[00:03:02] Jason Kirby: So I started a small business in college, offering photography services. It was nothing really special, but it was something I was passionate about at the time. That was one piece of advice I got from successful entrepreneurs: do something that you love, and the money will follow. Never chase the money.

[00:03:23] Jason Kirby: I pursued that and ended up building a very successful business. I expanded into different service lines, building the largest photography school in San Diego and one of the largest event and headshot services in San Diego as well. From there, I was learning a lot and having a ton of fun traveling the world, visiting more than 30 countries and enjoying a really good lifestyle.

[00:03:49] Jason Kirby: But then I quickly realized that I was more in love with building and scaling businesses than with photography and the creative aspect. So I quickly worked towards selling those businesses and getting into the startup world. My first foray into tech startups was with a new company called Liquid Sky.

[00:04:10] Jason Kirby: Liquid Sky is a cloud gaming technology company that solved a big problem. We allowed gamers to play any game on any device, and we raised $12 million for that company, with Samsung being one of our largest investors. Eventually, we turned the company around and sold it to Walmart at the end of 2018, which was a massive success.

[00:04:34] Jason Kirby: That brings me to what I’m working on now, which is Thunder. We’re a network of founders, VCs, and LPs that uses AI to identify who has a higher probability of investing in what. So, that’s the super long, 15-year journey in just a few minutes.

[00:04:52] Jason Kirby: I’m happy to unpack any of those stories, and since the acquisition of Walmart, I’ve been investing in startups and funds myself, gaining experience deploying capital in addition to having raised capital in the venture world. So, I’ve seen it from both perspectives.

[00:05:09] Rebecca Hotsko: That is a very cool story, and you got bit by this startup bug early and you’ve been extremely successful at it. I want to get into some of the challenges you faced during your times because you had successful exits in your startups, but what were some of those challenges you faced along the way and how did you kind of overcome them?

[00:05:28] Jason Kirby: Well, when it comes to operating on the startup side, the challenge that pretty much any founder deals with is being able to run the business, grow the business, hire and manage people, and be able to do that very well, all while trying to schmooze and get involved with VCs, pitch them, entertain them, and try to get their attention and, you know, get them interested in investing.

[00:05:56] Jason Kirby: VCs, family offices, high net individuals, and angel investors – it’s incredibly difficult to do. And I think that’s why there’s so much respect for founders in America, as opposed to other parts of the country where entrepreneurship is not as idolized as it is in the US. Because it’s just incredibly difficult to do everything well all the time. And often, founder health, wellness, and mental health are becoming more of a talking point because burnout is very common.

[00:06:27] Jason Kirby: Going back to the Samsung story, at Liquid Sky, we had raised, I think, at the time, eight or nine million, most of which was from Samsung, with the expectation that they were going to acquire us. We were in six months of due diligence, 46 months of due diligence with them to acquire the company, with the intent of rolling out our technology across all Samsung devices across the world. It was a super exciting and awesome opportunity. We had about 1.8 million users across the world, but Samsung sells billions of devices. So it was a super exciting opportunity. And we had no reason to believe that this deal wouldn’t go through.

[00:07:13] Jason Kirby: Then, on the next day and the morning of it, business hours in Korea, but it’s like, you know, whatever, 2:00 AM our time, we get a text message that the deal is dead.

[00:07:27] Jason Kirby: Basically, there was a huge corruption case in senior management at Samsung that had recently come to light. The new CEO that came in to clean up that mess said every deal on the table is dead, regardless of what it is. So his signature authority went into place. The day of closing, it was a crushing blow.

[00:07:50] Jason Kirby: So you had just spent several months and tons of resources pushing towards this outcome of selling the company, all for it to just come crashing down on you the day of. We were smart enough to negotiate a breakup fee, so if they were to pull out of the deal, we got a million to two million bucks from that. Then we raised some money from existing investors and pivoted the company quickly because we were burning a lot of cash. We had to quickly cut our burn dramatically.

[00:08:26] Jason Kirby: We had to remove the majority of our services for consumers because the unit economics didn’t make sense at our size for consumer services. So we had to pivot to B2B. We were selling our technology for the GPU edge computer, which is considered some cool, innovative stuff, especially at the launch and rise of 5G, the wireless internet that was coming out. We were working with Verizon, LG, KT Telecom, Walmart, and a bunch of other big brands that we were working on some really cool big projects.

[00:09:01] Jason Kirby: I started signing seven-figure and six-figure contracts with these partners to basically keep us alive and with the ultimate goal of trying to sell the company to Walmart, which was kind of where we were headed. So it took about a year in that chaotic environment. We had to make layoffs. We had to pivot the technology and refocus. It was, for lack of a better word, a disaster across many different levels, but we pulled through and created a successful outcome. Walmart closed the acquisition in December of 2018 and we transitioned pretty quickly to building what was going to be Walmart gaming, which would inevitably become Walmart Entertainment to take on Prime, Amazon Prime.

[00:09:47] Jason Kirby: But about six months in, just two weeks before announcing the platform and the technology and the full integration of everything we were doing, everything changed. They basically said that they wanted to reprioritize resources towards next-day delivery and same-day delivery, merging the offline and online commerce experience. The budget they had allocated to us, which was in the nine figures, was basically pulled away.

[00:10:13] Jason Kirby: We were, if you’ve seen the TV show Silicon Valley, we were basically put up on the roof. Honestly, all things considered, the chaos and everything aside, it was a very good learning experience. There are many more stories, but that’s probably one of the craziest ones that took basically a year to recover from a decision that happened abruptly and had nothing to do with us.

[00:10:40] Jason Kirby: It led us into quite the spiral.

[00:10:43] Rebecca Hotsko: Yeah, that is quite wild indeed. And so cool to hear about how you pivoted because that’s something that I mentioned to you. Prior to this interview, I just read the book, the Founders, on how PayPal was created and they had to pivot a bunch of times. You just talked about how you had to pivot the company and do you think that is a big key of how successful a startup will be?

[00:11:05] Rebecca Hotsko: Their ability to pivot and change their, even change their business model sometimes to be, we have to adapt to these new circumstances and that really drives success. 

[00:11:17] Jason Kirby: That’s a hundred percent true. Some businesses can hit their stride on their first hypothesis or thesis of what they’re trying to build the business around. But it really comes down to applying the scientific method, where you try something and make a hypothesis. You expect certain results when you provide X to these customers. If you’re not receiving confirmation of your hypothesis, you have to make a new one and look at the available resources to test it.

[00:11:48] Jason Kirby: I meet hundreds, if not thousands of founders on a regular basis, given my network with Thunder and all the founders that come in and tell us their stories and try to raise money. I see many that are stuck in their ways and so passionate about solving one particular problem. They haven’t solved the commercialization aspect of it or found product-market fit. Maybe they have a good idea, but the execution is not where it needs to be. The ability to be nimble, pivot and prioritize resources is truly key to being successful in startups.

[00:12:27] Jason Kirby: In addition to a million other things, hiring great talent and knowing how to present your story and communicate, building products that people actually want or need is another crucial part. I think a lot of founders spend too much time building something that they want, but no one else does. It’s important to reflect on that and make sure that you’re building something for a market and validating that the market actually wants it before you build it. Sometimes, investing in validating the market is well worth it before you go into a black hole, build for a long time, spend a bunch of money, and then try to market it, only to find that it doesn’t go anywhere because you didn’t test the market beforehand.

[00:13:17] Jason Kirby: So, every pivot we made, we had market validation, even at the smallest capacity, which was worth making a bet on. We had enough evidence to pivot into that model. If you’re interested, I can go into a similar story at Generation eSports, where we pivoted in the middle of the pandemic to what became inevitably Generation eSports, the next company I went to after Walmart

[00:13:44] Rebecca Hotsko: Yeah, so it’s all about books like “The Lean Startup” and building an MVP. This is not a one-size-fits-all recommendation, but hopefully, it will spark people’s perspectives on how they can approach it. Ideally, if you want to build some really cool software, you have either the technical ability or a co-founder who has the technical ability to do so.

[00:14:08] Rebecca Hotsko: Even if you have the ability to build the product in full, something that’s very simple is building out a square or a basic landing page website that sells the concept of what you’re building and focus on driving traffic to that with a call to action. Whether you’re going to sell a new widget or a product, something that’s physical or digital, or you’re going to sell software or a service, if you spend a little bit of time working on the messaging and launching a web page or a landing page that sells the concept and gets people to take action, you can now gauge overall interest.

[00:14:51] Rebecca Hotsko: If you have less than a 1% conversion rate and not a lot of engagement, you might need to tweak your messaging or offering, or maybe you just didn’t strike gold. However, if you have a 20% conversion rate and a lot of people saying, “Where is it? I want it. What is it?” and a lot of engagement from prospective customers that you’re trying to target, that’s a clear indicator that you’re onto something, and now it’s worth building.

[00:15:23] Rebecca Hotsko: That’s something I challenge people to do, whether you already have a successful product and you’re trying to test a new concept for that product, or introducing AB testing with just a simple MVP to identify what actually resonates with the audience. You can do AB testing where you kind of leave the control or one option, and then you test it against another option, and then you see how they perform against each other.

[00:15:53] Rebecca Hotsko: You can do messaging or pricing or design all kinds of different ways of testing an idea against a particular market. Another framework that I like to use just to kind of, before I build anything, I do something called the post method, which is basically identifying the people, the objective, the strategy, and the tools.

[00:16:15] Rebecca Hotsko: So you first start with people, like who are you targeting? Who’s the audience? Go as far as building customer personas, what are their needs and wants? What’s their story? What’s their demographics? Then you go into the objectives. What are the business objectives? What are you trying to accomplish? For example, you want to hit X amount of money in revenue, you want to hit user growth, you want a net promoter score, whatever your objective is for the particular task or test.

[00:16:49] Rebecca Hotsko: Then you go into the strategy. Strategy is how you align the wants and needs of the customer with the wants and needs of the business. So strategy involves messaging, articulation of how you execute across, enabling that. Build a landing page that has this messaging, that has this flow, and then you get into tools. What tools will you use to enable all this? For example, Squarespace with MailChimp and other inexpensive tools to launch something.

[00:17:19] Rebecca Hotsko: I always emphasize the post method because often people will start with tools like, “Oh, we need a website,” or “Oh, we need an email marketing thing.” Well, before you go down that path, you need to know who you’re targeting, what your objectives are, and what’s the strategy to accomplish both. Then you can go to tools because your tools will change depending on what your strategy is. I find that to be a very good and effective framework to challenge people with, in addition to complementing that with a scientific method of having an initial hypothesis, testing it, reviewing it, and 

[00:18:01] Jason Kirby: see where you’re at and review the results.

[00:18:04] Rebecca Hotsko: That’s a great strategy. That is one that I think applies to any business, not just a tech one. I am interested, one last thing. On your startup experience, how do you decide whether you get funding or you’re trying to raise funding from an angel investor or a venture capital firm? What’s the goal or the difference between that?

[00:18:24] Jason Kirby: That’s a very good question. The question you need to ask yourself is, do you really want to raise any kind of money? My first two businesses were profitable and funded my lifestyle comfortably. I had an awesome early twenties, but I wanted to do something bigger. I wanted to scale something bigger.

[00:18:45] Jason Kirby: I wanted that experience. In order to build something before it makes money, you need to raise money. However, with that, you sacrifice a little bit of autonomy. You have to focus not just on selling to customers but also on selling to investors. In some cases, it’s not the same pitch, and you have to position your business. Raising capital is a huge undertaking, and there are all kinds of different stages of raising capital, depending on your market.

[00:19:17] Jason Kirby: A couple of years ago, from 2016 to 2021, everyone wanted to raise money, and there was tons of money to go around. It was a big, sexy thing. A lot of founders went after raising money because why not use other people’s money to build your dream as opposed to building a foundational, successful, and profitable business from the beginning? We trained a whole generation of entrepreneurs to chase venture capital and angel capital without focusing on the fundamentals of building a profitable business.

[00:19:51] Jason Kirby: Venture capital has sex appeal, but now, after the recent market correction and venture capital taking a huge hit, we’re seeing fewer deals get done and less capital being raised. There is more scrutiny in building profitable and foundationally sound businesses that aren’t just house of cards, but something that’s actually foundational.

[00:20:12] Jason Kirby: When founders come to me trying to raise capital, I always challenge them by asking if they’re building a venture-backable business. Just because you want money doesn’t mean you’re going to get it. Even if you have a pitch deck and you think you’re building the next Facebook or whatever, the reality is that there’s a lot of scrutiny over what you’re building. VCs have hundreds, if not thousands, of pitch decks to go through, and you have to be substantially differentiated in this market to even have a shot

[00:20:48] Jason Kirby: I think it’s like. Over 200,000 or 300,000 companies try to raise capital every year and only 10,000 get venture funding. So it’s a very small percentage. Get venture funding and that’s where institutional capital comes in. You’re usually raising seven figures or more, but what some people don’t realize is getting some angel investors raising quarter million to a million.

[00:21:11] Jason Kirby: You. Raise from a bunch of small investors. You can use all kinds of tools to make that easy. You could, you have all these instruments like safe notes and convertible notes to make it quick and easy and lowe legal cost to raise a couple hundred grand to kind of get to some kind of validation, which in this market now, if you want to have any kind of business, you have to get profitability.

[00:21:32] Jason Kirby: Or at least have a clear unit economics that shows a path to profitability. And so that’s like the big challenge for founders now is like, how are you gonna design your business? And how are you gonna execute on your business to be lean and drive revenue sooner rather than later? Which. The previous couple years, it was more about like, worry about revenue la later get growth and grow at all cost now kind of thing.

[00:21:56] Jason Kirby: So that’s like, I always challenge founders to say like, are you really building something? Venture backable where are you gonna have to raise tens of millions of dollars and have a billion dollar exit potential? Because that’s all VCs want to fund. VCs don’t want to fund your small.

[00:22:11] Jason Kirby: They want to fund venture scale opportunities where you’re gonna have hundreds of employees, you’re gonna be generating hundreds of millions of dollars in revenue. Is that the life that you want? Do you want to always be raising money and building this big team? Or can you build a very successful business that does 5 million a year or 10 million a year?

[00:22:28] Jason Kirby: Well, there’s plenty of angel investors or small family offices that are happy to fund cash flowing businesses or have to kind of seed the start of a small business, assuming there’s some kind of cash flow returns or exit potential for those investors. So it’s not as difficult to raise.

[00:22:44] Jason Kirby: Couple hundred thousand or a million that will get you to that point. But just don’t expect to raise tens of millions of dollars if your business only has potential to generate a couple million dollars in revenue. So that’s kinda the thing I challenge people to consider and think about whether they’re considering raising capital or not.

[00:22:59] Rebecca Hotsko: And I guess just before we get into the discussion of you being an angel investor, on the other side of the coin, can you just explain the difference between an angel investor and a venture capitalist? 

[00:23:12] Jason Kirby: An angel investor can be someone as simple as me or, typically, they’re described as a high net worth individual. They’re also known as accredited investors by the government. Someone who’s worth over a million dollars or has an income of over a quarter million dollars is typically labeled as an angel investor. If they make personal investments, usually more than $15,000 to $25,000, I would consider them an angel investor.

[00:23:41] Jason Kirby: I know there are arguments that there’s more accessibility to write thousand-dollar checks these days and to listen known as a single purpose vehicle or PVS on platforms like Angel List and other crowdfunding sites, but what I consider a real angel investor is someone who’s writing $15,000 to $25,000 plus checks anywhere between $25,000 to like a quarter million dollars, which is a typical angel investment. This usually comes from successful executives, previously successful entrepreneurs or founders, or sometimes, a wealthy heir to a family that’s had a lot of money. They’re known as the family office, so they’re usually perceived as angels.

[00:24:23] Jason Kirby: An angel investor is an individual who can make a decision independent of anyone else and can act quickly and just wire money once they believe in you, the idea, or the business. They’re harder to find, and it usually is a network thing, so you usually have to know someone to be able to get that check. But sometimes, you know someone who knows someone, and you can raise that capital from them. It’s hard to cold email angels and get checks, but it’s possible. It’s happened to me. I’ve received a check from a cold email, so that’s typically what an angel is – an individual who can make a decision independent of anyone else.

[00:25:09] Jason Kirby: A venture firm is someone that has a general partner, who goes out and raises money from limited partners. These are family offices, institutions, pension plans, and high net worth individuals. They’ll raise $10 million, $100 million, or even a billion dollars, which they can then invest into individual businesses following their investment.

[00:25:30] Jason Kirby: So these VCs in this case are held to a much higher standard because now they’re protecting other people’s money. And as Warren Buffett says, never lose money. That’s like the golden rule of investing. Unfortunately, venture capital is all about losing money. In fact, most investments are lost in amounts to nothing.

[00:25:47] Jason Kirby: And it’s what’s known as the power law effect. So an angel investor will make a decision independent of any kind of portfolio, construction theory or thesis or anything like that. Or like, I think you’re cool. I like you. I want to back you. I believe in you. This is a cool concept. Should exist.

[00:26:03] Jason Kirby: That’s usually what indicates an investment from an angel investor, and they’re usually investing an insignificant amount of their wealth, so they know it’s probably not gonna work out. I know most of my angel investments are probably not gonna amount to anything. That’s one of the sad realities of angel investing and why it’s highly ill advised for non-accredited investors or people that don’t have the money to lose, and it’s in the hopes of what’s known as a power law effect.

[00:26:26] Jason Kirby: You, and this is for VCs as well. It’s like, sure, like 90% of your investments are gonna go down the toilet, but it’s that 1% that returns all your money and some, so if you’re an angel investor, you invest half a million dollars into startups, say $50,000 into 10 different startups. There might be one of those startups that go off to a billion dollar valuation and you make $5 million off and you make 10 x off your entire investment where the other nine went to.

[00:26:52] Jason Kirby: So that’s what venture capitalists are trying to do. That’s what angels are trying to do. They’re trying to pick winners and ideally one of those winners goes to the moon and they’re trying to back the biggest possible companies. And that’s why, going back to the whole conversation earlier, venture capital firms need a 20, 3,000 x return when they make an investment in you.

[00:27:12] Jason Kirby: And so that’s why if you’re trying to raise a $5 million valuation or something like that in your early days, you need to have potential to get to $500 million. Exit. There’s all kinds of other factors in terms of dilution and other things that go into like portfolio construction that I will bore you on right now.

[00:27:25] Jason Kirby: But that’s something that is pretty important to take into consideration. The difference between an angel investor and a vc. VC has to be accountable to limited partners. They have investment committees. They have a lot more deals to look at, so they’re looking at a thousand deals a year, and they’re only making 12 investments a year.

[00:27:41] Jason Kirby: So it’s a very hard job as a venture capitalist, but also difficult for the feces, I mean, for the founders to raise the capital from. 

[00:27:50] Rebecca Hotsko: So you are an angel investor and you’ve made some investments over the years. What does your investment process look like? You kind of mentioned a few things there, but I’d love to know a little bit more about your due diligence and how you find deals to then how you figure out if you actually want to put the money towards it.

[00:28:11] Jason Kirby: I would say my first couple of investments were not as good due diligence as I probably should have. I kind of got caught up in the hype and the FOMO that was going on in the market in 2020 and 2021. I made some bets on things that I thought could be very big, with massive market potential, but also something that I felt I could add value to.

[00:28:39] Jason Kirby: So that’s another thing with Angels – you can kind of write a check and walk away. I’ve had angel investors invest in us. That’s basically like, “oh, here’s a hundred grand, and give me updates when you have them.” And then I have other angel investors like, “here’s 10 grand or 25 grand, but I want to have meetings with you on a monthly basis and try to help you and advise. They try to advise companies and give them feedback or try to find them customers, or whatever it might be.

[00:29:15] Jason Kirby: So with some startups that I’ve made investments into, I typically like to have some kind of value add. So whether that’s helping them with fundraising, hiring, sales, marketing, or connecting them to my network, that’s typically the role an angel investor will play. If some kind of manufacturing technology company comes to me and pitches me and says, “I have zero value to offer you,” I don’t really understand the market, so I’m probably going to pass. But with companies I do invest in, I look at them like, “okay, so I know SaaS, I know consumer, I know B2B, I know crypto pretty well.” Like I feel comfortable in these particular areas. So in terms of getting deal flow, there are a million ways to get deal flow.

[00:30:07] Jason Kirby: First, update your LinkedIn to state that you’re an investor of some kind. Then you’ll get a bunch of cold inbound stuff. There are lists and communities to join, Slack groups, and you’ll start seeing deals come through. It is a full-time job. If you want to actively seek out investments and make investments, it could be a full-time job.

[00:30:31] Jason Kirby: And that’s not something I truly wanted. So I kind of either sat back and waited for inbound deal flow to come my way or got referrals from my friends or things that I saw on Angel List that I thought were interesting. Where I came in with a much less significant check that I didn’t have as much influence on and things of that sort.

[00:30:57] Jason Kirby: So it just really depends and it’s a lot more haphazard than it should be in Angel Invest. There are some super angels that have very strict criteria and then most angels kinda like me, where it’s like, “I think I can add value. I think it’s interesting, and I know I’ll probably lose my money.” Like those are the typical criteria, but I’m willing to take that risk. I’m willing to go on that journey with you, and I’ll try to help you along the way. And those are typically what you want from an angel as a founder, the clear understanding that yeah, you’re probably going to lose the money, statistically speaking, but that angel investor needs to be aware of it.

[00:31:47] Jason Kirby: And also for your protection, you want them to be a credit investor. When you get money from angel investors, if you take a $25,000 check and it’s from their life savings and they have nothing else to their name, you should not be taking their money. And as a responsible founder raising capital from other people, you should make sure to do due diligence on your investors.

[00:32:14] Jason Kirby: Before you take that money because you don’t want to take someone’s life savings promising that you’ll make them a millionaire, because when that doesn’t work out, which happens 95% of the time, that person is gonna be very upset with you. So it’s best to take money from seasoned investors that are comfortable and understand what they’re getting themselves into and know how the venture world works or the startup world works so they can add value to you as opposed.

[00:32:39] Jason Kirby: Basically take value from you. That’s kind of my rant on angels versus VCs and how to raise money from. Yeah. That’s very 

[00:32:48] Rebecca Hotsko: Interesting to hear you talk about that, and I love your transparency about how, I guess, unlikely it is to be successful in this. But I guess I’m wondering for individuals who could be interested in diversifying away from just investing in the stock market, Who do you think this would be right for?

[00:33:07] Rebecca Hotsko: Who do you think being an angel investor would be right for? Even if it’s just a small part of their portfolio, maybe 10% of their total investments, do you think it would be right for some individuals? 

[00:33:18] Jason Kirby: For most people? No. To be completely honest, as much as I believe in growing the market and access to capital, it’s a very complicated game.

[00:33:26] Jason Kirby: And I typically encourage angel investors to reconsider the idea of making individual bets and considering investing in funds and funds they get access to. So if you’re, if. Let’s just say you’re an accredited investor. You’re comfortable making big bets with 10% of your money. There are some big bet opportunities with stocks, and that’s very much a picking stocks.

[00:33:48] Jason Kirby: There’s a lot more liquidity, there’s more options. You can get into different strategies there, but when it comes to private investments, there’s no liquidity. You don’t get that money back. You can’t just be like, ah, chamber of mind I want my money back, or can I get cashed out? You guys had a fundraiser and it’s like, nope you’re in it for 7, 10, 15 years.

[00:34:05] Jason Kirby: And so it’s going to be money. You do not need to. It’s not considered a savings account. They’re not like, what? There’s a lot of risk involved and that’s why you typically here, why it’s an old boys club and venture capital’s hard to break into. It’s because it is, and. Probably not great for a lot of the system, but there’s a lot of, I would say, companies breaking down those walls.

[00:34:24] Jason Kirby: And if someone’s very adamant about getting their feet wet and like getting exposure to this market and making small bets, I recommend like Angel list for getting access to what’s in a syndicate. So Angelo says a bunch of syndicates, and you can write a bunch of like thousand dollars checks. So if you have a hundred grand that you’re willing to invest into the startup venture world, you can look at trying to get access to funds, which thunder can get you access to on our platform.

[00:34:49] Jason Kirby: So we help introduce you to relevant funds that might be of interest. You join as an lp. Or as an angel and you can create an account and be able to identify which VCs might be relevant to you or which companies might be relevant to you. But typically, direct investments in either a fund or company will usually start at around $25,000 minimum for a fund, typically a hundred k plus.

[00:35:08] Jason Kirby: So you have to kind of keep that in mind. There’s not. It’s not as easy to diversify a small amount of money. Diversification is always kind of seen as a strategy, but it’s hard to do with small amounts of money in private markets. So if you have like a million bucks to deploy, then you have a lot of options.

[00:35:24] Jason Kirby: You can really architect a good portfolio strategy. But if you got 10 grand, I will say, in my opinion, stay far away from crowdfunding sites. So, There’s a lot of crowdfunding websites out there. They sound cool. Now, if you are a fan of a particular brand that you’re a customer of a little different don’t necessarily want to say no to that.

[00:35:44] Jason Kirby: But typically companies that fund on crowdfunding sites are typically not well enough capitalized to have big venture returns. Also, there’s not a historical president on. Actual returned capital to investors on those platforms? Something known well, I don’t want to get into the technical terms, but basically the capital gets paid back to investors.

[00:36:05] Jason Kirby: Very minimal. So if a dollar goes, if a dollar has been deployed, a billion dollars has been deployed on crowdfunding, only maybe like a hundred million has been returned. That’s an assumption. It’s not like a research document. But every crowdfunding platform I partnered with or talk to, they have little to no information on what.

[00:36:22] Jason Kirby: Oh, we raised a hundred million, we raised a billion, whatever. But they don’t have any stats on what actually went back to the investors. So crowdfunding is, albeit you can put a hundred dollars check in, yay. But I mean, you can diversify and you can find interesting companies, but you typically, there’s this, it’s hard to find the best deals on crowdfunding.

[00:36:39] Jason Kirby: So I usually like Angel List, if you’re writing small. Thousand dollars minimum is typically the requirement, sometimes 5,000, but you can follow a bunch of syndicates. These are real VCs that have exposure to great deals at negotiated valuations. Typically, crowdfunding founders could just make up evaluation and have no accountability to it, whereas a VC will be able to get you a better rate, better terms have liquidity protections like what’s known as liquidity pre preferential.

[00:37:10] Jason Kirby: So there’s all kinds of protections. When you work with a manager, now you pay. There’s either an admin fee and a management fee or performance fee associated with that, but you’ll tend to get a better deal in that situation through an Angel list syndicate or a fund. Then you are writing a thousand dollars.

[00:37:26] Jason Kirby: Check yourself into a company, which you’ll have zero say. You’ll have zero influence. You’ll just have to accept whatever the terms are. So that’s just something to kind of keep in mind. The more money you have to deploy in the private markets, the more likely you’ll be successful. The less money you have, you’re writing small checks.

[00:37:41] Jason Kirby: It’s one thing to maybe use it as a learning experience, maybe use it as a way to build up an education in space, but you, it’s an expensive education. So I just kind of tell everyone to go in there with open eyes, absorb as much information as possible, follow thought leaders in the space, and get educated.

[00:37:59] Jason Kirby: This is not, so, it’s not like, You do research on a stock and you’re like, oh, that’s cool, and you go into Robinhood account, buy 10 grand, and they’re like you could sell it five days later if you regret it or it didn’t work out, or like option training. These are the things that are, have a lot more liquidity, a lot more data, a lot more research, and you have a lot more autonomy in those investment decisions.

[00:38:16] Jason Kirby: So that’s my input on investing in private markets, specifically startups, early stage startups, which is all, most people writing smaller checks would’ve access. 

[00:38:25] Rebecca Hotsko: That was really helpful to hear your perspective on that. And I do want to ask you about one of your success stories as an angel investor, because I’m assuming if you’re still doing it, they haven’t all been bad.

[00:38:36] Rebecca Hotsko: So do you have one that you could share with us? 

[00:38:39] Jason Kirby: No, it’s too early to tell. Like I said, it’s a 10-year game, so I have a decent amount of change spread across a couple of different companies as well as a few funds,TBD. Most of that money was deployed in the last three years. I’ll have no insight on whether or not they’re all still, everything’s still alive and running.

[00:39:05] Jason Kirby: I would say some are struggling a little bit more than others, but they’re all still, they all still have a shot, but there’s no breakout portfolio company of mine just yet. Some interesting ones have done some cool stuff, but not like household names by any means. So it’s a difficult game.

[00:39:26] Jason Kirby: And for someone that has experience, that has access, one thing I kind of decided is after I made about six or so individual investments, I decided to deploy the majority of my capital that I had originally intended to make individual investments in. I decided to invest in a fund that aligned with my investment thesis, and I pay the fees, I pay all that just because it’s a full-time job to really do angel investing.

[00:39:57] Jason Kirby: Right. And that’s not where I went in my head. Also, I have a slight conflict of interest making individual investments while also working with companies on Thunder and stuff like that. So it’s just easier to handle that. So my personal situation is more appropriate to investment fund

[00:40:16] Rebecca Hotsko: Do you think your experience working in startups and having that, I guess that great experience building them and selling has helped you invest?

[00:40:25] Rebecca Hotsko: I guess it’s early to tell, but has that worked its way into your investment process at all, or helped you do you think? 

[00:40:32] Jason Kirby: It helps me get access. So founders, when I meet with them, they, after having a chat with them and they learn about my experience and what I’ve gone through, they’ll ask that I invest or be on the cap table or be an advisor because they value my input and they value my opinion.

[00:40:47] Jason Kirby: Now, they probably wouldn’t want that if I was only writing a $500 check or a thousand dollars check, but that’s typically my past history. Is valued by the founders that I get access to their rounds and they want me a part of their cap table or as an advisor or something along those lines so I can share my input and help them kind of navigate certain challenges when they need me.

[00:41:10] Jason Kirby: So that’s often what it’s about. It’s more about getting access and being of value. At least from my perspective, we’re making those investments. And so that, that’s where my background comes into play, is being able to start a conversation. So if I message a founder, I get a response or if I didn’t have the background in cloud that I do, I might not get a response.

[00:41:30] Jason Kirby: Or if I reach out to a unicorn that’s already worth a billion dollars and I say, Hey, I want to invest in you. They’re not gonna respond to me. But for a founder that is raising 2 million and hasn’t achieved astronomical success, I would typically get a response. So that’s the other thing is reaching out to founders directly or having them reach out to you and having a conversation and figuring out what works.

[00:41:51] Jason Kirby: That makes sense. 

[00:41:52] Rebecca Hotsko: And two quick questions before I let you go. It kind of seems like capital dries up during hard times, and so right now there’s less liquidity to go around. Is that the same for the venture or startup world where it’s harder to raise money today? 

[00:42:09] Jason Kirby: Exponentially. It was hard to raise money in 2016, 2018, 2013, like it’s historically always been hard to raise money, but we’re coming out of this massive inflationary market where free capital was abundant and anyone and everyone could raise money at ridiculous valuations.

[00:42:26] Jason Kirby: It was like a, it was a founder’s market. Founders were setting terms, things were going quickly, so everyone got used to those good times and a lot of founders. First company, they raised capital in those markets. But we’re kind of going back to what it was like 2016, 2017, where it’s just only the best companies getting funded.

[00:42:45] Jason Kirby: It’s extremely difficult. You truly have to differentiate. You can’t just be a me too product, like copying someone else’s product and saying you’re different. Like you really need to have a 10 x differentiation gap between you and your other competitors. VCs are under a much finer microscope when it comes to their lp.

[00:43:06] Jason Kirby: Their investors, because of the high valuations over last year, overpaying for certain companies, losing money on deals. So VCs are a lot more hesitant. They’re doing less deals, they’re spending a lot more time due diligence. So you used to be able to go out in 2021 and raise around in a month, like from start to finish, like money in the bank.

[00:43:26] Jason Kirby: Now it’s like three to six months and it’s much more difficult. Hence, you know why we built Thunder. It helps streamline that process of identifying who’s gonna be investing in who and makes it a little bit smoother. But even then it’s still a much more lengthy process than it used to be.

[00:43:40] Jason Kirby: And that’s because LPs lost a lot of money. VCs made some bad decisions. Founders over-raised or under-raised, or raised a too high evaluation they’re doing with someone’s down round, having to do with someone’s recaps that are extremely painful and depressing. You raised whatever, 20 million on a hundred million evaluation, but now you’re only worth 30 million.

[00:44:01] Jason Kirby: It’s like in this market you might be cut in half or by 70% or 80% of whatever your last valuation was because realities kind of come back in and people are doing due diligence. There’s no more free money. So it’s a much more difficult market. 

[00:44:14] Rebecca Hotsko: And I guess just the last quick question, what do you see is the biggest trends that are, and opportunities that are really shaping the industry today?

[00:44:23] Jason Kirby: AI is everywhere right now. ChatGPT, GPT-3, OpenAI, everything they’ve done since I launched, I think in November or December, basically any money that’s really being actively deployed by what I call more generalist VCs. So VCs have a lot more flexibility. They’re not necessarily sector-focused. They have a lot more flexibility investments. A lot of that capital is going into AI-related companies, which is kind of the hot trending sector right now.

[00:44:52] Jason Kirby: Companies focusing on profitability is a big trend. I’ve talked to a lot of companies and founders that raised a lot of money in 2020 and 2021, and they’re coming back to the market to get more funding. However, they are expecting big valuations and lots of money, but instead, it’s crickets. They’re having to make layoffs, cut their costs, and focus on driving more revenue. The ones that can’t pivot or didn’t reserve enough capital to enable that will go out of business or get consolidated.

[00:45:27] Jason Kirby: That’s the other trend I’m seeing, and I have a big bet right now on consolidation. There’s a lot of amazing talent and technology out there that raised hundreds of millions, if not billions of dollars across many different companies, but that is now underwater as far as the value of those companies. There are billion-dollar companies that could probably get acquired for 50 million or a hundred million. They probably raised more than what they would get acquired for now, and that’s the reality.

[00:46:01] Jason Kirby: The companies that were smart, savvy, well-capitalized, and generating cash flow are going to come in and scoop up those technology companies as acquihires or asset purchases to acquire the technology, the IP, and the team on pennies on the dollar because pennies on the dollar is a better outcome for these companies than zero or facing debt or bankruptcy.

[00:46:25] Jason Kirby: So investors reluctantly will accept those terms because there’s no capital in the market for those businesses that couldn’t survive. Investment banks and mergers and acquisitions (M&A) and corporate M&A professionals are going to be very busy over the next two years, in my opinion.

[00:46:43] Rebecca Hotsko: I think that is all I had for you today. Before I let you go though, where can the listeners go to learn more about you? Everything that you do in your business. 

[00:46:51] Jason Kirby: Yeah, sure. So, anyone is welcome to reach out to me via email: jason@thunder.vc if you want to learn about thunder. It’s just web.thunder.vc as the website. And then, if you want to follow me, I’m on Twitter @JasonKirby, or LinkedIn,linkedin.com/in/jasonrkirby/. So, anyone is welcome to follow me or reach out to me anytime.

[00:47:13] Rebecca Hotsko: Perfect. I will link those all in the show notes. Thank you so much for coming on again. 

[00:47:18] Jason Kirby: No. I appreciate it, Rebecca.

[00:47:18] Jason Kirby: Thanks for having me. 

[00:47:20] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you never miss a new episode. And if you’ve been enjoying the podcast, I would really appreciate it if you left a rating or review. This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter, We Study Markets which goes out daily and will help you understand what’s going on in the markets in just a few minutes. So, with that all said, I will see you again next time. 

[00:48:05] Outro:  Thank you for listening to TIP. Make sure to subscribe to We Study Billionaires by The Investor’s Podcast Network. Every Wednesday, we teach you about Bitcoin, and every Saturday, we study billionaires and the financial markets. To access our show notes, transcripts, or courses, go to theinvestorspodcast.com. This show is for entertainment purposes. Before making any decision, consult a professional. This show is copyrighted by The Investor’s Podcast Network. Written permission must be granted before syndication or rebroadcasting.