool but it's laserfocused on data models.
So data models are sort of likethe foundation of all of your
source code.
It's like the blueprints for ahouse.
If the data models are right,you're going to be in a really
good place.
If they're wrong, you're goingto be in trouble and updating
data models and having thosechanges cascade through millions
of lines of code.
(22:15):
It's very difficult, verymanual, very laborious.
So essentially what we can dois we can ingest all of your
code, we can spit out full unittested, context aware data
models and we can turbochargeexisting engineering teams or,
you know, teams that want tocreate new products and set them
up in microservices.
So that one's been reallyexciting.
And we were able to bring on aCEO named Harish who was chief
(22:37):
product officer at LeafLink.
He was like very high up on theproduct team at Apple for Siri.
He was at Microsoft for 10years and he's like a master's
in CS, so he's been awesome.
Another one, maybe less sexy butvery interesting from our
perspective, it's called PawCare.
It's a vertical SaaS solutionin the pet care space, but
specifically going aftergroomers, boarders and daycare.
(22:59):
So there's been so much venturedollars going into veterinary
but there's really not much interms of like groomers, boarders
and daycare, and they need avertical SaaS solution, they
need payments.
So we've been scaling heavilywith that and you know we
actually were approachedrecently by one of the
incumbents talking aboutacquiring us because they heard
(23:21):
oh my God, the C2 of Resi is nowentering the Pender space.
We're a little concerned.
So that one's been a lot of funand scaling dramatically.
We have another one that we'reactually raising for right now,
called Balto.
The way you should think aboutyour Balto.
It's in the healthcare space.
It's sort of like your 24-7personal sort of healthcare
assistant, but we go after aB2B2C use case.
(23:43):
So what we want to essentiallydo is, when companies are going
through open enrollment andthey're selecting, you know
which benefits they should have.
You know, should I do theplatinum plan, the bronze plan,
the silver plan, all of thisstuff?
We can essentially ingest allof this you know data, life
events and recommend you to theright plan and then, once we do
(24:03):
that, there's essentially a very, very accurate sort of co-pilot
that when you have questionslike hey, I've got an emergency,
should I go to the urgent care.
How much will that impact mydeductible?
You know, hey, I want to getthis medication.
How much is it going to cost me?
So we're really trying to easethe burden of HR teams dealing
with employees who are askingvery specific questions about
(24:24):
their plan and billing andhealthcare, that they're just
ill-equipped and the worst thingthat you can do as an HR
persona is tell your employee togo call their carrier Like it's
a very negative Glassdoorreview so we can prevent all of
that.
And then the last part of theBaltro product which we think
turns it from a point solutionto a really sort of holistic
(24:45):
platform offering is we caningest your EOBs.
So when you go and you know,say you went for a routine
checkup, you thought it wascovered by your insurance.
The next thing you know you'vegot a $500 bill.
You get what's called anexplanation of benefits from the
carrier and if you've evertried to read an EOB like you
might as well be in a differentlanguage carrier and if you've
ever tried to read an EOB likeyou might as well be in a
(25:06):
different language.
Most of the time there's errorsin these EOBs and people are
just like I don't have the timeto like go and appeal this and
do all this stuff.
So we can essentially likeingest those EOBs, we can pick
up where there's been you know,sort of the wrong billing codes,
errors.
We can do the appeal on behalfof the, you know, of the
employee.
And what's great about this isthe employer pays for all this.
(25:26):
And you know, with the currentcustomers that we have, like
they're talking about like four,five, six dollar per employee
per month, which for them, whenthey're spending thousands of
dollars per employee, you knowthis can really increase
satisfaction and decrease burdenon their HR leader, hr team.
There's a lot of ROI there.
And then the last one is veryinteresting we're just about to
(25:50):
officially launch it and raise.
So the product's built.
We've got a great CEO.
We've got a bunch of designpartners.
I don't know if you've everheard of companies called
SecureFrame or Vanta, whichbasically changed the way that
internet companies would get SOC2, type 1, type 2 compliance.
If you want to go and get a bigenterprise customer, you have
to all of a sudden become likeSOC 2, type 1, type 2 compliant.
(26:12):
Yeah, exactly, so thatdetermines, like how you hold
data, like privacy, security,all of these things.
So we, and then Vanta and SecSecureframe are, like you know,
unicorns and what they've doneis they digitized that, that
compliance burden SOC 2, type 1,type 2 compliance and then,
(26:34):
once you use them as a system ofrecord platform to get you know
sort of those credentials, theythen continuously monitor you
and and sort of become you know,as I mentioned right that, that
system of record platform forcompliance and monitoring.
So we want to do the same thing,but specifically for food
manufacturers.
So there's something called aHACCP plan which is essentially
like your food and safety plan.
Like, let's just say, you are,you're creating something and
there's chicken or there's egg,or you know what's the
(26:55):
temperatures, like how, how manytimes do you have to check the
metal detectors on the line tomake sure that there's no metal
in the foods?
All these different things theFDA is very robust what are
called HACCP plans.
So we want to start out asessentially like a HACCP plan
builder, you know, similar tolike what Secure Frame and Vanta
did for SOC 2, type 1, type 2compliance.
And then we can, and a lot ofthese major manufacturers, you
(27:19):
know, like ones that are doinghundreds of million dollars a
year, they have manual sort ofsafety personnel on the floor
that are checking these withpaper and pencil, but we can
digitize that entire process andput them with an iPad, have
essentially a dashboard that amanager that's even remote can
review and they can see everytemperature check.
(27:40):
You know all the real timemonitoring, et cetera.
Temperature check, you know allthe real-time monitoring, et
cetera.
So it's a very similargo-to-market motion with Vantan
SecureFrame, but very muchfocused on food and safety
compliance for foodmanufacturers.
What's also really interesting,just as a quick note, is there's
a ton of macro tailwinds rightnow.
I don't know if you saw, butMcDonald's literally, like last
week, had an E coli outbreak.
(28:01):
I did see that, yeah, and itlowered their stock by like 9%
when that happened.
So there's a lot of pull rightfrom major players and what
we've realized is for some ofthese manufacturers, if they can
go to their customers and say,hey, we just moved away from our
manual system to a digitized,like AI enabled system, they can
actually get more revenue rightand close you know, close
(28:24):
customers quicker.
So it's something for us thatwe think you know prevents the
loss of revenue through beingshut down by the FDA, but we
also think it's a revenue driverbecause it's.
We've noticed that it's helpingour design partners in their
business development processes.
So, yeah, that one's calledProtocol Foods and got a killer
CEO for that and we're we'reexcited to raise for that
(28:44):
shortly.
Riece Keck (28:45):
Wow, okay, so you're doing all that.
You've got the crypto side,you've got the investment part.
Do you ever sleep?
Adam Struck (28:54):
I don't sleep a lot .
I've got two daughters as well,and I try and be an active
father.
So, no, there's a lot going on,but I've got an incredible team
around me and just amazingpeople that push me and I push
them, and there's a lot ofenergy.
So I'm only 36 years old.
I got a lot of room to run, soall good things.
(29:15):
It's a good problem to have.
Riece Keck (29:17):
Those are a good problem to have.
So you place a really bigemphasis on the.
You know putting in more sweatper dollar than any other
venture firm is going to do.
Adam Struck (29:26):
What does that look like?
Riece Keck (29:26):
in practice.
Adam Struck (29:27):
Yeah.
So first off, in our officewe've got a neon sign that says
sweat equity is the best equity.
So I really believe that.
But over the years now we havecompletely productized that
motion.
It's a finely oiled machine.
And again, no disrespect to myother venture fund colleagues,
but I still think a lot of VCsthink the definition of value
(29:49):
add is calling a founder once aquarter and asking for KPIs,
like I literally think that'swhat they think and you've got a
lot of some of the mega fundsout there maybe less now, but
like at the height of 21, theywere they'd say we don't even
want to board Seabrook to giveyou like 2 million bucks to hire
McKinsey, because we don't evenwant to, don't want to help.
You know, post investment, frommy perspective, I fundamentally
(30:11):
believe and I tell founders thisall the time you know I'm never
going to know more about yourbusiness than you will.
You're doing this every singleday.
But I've I've created thisreally robust horizontal lens
watching many companies go fromzero to billions of dollars in
enterprise value.
And I fundamentally believethere's pattern recognition.
No matter what sector you're in, there's pattern recognition
(30:31):
where you're going from zero toone.
So the best founders are theones that will leverage sort of
my horizontal lens and if we cando it in the right way, I can
maybe put them in a place wherethey're proactive instead of
reactive, which I think can makethe difference, make or break a
company in the early stages.
So, in terms of what that lookslike, we have a whole platform
team and we have a bunch ofofferings.
So like we think that theminute our company is raised, if
(30:54):
they can get you know, 10x oryou know 10X talent into the
company, you know that's goingto, you know, materially sort of
increase their enterprise valueand ultimately their exit value
, especially across the totalityof a portfolio.
So we have literally built ourown proprietary in-house talent
acquisition engine where we canget a JD.
We can essentially scrapeLinkedIn for attributes that
(31:17):
correlate to that JD.
We've built out full emailautomation so we can literally
reach out on behalf of the ceocandidates and the next thing
you know, within like 48 hours,we've got 10 highly engaged
candidates that match theattributes perfectly of who our
ceos are looking for and then wegive them to them to close.
So it's almost like um top offunnel, fully qualified, uh,
(31:39):
sort of talent acquisitionpipeline creation in an
automated manner, so that's so.
That's like something that wedo on the talent acquisition
side For business development.
We've mapped out our wholesocial graph.
So we don't even know.
It's not even just about like,who are my LinkedIn connections.
It's like who are the secondaryconnections of my LinkedIn
connections and because ofCapital, Crypto and Studio and
just all of our LPs and ouradvisors, it's a really robust
(32:01):
social graph.
So we do a very good job.
Like when we onboard ourcompanies, we're like give us
sales paraphernalia that we canuse because we're going to know
buyer personas, we're going tooutreach on your behalf and like
we're going to set you up withqualified leads in your pipeline
.
So we track that.
We're super sophisticated aboutthat.
We really want to move theneedle from a go-to-market
perspective.
You know we've got in-houselike marketing as well.
(32:23):
So the minute they get, youknow the, the minute they get
funded, we get them in tech runor Forbes or something like that
.
And you know we believe thatthat helps with sort of three
different things.
It helps drive a go-to-marketbusiness development, it helps
drive talent acquisition and italso, you know, drives
downstream investor interests.
You know ideally can help thempreempt the round.
You know, we have just, I think, a lot of VCs.
(32:50):
They look at product market fitand they just assume that if
the product market fit is there,the product will have enough
scale to service those customers.
But what I've learned is it'sreally, really important to pay
attention to the actual techstack itself and sort of the
sort of tech debt associatedwith that.
You know, are these teams unittesting their code?
Are they investing inregression testing?
(33:11):
Testing their code?
Are they investing inregression testing?
Are they running monolithswhere there's a bug and it's
going to shut everything downand they're not going to know
sort of where the bug is?
Have they broken up thatmonolith and shifted to
microservices?
We're very, very granular aboutsort of the tech stacks and the
code that we invest in and theway that we sort of our founders
will see that during thediligence process.
(33:32):
But then what we'll do is we'llset them up with someone like
Mike right, who's the creator ofBrezzy, to do like a monthly
call to just go out, go, youknow, go over everything and
just make sure that you know,while they're pushing really
hard to ship features, they'realso, every time they write a
new line of code.
They're writing a unit test andtest how that new line of code
interacts with the rest of theirsource code.
So we're just very, veryhands-on on all the things that
(33:55):
we believe can make or break astartup in the early days and we
try and treat it like our ownproduct roadmap and essentially
ship new features and upgradeexisting features on a
continuous basis.
Like literally right after thisI've got a call with my
platform team to talk about whatthe sort of platform product
(34:16):
roadmap you know is going to befor the rest of the year and
like Q1 of next year.
We really view it in the sameway as software companies view
sort of like their product.
Riece Keck (34:26):
I have so many questions, but I absolutely love
all of that.
You've clearly put your moneywhere your mouth is in terms of
actually truly helping theportfolio companies.
You mentioned the knowledgegraph.
I'm just curious what platformdo you use?
What does that look like?
How do you build and maintainthat?
Adam Struck (34:41):
Yeah, yeah, so the talent acquisition engine is
completely internal.
The go-to-market sort of engineis various different tools that
we sort of piece together.
So we have Affinity, which isour CRM, so that allows us to
sort of track like every singleemail, every single person.
Affinity will automaticallypull from like LinkedIn and
(35:01):
Crunchbase to developessentially cards for each of
these personas.
So that's super helpful.
And then we use anothersoftware company called Atlas,
which is created by Hunt Club,and Atlas is the one that allows
us assuming we can sort ofupload all these contacts into
their system and get you know,sort of like our LPs and our
advisors and our employees toopt in.
(35:23):
Atlas then can tell us who theprimary and secondary
connections are of all of ourconnections.
So that's been like super,super helpful.
Because you know we just made aninvestment on the capital side
of a company called Rapid Flare.
And what Rapid Flare is?
It's a verticalized agenticsystem that's trying to replace
(35:43):
sales engineers, butspecifically in the electronics
and semiconductor space.
So there's a lot of AI.
Verticalized agentic systemsare like oh, we're going to
replace your sales engineer inSaaS, like that's really crowded
.
There's no one like doinganything for companies like AMD
and like massive chipmanufacturers.
So when we were, you know, wewere really excited about the
(36:05):
deal, the founding team, etcetera.
Like.
One of the things that we did,though, is we went through Atlas
just to make sure that we had abunch of connections to buyer
personas, because if we didn't,we wouldn't be the right fund to
lead the deal.
So, yeah, the go to marketmotion by just understanding not
only who are the primaryconnections of my entire network
, but who are their secondaryconnections, and then maybe
(36:28):
leveraging something like Apolloto get their email addresses.
We were seed investors inApollo.
That's been one of the bestinvestments I've ever made.
So sort of leveraging, acombination of Affinity, atlas
and Apollo allows us to reallymove the needle from a
go-to-market perspective.
And then the critical component, too, is when we're doing
onboarding calls with ourportfolio companies, just
(36:50):
explaining to them exactly whatwe mean by, like, the sales
paraphernalia that we need tosee.
That's going to driveconversion.
When we do our outreach, youknow, sometimes you'll ask a
founder like, hey, give me ablurb or give me some materials
that will send you like you know, like bad grammar and like you
know, like it just doesn't lookprofessional.
We want our companies to havelike really slick sales
(37:11):
materials, because it makes iteasier for us to drive
conversion when we take the timeto do the outreach.
Riece Keck (37:16):
Got it Okay.
You mentioned product marketfit a few times and obviously at
the stage that you're investing, that's you know can the
company find.
That oftentimes is the bigquestion.
Are there certain KPIs ormetrics that you are looking at
to determine, or even aframework to determine if a
company has found product marketfit?
Adam Struck (37:36):
Yeah, 100%.
You know.
What I'll say is what's kind ofinteresting in this current
environment.
People always ask me like, oh,like you know, because it's a, I
guess, like a high interestrate environment and it's you
know, it's still a bunch ofmacro headwinds and uncertainty
from the election like, doesthat mean that your valuations,
your average post-moneyvaluation for your investments
has gone way down?
And I say no, actually ithasn't.
(37:56):
The post money valuation hasstayed the same.
The difference is the tractionthat we can see for that
post-money valuation has goneway up.
So we're typically in asituation now where we're doing
seed rounds at, you know, maybelike an 11 to $13 million post
and they've got like 250K tomaybe even four or 500k of arr
um.
That same amount of traction atthe height of 2021 would have
(38:16):
gotten you like a 10 milliondollar round at a 40 post for a
series a um.
So for us, right, we don't mindthe valuation staying the same.
But what's really cool is wecan see a lot more cards that
are turned over right, whereastypically in a different market,
we can't um.
So I'm we're literally in aplace now where we can do like
full net dollar retentionanalysis on our companies,
because these companies haveenough revenue to actually show
(38:39):
you know we land revenue.
We can now, in a productizedmotion, expand revenue from our
defined ICP.
There's like no churn, we'renot having a bunch of downgrades
.
So a net dollar retention, sortof that metric, and really
seeing the product sizeexpansion motion which is
typically something you wouldonly expect at like Series A we
are now seeing in the seed round.
(39:00):
So those types of things arevery critical to us when we're
just doing like a quantitativeassessment on whether or not
there is product market fit.
Another thing that we pay a lotof attention to is just sort of
the economics of the motion.
So how do your ACVs correlateto your sales velocity?
Right?
So if you're in a situationthat it's taking you 250 days to
(39:24):
go from a qualified lead at thetop of funnel to a signed
contract and it's a $10,000 ACV,like you're upside down from an
economics perspective, so evenif you think you have a lot of
customers, that's not trueproduct market fit.
If there's true product marketfit, there's going to be a pull
and like a ratio that we wantfor like 100k ACVs, like a 90
day sales cycle.
So things like velocity ofsales motion and how it
(39:47):
correlates to contract size.
That's obviously anotheranother sign of product market
fit.
Um, you know earlier, becausesometimes companies don't have
that, you know some of thethings that we will look for.
Even if they're still maybe inlike a bit of customer discovery
phase, they've got one or tworeal lighthouse customers.
Are those customers pulling andpushing them to ship new
(40:07):
features that they fundamentallybelieve won't be non-recurring
engineering?
These are not idiosyncraticfeatures just for that customer.
These are features that wouldallow you to still to feel like
you're creating a sort ofutilitarian mindset.
You know the greatest number.
You know features that willprovide the greatest good for
the greatest number of buyerpersonas within my ICP.
So something like that right,like with RapidFlare, for
(40:30):
example, this deal that we justdid, this verticalized agentic
system in the electronic space,they're getting a lot of pull
from AMD as sort of a lighthousecustomer and AMD has gone from
like a 12K contract to a 30Kcontract to a 60K contract.
They're meeting with them allthe time.
So that's also a good exampleof product market fit, even when
things are maybe a little bitearly.
So yeah, hopefully that answersit.
Riece Keck (40:52):
No, that does Absolutely early.
So yeah, hopefully that answersit.
No, that does Absolutely.
How do you think about the LTVto CAC ratio for product market
fit?
I know traditionally you wantlike three to one, Is that?
Or do you still consider thatto be the gold standard at the
early stage?
Adam Struck (41:05):
Yeah, yeah, I mean I think three to one is
definitely what you want.
You know, typically for uswe're dealing with more like
enterprise sales, very largeACVs, so you're not usually
going to be in a situation thatyou really have to worry about.
You know you're not doing likeperformance marketing from a
customer acquisition perspectivewhere you have to worry about,
like you know, economicdegradation at scale.
(41:26):
So we would look at LTV to CACusually more.
If there's like a consumery,like elements maybe to the
acquisition motion.
If you're doing enterprisesales and there's a path to six
figure ACVs, we know that theLTV is going to massively
supersede CAC.
But what's important from ourperspective is what is the
(41:46):
velocity of the sales motionright bottoms up, PLG,
self-serve motion.
That can you know.
You know sort of put you in areally good place where you're
not having to invest a ton oftime and energy and you're
getting strong ACVs and you canland expanded.
That's amazing.
If you need to do more liketop-down hand-holding,
account-based marketing, that'sokay.
But you really need to makesure, as you said right, there
(42:07):
is a quote, unquote CAC or justcost generally to that motion.
So you really need to make surethat the juice is worth the
squeeze from an ACB, or I guessyou could call it LTB
perspective.
Riece Keck (42:17):
Got it Okay.
So looking forward.
So you mentioned you'replanning on raising a third fund
of a hundred million, I thinkyou said starting in the next
couple of months.
What are you hoping toaccomplish with that?
Are you changing the investmentstrategy at all the criteria?
What does that look like?
Adam Struck (42:32):
Yeah, no, we're not changing the criteria, the
strategy.
I think what we're doing isreally working basically
investing in incredible earlystage companies with a B2B
motion, and you know there'sspecific areas or sub verticals
within there where we feelreally strong, because we have a
bunch of informationasymmetries and a lot of
founders that have hit escapevelocity.
So we'll definitely want tosort of double down and lean in
(42:55):
there.
I think the desire for us to gofrom like 75 million to 100
million is just because we arenoticing sort of like, you know,
maybe those like three to $4million seed rounds where we
still want to make sure that wecan take half the round and lead
the round, and I think gettingup to 100 million would just
allow for that.
We also just have a bunch ofour competitors, you know, you
(43:15):
know in our space, that havesimilar fund sizes.
And I think when you look atsort of portfolio construction
theory even if you're stillleading, you know writing one
half million dollar checks to 25portfolio companies in three
million dollar rounds if there'san extra 25 million to just
give you more dry powder toexercise pro rata rights for
your winners and sort of maybeinstead of being a 50-50 split
(43:36):
between initial investment andfollow on it becomes 40-60.
I think that's healthyGenerally for us.
We are what I would consider amore concentrated venture fund.
We're typically only doingaround 20 to 22 deals per fund.
There are funds out there thatare doing 30, 50, 70 deals.
I don't understand how you canlead rounds and add a ton of
(43:58):
value post-investment if you'respraying and praying like that.
But yeah, there does come a timewhere there's a really hot
company.
They raise a one and a half $2million pre-seed round and
they're now going out for that$5 million seed round, we want
to be able to say, hey, we needto cut a $2.5 million check to
leave that round we can, whereasright now, with a $75 million
(44:18):
fund, it would be very difficultto get that through.
I see, just from a sort ofconcentration risk perspective.
Riece Keck (44:26):
So final question for you.
This could either be to newinvestors or to new founders.
What's the best piece of advicethat you could give for those
who are on the rise?
Adam Struck (44:35):
Yeah.
So I mean, I think, for newfounders, I would just say that
you know, for me, the bestfounders I've ever worked with,
not only are they superpassionate, do they feel like
they have, you know, a veryunique sort of lens in the space
and, most importantly, theyknow how to deal with adversity.
They know how to get punched inthe face, they expect it and
they get back up.
(44:56):
And when they're going throughadversity, they're hyper honest
with their investors.
So there are a lot of foundersout there that I've met that you
know.
I asked them hey, like what'sgoing wrong with your company?
Oh, nothing's going wrong.
There's nothing going wrong.
Like there's, it's supposed to,there's supposed to be things
going on by its early stage.
And they don't want to sort ofyou know, sort of tell their cap
(45:17):
table like what's keeping up atnight, what am I most scared
about?
Because they think that it'sgoing to create problems.
What they don't realize is themore open and honest you are and
the more you can sort ofleverage the totality of your
cap table, the stronger you'regoing to be.
You know founders that don'thave product market fit and they
think that they should justkeep building features
constantly because hopefully, ifI build it, it will come, but
(45:43):
they're not actually taking thetime to do the work, to
understand what does thecustomer really want.
That's another sort of pitfallthat I see a lot of early
founders, young founders fallinginto.
So what I would just saygenerally is it's supposed to be
hard, it's supposed to be likechewing glass.
You're supposed to makemistakes.
My advice is if you bring thework ethic and you feel like you
understand the space, just bereally honest when you're
(46:04):
feeling the most vulnerable,because in my opinion, that
creates self-awareness and thatalso makes your investors feel
like you're being open, you'rebeing honest and ideally it's
going to make them want to pushharder to make you successful.
Riece Keck (46:18):
Love that All right.
Well, thank you so much forcoming on, Adam.
That's a ton of valuable adviceand I really enjoyed the
conversation.
Yeah, thanks so much for havingme.
Thank you for tuning in to thisepisode of Seed to Exit.
I hope you found today'sconversation insightful and
valuable.
If you enjoyed the episode,please take a moment to
subscribe, leave a review andshare it with your network.
(46:38):
Your support means the worldhelps us continue to grow and
bring more incredible guestsonto the show.
Now for more content andupdates, follow me on LinkedIn
or Twitter, or you can check outMindHire, where we help
startups build exceptional teams.
Thanks again for listening andI'll see you in the next episode
of Seed to Exit.
So we have literally built our own
proprietary in-house talentacquisition engine where we can
get a JD.
We can essentially scrapeLinkedIn for attributes that
correlate to that JD.
We've built out full emailautomation so we can literally
reach out on behalf of the CEO'scandidates and the next thing
you know, within like 48 hours,we've got 10 highly engaged
(00:22):
candidates that match theattributes perfectly of who our
CEOs are looking for, and thenwe give them to them.
So it's almost like top of thefunnel, fully qualified sort of
talent acquisition pipelinecreation in an automated manner.
Riece Keck (00:37):
Today, I'm joined by Adam Struck, founder and
managing partner of StrzokCapital, a leading early stage
venture capital firm.
Of Struck Capital, a leadingearly-stage venture capital firm
.
Adam's portfolio includescompanies like Postmates,
nutanix and Mythical Games, andhe's a recipient of Forbes 30
Under 30 in venture capital.
Beyond Structurally VentureInvesting, adam has also
co-founded and runs StruckCrypto, as well as Struck Studio
, which has cemented hisinfluence across multiple
(00:59):
emerging technologies.
So today we're going to talkmore about Adam's investment
philosophy, how he got startedin venture capital, his
entrepreneurial ventures and hisvision for the future of
venture capital.
So with that, let's get started.
Welcome to Seed to Exit, thepodcast where we uncover the
stories, strategies and insightsthat power the startup
ecosystem.
I'm your host, rhys Keck,founder of MindHire, a talent
(01:22):
acquisition firm specializing inhelping startups build
exceptional teams.
Each week, I sit down withfounders, investors and industry
leaders to explore the journeysbehind iconic companies and
game-changing ideas.
Whether you're building,investing or just curious about
what it takes to succeed in thestartup world, I want this
podcast to be your go-toresource for actionable insights
(01:42):
and inspiring conversations.
Now, if you enjoy the show,please don't forget to subscribe
, leave a review or share itwith your network.
Your support means the worldand really helps bring more
incredible conversations to life.
All right, adam, thanks forcoming on.
Glad to have you.
Thanks for having me,absolutely so I'm excited to
chat with you.
I had a chance to look over alot of the portfolio investments
(02:03):
that you do.
You've got your hands in a lotof different spaces right now,
so just excited to dive a littlebit deeper into everything with
you and learn a little bit moreabout how you invest.
Sounds great, awesome.
So before we get into StruckCapital, you, of course, had
your own start as anentrepreneur, not in the tech
space, in the CPG space.
(02:24):
Tell me a little bit more aboutthat and what led you into
venture.
Adam Struck (02:27):
Yeah, so I was originally a big law attorney at
Kirkland Ellis in their M&Acorporate practice group in New
York.
I worked on the Skinny Girlacquisition by Jim Beam and I
think that kind of inspired meto just look at sort of you know
, the ready to drink categoryand see if there were
opportunities for innovation.
Initially wanted to sort of dowhat Skinny Girl did for
(02:50):
margaritas to actual like LongIsland I see meaning like Long
Island like the alcoholicbeverage.
And then actually I decided topivot because there's a
three-tiered system associatedwith manufacturing alcohol.
That just makes it verydifficult from a distribution
perspective.
And when we did a bunch of sortof market research we saw that
(03:11):
Arizona Iced Tea was the sort ofmarket leader.
It had like 74 grams of highfructose corn syrup and we sort
of just sort of entered themarket at the perfect time where
people wanted to be healthy.
But there's definitely agreenfield opportunity.
So we used reverse osmosisfiltration to preserve the
integrity of the tea leaf.
We had organic cane sugar andpeople were just really
attracted to the brand along theEastern Corridor, ended up
(03:34):
getting into 17,000 mom and pops, costco, shoprite, 7-eleven.
Petitioned the USPTO for thetrademark to Long Island IC in
the RTD category and won andthen found a PE firm that wanted
to acquire us and then theyactually ended up taking the
company public under our brandand rolling up a bunch of other
assets.
So while it's not a typicaldirection in the sense of
(03:57):
starting a software tech company, it definitely, from my
perspective, was very sort ofgritty.
You know, going from zero to one, productizing every motion,
getting yourself ready for scale.
And I thought, um, given thatexperience, maybe I could be a
strong strategic advisor toyoung founders.
You know, really trying to hitescape velocity.
And I was lucky to have, youknow, a bunch of friends on
(04:19):
sandhill road and uh, um, I havea cousin as well that that's
had very high up positions at abunch of tech companies.
And I was able to sort of, youknow, find founders and just say
listen, you know, open up someallocation for me in a round and
I'll put up, you know, moresweat equity per dollar invested
than anybody else on your captable.
And I definitely got lucky, hada few early wins with companies
(04:42):
like Nutanix and Postmates andsort of, after doing 18 special
purpose vehicle opportunities, Ithen felt like I had enough of
a track record to raise adiscretionary fund,
(05:08):
no-transcript.
Create a track record withouteveryone 100% betting on you.
And it was sort of scratchingand clawing my way, spv through
SPV that then allowed me to sortof create you know what struck
is today.
Riece Keck (05:23):
So that's super interesting.
So you started out was it yourown funds that you were
investing that?
You got through the exit fromLong Island and then, once you
built that track record withyour own funds, then that's when
you said, okay, now I can goout and raise money from LPs.
Adam Struck (05:35):
Yeah, so it was my own funds, but because I had
access to companies that peopleknew about, people maybe wanted
to like talk about on the golfcourse or something like that.
It was also funds from externalinvestors as well, and what I
would do is I would structure itas like zero and 20.
So I wasn't taking anymanagement fees.
I would only sort of win ifthey won and I would purposely
put, you know, as many people inthe SPV as I could.
(05:57):
You know, sometimes like 7080people, and I did that because I
just wanted as many people aspossible to have, you know, sort
of strong brand equity with meand what I was trying to create.
This is also like before theAngelList days.
So I was doing all like the youknow, structuring the legal
documents, the subscriptionagreement, operating agreements,
myself like handling the K-1s.
It's like a lot of admin work,but that wasn't the best way to
(06:21):
get started.
Riece Keck (06:22):
Cool, awesome.
So you had a really interestingbackground.
So were you doing the Kirklandand Ellis?
Were you doing that alongsidefounding the iced tea company,
or was it one and then the other?
Adam Struck (06:34):
Yeah, yeah.
So I started Long Island BrandBeverages with my brother.
So I was sort of working likecrazy at Kirkland but also very
passionate about this sort ofexternal side gig.
And then, once it startedgetting very material traction,
I left my day job.
But you know, kirkland also islike a day and night job.
Riece Keck (06:53):
I was gonna say big law is not for the faint of
heart.
Adam Struck (06:56):
It's not, it's not.
Yeah.
And then, and yeah, then Ijumped in.
But even when I jumped in, thebusiness was still super early,
had a lot of risk, and Iremember my mother was very
upset with my older brotherbecause she thought it was
influencing me to leave law.
But you know, I tell everybody,you know you have to think
about the totality of yourjourney and when you're able to
(07:17):
take risk and really sort of youknow swallow and come back from
failure.
So for me, you know, as a youngperson, you know I didn't have
you know swallow and come backfrom failure.
So for me, you know, as a youngperson, you know I didn't have,
you know, a wife yet or kids oranything like that.
So it was a great time to beton myself and I think I got very
lucky that, you know, I wasable to be successful and then
propel me into, you know, sortof not only investing in
(07:38):
companies, but now we alsocreate companies through our
venture studio.
Riece Keck (07:41):
When was the inflection point?
This isn't really the point ofthe this overall podcast, but
for you know, but for those whoare thinking about starting
their own entrepreneurialjourney, when is the inflection
point?
When you felt leaving K and Eto take the plunge into your own
thing?
Full-time Is it when?
Replaces your full-time income?
Is it something else?
Yeah, yeah, Great question.
Adam Struck (07:59):
So for me it was like the way I interpret that as
like what does product marketfit feel like?
And for us it got to a pointwhere there was so much demand
that we couldn't get enough linetime from our co-packer to sort
of fill that demand.
You know, we would expand into,you know, 15 stores, 20 stores,
no-transcript.
(08:35):
So it was almost likeenterprise-esque, where we would
land and expand very materially, materially.
So once I got to the point thatwe could see the velocity in
which these sort of single unitpacks or six or a dozen were
sort of flying off the shelvesand then we got to the point
where we outgrew our co-packer,then I was like, oh, this is
really serious.
(08:56):
But in terms of it still wasn't.
It was an equity game.
I wasn't paying myself nearlyas much as I was making it at
Kirkland and Ellis.
I can game.
I wasn't paying myself nearlyas much, you know, as I was
making it at Kirkland and Ellis.
Riece Keck (09:07):
I can imagine.
So it sounds like you've hadsome really strong influence.
You had your brother, you hadyour cousin, who you'd mentioned
has worked in big tech who havebeen some of your overall
biggest mentors or influencers,and what lessons have you
learned from them that you stillkeep now?
Adam Struck (09:20):
Yeah, you know, david Blumberg from Blumberg
Capital was, you know, veryinspirational to me.
He was an early investor inNutanix and you know also sort
of started out with sort of SPVsand sort of created a large
fund with a ton of you know sortof a ton of wins through that
process.
I think that was was definitelyone that you know sort of
(09:43):
inspired me.
That was definitely one thatyou know sort of inspired me.
But when I was really reallyearly thinking about venture and
entrepreneurship, I rememberreading Ben Horowitz's the Hard
Thing About Hard Things.
You know, obviously he's awell-known name, but what I
loved about just sort of theethos of how he was writing is
you almost felt like you were,you know, in the room with him,
you know, having a coffee andreally just talking.
You know, you know, sort ofhonestly and truthfully about
(10:06):
not only all the amazing thingsassociated with entrepreneurship
but you know, the concept oflike eating glass and swallowing
it and continuing to go.
You know, I've also been verymotivated by just the story of
my, my grandfathers.
Both of them respectively, youknow, were immigrants and you
know both actually came to SouthAfrica and started with
(10:27):
absolutely nothing and in theirown way, created large companies
and unfortunately they thendealt with things like
hyperinflation and all thesethings that can come with maybe
trying to scale in South Africain sort of the 70s, etc.
But you know, from myperspective I kind of always
felt like I came from verystrong entrepreneurial genes and
(10:49):
I felt like you know, if theycould do it, you know I think I
can do it.
So I think that that memory andthat story also was very
influential for me.
Riece Keck (10:58):
I love that.
I mean you clearly have thescrappiness, both with starting
the beverage company, as well asthe SPVs and Struck, which
we'll get to in a minute, bothwith starting the beverage
company as well as the SPVs andStruck, which we'll get to in a
minute.
I'm really curious how does theSPV vehicle that you mentioned
work?
I mean, I know what a specialpurpose vehicle is, but you
mentioned getting 70 to 80people in there.
So are you then functionallydoing almost like syndication or
small level crowdfunding from,call it, 70, 80 investors and
(11:21):
saying taking maybe three to5,000 and then going to a seed
fund or a seed level owner andsaying I can write you a
$250,000 check?
Is that your model?
Adam Struck (11:31):
Yeah, so typically what we would do you know what I
would do is I would firstsecure the allocation with a
portfolio company.
Cause what we don't want to dois sort of promise an allocation
and a hot startup and then allof a sudden you, you raise the
capital but you get everyone tosign some scripture agreements.
Then you can't get into thedeal.
So so I would try and securethe allocation, but then the
minute I would secure it, itwould create fear Cause it's
(11:56):
like oh my God, now I have tofill it.
That's not so easy, but yeah, sotypically like what I would do
is I would secure like 250, k,500k, you know, million dollar,
you know allocations and variousstartups.
I would then create you knowsort of proprietary materials,
you know sort of our investmentmemo, you know financial model,
all those types of things.
And then it's really about justsort of you know pounding the
(12:19):
pavement with people in yournetwork that you think would be
attracted to sort of havingexposure to this type of you
know to venture as an assetclass and maybe this particular
company taking lots of calls.
And you're really being asalesman, right, you're sort of
selling your ability to sourcethe deal but, most importantly,
you're selling what you believeare going to be the future
prospects of the company.
So you know there were timeswhere I would lock in like a
(12:41):
250K allocation and that wouldbe heavily oversubscribed and
then maybe the founders wouldgive me more allocation, or
sometimes they didn't, and youknow we've had times.
We had times, I remember, wherethere was like a deal where I
had like $7 million of interestbut my allocation was only like
a million dollars.
So then what we would do is wewould lower every lower,
everybody per RADA and then givethem their, their allocation.
(13:03):
So that's kind of the thing,right is you push really hard by
adding value to the founder tohave them be like, hey, I'm
going to give you some of thisallocation.
And then you have to go out andsort of raise the capital and
just hope that all the duckssort of fall in a row prior to
closing, because you also don'twant to be that person that is
(13:23):
delaying a closing or having tocome in on second close.
You know you could ruin yourreputation really quickly.
So yeah, I mean, basically wewould get the allocation, you
know, prepare proprietarymaterials and then you know,
just run a good process to geteverybody coming in at the
appropriate time to then notdelay the company's closing with
other institutional investorstime to then not delay the
(13:44):
company's closing with otherinstitutional investors.
Riece Keck (13:47):
I mean, it's really fascinating because it's a
little bit opposite from how thetraditional venture model works
, right, where you raise a fundand then you go and you deploy
that capital.
It's like you get theallocation, now shit, now I have
to go raise the money.
Did you ever run into asituation where you got the
allocation but you weren't ableto raise the capital and then,
if so, what happened?
Adam Struck (14:01):
Yeah, if so, what happened?
Yeah, so, luckily, you know,knock on wood, uh, that has
never happened.
Uh, now what I will say?
there have been times where,like the closing is happening
tomorrow and I'm like hadn'tfilled it and that's very
stressful, um, but but generallyI think we did a good job.
You know getting sort ofindication of interest from
different people.
You know having having um.
(14:23):
You know various.
You know lps.
You know various.
You know LPs that have deeppockets.
You know we're excited byvarious opportunities and you
build a lot of trust.
You know, one of the interesting, interesting things for me is
one of the family offices thatcut me like a 50k check for like
my first SPV ended up anchoringmy first fund, which is a $32
million fund.
So that was really just overyears of growing with them and
(14:46):
then respecting my lens and howI conducted diligence and again,
my proprietary access to dealflow.
But you are right, it is sortof backwards and you're sort of
forced to do it backwardsbecause you know I didn't go to
Stanford and sell a SaaS company.
You know it was a differentsort of background.
So I thought the way that Icould get people to invest in me
was not having them underwriteme but underwrite the company.
(15:08):
But that meant that I had tosecure the allocation to the
company, you know, beforeactually making it happen.
Riece Keck (15:15):
I love that approach .
When you mentioned theproprietary deal flow, what does
that mean?
Is that just because you have alarge network Did you have
access to some data sources?
Adam Struck (15:27):
Yeah, I mean.
So now, like at Struck, we haveextremely proprietary access to
deal for plethora of reasons.
You know.
We've got, you know, incredibleconnections with downstream and
upstream VCs that want to dodeals with us and share
everything.
We've got a really strongfounder network.
These founders, you know, arenow leaders in their fields and
when employee number 10 fromtheir company leaves and does
something else, they're going tosend them right to us because
they had such a good experienceat the seed round.
We have, like, early access toa bunch of accelerators like the
(15:50):
Y Combinators of the world, andthen, most importantly, we have
our own venture studio wherewe're actually creating our own
companies.
So that's as proprietary as itgets.
The way I would have defined it,you know, sort of early in my
career from an SPV perspective,was basically just being, as you
said, well-networked.
So the cousin that I mentionedjust as an example was global
(16:10):
head of business development atSpotify, then chief strategy
officer at Snapchat, chiefstrategy officer at Chime, so
that's a pretty incrediblenetwork, right.
So being able to tap into thosepeople, meet founders and, you
know, go to someone like BastianLehman, you know founder of
Postmates, and say, hey, likeI'm just looking for like 100k
in this series A or series B andlike tell me who you're looking
(16:31):
to hire, tell me, like whoyou're trying to talk to and I'm
going to show you what I can do.
So it's all about sort ofunderstanding the totality of
your network and your socialgraph and just being super
gritty with founders and ideallyright reminding them of
themselves, because no founderhas gotten to series A or series
B without having to send themto do the non-scalable gritty
things to find product marketfit, and I still believe that
(16:54):
the bar for value add andventure capital is super low.
So I think I was able to standout by leveraging my network in
front of the right people andthen like literally pestering
them with value add until theylet me into the round.
Riece Keck (17:08):
I love that.
Okay, so you did really wellwith the SPVs.
You then raised your $32million first fund.
What has happened from raisingthat first fund to today?
Yeah so definitely a lot.
Adam Struck (17:21):
So that first fund is what we call struck capital,
and that's basically like ourB2B closed ended software fund.
We are now investing out of anew fund, struck capital, fund
two, which is $75 million.
We're going to be going out for$100 million fund three in
January.
I'm just waiting for thoseinterest rates to drop a little
(17:41):
bit more.
Just waiting for those interestrates to drop a little bit more
.
One of the things that we alsodid that was very opportunistic
was one of the SPVs that Iinvested in.
I ended up selling to Bittrex,which, at the time, was one of
the largest cryptocurrencyexchanges, and I was actually
approached by a relatively largefund in the LA area that said
we want exposure to crypto.
We've heard about your exit.
You have proprietary access tothese exchanges, and that was
(18:09):
during, like the ICO craze.
You can get these projectslisted.
So we're going to you know,essentially amend our LPA, turn
ourselves into a fund to fund,cut you a $5 million check and
then that can anchor a cryptofund.
So we did that as well.
That was a 2017 vintage.
That fund today is sort of likea hybrid open-ended fund, where
we, you know, can invest inearly stage venture capital
deals, but then we can alsotrade those tokens after a sort
(18:30):
of token generation event.
There's around a hundredmillion or so in that fund that
the NAB changes, you know,essentially daily.
And then the third leg of thestool, so to speak, is our
venture studio and that was sortof born at the height of 2021,
where I would find founders,develop strong relations with
them for six months, add a tonof value, and then I'd write
(18:52):
them a term sheet and thenthey'd call me and say a junior
partner at Tiger Global that Ijust met yesterday is offering
3x what you're offering and theydon't even want a board seat
and they don't care about any ofthis.
That's like I'm just taking itas easy money.
And it happened like numeroustimes and I kind of just felt
like gosh.
You know, even as a venturecapitalist.
You know on the you know sortof forefront of innovation, all
(19:13):
early stage, real sort of valueadd.
You know sort of sweat equityintensive investor I still find
that because of the macroenvironment, I have like no ball
control and I can't really getdeals done according to my sort
of investment criteria and youknow sort of valuation framework
.
So I said you know what?
Like I'm an entrepreneur, I'vegot a lot of entrepreneurs
(19:34):
around me.
Riece Keck (19:35):
Why don't I just?
Adam Struck (19:35):
launch a studio so I can be master of my own domain
and create my own companies.
So I teamed up with MichaelMontero, who was my CTO
operating partner at the time.
So I teamed up with MichaelMontero, who was my CTO
operating partner at the time.
Mike's incredible because hebuilt Resi.
So I'm sure you've used Resi tomake a restaurant reservation
and we's been really cool aboutthat is we raised it.
(20:05):
We raised the capital from abunch of tier one VC funds.
So we've got like Andy Weissmanfrom Union Square Ventures, rob
Chesney from Chicago Ventures,revolution Liquid 2, great Oaks
US Venture Partners.
So these funds have allinvested in us because they view
it as a way for them to haveproprietary access to deal flow.
And then what's great is we canleverage their information
(20:26):
asymmetries to be like, hey,where do you see greenfield
opportunities?
Where should we build?
Obviously, I also created a lotof cross pollination between
the struck investment teams andthe studio, because it also
helps to understand what tobuild.
And yeah, for me we're now liketwo and a half years into the
venture studio.
We've created four companies todate.
You know they've been funded.
(20:47):
They're real companies.
It is a really fulfillingsituation for me.
You know, I just find that for alot of VCs out there and I'm
sure a lot of them are greatoperators If you create a
company 20 years ago, before theexplosion of Gen AI, and before
having to deal with, likehybrid teams, like it's just not
the same, I don't care whatanyone says.
So for me, for me, you know,with the studio it's sharpening
(21:11):
my pencils and sort of keepingme strong on the investor side.
Because you know, if a foundertells me like oh, we can do PDF
extraction with LLMs and likethat's how we get, you know, get
through integration, and I'msitting there saying when we are
fine tuning LLMs and trying todo PDF extraction, it's abysmal.
I know that they're BSing me.
You wouldn't know that unlessyou're like building today.
(21:33):
So you know, I think the studiohas made me a sharper investor.
And then I think being able tomarket, map and understand where
things are going from theinvestor lens, that impacts what
we're building at the studio.
So it's become this really sortof virtuous, like one plus one
equals three.
Riece Keck (21:49):
Yeah, totally, that's fascinating.
Can I ask what the fourcompanies are?
Adam Struck (21:54):
Yeah, yeah for sure .
So one is called Gibson AI.
It's a dev tool but it's laserfocused on data models.
So data models are sort of likethe foundation of all of your
source code.
It's like the blueprints for ahouse.
If the data models are right,you're going to be in a really
good place.
If they're wrong, you're goingto be in trouble and updating
data models and having thosechanges cascade through millions
of lines of code.
(22:15):
It's very difficult, verymanual, very laborious.
So essentially what we can dois we can ingest all of your
code, we can spit out full unittested, context aware data
models and we can turbochargeexisting engineering teams or,
you know, teams that want tocreate new products and set them
up in microservices.
So that one's been reallyexciting.
And we were able to bring on aCEO named Harish who was chief
(22:37):
product officer at LeafLink.
He was like very high up on theproduct team at Apple for Siri.
He was at Microsoft for 10years and he's like a master's
in CS, so he's been awesome.
Another one, maybe less sexy butvery interesting from our
perspective, it's called PawCare.
It's a vertical SaaS solutionin the pet care space, but
specifically going aftergroomers, boarders and daycare.
(22:59):
So there's been so much venturedollars going into veterinary
but there's really not much interms of like groomers, boarders
and daycare, and they need avertical SaaS solution, they
need payments.
So we've been scaling heavilywith that and you know we
actually were approachedrecently by one of the
incumbents talking aboutacquiring us because they heard
(23:21):
oh my God, the C2 of Resi is nowentering the Pender space.
We're a little concerned.
So that one's been a lot of funand scaling dramatically.
We have another one that we'reactually raising for right now,
called Balto.
The way you should think aboutyour Balto.
It's in the healthcare space.
It's sort of like your 24-7personal sort of healthcare
assistant, but we go after aB2B2C use case.
(23:43):
So what we want to essentiallydo is, when companies are going
through open enrollment andthey're selecting, you know
which benefits they should have.
You know, should I do theplatinum plan, the bronze plan,
the silver plan, all of thisstuff?
We can essentially ingest allof this you know data, life
events and recommend you to theright plan and then, once we do
(24:03):
that, there's essentially a very, very accurate sort of co-pilot
that when you have questionslike hey, I've got an emergency,
should I go to the urgent care.
How much will that impact mydeductible?
You know, hey, I want to getthis medication.
How much is it going to cost me?
So we're really trying to easethe burden of HR teams dealing
with employees who are askingvery specific questions about
(24:24):
their plan and billing andhealthcare, that they're just
ill-equipped and the worst thingthat you can do as an HR
persona is tell your employee togo call their carrier Like it's
a very negative Glassdoorreview so we can prevent all of
that.
And then the last part of theBaltro product which we think
turns it from a point solutionto a really sort of holistic
(24:45):
platform offering is we caningest your EOBs.
So when you go and you know,say you went for a routine
checkup, you thought it wascovered by your insurance.
The next thing you know you'vegot a $500 bill.
You get what's called anexplanation of benefits from the
carrier and if you've evertried to read an EOB like you
might as well be in a differentlanguage carrier and if you've
ever tried to read an EOB likeyou might as well be in a
(25:06):
different language.
Most of the time there's errorsin these EOBs and people are
just like I don't have the timeto like go and appeal this and
do all this stuff.
So we can essentially likeingest those EOBs, we can pick
up where there's been you know,sort of the wrong billing codes,
errors.
We can do the appeal on behalfof the, you know, of the
employee.
And what's great about this isthe employer pays for all this.
(25:26):
And you know, with the currentcustomers that we have, like
they're talking about like four,five, six dollar per employee
per month, which for them, whenthey're spending thousands of
dollars per employee, you knowthis can really increase
satisfaction and decrease burdenon their HR leader, hr team.
There's a lot of ROI there.
And then the last one is veryinteresting we're just about to
(25:50):
officially launch it and raise.
So the product's built.
We've got a great CEO.
We've got a bunch of designpartners.
I don't know if you've everheard of companies called
SecureFrame or Vanta, whichbasically changed the way that
internet companies would get SOC2, type 1, type 2 compliance.
If you want to go and get a bigenterprise customer, you have
to all of a sudden become likeSOC 2, type 1, type 2 compliant.
(26:12):
Yeah, exactly, so thatdetermines, like how you hold
data, like privacy, security,all of these things.
So we, and then Vanta and SecSecureframe are, like you know,
unicorns and what they've doneis they digitized that, that
compliance burden SOC 2, type 1,type 2 compliance and then,
(26:34):
once you use them as a system ofrecord platform to get you know
sort of those credentials, theythen continuously monitor you
and and sort of become you know,as I mentioned right that, that
system of record platform forcompliance and monitoring.
So we want to do the same thing,but specifically for food
manufacturers.
So there's something called aHACCP plan which is essentially
like your food and safety plan.
Like, let's just say, you are,you're creating something and
there's chicken or there's egg,or you know what's the
(26:55):
temperatures, like how, how manytimes do you have to check the
metal detectors on the line tomake sure that there's no metal
in the foods?
All these different things theFDA is very robust what are
called HACCP plans.
So we want to start out asessentially like a HACCP plan
builder, you know, similar tolike what Secure Frame and Vanta
did for SOC 2, type 1, type 2compliance.
And then we can, and a lot ofthese major manufacturers, you
(27:19):
know, like ones that are doinghundreds of million dollars a
year, they have manual sort ofsafety personnel on the floor
that are checking these withpaper and pencil, but we can
digitize that entire process andput them with an iPad, have
essentially a dashboard that amanager that's even remote can
review and they can see everytemperature check.
(27:40):
You know all the real timemonitoring, et cetera.
Temperature check, you know allthe real-time monitoring, et
cetera.
So it's a very similargo-to-market motion with Vantan
SecureFrame, but very muchfocused on food and safety
compliance for foodmanufacturers.
What's also really interesting,just as a quick note, is there's
a ton of macro tailwinds rightnow.
I don't know if you saw, butMcDonald's literally, like last
week, had an E coli outbreak.
(28:01):
I did see that, yeah, and itlowered their stock by like 9%
when that happened.
So there's a lot of pull rightfrom major players and what
we've realized is for some ofthese manufacturers, if they can
go to their customers and say,hey, we just moved away from our
manual system to a digitized,like AI enabled system, they can
actually get more revenue rightand close you know, close
(28:24):
customers quicker.
So it's something for us thatwe think you know prevents the
loss of revenue through beingshut down by the FDA, but we
also think it's a revenue driverbecause it's.
We've noticed that it's helpingour design partners in their
business development processes.
So, yeah, that one's calledProtocol Foods and got a killer
CEO for that and we're we'reexcited to raise for that
(28:44):
shortly.
Riece Keck (28:45):
Wow, okay, so you're doing all that.
You've got the crypto side,you've got the investment part.
Do you ever sleep?
Adam Struck (28:54):
I don't sleep a lot .
I've got two daughters as well,and I try and be an active
father.
So, no, there's a lot going on,but I've got an incredible team
around me and just amazingpeople that push me and I push
them, and there's a lot ofenergy.
So I'm only 36 years old.
I got a lot of room to run, soall good things.
(29:15):
It's a good problem to have.
Riece Keck (29:17):
Those are a good problem to have.
So you place a really bigemphasis on the.
You know putting in more sweatper dollar than any other
venture firm is going to do.
Adam Struck (29:26):
What does that look like?
Riece Keck (29:26):
in practice.
Adam Struck (29:27):
Yeah.
So first off, in our officewe've got a neon sign that says
sweat equity is the best equity.
So I really believe that.
But over the years now we havecompletely productized that
motion.
It's a finely oiled machine.
And again, no disrespect to myother venture fund colleagues,
but I still think a lot of VCsthink the definition of value
(29:49):
add is calling a founder once aquarter and asking for KPIs,
like I literally think that'swhat they think and you've got a
lot of some of the mega fundsout there maybe less now, but
like at the height of 21, theywere they'd say we don't even
want to board Seabrook to giveyou like 2 million bucks to hire
McKinsey, because we don't evenwant to, don't want to help.
You know, post investment, frommy perspective, I fundamentally
(30:11):
believe and I tell founders thisall the time you know I'm never
going to know more about yourbusiness than you will.
You're doing this every singleday.
But I've I've created thisreally robust horizontal lens
watching many companies go fromzero to billions of dollars in
enterprise value.
And I fundamentally believethere's pattern recognition.
No matter what sector you're in, there's pattern recognition
(30:31):
where you're going from zero toone.
So the best founders are theones that will leverage sort of
my horizontal lens and if we cando it in the right way, I can
maybe put them in a place wherethey're proactive instead of
reactive, which I think can makethe difference, make or break a
company in the early stages.
So, in terms of what that lookslike, we have a whole platform
team and we have a bunch ofofferings.
So like we think that theminute our company is raised, if
(30:54):
they can get you know, 10x oryou know 10X talent into the
company, you know that's goingto, you know, materially sort of
increase their enterprise valueand ultimately their exit value
, especially across the totalityof a portfolio.
So we have literally built ourown proprietary in-house talent
acquisition engine where we canget a JD.
We can essentially scrapeLinkedIn for attributes that
(31:17):
correlate to that JD.
We've built out full emailautomation so we can literally
reach out on behalf of the ceocandidates and the next thing
you know, within like 48 hours,we've got 10 highly engaged
candidates that match theattributes perfectly of who our
ceos are looking for and then wegive them to them to close.
So it's almost like um top offunnel, fully qualified, uh,
(31:39):
sort of talent acquisitionpipeline creation in an
automated manner, so that's so.
That's like something that wedo on the talent acquisition
side For business development.
We've mapped out our wholesocial graph.
So we don't even know.
It's not even just about like,who are my LinkedIn connections.
It's like who are the secondaryconnections of my LinkedIn
connections and because ofCapital, Crypto and Studio and
just all of our LPs and ouradvisors, it's a really robust
(32:01):
social graph.
So we do a very good job.
Like when we onboard ourcompanies, we're like give us
sales paraphernalia that we canuse because we're going to know
buyer personas, we're going tooutreach on your behalf and like
we're going to set you up withqualified leads in your pipeline
.
So we track that.
We're super sophisticated aboutthat.
We really want to move theneedle from a go-to-market
perspective.
You know we've got in-houselike marketing as well.
(32:23):
So the minute they get, youknow the, the minute they get
funded, we get them in tech runor Forbes or something like that
.
And you know we believe thatthat helps with sort of three
different things.
It helps drive a go-to-marketbusiness development, it helps
drive talent acquisition and italso, you know, drives
downstream investor interests.
You know ideally can help thempreempt the round.
You know, we have just, I think, a lot of VCs.
(32:50):
They look at product market fitand they just assume that if
the product market fit is there,the product will have enough
scale to service those customers.
But what I've learned is it'sreally, really important to pay
attention to the actual techstack itself and sort of the
sort of tech debt associatedwith that.
You know, are these teams unittesting their code?
Are they investing inregression testing?
(33:11):
Testing their code?
Are they investing inregression testing?
Are they running monolithswhere there's a bug and it's
going to shut everything downand they're not going to know
sort of where the bug is?
Have they broken up thatmonolith and shifted to
microservices?
We're very, very granular aboutsort of the tech stacks and the
code that we invest in and theway that we sort of our founders
will see that during thediligence process.
(33:32):
But then what we'll do is we'llset them up with someone like
Mike right, who's the creator ofBrezzy, to do like a monthly
call to just go out, go, youknow, go over everything and
just make sure that you know,while they're pushing really
hard to ship features, they'realso, every time they write a
new line of code.
They're writing a unit test andtest how that new line of code
interacts with the rest of theirsource code.
So we're just very, veryhands-on on all the things that
(33:55):
we believe can make or break astartup in the early days and we
try and treat it like our ownproduct roadmap and essentially
ship new features and upgradeexisting features on a
continuous basis.
Like literally right after thisI've got a call with my
platform team to talk about whatthe sort of platform product
(34:16):
roadmap you know is going to befor the rest of the year and
like Q1 of next year.
We really view it in the sameway as software companies view
sort of like their product.
Riece Keck (34:26):
I have so many questions, but I absolutely love
all of that.
You've clearly put your moneywhere your mouth is in terms of
actually truly helping theportfolio companies.
You mentioned the knowledgegraph.
I'm just curious what platformdo you use?
What does that look like?
How do you build and maintainthat?
Adam Struck (34:41):
Yeah, yeah, so the talent acquisition engine is
completely internal.
The go-to-market sort of engineis various different tools that
we sort of piece together.
So we have Affinity, which isour CRM, so that allows us to
sort of track like every singleemail, every single person.
Affinity will automaticallypull from like LinkedIn and
(35:01):
Crunchbase to developessentially cards for each of
these personas.
So that's super helpful.
And then we use anothersoftware company called Atlas,
which is created by Hunt Club,and Atlas is the one that allows
us assuming we can sort ofupload all these contacts into
their system and get you know,sort of like our LPs and our
advisors and our employees toopt in.
(35:23):
Atlas then can tell us who theprimary and secondary
connections are of all of ourconnections.
So that's been like super,super helpful.
Because you know we just made aninvestment on the capital side
of a company called Rapid Flare.
And what Rapid Flare is?
It's a verticalized agenticsystem that's trying to replace
(35:43):
sales engineers, butspecifically in the electronics
and semiconductor space.
So there's a lot of AI.
Verticalized agentic systemsare like oh, we're going to
replace your sales engineer inSaaS, like that's really crowded
.
There's no one like doinganything for companies like AMD
and like massive chipmanufacturers.
So when we were, you know, wewere really excited about the
(36:05):
deal, the founding team, etcetera.
Like.
One of the things that we did,though, is we went through Atlas
just to make sure that we had abunch of connections to buyer
personas, because if we didn't,we wouldn't be the right fund to
lead the deal.
So, yeah, the go to marketmotion by just understanding not
only who are the primaryconnections of my entire network
, but who are their secondaryconnections, and then maybe
(36:28):
leveraging something like Apolloto get their email addresses.
We were seed investors inApollo.
That's been one of the bestinvestments I've ever made.
So sort of leveraging, acombination of Affinity, atlas
and Apollo allows us to reallymove the needle from a
go-to-market perspective.
And then the critical component, too, is when we're doing
onboarding calls with ourportfolio companies, just
(36:50):
explaining to them exactly whatwe mean by, like, the sales
paraphernalia that we need tosee.
That's going to driveconversion.
When we do our outreach, youknow, sometimes you'll ask a
founder like, hey, give me ablurb or give me some materials
that will send you like you know, like bad grammar and like you
know, like it just doesn't lookprofessional.
We want our companies to havelike really slick sales
(37:11):
materials, because it makes iteasier for us to drive
conversion when we take the timeto do the outreach.
Riece Keck (37:16):
Got it Okay.
You mentioned product marketfit a few times and obviously at
the stage that you're investing, that's you know can the
company find.
That oftentimes is the bigquestion.
Are there certain KPIs ormetrics that you are looking at
to determine, or even aframework to determine if a
company has found product marketfit?
Adam Struck (37:36):
Yeah, 100%.
You know.
What I'll say is what's kind ofinteresting in this current
environment.
People always ask me like, oh,like you know, because it's a, I
guess, like a high interestrate environment and it's you
know, it's still a bunch ofmacro headwinds and uncertainty
from the election like, doesthat mean that your valuations,
your average post-moneyvaluation for your investments
has gone way down?
And I say no, actually ithasn't.
(37:56):
The post money valuation hasstayed the same.
The difference is the tractionthat we can see for that
post-money valuation has goneway up.
So we're typically in asituation now where we're doing
seed rounds at, you know, maybelike an 11 to $13 million post
and they've got like 250K tomaybe even four or 500k of arr
um.
That same amount of traction atthe height of 2021 would have
(38:16):
gotten you like a 10 milliondollar round at a 40 post for a
series a um.
So for us, right, we don't mindthe valuation staying the same.
But what's really cool is wecan see a lot more cards that
are turned over right, whereastypically in a different market,
we can't um.
So I'm we're literally in aplace now where we can do like
full net dollar retentionanalysis on our companies,
because these companies haveenough revenue to actually show
(38:39):
you know we land revenue.
We can now, in a productizedmotion, expand revenue from our
defined ICP.
There's like no churn, we'renot having a bunch of downgrades
.
So a net dollar retention, sortof that metric, and really
seeing the product sizeexpansion motion which is
typically something you wouldonly expect at like Series A we
are now seeing in the seed round.
(39:00):
So those types of things arevery critical to us when we're
just doing like a quantitativeassessment on whether or not
there is product market fit.
Another thing that we pay a lotof attention to is just sort of
the economics of the motion.
So how do your ACVs correlateto your sales velocity?
Right?
So if you're in a situationthat it's taking you 250 days to
(39:24):
go from a qualified lead at thetop of funnel to a signed
contract and it's a $10,000 ACV,like you're upside down from an
economics perspective, so evenif you think you have a lot of
customers, that's not trueproduct market fit.
If there's true product marketfit, there's going to be a pull
and like a ratio that we wantfor like 100k ACVs, like a 90
day sales cycle.
So things like velocity ofsales motion and how it
(39:47):
correlates to contract size.
That's obviously anotheranother sign of product market
fit.
Um, you know earlier, becausesometimes companies don't have
that, you know some of thethings that we will look for.
Even if they're still maybe inlike a bit of customer discovery
phase, they've got one or tworeal lighthouse customers.
Are those customers pulling andpushing them to ship new
(40:07):
features that they fundamentallybelieve won't be non-recurring
engineering?
These are not idiosyncraticfeatures just for that customer.
These are features that wouldallow you to still to feel like
you're creating a sort ofutilitarian mindset.
You know the greatest number.
You know features that willprovide the greatest good for
the greatest number of buyerpersonas within my ICP.
So something like that right,like with RapidFlare, for
(40:30):
example, this deal that we justdid, this verticalized agentic
system in the electronic space,they're getting a lot of pull
from AMD as sort of a lighthousecustomer and AMD has gone from
like a 12K contract to a 30Kcontract to a 60K contract.
They're meeting with them allthe time.
So that's also a good exampleof product market fit, even when
things are maybe a little bitearly.
So yeah, hopefully that answersit.
Riece Keck (40:52):
No, that does Absolutely early.
So yeah, hopefully that answersit.
No, that does Absolutely.
How do you think about the LTVto CAC ratio for product market
fit?
I know traditionally you wantlike three to one, Is that?
Or do you still consider thatto be the gold standard at the
early stage?
Adam Struck (41:05):
Yeah, yeah, I mean I think three to one is
definitely what you want.
You know, typically for uswe're dealing with more like
enterprise sales, very largeACVs, so you're not usually
going to be in a situation thatyou really have to worry about.
You know you're not doing likeperformance marketing from a
customer acquisition perspectivewhere you have to worry about,
like you know, economicdegradation at scale.
(41:26):
So we would look at LTV to CACusually more.
If there's like a consumery,like elements maybe to the
acquisition motion.
If you're doing enterprisesales and there's a path to six
figure ACVs, we know that theLTV is going to massively
supersede CAC.
But what's important from ourperspective is what is the
(41:46):
velocity of the sales motionright bottoms up, PLG,
self-serve motion.
That can you know.
You know sort of put you in areally good place where you're
not having to invest a ton oftime and energy and you're
getting strong ACVs and you canland expanded.
That's amazing.
If you need to do more liketop-down hand-holding,
account-based marketing, that'sokay.
But you really need to makesure, as you said right, there
(42:07):
is a quote, unquote CAC or justcost generally to that motion.
So you really need to make surethat the juice is worth the
squeeze from an ACB, or I guessyou could call it LTB
perspective.
Riece Keck (42:17):
Got it Okay.
So looking forward.
So you mentioned you'replanning on raising a third fund
of a hundred million, I thinkyou said starting in the next
couple of months.
What are you hoping toaccomplish with that?
Are you changing the investmentstrategy at all the criteria?
What does that look like?
Adam Struck (42:32):
Yeah, no, we're not changing the criteria, the
strategy.
I think what we're doing isreally working basically
investing in incredible earlystage companies with a B2B
motion, and you know there'sspecific areas or sub verticals
within there where we feelreally strong, because we have a
bunch of informationasymmetries and a lot of
founders that have hit escapevelocity.
So we'll definitely want tosort of double down and lean in
(42:55):
there.
I think the desire for us to gofrom like 75 million to 100
million is just because we arenoticing sort of like, you know,
maybe those like three to $4million seed rounds where we
still want to make sure that wecan take half the round and lead
the round, and I think gettingup to 100 million would just
allow for that.
We also just have a bunch ofour competitors, you know, you
(43:15):
know in our space, that havesimilar fund sizes.
And I think when you look atsort of portfolio construction
theory even if you're stillleading, you know writing one
half million dollar checks to 25portfolio companies in three
million dollar rounds if there'san extra 25 million to just
give you more dry powder toexercise pro rata rights for
your winners and sort of maybeinstead of being a 50-50 split
(43:36):
between initial investment andfollow on it becomes 40-60.
I think that's healthyGenerally for us.
We are what I would consider amore concentrated venture fund.
We're typically only doingaround 20 to 22 deals per fund.
There are funds out there thatare doing 30, 50, 70 deals.
I don't understand how you canlead rounds and add a ton of
(43:58):
value post-investment if you'respraying and praying like that.
But yeah, there does come a timewhere there's a really hot
company.
They raise a one and a half $2million pre-seed round and
they're now going out for that$5 million seed round, we want
to be able to say, hey, we needto cut a $2.5 million check to
leave that round we can, whereasright now, with a $75 million
(44:18):
fund, it would be very difficultto get that through.
I see, just from a sort ofconcentration risk perspective.
Riece Keck (44:26):
So final question for you.
This could either be to newinvestors or to new founders.
What's the best piece of advicethat you could give for those
who are on the rise?
Adam Struck (44:35):
Yeah.
So I mean, I think, for newfounders, I would just say that
you know, for me, the bestfounders I've ever worked with,
not only are they superpassionate, do they feel like
they have, you know, a veryunique sort of lens in the space
and, most importantly, theyknow how to deal with adversity.
They know how to get punched inthe face, they expect it and
they get back up.
(44:56):
And when they're going throughadversity, they're hyper honest
with their investors.
So there are a lot of foundersout there that I've met that you
know.
I asked them hey, like what'sgoing wrong with your company?
Oh, nothing's going wrong.
There's nothing going wrong.
Like there's, it's supposed to,there's supposed to be things
going on by its early stage.
And they don't want to sort ofyou know, sort of tell their cap
(45:17):
table like what's keeping up atnight, what am I most scared
about?
Because they think that it'sgoing to create problems.
What they don't realize is themore open and honest you are and
the more you can sort ofleverage the totality of your
cap table, the stronger you'regoing to be.
You know founders that don'thave product market fit and they
think that they should justkeep building features
constantly because hopefully, ifI build it, it will come, but
(45:43):
they're not actually taking thetime to do the work, to
understand what does thecustomer really want.
That's another sort of pitfallthat I see a lot of early
founders, young founders fallinginto.
So what I would just saygenerally is it's supposed to be
hard, it's supposed to be likechewing glass.
You're supposed to makemistakes.
My advice is if you bring thework ethic and you feel like you
understand the space, just bereally honest when you're
(46:04):
feeling the most vulnerable,because in my opinion, that
creates self-awareness and thatalso makes your investors feel
like you're being open, you'rebeing honest and ideally it's
going to make them want to pushharder to make you successful.
Riece Keck (46:18):
Love that All right.
Well, thank you so much forcoming on, Adam.
That's a ton of valuable adviceand I really enjoyed the
conversation.
Yeah, thanks so much for havingme.
Thank you for tuning in to thisepisode of Seed to Exit.
I hope you found today'sconversation insightful and
valuable.
If you enjoyed the episode,please take a moment to
subscribe, leave a review andshare it with your network.
(46:38):
Your support means the worldhelps us continue to grow and
bring more incredible guestsonto the show.
Now for more content andupdates, follow me on LinkedIn
or Twitter, or you can check outMindHire, where we help
startups build exceptional teams.
Thanks again for listening andI'll see you in the next episode
of Seed to Exit.
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