Episode #370: Ashley Flucas, Flucas Ventures, “This Is A Really Opportunistic Time For Someone Who’s Not Afraid And New In The Game To Get Started”
Guest: Ashley Flucas is the founder and general partner of Flucas Ventures. Based in West Palm Beach, Florida, the syndicate of around 2,000 angel investors has invested in more than 200 startups. Flucas, a graduate of Duke University and Harvard Law School, also serves as a partner at Jupiter, a Florida-based real estate finance fund with $3 billion in assets under management.
Date Recorded: 11/3/2021 | Run-Time: 57:14
Summary: In today’s episode, we hear how someone with a capital markets law background transitioned into venture investing. Our guest walks us through her path to break in to the world of venture capital, first by participating in deals on AngelList, then building out her own syndicate. She shares how COVID accelerated the transition, allowing her to capitalize on both the lack of capital and shift to a remote world. She shares her investment philosophy, why she benefits from a non-tech background, and what it’s like writing checks while being based in Florida.
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Links from the Episode:
- 0:00 – Sponsor: Public.com
- 0:51 – Intro
- 1:35 – Welcome to our guest, Ashley Flucas
- 2:52 – From Harvard Law to a career in AngelList
- 7:08 – The Monk and the Riddle
- 8:33 – Ashley’s mindset and approach to allocating to early stage startups
- 10:23 – Ashley’s start in venture capital
- 14:02 – How her framework and how what she looks for has changed
- 19:43 – Sponsor: Public.com
- 21:05 – Ashley’s transition from syndicate participant to a syndicate lead
- 24:07 – Sourcing deals and convincing companies to partner with a syndicate
- 30:10 – Episode #19: Peter Livingstone, Unpopular Ventures
- 31:19 – How the conversation is when making an offering that isn’t concrete
- 34:12 – What the first few deals felt like and getting comfortable leading deals over time
- 36:46 – Some case studies to further explain Ashley’s approach
- 43:41 – Is there a correlation between a successful company and Ashley’s initial belief in their idea?
- 47:22 – Additional resources for those wishing to step into the syndicate space; Demo Days, AngelList, OnDeck, HustleFund, PitchBook, Not Boring,
- 39:48 – What her plans are for the years ahead as Ashley looks to the horizon
- 50:56 – Ashley’s most memorable investment as she looks back over her career
- 52:37 – Learn more about Ashley; LinkedIn, AngelList
Transcript of Episode 370:
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Disclaimer: Meb Faber is the co-founder and chief investment officer at Cambria Investment Management. Due to industry regulations, he will not discuss any of Cambria’s funds on this podcast. All opinions expressed by podcast participants are solely their own opinions and do not reflect the opinion of Cambria investment management or its affiliates. For more information, visit cambriainvestments.com.
Meb: What’s up, y’all, fun show today. Our guest is the founder of Flucas Ventures and she’s invested in over 200 angel deals while also serving as general counsel and partner for Real Estate Finance Fund. In today’s show, we hear how someone with a capital markets law background transitioned into VC. Our guest walks us through her path to break into the world of venture capital first by participating in deals on AngelList and then building out her own syndicate. She shares how COVID accelerated the transition, allowing her to shift to a remote world. She talks about her investment philosophy, why she benefits from a non-tech background and what it’s like writing checks while being based in Florida. Please enjoy this episode with Flucas Ventures, Ashley Flucas.
Meb: Ashley, welcome to the show.
Ashley: Thank you for having me.
Meb: Where do we find you today? South Florida? I mean, is this like, are you just on the venture capital bus where everyone is moving to Florida and Texas? Is that why you’re there? What’s going on?
Ashley: I was born in Ocala, Florida, which is a horse country in the middle of nowhere in Florida. So I’m a native Floridian. And I left for college in law school and started the early part of my career in London. I’ve been back here in Florida for eight years now. So I was not part of the mass migration.
Meb: Sadly, you went to Duke. I say that, right, aren’t you a Dukey?
Ashley: Yeah, yeah, Duke undergrad.
Meb: I was a Cavalier, but I grew up in North Carolina. I went to Carolina Basketball Camp as a young adolescent. And I recall that my uncle Meb, by the way, like the only other Meb on the planet, my Uncle Meb went to Duke, but he had always tried to take me to the ACC games. I remember I was wearing a Duke shirt. I showed up to Carolina Basketball Camp with a Duke shirt, and within the first five minutes, they made me take it off and be shirtless for the entire day. They were not about to have anyone wearing Duke paraphernalia at Chapel Hill. So, listeners, the rivalry is real. Where was grad school?
Ashley: Harvard for law school.
Meb: So what is a Harvard Law Dukey doing sending out some pretty incredible angel investment ideas? How did that transition happen? I know the answer, but tell the listeners,
Ashley: Venture tech was not something that I had exposure to in college or law school. I don’t know if it was an East Coast thing or just kind of being on the track that I was, a political science major, and then law school. But I started my career as a capital markets lawyer, started off practicing in London. And around that time, actually, I got my hands on this book, “The Monk and the Riddle.” And it was about a guy, who I believe incidentally had went to Harvard Law School, decided that the typical legal path kind of wasn’t for him, kind of went about travelling the world, started taking some jobs in tech, and eventually got into venture capital. That was my first aha moment, like a decade ago that I’m like, “That’s exactly what I want to do.” Like, I had kind of no idea what I really wanted to do. I kind of fell into law by default in some ways, but I’m like, “This is it,” and he’s kind of speaking my language. But I still was kind of on the path that I was on, worked in London for a few years, got sidetracked by the path I was following, and I always had this in the back of my head, but honestly had no idea how to get started.
That idea was just kind of tucked away for a long time, I guess, basically, like seven years because I didn’t make my first investment in venture until three years ago. But frankly, I was at a point where I actually have the capital to allocate towards the asset class. And I was thinking about what I wanted to do, not just from an investment standpoint, but from a time standpoint. And you know, I guess probably just reading headlines or whatever and startups that were doing well at the time, I’m like, “Yeah, I remember that venture thing, I really want to try to figure this out,” and then like, “How do I do that?” Because I was in North Palm Beach, Florida. This is pre-COVID, pre-Zoom explosion, etc. And I had a full-blown career working around commercial real estate, not anything in tech, but just determined to see how could I figure out how to do this virtually because I didn’t think it was scalable or practical, you know, just trying to go to the epicenters and then balancing that against a full-time career. I just spent some time trying to figure out like, there must be people who do this in some kind of remote fashion.
And the first thing I discovered, or the best thing I should say, I discovered was AngelList. I’ve read a ton of stuff about the platform, it seemed to have credibility, I could see that a ton of really good deals had passed through it. And so I thought, “Okay, this is a great way to get started.” And then also just learn, right? So I could join a bunch of syndicates, see a lot of deal flow, and kind of learn the ins and outs, the language, the players, and the rules of the game as it were. And so I did that for the first year-and-a-half a combination of starting on AngelList then getting emboldened.
Meb: What year in the metaverse timeline was this? Is this, like, 2018?
Ashley: I think I made my first investment on AngelList in late…like September of 2018. So just coming up on the three year anniversary, after I kind of got my feet wet doing that kind of got emboldened and really started reaching out cold trying to get it direct on cap tables, or you know, going to virtual demo days and that kind of thing to the extent they were available. And then I had the next evolution, the idea in March of 2020, when COVID hit I’m like, “Oh yeah, now’s the time, a lot of folks are going to be pulling back, assessing their portfolio, trying to stem the bleeding.” This is a really opportunistic time for someone who’s kind of not afraid and new in the game to get started. And then also, I think, probably going to that real estate background kind of a mindset of the most opportunity is in trouble in terms of being able to get into things that you may not ordinarily get into or getting things at attractive prices, and so on and so forth. And then the added component of virtual was going to be the new way to do business. And now as we see things are hybrid, virtual distributed, etc. So it was kind of a perfect time to try to do that.
Meb: We’re going to dig into a bunch of things here. But the first being it’s rare at this point where a guest mentions a book that I’ve never heard of. So I have, what is it, “The Monk and the Riddle” en route, hasn’t showed up yet. But I’m now an owner of this…it’s probably there when I get home today, knowing Amazon. I’m excited to check that out. What’s really cool about your experience in the story thus far, and only being a handful of years in, four years in I guess, I don’t know that I’ve met anyone yet that’s invested on AngelList that I probably have as much Venn diagram overlap on portfolio companies. So I’m looking forward to hearing your methodology as we go down the list. But it’s a pretty amazing point in time to where your story of how you’ve kind of gone from pure investor to now lead, like you mentioned, from Florida, not in Silicon Valley, is possible in ’20s now where this is not only a thing, but a very successful thing. So let’s walk through, sort of, like, your evolution. What was your mindset in the first handful of, like, investments and deals that you made? And you’ve made quite a few. And eventually, we’ll walk through how that process has evolved into doing your own syndicate. But let’s start with the early days, what was, sort of, like, the goal and approach as you started to allocate these early-stage startups?
Ashley: It was kind of diving in the deep end. I mean, the things that I had going for me was the legal and capital markets background. So I felt comfortable chugging through the stuff that I needed to review. But venture is still a bit of a different animal. And I didn’t know anyone else who’d ever made an angel investment. So I didn’t have community or mentor, someone that I could go to. It was kind of throwing myself in the deep end and using a substantial amount of my own capital. But in those early days, I mean, candidly, I didn’t have…I wouldn’t say that I truly had a real thesis, it was kind of I know it when I see it. And I think maybe as typical of probably early investors clinging to things that are familiar. So if I look at the skew of earlier companies, I think it was probably heavily oriented towards consumer and FinTech because of the cap markets background.
And weirdly enough, it was probably pretty adventurous of me at the time. I was also early on looking at stuff in emerging markets following…which is still a big thesis of mine. But following this idea of, okay, here’s a company using a playbook that I’ve seen work really well, unicorn level perhaps in the U.S. This team looks really good, they’re executing really fast, it looks like they’re going to be able to potentially dominate in their region. Maybe it’s not necessarily my comfort zone, like I have some contacts in the region, but I think this works. And so far, that kind of particular has panned out really well. But in the beginning, frankly, I didn’t have a lot of discipline around check size, cadence of investment, etc. It was more intuitive style than anything else, good or bad, particularly when your early thoughts have evolved around that. And then, you know, certain signals, ect. in terms of co-investors. But in the beginning, I guess it was one of those it’s better to be lucky than good type of things.
Meb: 100%. I mean, I think your process, which on the surface may sound less intentional than it probably was, I think is really thoughtful because so much about investing, and this applies to public markets as well, comes down to personality and a lot of people will naturally gravitate towards certain styles. I have friends in this world of startup investing that they don’t want the high attrition rate of a seed or pre-seed portfolio. It’s painful for them to see the losses and low batting average, so they gravitate towards late stage private, pre-public. On the flip side, you have people that say, “Look, I only want to invest in tech companies,” and you may not know that in the beginning.
And so starting to go about it the way you did, which is very similar…and these listeners of the podcast have been hearing me drone on about this for a long time, very similar to my approach as well, which was start small, place a significant number of bets so that you can start to get a feel for what your approach will condense to over time. And I have a very specific approach, some of which is the you’ll know when you see it approach that you’re talking about. But I think that’s a good way to get going because you kind of learn the space and figure out what you gravitate towards.
Ashley: It’s important, I don’t think you really know until you’re in it or really capable or maybe shouldn’t be using other people’s money until you’ve done that with your own money. But figuring that out and doing just the analysis and challenging myself the question, okay, like now, once you start to build this track record, besides obviously looking at things are familiar, trying to really dissect, okay, like, what are the unifying themes behind these investments? Even if it’s not in the same vertical, what is it that keeps attracting you? And then obviously, as times go on, and you see how these companies are trucking along, then you have a little bit more data to see some correlations between, you know, what you were analyzing and what ended up being effective. And so for me, like I said, that’s how it happened in the beginning until I just started to see enough deals and started to branch out a bit more, start to test some of the same thesis, but test it out in other spaces to see if some of those things still hold. And that’s basically how it evolved.
And then actually, I came across another book. I think it has multiple authors, so I won’t be able to pull the authors but it’s called “Play Bigger.” And it was around this whole idea of category creation. And I was reading a memo from another syndicate in the context of this investment called Turing. And so I was kind of looking at the…I read the book, or I was reading some excerpts and stuff from the book, and I was looking at Turing kind of through that lens. And then when I read the book and invested in Turing, and they are doing beyond amazing. And then, later on, ended up meeting the company and leading several syndicates for them as well. But that was kind of eye-opening for me.
And so what that book said is the probably the best explanation of how I look at things, which, again, in some ways, is cheating a bit. It’s a bit broad, and it’s a bit I know it when I see it, but it’s kind of this idea of category creation or companies owning categories. And I realized that’s probably what I like a lot about kind of the emerging markets that we talked about, this idea of you want to be an Uber and Lyft and not who’s number three. So like how do you read the tea leaves to kind of figure out who those people are in a given category, or they’re defining something that hasn’t quite been defined yet. Particularly early stage, that’s the most attractive, it’s a different skill set thought when you’re B-plus investing because, you know, there’s product-market fit, etc. So you’re just looking at some different metrics than you are a pre-seed day.
Meb: Well, you’ve been successful. I saw…congrats on Chipper Cash just announced yesterday. They are now officially the most valuable tech company startup in Africa, which I see is in your portfolio holdings. We had Ham on the show, he was great. Tell me how your, sort of, filters and framework has evolved to today. So what are you looking for? Are you a pre-seed girl? Are you down Series A? Are you looking at mostly emerging markets? How do you filter through all the noise to what you’re looking for after a few years and a few hundred positions?
Ashley: I like to think I hope if you’re doing it right, you should be able to be much more surgical. I think when you’re first starting out, it might be like a hatchet approach. But in the end, I think you should end up pretty surgical and pretty precise. So there is a lot of noise and I do think you still…even me, I love to still see a lot of volume, even if ultimately, like, as it kind of passes through the sieve, it’s going to be much narrower, but you get to know what you’re looking for. You know, I think the hard part of being a solo investor and angel, especially in the beginning, is kind of that lack of an institutional knowledge base, right, in terms of understanding trends within the space, why companies fail, what early signs or red herrings or whatever you want to call it. And if you do it enough over time, if you do enough deals and get exposed to enough deals, you can start to kind of build some of that experience base as well.
So for me, I like to think I’m getting more efficient. For me, the number one thing that I focus on and, you know, it’s not applicable to something like biotech, but for the most part, anything that has a sale type component is I’m really focused on distribution, that’s the single most important thing to me on the theory of you can have a product that really is not objectively amazing or reinventing the game, but if you’re brilliant around distribution, you can have a big company. And similarly, great ideas are a dime a dozen. If you don’t know how to distribute that, then you have nothing. Companies who focus on distribution, and usually when you’re having those conversations around that you get a lot of insight into the other things that matter, the team, etc., but how they think around those problems is important and having something other than I’m planning to buy Facebook and Google ads, not that that can’t be a part of your strategy, but companies that have thought deeply around that and doing something different, that’s when I felt like I’ve kind of had the most success, companies that focus on that.
And I think having a non-tech background frees me to think in that way and think, I guess, more like a plain vanilla business way in that I’m getting better over time but, you know, I’m not someone who’s going to come in and be necessarily deep on product. I actually think that’s an advantage because I think people who are so close to something, you think you’re an expert, and that can be good or bad in terms of falling in love or being too critical. Considering the iterations things will go to or thinking about how you would run a company versus I’m trying to focus on things that I think will make the company an outlier beyond just the product.
Meb: That’s a really thoughtful comment from someone who is in the asset management industry. And partially FinTech, there’s been a million times where I’ve seen something, I know where all the bodies are buried, and I’m like, “Man, that idea has been tried 40 times and it has never worked, it is a graveyard,” almost to my detriment where if someone finally figures out the right product-market fit, or I’ve looked at a bunch…I’ve seen this a lot. One of the big areas I missed was the fractionalization of a lot of the collectable asset class. And my foolish concept on that was I said, “I’ve seen a gazillion wine funds, I’ve seen a gazillion farmland funds, they really have trouble scaling.” And while that’s been true historically, now it’s not. And so you have a dozen of these platforms that have nailed it on that, sort of, world. I’m happy to eat crow on it. But it’s an interesting blind spot, for me personally, and I think it’s, once you’re aware of it, can be useful to at least understand that you have that, sort of, too much knowledge is good.
Ashley: Or at least, like you said, recognizing that blind spot and if you find yourself going too negative because you know where all the bodies are buried, at least making yourself examine the why now question because there are probably amazing, deep reasons that you know that those things didn’t work. And the answer a lot of times is a why now? In terms of mobile technology, things happening differently in the security space, etc., things that you’re able to do with a lot of things as far as fractionalized stuff because we’re now obviously seeing, like, fractionalized real estate, all this stuff that maybe probably didn’t make sense 5, 10 years ago. There’s a different kind of why now? Nobody’s perfect at it, but I really try to be conscious if I’m really high on something or really low trying to dig into why that is, or get a fresh set of eyes, or kind of ask the why now question. Because I was like, I certainly do that too with real estate when I find a prop-tech company that I really like. I’m super happy about it because it’s passed double layers of filtration. But I know that’s an area where I have a blind spot because I feel like I know X, Y, and Z. So I think you’re right, that self-examination is important.
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Meb: You get your feet wet, you start to make some investments, you start to see some traction, some markups. I imagine a couple of liquidity events as well as some zeros. What was the evolution from sure allocator investor to syndicate lead? That takes a certain amount of chutzpah to go from saying, “Hey, I’m going from someone who can just anonymously quietly allocate,” to, “Hey, I’m going to be the one bringing these to an audience.” What was the thesis there? And how did you make it happen?
Ashley: I would agree with you there. There are some days where it’s draining and I kind of wish I was quietly in the shadows. And naturally, I’m kind of an introvert, right? And that doesn’t work for this, you’re building…syndicating, you’re building in a quasi-public way, you’re in front of so many people and having to put yourself out there if you want to be successful at it. So definitely one where I had to step outside the comfort zone. But the decisioning behind it, part of it was what I mentioned to you like kind of just seeing the opportunity in the market at that moment in terms of COVID hitting and things being virtual and the opportunity to kind of get into some deals. So obviously, granted, I could have done that still deploying my own capital.
But also, there were a couple other things behind it. One that I was, as an individual investor, mostly focused on earlier stage stuff. But also, I wanted to diversify. I wanted to get into some later-stage deals as well because my thought around private investing is I’m not sure why it has to look dramatically different from public investing in terms of the number one rule of investing is still diversification. And so my own view and constructing a portfolio I was like, I don’t want to be exposed to all early stuff, I want to have some singles and doubles along with the home runs and be exposed to different geographies, sectors, etc.
And I think that kind of basket overall is how I’m going to have return profile that I want. And I’m like, okay, well, if you want to start to play like that, you need to be able to bring big checks to the table and more network, etc. Syndicate, from what I can see, you know, just observing them on AngelList, seemed like a great and also highly flexible tool to do that. Because as a syndicate, obviously, every deal stands alone, you don’t have a target ownership percentage, you can be pretty flexible. I like that idea of being armed with this capital, this potential capital, this potential network, and this potential flexibility to be super opportunistic and to execute quickly. So I just thought it was a nice marriage between how I wanted to approach things and the timing and the market.
And then the other aspect of it, as someone who backed probably a couple hundred syndicates on AngelList, and I don’t know how many thousands of investors are on it, I’ve not really seen many women leading deals in any visible way. And I have not seen any people of color leading deals in a visible way outside of the South Asian community, which has done an amazing job within venture, and that troubled me. And I thought, as a first step, I was like, I think I’ve got access to the deal flow. I think I’ve got a pretty good eye. Maybe I can do this and show that it’s possible that you can do this without coming from whatever venture background without having been anointed by this firm, or this internship, or whatever else, if you hustle and hope that other people might follow the same path, that was kind of the motivation.
Meb: I’ve said this before, too. And this, I feel like, I get pushback from other people about it, I tell our listeners, I say, “Just go sign up for every single syndicate you can possibly get.” The downside is you’re going to have a full inbox. I just turn every single notification and email from AngelList off. And the way to do it, listeners, is you can just check in whatever your frequency is once a day, once a week, whatever, and just start reading the deal memos, and you start to develop, A, the jargon of angel investing what’s GMV, what’s AR, on and on. But also, you start to get the pattern recognition of when someone may be blowing a little smoke at you, or BSing a little bit, or leaving something out, you start to read 1000 decks, there’s a little counter, AngelList keeps track of how many you’ve reviewed, and I think mine’s like past 5000 now. And just take the time and set aside an hour week. But a lot of people say, “No, that’s crazy. That’s too many. It’s the wrong focus.” But I actually think that’s the right way to do it, which is the way you did it.
Talk to me how you jumped though…How does one go from having the deal flow show up at your feet, you wake up in the morning, and you have a croissant and coffee, 20 deals in your inbox, to being the one that’s out, like, hustling? Because that’s a lot harder. How did you go from saying, “Okay, I can write a check,” to, “I can write 100 or,” how many ever syndicate backers there are, “1000 checks, but I got to convince these companies to let me do it?” How do you even find the companies?
Ashley: A lot of it early for me was on AngelList, which like you said, requires nothing other than me…there’s work involved, and I did everything you do in terms of putting aside this time and reading these memos. By the end of the day, like you put it, you can have your coffee and sit there and click through and it eliminates 99% of the work on your part. For me, the first step was testing the ability to get in deals directly. I did that two ways. Number one was accelerators, right? So there’s obviously like the Y Combinator, 500 Startups, and all of that where these startups are public and I guess anyone can get into the fray, not that everyone’s going to like answer. But working in and going in these environments, which is probably the hardest environments because everyone is looking at the same companies at the same time, but kind of like swimming with the sharks and saying, like, we’re finding my pitch and getting comfortable reaching out to people and refining the pitch in that way. And then frankly, like a lot of cold emailing, like I don’t really do much or any of that now. I don’t have to at this point, but just not being afraid in that regard.
And in terms of how just discovering companies, I mean, a little bit of everything. It could be every reputable tech publication that I could get my hands on or newsletters from these accelerators, etc. CrunchBase, PitchBook, whatever, you name it, voraciously, kind of, diving into that stuff every day. And as simple as I read about something and I think it’s really surface-level interesting to me and just reaching out and seeing what happens. Even things, which one thing I’ll do say…like, sometimes I’m just on my LinkedIn feed and somebody, mutual friend or somebody I like, likes or is commenting on some startup. And I’m just like, being curious I think is a big part of that. I’m like, “Oh shit, what’s that?” Click on that. And I’m like, “Oh, this is awesome.” And if I can’t get a warm intro, go cold and see what happens. And I was, frankly, pleasantly surprised with how often that actually worked.
And then you start to realize, like, particularly one benefit of if you’re doing it at a pretty significant cadence is I did have a portfolio behind me. And I could stand on that as you build the other things to stand on. So like, as you go further in your journey, whether it’s your brand, whether it’s your past investments, whether operator experience, whatever you have, there’s so many different, kind of, things you can stand on, they stack up over time, but when you get started, you start with whatever you can, whatever your wedge might be, and then just kind of be fearless in that way. So it was a lot of direct investing.
Then I started looking into like, what are the networks here? Like, looking at different angel groups, I joined a really prolific group called Gaingels and they had amazing access to deals. Life Science Angels, there are a number of different groups. After I’d already been syndicating, did some angel fellowships like First Rounds Angel Track and OnDeck and some of these others more for community. But just like always being curious and always trying to figure out like, where are these people? Where are they aggregated? Like, where are these communities? Like, where are these access points? And exploring them and being curious and being bold and seeing what happens.
And the ones I was seeing was kind of like beta testing what I was seeing, like, I can get deals, I can get deals. And I think if they’re going to allow me to put in X, I don’t think they’re going to have a problem with me putting in Y, to now I just have to solve for Y, which is aggregating the capital and building the syndicate. And so I mean, I think I understood really early on, okay, you have to solve for deal flow, but you have to solve for the audience. And for me, AngelList was like the perfect tool to build that out because on top of kind of the backend stuff, I mean, AngelList is a marketplace, right? It solves the trust thing. It’s a discovery tool. So I was like, I can be discovered here and discover investors. Everybody does it now. But my early insight is like, I need to partner with people who have done this and done it prolifically.
So in the beginning, my first deal, I was like, I’m not going to worry about the economics, I’m just going to worry about getting the deal done, making an awesome first impression on the platform to that initial base of users and to the company. And just making it about that, and not really concerning myself about economic, just execution, execution. So I partnered my very first deal, I had a couple that were running in tandem, but I did a deal called Foodology with a syndicate called Unpopular Ventures with Peter Livingston.
Meb: A fellow podcast alum on the show.
Ashley: Yeah. And so he had this awesome syndicate, I loved a lot of what he was doing in emerging markets, and I had this deal, I feel like it’s really going to resonate, went to Peter with it, he loved it, he supported me on that first raise by promoting it to his syndicate as well. And then after doing that one deal with him, I went from overnight, within a couple of weeks, had a few hundred LPs, just from that deal, because the very first deal I ever did on AngelList closed, I think, July of last year. And then two weeks ago, they just had their Series A led by Andreessen, but it had none of those flashy people when Peter and I first came in, but that was kind of a full-circle moment for me and just reifies the thinking that it’s like in the beginning, just worry about reputation delivering to your LPs, delivering to the company, don’t so much focus on the money, because if you do it right, and you build this thing correctly, all of that will come. I’m kind of a long horizon thinker on that front.
Meb: I invested right there along with you on that one, Ashley. So, well done. How nerve-wracking was the first few deals? Because you think of traditional fund of funds or an allocator, you call up a company and you say, “Company, I’m interested in what you’re doing, it seems pretty cool. Can you send me your deck? Are you raising money?” Get to the point, you say, “All right, I’d be interested in investing. However, I can probably invest somewhere between zero and a million dollars. I’m not going to know where yet.” How nerve-wracking is that conversation? If not at all? Could be. How does that conversation go with companies? I assume it’s a little more commonplace now that people get it. In a world awash with cash, how does that conversation go into 2021?
Ashley: It’s a different conversation now than it was deals 1 through 10, right, where I was kind of tinkering and getting to know the audience, getting to know what was effective, etc. Present day, and you still kind of have to give the conversation of our range. But if you’ve done it enough, I’ve done enough different types of deals and built out a pretty robust syndicate, I’m usually right. And so I take an attitude of under-promise, over-deliver. If I get a deal, like, based on kind of the big characteristics that I know resonate, I’m reasonably sure what I can do at a minimum. And I say, “Hey, let’s do that. But just so you know, this is a syndicate, this is how it works. This is the timeline. After one to two days, I’m going to know if this thing is really going to rock it and I’m potentially going to be able to fill much more than I’m telling you. But I’m committing to you hell or high water, you don’t have to think about it. If I tell you I’m going to do X, I’m going to do X.”
And that’s the way I operate. More often than not, I’m pretty right on…usually, I underestimate sometimes, you know, I’ve had some deals where the minimum ticket size is pretty big relative to AngelList. But now I’m able to kind of bite that off just by the size of the syndicate but also, having developed relationships, I get some seven-figure allocation. I was like, okay, I know other syndicate leads, I know other groups. So if the minimum ticket size is a million and it’s the kind of deal and it’s a great, great deal, I will figure it out hell or high water and I’ll go in with that mindset.
But in the beginning, you really didn’t know so it was being candid and but still have a similar approach of under-promise, over- deliver, like, this is the syndicate, this is what it means, this is the possible range. How about you and I just have an open dialogue? I’ll be transparent about how it’s going, and then you and I can correct as we go into the process. And I found that for the most part, folks were receptive to that. But in the beginning, I had no real idea really of what things we’re going to do potentially deal to deal versus once you get pretty experienced, nobody’s going to, I guess, be correct 100% of the time, but you get a real feel for what you’re usually able to do.
Meb: How many deals did it take you to get that comfort level? I could just picture the first three or five would have been a little nerve-racking. It’s like you sent out this email into the ether, and you’re like, “Here’s this company,” and then you just wait for people to invest? Is it like, you just get notifications? Like, all right, $5k, $1k, $2k. Did it take a while to get comfortable? Or was it like out of the gate, it felt like this was going to work?
Ashley: I still think it takes a while. And I think even now, sometimes you can still kind of get a little bit of the pre-game jitters as far as launching a deal, but things like I’m more relaxed…like, when you’re first doing a deal, you don’t get pinged every time someone invests, you kind of…at least on AngelList, you’ve got this bar ticking across with your allocation. And so it’s on your phone, or your laptop, or whatever, like constantly refreshing, trying to see what’s doing what. And so it’s a lot, it can feel overwhelming. In terms of when I really started to feel like I had my bearings around that, I don’t know if it was a deal number, it might have been more of a time thing, like probably month six or nine, frankly, in terms of comfort zone, because I think you need to be through a few quarters, a few different cycles, you need to see things go right, you need to see things go wrong, you just see things happen that are first instance and seeing how you deal with different fact patterns.
You went out and raised this money and the company said, “Just kidding, it’s over-subscribed, you need to invest to the slightly higher capper.” All these different scenarios. And if you’ve never, like, done this before and you’re thinking about, like, my reputation, and I’m just starting to build, you really have to go through all of those scenarios and get your feet wet. And then once you have the most anxiety at the time, but once you get through them and survive them and see things are okay, then you kind of get your wind under you and it’s good. So I don’t even know that that tied to a certain number of deals so much as time and you need enough stuff to go wrong, or just be a wrinkle to have to deal with and really adjust to, frankly, that investor relations component.
And for me, that was one thing where I was comfortable. Because even in my role in the real estate world, like I’ve done like a ton of investor relations work and outside of the U.S. as well. So I’m pretty comfortable dealing in that space where people are investing huge amounts of money, and how do you solve, and when there are issues, there are just things that communicate, etc. So I was a bit comfortable there. But I just think you have to get through those cycles.
Meb: Would love to hear, to the extent you can, mention a few ideas that you…as almost like a case study or walk through some of your investments over the past couple years. Here’s a company, here’s why we did it. Here’s the thesis, here’s how it came to be. Any of your children come to mind?
Ashley: There are so many, so apologies in advance for all that are left out, but happy to talk about as many as you like. One recent one that I’m pretty excited about that I did, I think maybe just like two months ago, it was an EdTech company called Inspira Futures. And EdTech was one of the areas that I have the least exposure to because it’s not like it’s an area that’s not intuitive, right, through all the cycles of education since kindergarten. But I’m just like, I just fundamentally usually don’t understand like how some companies stick out there. So it’s an area where I’m kind of cautious about unless a model, like, really hits me over the head. But again, that’s where that distribution mindset comes in mind and that, kind of, category creation thought.
So Inspira Futures, their whole concept was creating this manage marketplace between counselors and higher education first starting with grad school, MDs and MBAs, and then filtering down to college and kind of matching them with students around preparation for college admissions, and then, of course, could expand. And I thought that was really interesting. Obviously, there was like the huge varsity blues scandal. So for me the inside there was you would think that this would exist on some scale, but clearly, it doesn’t if people are literally willing to go to jail to try to get their kids some leg up in college admissions. So I’m like, the idea of, like, that checks out.
But you know me, like I said, I’m not just purely an idea person, but I was like, there’s a real category to be owned there. And then as I, like, dove in with the team and started getting excited about how they were looking at distribution, the partnership, how quickly they were getting supply on the platform, and then also how they were thinking about global distribution and appreciating that…actually, they probably get a lot of hits from like PRC, etc. Had some interesting conversations early about immigration agents and some of these other education companies that own some of these customers early for other reason. I’m like, “If you, like, nail relationships with these groups that you’re talking about, you can get really big really fast.” So I started to get excited, even though I don’t really like EdTech. Ended up investing, syndicated it on AngelList, and it’s only been two months and they’ve, like, tripled revenue in two months and, like, are going crazy. I’m really excited about what they might end up ultimately doing. That’s a pretty recent example that comes to mind and kind of shows the thinking.
Meb: I’ll give you one or two more pitches, let’s hear them.
Ashley: I’ve done it both ways, right? I’ve done it as the active investor, the syndicator, and I’ve also done it as a passive investor. And as a passive investor, obviously, it’s nice, like sitting back, but in some ways, you have one arm tied behind your back, you’re getting the filter diligence, you’re hoping you’re getting some diligence, which is another case, you’re not getting to meet the team, etc. So you really got to focus in on other things and really be tight about sticking to whatever your thesis is for evaluation. So I’ll take it back to the company that I mentioned, Turing, which I guess actually I did end up syndicating two of their last notes.
When I first saw them, it was through a syndicate, I think it was one of my first 2018, maybe early 2019. So I think it was among, like, my first 10 or so investments that I ever did, they had no revenue, the cap was, like, a little egregious. But their whole idea, and this was pre-COVID, they were playing around this idea…and it resonated with some themes from my background. But this idea of a distributed workforce, this idea that there’s a global talent pool, if you’re not biased, can be as talented as the talent pool here and infinitely cheaper, and starting with engineers and the idea of becoming a Google quality engineer, but a fraction of the price and then that working well for the engineer because even at a fraction of the price, that income might far exceed what they’re getting in their local region. And we’re doing some interesting things around AI and screening.
And so I was like, “This is really interesting,” and not knowing, like, their product would really blow up because of COVID. But like the product, but again, seizing on that and reading it through that bigger type of mindset. I love what they were doing around distribution in terms of like, they figured out how to make this really scalable because of the things they were doing around AI. And I love the fact that they were doing some interesting stuff from a promotional standpoint in towards of like, almost making it from a sales point of what do you have to lose type of thing in terms of them underwriting the work and how they were going about the products. And I thought that was really interesting. And fast forward, they’ve gone from zero to infinity and have knocked it out of the box. And now what they’re doing, obviously got a push by COVID, is more salient than ever. But that’s one that I really like.
Another I didn’t syndicate but I actually invested in through Peter with a company called Outer. And so this is, again, around that distribution thesis. So no disrespect, but from reading the materials, there was nothing that stood out for me from a product standpoint because it was, like, outdoor furniture. Who looks at that and knows that’s necessarily going to be a huge thing? But I thought, and Peter did an amazing job in his memo, really focusing around that distribution. I was like, wasn’t something they invented something, they just went, dusted off a playbook that I was like, I don’t know why people went away from this. They basically had this idea of individual people’s could kind of have their own salesrooms or whatever at their homes thinking about like Tupperware parties, Mary Kay, whatever you want to see it as. I was like that business model can be really effective when married with the right product.
And I was thinking about outdoor furniture. I’m like, I can’t name a single brand. I know it’s something people spend a lot of money on. I think it’s something that living in the suburbs people show off. But I was like, so someone could own that because no one does. And then I really thought the distribution was awesome. I pictured people in my neighborhood inviting friends over and showing them the outdoor stuff. And that kind of sales model, shortly thereafter, I mean, they were among the fastest-growing D2C companies, period. I think it ended up getting an investment from Sequoia, all that other stuff. But it’s, again, kind of an example of even if you don’t have direct access to the company, etc., if you kind of stay true to what your true north is looking at deals that even…and don’t get sometimes biased on a product but focus on some of those other things, you can end up in some really interesting deals.
Meb: As you look back on your own personal investing, and this could apply to the syndicate excitement too, how often do you think your own personal…and I wish I had gone back and rated, kind of, all my investments from initiation on like 1 to 10. They passed the filter, so like it’s in the queue of an investment. But then even then once it’s passed, like 1 to 10, I’m, 1, interested in this, I think it’s going to work, to 10 being like, “This is the best idea I’ve ever heard. I want to put all my money in this. Like, I think this is going to be a huge winner.” How much correlation do you think there is? The extension of that question is as you pitch deals to the end investors, I imagine there’s times where you’re like strangling people where like, “You guys don’t understand, this isn’t an amazing idea.” Or other times, it’s just like, the money is flooding in, it’s quadruple over-subscribed, and you’re like, “Really, like, another whatever company?”
Ashley: Both points are pretty on point. I’ll take the latter first. There are some times that I go and do a deal and I’m like, “This is it, like, this is amazing. It checks all this box. I’m, like, seeing so many other things that I want to see. Like, I think I’m communicating that memo.” And it is pretty good. But I’m like, “I thought I would have raised at least like twice as much. This is an awesome company.” And then that company goes on and does freaking amazing. There’s almost a correlation between the good deals that raise the least actually being the best deals, maybe because those are truly outlier opportunities might be the correlation there versus some, where I’m like, I have conviction in every deal I do.
But you know, some deals are like more run of the mill or maybe because they are later stage or people feel like they’re a risk. And I’m like, “Wow, really, that’s the thing that you’re pouring all your money in, at least relative to this other deal?” There’s definitely a lot of that, and you can’t control that. And I think that might be some of the nature of angel investing and party rounds. Like, if you do certain deals that have certain investors attached to them, it’s just going to raise a lot of money. That’s just how it is versus another deal may not have that same signal but it is an amazing deal. Those are trickier. But that’s just the nature of this, unfortunately.
On your other point in terms of like, what’s the correlation between hype and doing well? I think that would be an interesting exercise. But I feel like personally, the results will be mixed because I look at some deals that I’m like, I wasn’t over the moon excited about, I’m like, “Okay, that’s pretty cool,” and obviously, like you said, met the filter. And I might have been like, “Ah, should I do it?” And I’m like, “Okay, I do it.” And I’m like, “Damn, I wish I’d put everything I owned into that deal, like, in hindsight.” And it’s easy to play that down, Monday morning quarterback. I think like, it happens less and less that there’s a deal where you’re like over the moon excited and then it becomes that, but that does happen.
So I know, for me, one of those deals, I remember when I first read pipe, I was like, “Holy shit.” I’m like, “But I wish I’d put more into it.” And then lo and behold, obviously, within, I don’t know what it was, like six months or something, nine months, it became a unicorn. But it happens every now and again, you read a deal or meet a founder, and you’re like, “Wow,” like stars aligned. But then if we look back over the course of 5, 10 years, among those deals that tilt the Richter scale the most, there’ll probably be a mixed number between failures and successes for the things that get you the most excited that it’s probably pretty binary, and that you’re excited because it could be really huge, which means it could also be a huge loss as well.
Meb: For the people who are the investors, your LP syndicate backers/people new to this world or experience, just you want to convey some info, what are some of the good resources other than just signing up following syndicates? Are there any specific events you recommend? Maybe the demo days any other resources where you’re like, look, this is a great daily newsletter subscribe to? What are some of the main waypoints for you?
Ashley: For sure recommend signing up for demo days, even if you’re not in the fray, just listening to the pitches, etc., being around that. Obviously, I’m a big proponent of AngelList. And oh, a lot of my getting started, is kind of being able to use that platform to learn and network and grow. There’s also a number of…angel groups are a good way. And also, there are like angel fellowships, and those are growing. So you’ve got like OnDeck has a fellowship, First Round Capital as a fellowship, Hustle Fund, they have this thing called Angel Squad, and they are probably like five or six others and those are ways to take, like, a cohort learning-based approach. And so that can be really helpful.
And then beyond that, I don’t know if you learned…if there’s any, like, newsletter or anything that I learn from. I mean there are ones that are interesting to keep abreast with what’s going on, like “Term Sheet” or “Axios Pro Rata.” PitchBook has a summary, and you can kind of follow those to see what’s getting funded, etc. And that’s good as far as keeping up with trends. Packy McCormick has a newsletter called “Not Boring.” And that’s really good because he tends to…and he’s a fellow Duke guy, so you might have something against him there. But he tends to take really deep dives into startups or horse modems on things. And so I think that can be a pretty good educational resource for people who want to see into the mind of someone in venture and how they’re thinking through deals.
But like to your point, for me, the best education was backing the syndicates and doing the work of reading through everything because I’m like, if I back…obviously, some of the syndicates operate at different cadences. But I was like, “If I can look at, on AngelList, whatever your tolerance is, 10, 20, whatever deals a week, from 10 or 15 different perspectives and see what they look at, what they focus on, see what the cadence is, see what the trends are, learn about these different markets and sectors, for me, that’s the best learning that there is, frankly.
Meb: What’s the future look like for you? What’s the plan for 2022, 2025? We have you back on the podcast next year, a few years from now, are you going to be growing the syndicate? Are you going to be…what? What’s the eyes on the horizon?
Ashley: I want to continue the mindset that I had going into this, which is being curious, experimenting, and kind of walking through open doors, that was my mindset coming into it, and hustling, and might want to do more of the same because I like where that’s gotten me so far. So I’m not really doing this with any finite objective of I have to raise a fund, or I have to have this much under management, or I have to do X, Y, and Z. It would also deflate a lot of what I like about it. And the answer is I have no idea. But I like to think that if I keep my head down, keep doing what I’m doing, something really awesome will germinate, and I’m excited to see what that’ll be. And so much of life before was planned, do well in school to go to this undergrad, to go to this law school, to work at this firm, to do this. And what I like about venture is I don’t have to do that here. And so I’m trying to be intentional about not doing that here.
Meb: As you look back, I know it’s only been a number of years in the making and almost all of these are TBD, what’s been the most memorable investment for you? Good, bad, in-between, anything seared into your brain?
Ashley: I think it is mostly TBD. Because obviously, I go vain and name some things that have had the big markups and the pipes and all that stuff. But I don’t know that any one really changed everything. But I feel like that answer could look differently. But I guess if I had to name something, I’m kind of excited about some of the ones…and maybe there’s a bias there because they’ve experienced liquidity events, but some of the ones that were really outside of my scope of expertise because kind of what I did, we talked about early in the podcast of like starting off on familiar ground and then taking that thesis and applying it more broadly. At first I stuck to familiar areas, and eventually branched out and started investing in things that were, like, so outside of my depth, but still trying to apply some of that same thinking.
For example, a couple of specs in the last few months, one XX Trucks and the other, Vicarious Surgical, these are electric trucks and deep tech and robotics, etc. That’s not the world that I come from. But it was this idea, like, they resonate with me because it told me, like, if you stick to that lens, even if you apply it to things where you don’t have the deep technical understanding necessarily, you can be successful. And then just me being proud of myself for kind of branching outside of things strictly in my comfort zone and seeing that bear fruit.
Meb: Ashley, where do people follow along? They want to sign up for your syndicate, they want to see what you’re up to, what’s the best places to go?
Ashley: I don’t know if I can be considered as operating a venture since I don’t use Twitter. If people want to find me, I’m actually probably unusually responsive on LinkedIn, or get in touch with me via the website, or just find me on AngelList, put in my name and I’ll come up in my syndicate.
Meb: We’ll add these all links to the show notes, listeners, mebfaber.com/podcast. Ashley, it has been a pleasure. Thanks so much for joining us today.
Ashley: All right. Thanks for having me.
Meb: Podcast listeners, we’ll post show notes to today’s conversation at mebfaber.com/podcast. If you love the show, if you hate it, shoot us feedback at email@example.com, we love to read the reviews. Please review us on iTunes and subscribe to the show anywhere good podcasts are found. Thanks for listening, friends, and good investing.