The Right Idea, The Right Founder: How Undercapitalized Entrepreneurs are Getting Their Shot - Jennifer Abele & Raquel Filmanowicz, Managing Partners at VC 414 - The TechEd Podcast

Episode Transcript
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Matt Kirchner (00:00):
Matt, welcome into The TechEd Podcast. It is

(00:10):
your host, Matt Kirchner, forany of our young listeners who
are interested inentrepreneurship, or for anybody
who is mentoring a young personwho is that budding perfect
entrepreneur wondering about howwe generate capital, how we find
partners, how we think abouttechnology, how we grow our
companies, what personalitytraits make awesome

(00:32):
entrepreneurs. This is theepisode for all of you. We are
talking with two women who Iknow quite well. They are the
founders and managing partnersof an organization called VC
414, if that isn't familiar toyou, you will know all about it
in just a mere matter ofmoments, as we go deep on the
venture capital model and all ofthe opportunities available for

(00:53):
our young entrepreneurs, andreally entrepreneurs of any age.
So it is my great pleasure towelcome to the studio of The
TechEd Podcast two greatfriends, Jennifer ably and
Raquel. Phil manowitz, thanks toboth of you for joining us.
Thanks for having us. Thanks forhaving us. Matt and I know both
of you. Well, we're gonna haveso much fun. You're just both
brilliant people that yourmission in the work that you're

(01:16):
doing is absolutely incredibleat VC 414, our audience is gonna
learn all about that before weget to that, though, let's just
talk a little bit about venturecapital. People hear about
venture capital. They hear aboutprivate equity. Lot of folks
maybe don't necessarily know thedifference between those models
and others. What can you tellus? And maybe Jennifer, if you
want to give us a quick overviewof what venture capital

Jennifer Abele (01:36):
is, sure venture capital is a form of private
equity where financers put moneyinto fledgling startups that
have little or no operatinghistory, kind of taking bets to
see if they will advance. Thosecompanies sell ownership stakes
to venture investors in returnfor money, technical expertise,

(01:57):
operational expertise, and thenthe firm constructs a portfolio
of those startups into aprivately offered fund that
investors can invest inalongside the general partners.
So

you're really kind of sitting right at the
apex of on one side, theseentrepreneurs, these people with
great ideas, fledglingcompanies, to your point, maybe
don't have a track record thanan established company that's
been around for years mighthave. So a little bit of a risk
involved. There a lot of work inmaking sure that you're
understanding what opportunitiesexist with those potential
portfolio companies. And then onthe other side, you've got this

(02:30):
group of limited partners orinvestors who are firm believers
in either work you're doing,your ability to pick great
companies, and really yourability to pursue a mission that
maybe is a little bit unique inthe world of venture capital.
And Raquel, I want to ask you alittle bit about that. So VC 414
is certainly a traditionalventure capital fund in a lot of

(02:52):
ways, but some key differencesin terms of the types of
entrepreneurs and individualsthat you trying to help and
serve and mentor along the way.
So tell us a little bit aboutthe mission of VC, 4014. And
what makes it

Raquel Filmanowicz (03:03):
unique?
Yeah, what makes us unique isthat we invest at the
intersection of people andprosperity. So we're really
looking for founders that areunder capitalized, women,
minorities, veterans, LGBT, thatare building tech companies
within five verticals. SoJennifer and I are really
leaning into verticals where wehave expertise in where we've
had experience as beingoperators. So we like the future

(03:25):
of workforce, education,government, civics and health
and wealth.

So certainly, right in the sweet spot of The
TechEd Podcast when we talkabout anything related to
education, anything related tothe future of workforce, huge,
huge topics here at The TechEdPodcast, in as much as we are
all about securing the AmericanDream for the next generation of
STEM and workforce talent, lotsto talk about there as well, and
in that government and civicspace, as in healthcare too. So

(03:54):
really, really interesting andin many cases, emerging market
spaces that you're spending timein. And that's certainly one of
the things that makes BC 414,unique. You talked about the
underserved populations. Tell usa little bit more about the
individuals you're serving onthe entrepreneurship side, and
why it's so important to both ofyou and Raquel. Maybe I'll pose
that question to you again, whyit's so important to you to be

(04:16):
specializing in focusing onthose particular populations.
Well,

we know that only 2% of venture capital goes
to women, so 98% of venturecapital goes to men, and that's
a missed opportunity, becausethey're building really strong
companies. They outperform theircounterparts, and we just
realized there was a market gapas far as that first check, that
first access to capital for someof these startups, where we can

(04:41):
help in a lot of different ways,given our operator experience,
and it's proven true, we'veclosed down 12 deals, and
there's no shortage of greatcompanies coming out of the US,
and mostly within the GreatLakes region, is an emphasis of
where we're investing in. It

fascinates me. In fact, I don't know that I'd
heard that statistic. Recallthat 2% of venture capital is
placed with women ownedbusinesses and with women
entrepreneurs. The very firstcompany that I worked for after
my time in public accounting wasa tech company in the RFID
space, led by a womanentrepreneur. In that particular
case, I think the two of youknow that we've got several led

(05:17):
tech businesses that I'minvolved with. My wife Renee is
actually the CEO of several ofthose companies. So huge, huge
fan of women entrepreneurs, ofthe creativity that can
certainly come from those typesof investments and that type of
leadership, and so super, superimportant that we're finding
these individuals that maybehaven't been focused on in the
space of venture capital in thepast, and making sure that those

(05:39):
opportunities are available toanybody with a great idea,
anybody with a great futureahead of them on that topic.
Jennifer, I know there are somechallenges that are faced by the
individual entrepreneurs thatyou're serving and working with,
certainly the availability ofcapital being one of them.
Raquel touched on that. What aresome of the other challenges for
underrepresented populationswhen it comes to starting a tech

(06:00):
company,

right? So I mean, oftentimes these
entrepreneurs are solvingproblems that they know, and
those problems might not be thesame problems that typical
investors are focused oninvesting in. So one of the
things that we look at first andforemost is, does the founder
have a personal relationship tothe problem, or some domain
expertise related to theproblem? When I started

(06:21):
investing, I was hearing thesame story over and over again
that women were having a hardertime getting access to capital,
even though they were buildingalmost the same business as men
who are similarly situated. Sothat's what sparked my interest
in investing, but one of thethings that I think we bring to
the table that solves a problemfor them is access to a big
business network. Raquel and Iboth have extensive experience

(06:43):
working with many corporations,many organizations, local
governments, state government,members of Congress, where we
can really bring kind of accessto a network to the table that
some of the founders don'tnaturally have just because
they, you know, didn't grow upwith that wealth or an Ivy
League education. And so one ofthe things that we really try to
lean into is, how can we getthem access to that network so

(07:06):
that they can build morecustomers and build stronger
partnerships so the business canbe successful? You

know, that was one of the things growing up
that was just obvious to me. Igrew up in and around Milwaukee.
I grew up in a suburb ofMilwaukee, but spent a lot of
time in the city, a lot of timearound underrepresented
populations. We went to church.
And what is, you know, now, thecentral city, if you will, very
urban area of Milwaukee. I wasin Milwaukee County lifeguard
for six years, and had anopportunity to work in a couple

(07:30):
of cases at locations that were,you know, in some of those
underprivileged, underservedcommunities. And you really get
a sense for, you know, a youngkid growing up in the suburbs
that not everybody starts in thesame place and giving these
opportunities to folks that givethem, you know, raise the floor
and give them that chance tohave an opportunity, to grab the
brass ring, to be successful, tochange lives through the work in

(07:52):
the businesses that they areinvolved in. Really, really
important. But nobody is goingto necessarily take a chance on
an individual unless they've gotsubject matter expertise,
experience a personalrelationship, to your point,
Jennifer, the problem, or tothat business itself, so really
interesting that that'ssomething that you focus on as
well, is having somebody thatreally understands the market

(08:15):
space that they're getting into,so that they get a head start
and they maybe they know Some ofthe challenges that need to be
overcome, or some of the tricksof the trade to be successful.
What are some of the otherstandout skill sets or character
traits that you would point toin successful leaders of
companies, particularly those inyour portfolio.

So, you know, Raquel and I both have served in
executive leadership roles, andin those roles, we have both
interacted with CEOs and highlevel C suite officials, and
we've also hired individualsinto executive roles. And so
both of us have pretty extensiveexperience being able to
evaluate what it takes forsomebody to be successful
leading a company. And whenwe're investing in a company,

(08:56):
we're thinking about, can thisperson lead a company that can
grow to 100 million or more inrevenue in order for us to meet
sort of our returns test. Andthere are some skills that are
common amongst thoseindividuals, coachability, the
ability to be nimble oradaptable in their decision
making. There's just like anexecutive presence that you can

(09:16):
feel are they making smartdecisions? Are they
collaborative with their staffand their team, and then one of
the things that we really thinkabout is because it's a long
term investment for us. Youknow, is this somebody that we
can work with and we canconsider working with side by
side for the next 10 years? Andif we don't really see all those
things coming together, thenthose are signs that it's not a
good fit for us. Raquel, do youhave other pieces you want to

(09:38):
add to that? Yeah,

just good communication skills,
resourcefulness, they have somelevel of grit to them. You know?
They can stretch $1 so, and wecan assess that pretty early,
because we've hired so manypeople, right? And that's really
the bottom line at this stage ofwhere we invest in it's all
about the founder, becausethey're just kind of building
the company at that point.

No question, you think about a. Fledgling company
that's really starting inbootstrapping itself, figuring
out a way to make something outof nothing in a lot of cases,
which doesn't happen onautopilot. And then with that, I
too, cannot be $100 millioncompany. And obviously that
isn't anything that's easy todo, necessarily. It takes a lot
of what we just talked about. Ittakes a lot of grit. I love the

(10:19):
idea of, you know, Can youstretch $1 I think a lot of
times people think, Well, I'mstepping into this venture cap
world, and I'm going to get allthis cash, and I'm going to have
this glamorous entrepreneuriallifestyle, and that may come at
some point. That might be thegoal, but certainly that is not
what it feels like right out ofthe box. It's just a lot of
getting up in the morning andgrinding. And do you get a
sense, is there like a litmustest of people that would meet

(10:42):
those character traits, Raquel,or do you get a sense just kind
of by the feel and meeting withthem? Or how do you assess that?

Well, we dig into their backgrounds. Are they
second time founders? We, youknow, call on their references,
and we spend a lot of time withthem. This is a long term
relationship, so we're verymethodical. And, you know, we
have investing with otherpeople's money, so we try and
make sure that we do all thediligence involved to make sure
we're making a good bet. That's

a good point. You know, you're certainly making
your own bet on theseindividuals, and I know
firsthand that both of you havesignificant capital and assets
invested in the deals thatyou're doing, but you're also a
steward for other people'sinvestments, right? So does that
add a must another layer,Jennifer, of kind of
responsibility or pressure onyou, knowing that it's not just
your own personal net worth thatyou're investing in these

(11:28):
companies, but you've gotinvestors that are banking on
you and counting on you, and inthe same way that you are taking
a chance or investing in theseentrepreneurs, you've got people
that are doing exactly the samething with the two of you. Is
that right?

Yes, that is right. I mean, we are
entrepreneurs as well, and so inthat way, we can really relate
to the entrepreneurs that we'reinvesting in. And it is a lot of
weight on your shoulders whenyou're thinking about being a
responsible steward of somebodyelse's investment, and we take
that very seriously. We do avery extensive diligence process
on every company that we investin. We actually just finished a
diligence memo right before welogged into this call, and it's

(12:02):
19 and it's 19 pages long, justas an example, then we dig into
everything from market sizing tothe strength of the team to the
financial viability of thecompany, the financial or the
viability of the technology. Andwe do that because we want to
memorialize our decision makingso that if the company does
fail, and some of them will, wecan go back and look at where
did we go wrong? Did we notidentify a risk, or did

(12:23):
something really catastrophichappen in the market that
brought it down? And

that's a really important distinction as well
for people to recognize as youinvest in, you know, a dozen
companies, or a couple dozencompanies, you're not expecting
every one of those to be a grandslam home run. That's kind of
the beauty of the model, right?
But the hope is that there's acertain percentage, a
significant enough percentage ofthem that are and that you've
got some really good singles anddoubles, and you are going to
have some that for whateverreason you bet on that maybe
didn't work out exactly the waythat you expected. And that's

(12:49):
the nature of the model. I dowant to talk a little bit about
some of your portfoliocompanies, and I've had the
opportunity to meet a number ofyour founders, fascinating
people, all of them different.
What's a company Raquel, thatyou've invested in that has a
story that you'd like to sharewith our audience? Yeah,

one of the early investments we made was an
Latino gentleman from Milwaukeenamed Matt Rodriguez, and he
built a super fan app. It'sbasically technology for
emerging and established musicartists to release their music
before it goes to streaming, soit gives them an opportunity to
make money off of their art. Andhe's doing very, very well. He's

(13:28):
grown his company, and we're soproud of him. He's running the
company out of New York now, buthe's been super as far as
building out the team and thecustomer base, and he's got some
major, major name artists rightnow on the platform, and

he said yes to a lot of artists. And is there any
that he said no to that you wantto highlight, or you can
highlight on the podcast, or notso much. He has

declined at least one sort of controversial
major artist, but right now he'sonboarding 8000 artists a day.
Wow. So there is really highdemand, and they are doing no
marketing, so there's nocustomer acquisition costs. All
of these are inbound. It's veryexciting to see what's
happening. What's

the company's name? Even, even Awesome, yeah,
so when you started buildingthat relationship with that
particular entrepreneur, whatwere the things that jumped out
at you that said, this is aperson whose business we want to
be a part of, that we want to wewant to bank on and bet on.
Yeah,

he was so excited. He has great domain
expertise. He's worked in themusic industry for a very, very
long time. He's very well knownamongst the music labels, and he
was very particular of who hewanted on his cap table. And he
made a point that he wantedwomen, and particularly a Latina
woman, on his cap table. So wewere very happy. Yeah,

awesome. Cap table would be kind of the
financial structure the businessis correct, like, who's
investing in at what levels isthat is for folks that may not
be perfectly familiar with thatterm, right?

It's basically a spreadsheet that shows who owns
how many shares of the company

got it. And so this is an individual that loved
what you were doing and wantedto have you be a part of his
company, and you had theopportunity then to invest. And
you know, obviously, with an eyeto 8000 performers that he's
engaged with, and you've got tolove the idea that he's kind of
born and bred Milwaukee personas well, right, right from your
own backyard. Yep, 100% Allright. Well, thanks. Raquel,

(15:13):
that's a great example. Evenother ones. Jennifer, which ones
would you call out that youthink are really interesting, or
our audience might have aninterest in learning more about

Sure. I think one company that the audience
might be interested in is recentinvestment of ours called Master
tech AI. So AI is all over thenews, as we know, and you know,
the world is changing quicklybecause of, you know, the
implementation of AI across manydomains. In this case, Master
Tech is a vertical AI companythat creates an assistant for

(15:43):
individuals who are autotechnicians. So they take all
the data from all of the OEMs,as well as data from service
bulletins and repair histories,and sort of combine that into an
AI model that's proprietary tomaster tech, and that model
enables that auto technician tovery quickly find the resolution

(16:04):
to a problem with a vehicle, sothey can quickly search, quickly
resolve what the challenge is,and then it can go one step
further by also recommendingadditional repairs that might
need to take place for thatspecific make and model. So
we're really excited about thiscompany. They're selling to
independent auto shops rightnow. We think there's a very
large market opportunity. Itintegrates well with other
technologies that auto shops usein their tech stack. And the

(16:26):
founder has a wonderfulbackground working for Niantic
and Microsoft as a softwareengineer, and she's just highly
technical. She lives in Seattle,and we're really excited about
what she's building. So her nameis Linda gray. She's actually
been on many podcasts as welltalking about the company. So if
you look that up, you'll be ableto hear it directly from her.

Yeah, shout out for Linda Gray, that's awesome.
You know, you think about thechallenges in workforce, and one
of the things we hear about morethan anything else, is the fact
that we're not going to haveenough individuals to fill all
the jobs. In fact, we alreadydon't, and I suppose, especially
the more technical it seems thatthe job is, the harder it is to
find great people to do that.
You think about taking yourvehicle to an independent
service station 15 years ago,all the things those technicians

(17:07):
had to know about so manydifferent vehicles. And
obviously that creates a levelof education and experience
that's required to be effectivein a role like that. And
certainly, the advent of AIisn't going to take that skill
set away. But you think aboutbeing able to create it sounds
like a large language model fromall of these service bulletins
and other collateral that areavailable to mechanics and to

(17:30):
people working in the autoindustry. And being able to in
the same way that I can askpretty much any question of clot
or perplexity or chatgpt, andit'll give me an answer to be
able to do the same thing. Butin this particular case, focused
on the auto space. Really,really cool. And I could see
what you would absolutely beattracted to a business like
that. So that's a company thatyou said is in Seattle. I know

(17:53):
you have a focus on kind of theGreat Lakes region. How did you
go about connecting with acompany that's all the way out
on the West Coast.

Yeah. So that company was introduced to us
through a group called Launch.
Launch is led by a gentleman bythe name of Jason Calacanis.
He's also a very popular podcasthost, and I had previously co
invested with Jason on anotherdeal several years ago, and so I
kind of got into the dealpipeline, and so that's how we
learned about it, and it's justbeen really exciting to see it

(18:21):
grow. They ended up CO investingwith us in the deal, so she
closed out her pre seed round inOctober, and we're looking
forward to seeing what happenswith the company. I also just
want to, like, emphasize alittle bit sort of the workforce
element of this. We really lovethe fact that this is serving a
blue collar workforce, afrontline workforce and
providing them with a tech toolthat might only normally be

(18:43):
available to those in more whitecollar professions. Sure, there
was some question about whetherthey would adopt that, but what
we have found is that autotechnicians are really
technically savvy, so theyactually are adopting it quite
easily and are excited abouthaving that kind of a tool
available for them.

Well, in that technology, you think about it
giving just a tremendouscompetitive advantage to a
dealership, I shouldn't say adealership, but an auto shop
that is utilizing it, becausethe fact is that if they can get
to an answer quicker, if theycan troubleshoot faster, they're
going to provide better valuefor their clients. They're going
to be able to turn vehiclesaround more quickly. They're
going to be able to diagnoseproblems more effectively. That

(19:22):
just relates to a happiercustomer. And the more happy
customers you can create, morereturn business you're going to
create. So there's certainly abenefit to that technician
working in an auto shop in termsof job security and growth. And
that's that's got to be part ofthe value prop as well. Correct,
yeah, and they're making moremoney. Yeah, exactly. And
they're making more money. It'sexactly the model Raquel, you
know, we talk about finding, inthis particular case, finding a

(19:44):
portfolio company to invest in,through a contact, through your
network. What are the other waysthat you learn about companies
or entrepreneurs that may have aneed for venture cap?

Yeah, it number of different ways. We've
this last year, has spent a lotof time going out to the Great
Lakes cities and doing like.
Investors forms and meeting withother VCs to just get our name
and profile up, to get those coinvestment opportunities. Our
founders and our portfolio havebeen doing a very good job of
referring deals our way.
Founders know founders and sothey speak you know nicely about

(20:15):
the work that we do and helpingthem grow and scale. So we were
fortunate. There's no shortageof deals coming our way. Are you
able

to share, like, how many deals you look at in a
week, a month a year? I mean,you don't invest in every single
one of

them, right?
No. But Jen knows these stats.
What are we getting? Like, aboutfive a day. Yeah.

Last year we looked at a 1500 Wow,
approximately. And it's a lot towade through. And you know, 85%
of them are an immediate declinebecause they don't fit the
thesis, or maybe we've seensomething similar, or already
turned something down that'ssimilar, but 15% you know, we'll
take a first meeting, and thenfrom there, it's like a funnel.

(20:51):
We work through it until, untilwe find just the right one. And
then

we're going to talk in just a minute about what
just the right one looks like toour budding entrepreneurs that
are maybe doing their firstpitch at some point. What is it
that experienced venture capitalinvestors like yourselves are
looking for before we kind of goin that direction? Though, any
other companies we haven'ttalked about that you want to
highlight either one of you?
Let's

talk about Rex K 12. Yeah, and I think Rex K 12
is a great example of a companythat's headquartered in the
Great Lakes region. It's fromWisconsin, a woman founder who
worked in computer science atseveral major corporations, but
grew up in a 200 square footapartment in India and in
extreme poverty, and computerscience changed her life. So

(21:36):
when she came to the UnitedStates and put her son into
school, she didn't feel that hewas having the opportunity to
learn about computer science inthe way that she felt was going
to be necessary for him to becompetitive in the workforce. So
she started by teaching somecoding camps, boot camps, and
ended up building out a fullturnkey computer science and AI

(21:58):
learning platform that she sellsto K 12 schools, and she's
serving many school districtsacross the US now. The software
has dozens of modules,everything from Python to other
types of AI development, machinelearning, coding, and it can be
supplementary to the classroom,or it can actually fully replace
the computer science teacher,because they're in high demand.

(22:21):
And we're excited about thiscompany because so it really
meets that sort of EducationWorkforce Connection and teaches
those STEM skills that are goingto be so important for the US to
be competitive in the worldeconomy.

Absolutely, and it's got to feel just great to
not only know that you'reinvesting in what you expect to
be a successful company, toinvest in somebody that has
started with a very humblebackground and is has grown into
an entrepreneur, saw thisopportunity in the marketplace,
and really, like so manyopportunities and so many
entrepreneurial ideas, came fromsomething she was frustrated

(22:54):
with, in this case, maybe herson not getting the experience
on the computer science sidethat she thought was important,
and G turned that into positiveenergy and actually innovated
and created a company. Rex K 12,just a great example of how
you're changing the world of somany people, in the form of the
clients, in the form of theentrepreneur and the employees
of the company, advancingtechnology and so on. Really

(23:17):
important work and and certainlymaster tech AI. And even also
great examples in much the samevein of how you're doing really
good work, and also keeping afocus on the financial side of
what it is that you're doing.
And to that point, I've got tobelieve and you've mentioned a
couple of the things already,personality traits that make
effective founders andentrepreneurs, but we've got all
kinds of young people and theirteachers and their mentors that

(23:40):
listen to The TechEd Podcastthey're listening to you talk
about these people that startedwith an idea, people like you,
and said, here's my idea,eventually that evolved into an
investment in their company andreally creating what could be an
incredible future for all threeof those, as well as lots and
lots of other companies in yourportfolio. Let's talk for a
moment, and I want to get bothyou know how you've used this

(24:02):
the same. And then if there'sthings that both of you look for
individually, maybe we'll startwith Raquel. In this case, if
you've got somebody coming toyou that's pitching a company,
right, you look at 1500 a year,and maybe you're spending time
with a small percentage of thatover the course of a period of
12 months, somebody gets infront of you. They approached
you with some type of aprospectus or a proposal. It was

(24:23):
interesting enough to createthat first meeting. What is it
Raquel that you're looking for?
And what tips would you have forour young entrepreneurs in terms
of creating that winning pitch?

Yeah, so we like good storytellers, someone
that can explain the problemthey're trying to fix. Whether
they have personal experiencewith it or they have technical
experience with it, we look for,you know, do they understand the
market size? Do they understandthe revenue model and everything
all the way up to, like, what'sa potential exit strategy for

(24:56):
them? So there's, like, lots ofdifferent components, but I'd
say like. Some of the betterpitches, like touch on all those
areas for us, absolutely

no. I really like that. And so much of that points
to really having a command andhaving done their homework,
right? So understanding themarket, being able to
communicate it, communicate itconfidently, having an
understanding of an exitstrategy. So for our listeners,
I think they know that lot oftimes. In fact, almost every
time, if it's a PE fund, if it'sa venture capital investor, they
are not planning necessarily toown that company for decades and

(25:28):
decades. Maybe they do, but alot of times they're looking at,
is that company going to gopublic, or is there an
opportunity for a strategic orfinancial investor to buy it
somewhere down the road? Whattypes of things do people say
from the standpoint of that exitstrategy early on, Raquel, to
get your attention

that they've done their homework, like they
start to identify what companiescould be the potential
acquirers. And it's just it'sdifferent, you know, scenario
based if they get to thisrevenue or that revenue, they've
done their homework. And so thathelps us when we're assessing
those deals, too. And

I think Jennifer Abel, you probably have a lot of
commonality in terms of thethings that you look at relative
to what Raquel just mentioned,and maybe some things to add, or
some some differentperspectives. What are you
looking for in that initialpitch, and how should our new
entrepreneurs, youngentrepreneurs, be thinking about
that?

Right? So we actually use a scorecard when we
review every company, and fromthe very first meeting, we start
to think about where theentrepreneur or that company
fits within that scorecard. Sothe items that Raquel already
mentioned are critical,certainly, whether they're a
thesis fit for us, whetherthey're a fit for our team, and
whether we think we can addvalue to the company, because we

(26:34):
want to be more than justcapital at the table. We want to
be able to help that individualsucceed. So that's kind of like
the first screen. And then fromthere, you know, we really dig
in on the team and the founderstrength, as we've already
discussed, the market potential.
What does the industry landscapelook like? Who are the
competitors? What's the totalmarket size? Are there adjacent
markets that the company canbreak into? For instance, with
Master tech, you know, they'reworking with auto technicians

(26:54):
right now, but eventually theywant to go into h back also as
like, another vertical for them,and then we look at things like
market risk, like, Are thereregulatory or legal risks,
things that maybe could, youknow, tank the company in the
long run, is the productdifferentiated? Have we seen
things that look just like this,but just with a different color
pitch deck, you know? Are theystarting to see some velocity?

(27:15):
Are they starting to seecustomer uptake? Do they have a
sales strategy that's realistic,and is that sales strategy,
strategy resulting in somemomentum in their sales. And
then we look at all thefinancial viability. So I'm
pretty obsessed with that. Ilook at, you know, everything
from how the company iscapitalized to how much money
they have in the bank, what thatfinancial projection looks like,
what the use of funds is goingto be, how much runway that

(27:37):
gives them, and what milestoneswill they meet with that runway?
And then who are the otherinvestors at the table? And are
they people that we want to workwith? And do they add
conviction? And can they alsohelp the company succeed? So I'd
say that kind of rounds outeverything we look at. It's a
lot, but again, you know, we'restewarding other people's money
as well as our own, and we wantit to be successful, so we take
a close look at all of thoseelements.

Yeah. So other than that list of like 35 things
you just mentioned. You're notreally looking for anything,
right? Not much. So let me askyou this. I mean, is that pitch
coming in the form of a formalpresentation on the part of the
entrepreneur or founder? Is itcoming in the form of, you know,
your questions and reallydigging deep and what else is
involved?

We try and steer any potential start or
founder through our intake form,which is just a short
questionnaire that goes straightinto our CRM. And then they can
upload their pitch deck. Andthen Jennifer and I, a couple
times a week, will sit down fora few hours and kind of go
through what's come in for us.
And then that's where we juststart taking the next steps,
whether it's a straight declineor do we take that first

(28:39):
meeting, and it's usually avirtual meeting, and we have
them kind of walk through theirpitch and, you know, sharing it
in their own words. And that'sour first screen, yeah,

and that initial few hours, Raquel, is that like
your favorite part of your week,or is that kind of like the
grind, where you just, you know,you have to get through that
phase to get on to the next one?
It's our

favorite.
Yeah. It's really

inspiring, actually, because, you know, all
entrepreneurs are optimist,maybe sometimes too optimistic,
but it's fun to look throughthem and just see the exciting
ideas that people have after wehave that first meeting, and
really hear why they're buildingthe company and sort of what
their vision for it is. If wedecide to take another step,
we'll do a product demo. Istypically our second step, and
where we really look at thetechnology and understand the

(29:23):
user experience and ask moretechnical questions. And then
after that, we'll start to domarket research on our
independent market research ofwhat the founder tells us,
because we want to understand,you know, is there invalidate
what the competition looks likeand whether the market size is
valid. And if we get throughthat, and we still find it to be
really compelling anddifferentiated. Then from there,

(29:44):
we'll move into, like, reallymore detailed legal and
financial diligence. So

here's a question for both of you, and when we
think about what makes asuccessful entrepreneur, I know
a lot of people have thequestion of is that just, are
those just personality traitsthat are innate, that you know?
Maybe we learn really early inlife, or we're born with, are
those things that we, you know,we learn over the course of our
education pathway, or maybe, youknow, we're running and being in
business, and I'm sure it's acombination of both, but when

(30:13):
you think about it, is it like5050 nature versus education, or
is it more like 90% is just kindof how you're wired, and 10% is
what you learn. How would youbreak that down? Yeah,

I mean, I think it's, it could be 5050,
some of our founders are quietbut very strong leaders, so
they're not kind of very robustin their personality. But then
others are, and, you know,they're both like, doing the
right thing and growing theircompanies and doing everything
they can, but they just havejust a different approach,
right? Some we have to reachout, like, Hey, how's it going,

(30:45):
and others are like, you know,texting us and calling us. So,
you know, we just try and helpwherever we can. But I think for
some people too, it's justlearned, like, maybe they grew
up being more quiet and timid,but then they've kind of grown
to acquire some of thoseleadership skills. So,

Jennifer, you feel the same way. Is that a
little bit you're born with it?
Is it things you learn can be acombination or all over the map,
it's

a little bit of both. The fact of the matter is
that some people are just notmeant to be a CEO, and we do see
those, and sometimes we havesome kind of awkward meeting.
You know, the pitch deck mightlook great, product might look
great, but it becomes very clearin the first meeting that this
person just can't run a company.
And one of the things that welook for is, you know, do they

(31:28):
recognize that maybe they mightbe good now, but they might not
be good three years down theroad? Sure. Are they adaptive
enough to know that maybe theyshould be the CTO of the
company, not the CEO. And so Ithink, you know, there is
probably something innate formost people that enables them to
grow and scale and lead a largecompany. But I think there's

(31:51):
also something innate and someother people that they have the
idea, they think they can get itthrough these first steps, and
then they know they might needto turn it over. We actually are
really interested in looking at,you know, maybe some personality
assessments in the long run aswe continue to build out our
firm, and whether there are somecharacteristics that we can suss
out early on, will help usdetermine whether somebody will

(32:14):
be a good leader. You

know, early I mentioned the private equity
back business that I ran for anumber of years, and one of the
very first things I did, believeit or not, was I went to our
board of directors and had everysingle member of the board do a
personality profile, as anexample of, okay, here's what we
want to do in the rest of thebusiness in which we ended up
doing that. So we ended up ourentire leadership team did a
personality profile. And mywhole philosophy is that they're

(32:39):
not good bad, right or wrong,but certain personalities are
going to match certain rolesreally, really well, and so
understanding that and alsounderstanding how people are
wired, both in terms of whetherwe're a leader, understanding
our team, or we're a teammember, understanding our
teammates, really, reallyimportant. But the beauty of
that is I actually had thepersonality profiles of my
entire board of directors aswell. So imagine going into a

(32:59):
board meeting and knowingexactly how those folks are
wired, and there was a wide,wide variety of different
individuals. But that can bereally, really valuable. It'll
be interesting to maybe that'sanother podcast episode to
explore. We did that when westarted the company. Awesome. So
you guys have each other'spersonality profiles. We do

have them somewhere, filed away, but we
realize we have verycomplimentary skill sets are
personality traits.

No question about that. I'm tempted to ask a bunch
of really probing questionsabout both of your
personalities. Here we

Unknown (33:27):
go. You know us

a little bit, so you might be able to guess some
of them. So

on that point and in as much as working together
and having this partnership isso important, Jennifer, what's a
personality trait that Raquelhas that you would point to that
makes her really effective inthe work she's doing.

I would say collaborator. She has a really
special knack for making peoplefeel included and part of
something, and bringing peopleto the table and keeping them
there. And I think it's, it'ssomething really special and
unique about her business sensethat draws people to the table.

Yep, no question.
I can attest to that fromexperience and Raquel, same
question about Jennifer, yeah,

I'd say, I mean, I've always said this in
other calls, that I think she'sone of the smartest women I
know, and so I know that she hasmy back no matter what, and we
just work so great together. AndI just never feel like I'm at a
loss or I'm doing something onmy own, like she's right there
locks up with me absolutely.

And if anybody wants to take a look at Jennifer
avelles LinkedIn profile, youcan tell right away that this is
somebody who's brilliant becauseof just all the incredibly
diverse different types of rolesthat she's had over the course
of her career. And Raquel, Icould say the same thing about
you. Some of that was nurture,some of that was learning in
your educational experiences.
Let's dive into that a littlebit. If I'm a teacher, and we
have a lot of teachers, STEMteachers, TechEd teachers that

(34:48):
listen to this podcast, and I amtrying to foster the kinds of
skills, abilities and traits inmy students that will be
important when they get to theworld of entrepreneurship. For
those students. Said, have aknack for leadership, a knack
for creativity and beingentrepreneurs. What
recommendations would you havein terms of how we generate that
next generation ofentrepreneurs? Jennifer, as we

(35:11):
think about future students andyour future entrepreneurs and
founders,

I guess I'll start by saying that I do not
subscribe to the notion thathigher education is unimportant.
I think higher education isreally critical. And I just
really think that to be asuccessful entrepreneur, to the
extent possible, most people aregoing to need to go to business
school or engineering school orsomething like that. So let me

(35:40):
just start with that. You know,after that, I think building
confidence is really important,because entrepreneurship can
feel really scary and risky.
Leaving a job that you know youmight have the golden handcuffs,
or, you know, you may be wellcompensated, frankly, like
Raquel and I were before we leftto do this, it can be nerve
wracking. So I think buildingthat confidence in yourself and

(36:03):
knowing that you have sort of,at least the infrastructure to
support you be supported, tobuild a company, is really
important. I don't think it'sreally necessarily, like
intelligence specific. I thinkit's just, you know, having the
fortitude and the grit and thescrappiness and frankly, the
courage to do it, but it's hard.

(36:27):
I mean, I'm not gonna lie, it'sreally hard, absolutely. And you
know, there are good days andthere are bad days, but I will
tell you, it is very rewardingwhen things start to stick and
start to work,

absolutely. And I having been in entrepreneurial
world and in leading companiesnow for boy, I don't even know
how long, over 30 years, itseems like I think that's right.
It is right that it is amazinghow you can have a bad day
followed by a good day, but overtime, you have more and more
good ones and fewer and fewerbad ones. And the more
established to get, the moreexperience to get, the more
times you've kind of seen thisbefore and relying on that

(36:59):
background. But you're right.
It's not always. In fact, it'soften not the most brilliant,
highest IQ person who ends upbeing the greatest entrepreneur,
the greatest leader. It's reallyjust that person that was
willing to stay at it. I likethe adage of standing up one
more time than you fall down,because you fall down a lot and
running businesses, but you justgot to get up and dust yourself
off and get back in the game.

(37:20):
And over time, it gets better,and that's what creates success.
And it sounds like a lot of thatis similar to your experience in
terms of working withentrepreneurs. Raquel, same
question to you, if I'm ateacher and I've got a classroom
full of students, what do I needto instill in those students
that make them potential futuregreat founders and
entrepreneurs?

Yeah, my brain tends to go more towards,
like the mentorship and creatingrole models for students to look
up to. I think that's was a keychallenge for me growing up
coming from the inner city ofChicago, where I didn't have
like this network of businesspeople, and, you know, people
that went downtown for work. Andso even in starting venture
capital, I think representationmatters, so making sure that

(38:02):
they can see the people thatthey're trying to aspire to,
sure

absolutely well, and that background has to be
incredibly valuable to yourfounders as well, and relatable
and inspiring too, right? Imean, do you get that kind of
feedback from the folks you'reworking with?

Yeah, we do.
We get. Our favorite line is,you guys are so nice and helpful
because they've had such badexperiences pitching to VCs and,
you know, not getting the timeof day, or being very short
Curt, or, like, just gettingghosted. You know that sure that
we make sure we don't do, yeah,

one, what a testament to the work that
you're doing in a competitiveadvantage, right? Because if
you're like that, and you'retaking an honest interest in
these individuals, you're goingto see deals that maybe other
people aren't taking the time tolook at and and that really, in
a lot of ways, this is part ofthe secret sauce of what makes
VC 414, so successful. And whilewe're so excited to watch what
happens here into the future,before we dive into the future,

(38:56):
and we've spent a lot of timeinto the future, I guess I want
to spend a little time lookingbackwards. We all have our own
educational pathway that we'vebeen on our own educational
journey. I have mine. You haveyours. As you think about that,
I've got so many ideas that I'mlike man, having gone through
the education path, spendingtime in education, here's what I
would do different. I'm hopingthat the two of you have those

(39:18):
as well. Let's start Jenniferwith you and ask you this
question, what is something thatyou believe about education? And
you've actually worked in highereducation, I should measure
mention that. What is somethingthat you believe about education
that would surprise otherpeople?

One of the things that's really beautiful
about higher education inparticular is being in a cohort
of individuals who are learningabout the same thing. So you're
not just learning from yourinstructor, you're learning from
other people who share a commoninterest. And that, I think,
really helped advanceintellectual curiosity in a way
that you really can't learn onyour own.

So advancing that intellectual curiosity through
that higher ed experience, andit was your How long were you?
University of Wisconsin,Milwaukee, I know it was period
of time, correct? I was therefor four years, yeah. So seeing
higher education from the insideout, incredibly valuable
experience. Raquel, anythingthat you would point to in the
world of education that wouldsurprise people, that that's
kind of how you feel, or that'show you think about education.

I mean, for me, the biggest kind of aha
moment was being around diversestudents. You know, I came from
90% Latino schools, from K to12, and I went to college and
Carroll College in Waukesha,Wisconsin, awesome, where I was,
like, probably one of fiveLatinos in the whole school.
Wow. So it exposed me kind ofto, you know, black people,

(40:37):
white people. I didn't really,you know, understand customs and
culture of them. So for me, itwas very rich learning
experience. I

mean, that's absolutely perfect. And this,
this whole idea of growing up ina school and education system
where just about everybody youknow looked like you came from
similar background. I cancertainly say that it was, you
know, certainly different thanthe background that you came
from. But everybody in myschool, or at least most of
them, kind of looked like me.
And fortunately, I hadexperiences growing up. I
mentioned them earlier in thepodcast, where I was exposed to
all kinds of different cultures,all kinds of different people

(41:08):
and and recognize what you know,how beautiful it is to be around
people that aren't necessarilyof exactly the same background.
And in a lot of cases, that'swhat creates a strong
entrepreneurial mindset and astrong company is, is having a
lot of different individuals andways of life represented. So
really, really cool observationthere. We're gonna go back in
time for both of you and Raquel.

(41:29):
We'll start with you, and let'stalk about so you're this 15
year old girl. You're growing upin Chicago. You've got your
whole life ahead of you. Maybeback at that time, you knew that
it was in your absolutely inyour blood to be a, you know, to
be a VC, leader and anentrepreneur yourself. Maybe
not, but if you could go backand tell that 15 year old girl

(41:49):
one thing, what would that onething be?

Yeah, I lack confidence, so I, for me, it was
just to trust myself more anddon't be afraid to speak up.
That was, like, probably thebiggest thing, because I never
asked questions or anything. Andso now I look back and I just
think, like, those experienceswere just part of my growth
process.

And I can point to, you know, points in my life
where, like, that confidencelight just went on. Do you have
one in yours where it's justlike, you know, oh my goodness,
this filled me with confidence.
Or I found a different way oflooking at the world that kind
of kind of changed that paradigma little bit. Yeah,

I think it's probably like the last decade of
my career, having worked in in afew different roles, and then
launching this firm. Like, justgotta be confident. Jennifer,

same question to you, if you could go back to
that 15 year old Jennifer andgive her one piece of advice,
what would you tell

her? The advice I would give myself is start a
business someday, even if itfails, even if you don't feel
confident, you can do it on yourown. Do it with a great partner
that you trust. Take that leapof faith on yourself, because if
it does work, it feels reallygood.

As it turns out, that advice that you had given
your 15 year old self is exactlythe way things are turning out.
Somebody with a great businesspartner doing really, really
important things, going into anorganization like VC 414, not
knowing how it's going to end,but having the confidence in
yourself that you're going tofigure out a way to make it end
really, really well. You areboth well on your way. Can't

(43:17):
thank you enough for joining ushere on The TechEd Podcast.
Jennifer Abe Lee, Raquel, Philmanowitz, thank you so much for
spending

some time with us here. Thanks. Man Thanks,
Matt. It was great to be withyou today, and it was great

to be with both of you. It's great to have our
audience along with us as well.
Learn so much about venturecapital, about what venture
capitalists looks for inentrepreneurs, about what the
future of venture capital lookslike, about these great
opportunities to pitch yourcompany, your idea, to people
who are well versed in the worldof business that can help you
along the way, figure out how tobe that successful entrepreneur

(43:48):
that Jennifer mentioned in thatclosing discussion. So thanks so
much to Raquel and Jennifer toour audience. You will find
information on this episode ofThe TechEd Podcast in our show
notes, those will be at TechEdpodcast.com/vc 414, that's
TechEd podcast.com/vc and thenthe numbers 414, after that.

(44:09):
Check us out on social media. Weare all over LinkedIn,
Instagram, Facebook, Tiktok.
Wherever you go for socialmedia, you will find The TechEd
Podcast, and until next week, Iam Matt Kirkner, your host.
Thanks for joining us. You.

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