Peter: Welcome to the Venture Capital podcast with Jon and Peter and our special guest today, Bubba Page.
Bubba: Thank you. Thanks for having me, guys.
Peter: Thanks for being with us.
Jon: Welcome. Welcome. You've been you've had a major life change.
Bubba: Yeah. Depends on what you mean.
Jon: But I think one specifically related to why the VC podcast I think is interesting for you and for the audience.
Jon: So what other life changes are there referring to that?
Bubba: I mean, geez, I got eight kids, man. So having twins was a pretty big life changer.
Bubba: I don't know about you guys, but that's a big change.
Peter: I don't know. You have eight kids. That's impressive.
Bubba: Four boys. Four girls. All within ten years. My wife is an absolute champ. It's crazy.
Peter: What's the age range?
Bubba: Almost 14 down to almost four.
Bubba: For boys, it's just. It's interesting to see.
Peter: This every year. Yeah, it's good.
Bubba: Of course, the twins helped with that. Yeah. So that's a life change, even though they are a few years old, but still.
Jon: It's a great life change. What other life changes are there before we get into the the VC related life change?
Bubba: you got it. So. geez. I think you mean influence that we see.
Bubba: Okay. Just making sure. So Influence Ventures. I started just under a year ago, and it's a venture capital syndicate.
Bubba: So I'm basically just personally writing checks and the deals that I want to be a part of. And then I'm inviting my network of investors as a syndicate. And then we just can come together as a much larger check into those deals as just one entity on their cap table. I guess the the hope is that I can bring one unique value proposition is bringing the expertise of working with social media influencers, either as investors in that same deal or as promoters, affiliates or sponsor type content.
Bubba: There's just not as many venture firms that work with influencers, and I've been around that a lot.
Jon: So outside a space station, I mean, space station is the only other one I'm aware of.
Bubba: There's some out of the state.
Peter: There's a bunch out in.
Bubba: L.A. and San Francisco. There's some out there. And so it feels like it will become, I think, more of a thing, or at least venture firms will bring on operating partners that have that expertise because I think we've all seen how influence can dramatically impact a business for good and for bad. I mean, there's both.
Jon: Yeah, One thing I mean, I've known the last ten years is with ABC and so many VCs that used to just bring cash, Now it's, hey, this is an additional value add we have. I think in in Peter's case, he's got a bunch of students are extremely valuable. I think his value adds more towards other VCs because they can provide a lot more due diligence than a traditional VC might have.
Peter: I mean, sometimes, but we also do a lot of projects for entrepreneurs. Yeah, right. We pitch it as like, You're lead VC, we'll help you the top 50 things. We'll help you with the bottom 50 things that nobody else would ever touch, where I can throw like 8 to 10 smart people and just crank on something for you for free.
Peter: Right. Like every entrepreneur loves this. They're like, yeah, man. Like, I got like, ten right now. Please. Yes, Right. So that's.
Bubba: Best. I think it's great. You have to have, I think, the future VC, you have to be unique in.
Bubba: Check Either you're one of the biggest brands and then maybe you don't have to have anything unique except for you're the biggest badass brand of DC, or you come to the table with something that somebody wants. And my very first deal, I get a phone call from Pelion from Kickstart and Convoy to join in a round that was already oversubscribed.
Bubba: Nice. And they're like, bubble look, it's already oversubscribed. We'll carve out a tiny little piece for you to come in because we want and need your expertise from the social perspective. My hope is that that value add gets me into deals that I wouldn't have otherwise.
Bubba: Deal? They haven't gone public with it yet. Can I see it?
Bubba: They haven't announced a funding round.
Jon: When does the funding round get out?
Bubba: I should. I should follow up on that.
Jon: Okay. We believe in, like. Like mutating secrets. So I don't want to, like.
Bubba: Why I want to promote it. Guys on the blogs. I want to promote it.
Peter: So what do they do? Like, like in broad terms and like, the VAT? What, what's the value that you're bringing?
Bubba: So one of the co-founders of Divi, a friend of mine, we talked a few years ago about this concept of Divi for families. okay. And if anybody's listening, you're familiar with Divi. So some product people from Divvy left to create this Divi for Families product. So the moment that Alex called me up, I was like, Hey, it's actually happening.
Bubba: I was like, Dude, I'm in. I was already sold on this this idea four years ago when we talked about it back then. Yeah, and division of staying focus on B2B, which is great. And so now these guys are creating Divi for families. So which was the name of it. I'm stoked. I think it's gonna be awesome. They're pre product still in the process of building do we have to.
Bubba: I maybe I maybe I need a follow up and just a little.
Peter: Blip it out if if.
Jon: With you if remember.
Bubba: Because but I want to promote this heck I want you know I'm an investor love the.
Peter: Idea. I think it's a great idea.
Bubba: With eight kids. Like I know the pain. I want to teach my kids financial literacy. I want them to use credit cards.
Peter: But you want to track it and control it, too? Absolutely.
Bubba: I want all the functionality of what a divvy did for a business for my family. And there's there's a few other players out there that we've used personally, and they're horrible.
Bubba: The user experience at least has been miserable and I think these guys are crushed.
Jon: You're also an investor in Gab, right? Yeah.
Bubba: Yeah. So, I mean, that was as an angel. Okay, so CRU Financial was like influence VCs first deal and Gabbay came. This is actually unique story I got to share.
Peter: Okay. Yeah, please.
Bubba: Okay, so Gab came in, friend. You know, girl, Landon came in and said, Hey, we're raising the seed round. We want you to be involved, especially if you can help to promote this product. So they talk about safe tech for kids and like, I'm all about that. I don't want my kids, you know, on social media feeds or YouTube or browsing the web without some safety protocols.
Peter: Yeah, some guardrails.
Bubba: Some guardrails. And at least up to a certain age. Sure. And so they were building a trainer phone for kids. I was like, absolutely. I mean, so I wrote a 25 K angel check into the seed round. But then I said, Look, as we promote it, what if since at the moment we don't need that commission?
Bubba: As an affiliate, we don't need that commission. Could you convert it into equity?
Bubba: And they were like, What? Like you can do that? Mike, I think so. I've never done it, but I think we should. And so we created a structure to where they kept it at only 50 K, so. So we could only earn up to 50. And then after 50, they pay a normal count.
Jon: It was like two days from your isn't.
Jon: For the the wait your the your guys's like media assets.
Bubba: The my wife Jordan page on Instagram. If you're watching.
Peter: I say to her you got to give us the backstory here.
Bubba: I'll give you more of that for sure. But through her influence, I helped a tiny bit a 10th of what she did, because that's about my size and following. We cleared that in, I think, 3 to 4 months. And then beyond that, we just continue to receive commissions from the affiliate. Anyway, we totally believe in the product, we love the mission and all of our kids use it.
Bubba: And now the company is valued a I again, that's I.
Peter: You've seen a you've seen it you've seen a healthy write up and valuation of your investment. Yeah, that's great.
Bubba: And I hope I can educate more influencers to know Yeah. That they can also potentially exchange value for equity as well. Yeah. Especially if it's a pay for performance structure like we did with Michelle. I think that's a win win win for everybody. Gab Got to keep their marketing dollars.
Bubba: Spend it on other things. The influence her gets to diversify our investments or assets into equity and. And then the business gets sales.
Bubba: I don't know. I mean, that's a pretty sweet gig. I don't hear that happening very often unless you're like an A-list celebrity.
Jon: I think a lot of them get hit up for equity, but I think a lot of influencers the concern is how do I know I'm going to get something out of this deal? And I eventually that's part of what you're helping to structure.
Bubba: I feel. I mean, like I we came in again as an investor and influencer. I prefer that to versus just a straight Yeah.
Peter: Trade. How often are you doing that in the deals you do with influence Step You see.
Bubba: I do not share those. No, no. I mean that would be the goal.
Bubba: We haven't done enough deals with this structure yet.
Peter: Is there a reason why is it like you just haven't tried yet? Some are too early or the companies are really okay. Yeah. Yeah. Like this one. That's pre product, right?
Bubba: Yeah. So pre product there is a deal that that that we did called counter. I can't talk about that one can't counter account shout out. Okay. They just got their product is a macro. Have you ever counted your macros. Sure.
Jon: Yeah I do it every day right now I'm down £20.
Bubba: Do. That's amazing though. That's a big deal. So counting your macros, the frozen foods typically we think of frozen foods as horrible for you.
Peter: Right? Right. Processed pork. Just no nitrates. High nitrates. Yep.
Bubba: So these guys created a macro based frozen food company where these anyway, healthy, high in protein, all the stuff.
Peter: They like a competitor with. What is that brand like real good food or whatever. Have you seen that. Yeah.
Bubba: No, not factor. Those are like meals that could deliver these ones. So these guys are already in Target, they're in Walmart, they're in Sam's Club in there. You know, they're not across the country yet.
Peter: Yeah, I got to go try them.
Bubba: They're awesome. They're not new to you, but you can order. Okay, Maybe I can get you guys some samples. Anyway, they already brought in 11 influencers that had large followings specifically in the macro.
Peter: Yeah, space makes sense.
Bubba: And and they came in as investors and are promoting then some of them are recipe like chefs.
Bubba: So they've provided the recipe to the company so they know it's a tried and true recipe. Yeah, the audience already loves it. Now they put it in a form where it's shipped across the country in these forms for us. Have you ever so.
Peter: So is there like a standardized document for this?
Bubba: I'm going to create it.
Peter: I was I say you should create it and then post it out there and put it kind of like effort. But yeah, just like a safe.
Peter: Right. Yeah, I think it's genius.
Bubba: Yeah. So that is part of the goal. I've been talking to folks about that specific thing. I want to provide that for free and other educational info. I think a lot of influencers that are out there, the they haven't been an entrepreneur before becoming an influencer. Yeah. So the concept around like what a cap table is or raising capital and what investors do and how that works.
Bubba: I think it's fairly new to some, not all, but I'd love to help that educational side of it and just give that away to just help helping them in their world. And then hopefully that brings a whole ecosystem up as influencers get involved in more businesses and help them to scale.
Peter: I'm curious, who are the influencers around you? Like not specific names per se, but the time of graphics, the demographics that are coming in alongside you in these deals? Yeah.
Bubba: Well, primarily they're going to be women between the ages of 20 and 45. Okay, Because that's where the network of who my wife and I've worked with for the longest time.
Bubba: It. And so we host an event every year. It's called the the Paige Summer Soiree. It's this costume themed party. It's my wife's like love. She absolutely loves.
Bubba: Party. It's like a wedding every single time at that, you know, that level.
Jon: You just had it right.
Bubba: We just in August. Yeah. And it's a the idea is it's not a you know, you have to have a certain number of followers to be invited. That's not it. It's just if you're producing good quality, good content for the world and there's some relationship to my wife, then there's a potential to receive an invite. I my number one like what does that test?
Bubba: Characteristics tests. my gosh. Just blinking.
Bubba: Is the other one anyway is include her like I just.
Bubba: That's right. Designer. Thank you. Yep. Is include her so like and I know my wife has that same feeling we want to be inclusive, not exclusive. This specific event. We have to limit it to certain because of location and food and all that stuff. But yeah, yeah. So we've gotten to know a lot of these people, these influencers through that and, and then working with them and going to events.
Bubba: My wife is literally right now in Jamaica on an all expense paid trip because she's one of the top affiliates for a makeup company. Shine Cosmetics. And so you go to those types of events, you're hanging around all the other top affiliates and you create relationships.
Peter: Look at you. You're a good dad. Meet at home with eight kids.
Bubba: and she's on the beach. She is on the beach. She earned it, though.
Bubba: Percent earned every second of that vacay and stoked for her to be there. So, yeah, I'm hanging back. Take care, kiddos. We do have a nanny and put that out there. When we went from six kids, eight, it was like time.
Bubba: So that's the only reason I could be here, right?
Jon: I think it is for nannies.
Bubba: Yeah. So anyway, that's primarily they're going to be talking to other women. That's mostly the focus. Yes, I do have maybe a subset, maybe 10% that are male. Okay. Influencers. Maybe it's a little higher now just because of what I've been doing it influence.
Peter: Yeah. What kind of what kind of influencers are they?
Bubba: Typically they're going to be doing more business entrepreneur type influencing.
Jon: Cool. It's like you, Peter You. Yeah.
Peter: Like you. John You're an.
Jon: Guys, I'm just the intern.
Bubba: So whatever that gives you a whole story.
Peter: That's cool. I like.
Jon: It. How has your life changed since starting influenced? Obviously, like, or like, have your, like, perspectives changed?
Bubba: Well, I think on a day to day basis as an angel investor, it's very just casual and in in you take it whenever you whenever it comes you look at deals or talk to people making it more of a structured format. And then I think the second that you put V C or investor on your LinkedIn profile, you get bombarded.
Bubba: Obviously most of the people who come in through LinkedIn, just FYI, if you're going to be on LinkedIn, try to go through a network relationship first because there's just too many messages, too many deals. I'm probably not going to look at it, but if you can come in through somebody that I know that says, Hey, can you talk to this person or you should, then those go to the top of the list of what deals I'm going to look.
Bubba: Look at first. Yeah. And like this week I've written two angel checks just this week, but I'm backing people that I know love and trust, like people I've wanted to back. Yeah, and I did, Angel. I didn't do influence because again, way too.
Jon: Early and you're like,
Peter: Just him personally.
Bubba: Sorry as a person. Angel. And, and then my goal is with these companies I got in early enough too. So when they raised their next round, I can have influence, join the next round and bring in a much larger check, if that makes sense. I like, but typically, you know, these quick decisions like they were literally like one meeting and I'm writing a check when I have a relationship with that entrepreneur for X amount of time, that can happen.
Bubba: Sure, I had another call and we talk about like day to day. So my day is just packed full of pitch pitches of companies, which is great. I love it, but one of the companies that was pitches pitching today, I just straight up said like, Look, hey, you seem like a good person with a good business idea. You're very early on the traction I would love to begin our relationship now.
Bubba: And if you can update me every, you know, 3 to 4 weeks or even 4 to 6 weeks, I want to be able to see dots on the graph and in over some time that will help me to understand you and who you are better and how you handle maybe conflict or struggles, because I'm going to bet on the entrepreneur first.
Bubba: Versus the idea because the entrepreneur has to be able to solve all the problems that come with their business and maybe the business changes and they pivot, or.
Peter: Which it probably it.
Bubba: So you got to bet on the entrepreneur And so relationship are a big deal for me. Yeah.
Peter: What else do you look for in a deal?
Jon: Yeah. Like what are the metrics or characteristics?
Peter: Characteristics? It is like, yeah.
Bubba: I think for me, characteristics are more of what I base my judgment off of because the specific numbers of every deal vary so drastically. Yeah, because if you're if you're investing in a pre-revenue company.
Peter: What metrics do you have? No. Got anything.
Bubba: Right. And so that is purely I bet on you as a, as an entrepreneur, that's number one. So people first. Yeah. Then I typically look at the market. I want to be able to see their market size just to make sure that it's a venture back deal because some pitches will come in and I'll say, Guys, that's a phenomenal lifestyle business.
Peter: But don't raise money.
Bubba: But do raise money. You don't need to. Yeah, Like my first business launch, Leeds was not a venture packable business.
Jon: Yeah, it was a great business, but.
Bubba: It was a phenomenal lifestyle and it and it taught me business sense and the ability of hiring and training and building processes and system.
Bubba: And, and that helped how to exit it but like so when I so yes, so anyway I look at their market just to make sure it's viable and even if they're starting with a smaller market. Yeah. Knowing that they can expand that's important.
Bubba: And then their idea is last.
Peter: Yeah. How important is it that, that you feel like you can bring value through your network or through your investors?
Bubba: I think as an angel, it's less important for me. Sure, if I'm doing the deal as influence, it's a way that's that's part of the quote unquote.
Bubba: Is I want influence to be doing deals to where we can provide that value. As an angel. It's more like, hey, I'm I love you and I want to back you.
Bubba: And when you're further along, let me bring in more. More capital.
Peter: How late will you go? Because it sounds like you do a bunch of angel deals, as I'm assuming, like, precede pre product, some seed, maybe. Yeah, they influence.
Peter: Do you go above that? Yes. Do you do like a gross gross stage deal there on 50 million and revenue by product kind of thing.
Bubba: Besides these two deals I just did this week, I'm doing a deal right now. They're doing 250 million plus in revenue.
Bubba: Growth stage. Yeah totally not so for me, stage agnostic is fine. I'm not a fund, so I don't necessarily have to stick to a thesis. Yeah, and I love the syndication idea. Not that there's nothing wrong with funds, but the, the ability for investors, my investors, to just pick and choose which ones they want to be involved in instead of them giving me the money.
Bubba: And then I just allocate it wherever I think it should go.
Peter: Do you find that, like, how often do you bring them a deal? And they're like, Yeah, I'm in because I know about the verses. Like if I was up in the night on this one, I don't get it and I'm out or like, Yeah, this is really cool. Just on the merits of the deal.
Bubba: Yeah, I'd probably say 25% of the cash that gets that I've raised through the syndication is purely just if Bubba's in, I'm in.
Bubba: And, and I appreciate that. That's flattering. Sure. But I think most are looking at it and saying, okay, I'm going to put my $0.02 and my thinking through this and it is helpful. It's a good signal that Bubba has done his work to look through it. But again, we won't lead a deal. Sure. So we want to follow along because I don't have the due diligence, you know, people.
Bubba: So I'm doing my own little piece.
Bubba: But I want to be able to follow along in somebody that is more sophisticated in that process. So I think the 75% of it is, hey, here's the deal. Here's why I'm doing the deal. This is why I'm excited about it. Yeah, but I want you, Mr. or Mrs. Investor, to make your own decision. Yeah, And and I get no's all the time.
Bubba: Because they, they come in when they're stoked and, and then they're excited about it. Like this counter company. One of the investors was in Texas for the football game. The beautiful game. Yep. And he remembers that Texas is one of the states where Target had the product and he was like, Hey, talk to his wife. Let's drive 15 minutes out of our way to go to the target, see if they had and they had one product, all the rest was sold out, all of it.
Bubba: So they grab that one product, everything else was sold out.
Peter: And I felt pretty good about that. He was like, Everyone's bought it.
Bubba: He sent me a video of it like, This is awesome. And so I sent it to the founders and the founders are excited and everybody's pumped about it.
Jon: Yeah, you do more consumer plays, right, versus gas or does it matter?
Bubba: Does it matter to me?
Jon: I think but historically of deals you've done so far, I'm guessing because you've done gas, whether you've talk about I always have something physical I can hold.
Peter: Or they have a consumer aspect, right?
Bubba: Yeah, those are the ones that I brought up in this discussion. Right. But like and homie is one that we did early on and we, I say that was an angel preacher influence and flashlight learning is a pure edtech play. Okay. That's nothing to do with consumer necessarily. I mean, I guess their end product helps students.
Bubba: But. But they're selling into schools. I don't. I don't pick and choose based on whether they're B to B or B to C. Right now, I think the consumer model with influencers is proven to be helpful. So that does make faster sense. Some of the times, I believe there's a huge market of LinkedIn influencers that has not has not it has not been exposed as a go to market share plan yet.
Bubba: It's less frequent than consumer play. It doesn't make I see.
Peter: So you're saying like if I had some LinkedIn influencers and you backed like an enterprise SAS deal and then and then they're the ones that are like pushing it on LinkedIn.
Bubba: So if you think about if you're going let's say you're a fintech company, yeah, then you're selling it to banks. Well, who is speaking at the conferences that you go to? Who wrote the book? Right? And if they're speaking, then they're an influencer. And if they're on stage and they say, I wrote this book and I'm cool, and I did this and that, and they say, And I'm an investor in such and such company because look what they're doing.
Bubba: That's probably can have influence.
Peter: I'm really curious your thoughts on this around so you make you know the influencer makes an investment in this company how there's this like conflict of interest piece of it which is like you know yeah you invested and now you're promoting it but like, are you promoting it because you really believe in the product or because you just want to generate a good return?
Peter: I'm just curious, like how you think about navigating that whole issue.
Bubba: Well, it's happening every day with every influencer share planet for sure. So the bummer is that more often than not, the influencer, especially on a lower scale like sub 100,000 follower type feel anything that said to them, they're going to promote it because they're trying to make ends meet.
Bubba: What? And they're not.
Peter: Always disclosing like I'm getting paid.
Peter: To do this product. They should check. But they're not.
Bubba: Always. No they're not. They're not. And that's so as an investor, I need to be saying I'm an investor in this product. And so typically when I'm posting, you probably maybe I've seen a couple where I'm like, I love being an investor in, yeah, blah, blah, blah, blah, blah. And so it's disclosing. I'm an investor. I would hope that if somebody is willing to write a check as an investor, yeah, that they would want and believe in that company enough to do it.
Bubba: Yeah. When they're getting a free product it's different. Yeah. And their, their incentives may not be as aligned or if it's a purely paid sponsorship.
Bubba: Then their incentive may not be aligned at all.
Bubba: And so, but this is happening every day, all day on every platform. And as consumers, we have to realize that these influencers, they're getting paid to talk about X, Y, Z company, and they should disclose, hashtag, add or support partner.
Peter: Or like most people do recognize that, though I would be shocked if, like your average person that sees, you know, a woman, you know, talking about some new lotion is not getting some sort of compensation. I do think like.
Jon: Sponsor is what's happening more now.
Jon: I'm not promoted by this but I love.
Peter: yeah like they make the disclaimer. Yeah And then you just assume but I actually think it's a pretty strong statement to say, Hey, I'm an investor in these company because I love it so much, right? And nobody's paying me off. So yeah, I think that makes sense.
Bubba: So that's that's where I think like the influence you know, influencer ABC bringing these influencers in. Yeah that that hopefully will prove to the audience like I'm a believer I love this at least at least they love the concept of it if it's not there yet. And then what I think I was going to give another shout out to my wife.
Bubba: I think why her audience is so loyal is because she said no to hundreds, if not thousands of products that wanted to sponsor or give. And she's like, I don't know if I would use that right. And because she said no and she only promoted the ones that she loved for the most part, I think people felt it.
Bubba: Yeah. Feel the genuine authenticity. Yeah. And so when she does say this sweater is my favorite sweater of all time, she sells 200 grand for that sweater because they believe what she just said. Yep. It's the same thing I have with Gab and a bunch of others. Anyway, that gives you some insight and some influencer stuff.
Peter: Very cool. Curious, shifting gears a little bit away from influencers, but just venture in general. You know, we've been having conversations with others, especially at the seed stage. do you feel like deal flow and, and I get that you're, you're kind of new into this doing this, but you feel like deal flow is increasing decreasing are valuations that you're seeing going up going down.
Peter: I'm just curious kind of what you're saying at the seed stage.
Bubba: So I guess I started Angel investing in like 2015.
Peter: Yeah, sorry. I meant with the fund. I know you've been angel investing for a long time. No, but you're right.
Bubba: So close to the 15. But then the, you know, the influence is only over a year. Yeah, I absolutely think I'm seeing way more Now than I was before. And I think valuations are coming down. Yeah. I'm seeing more flat rounds down rounds, bridge rounds, that kind of thing.
Peter: Are you seeing more deal flow like, like, I guess there's a distinction between there are a lot of companies trying to raise, but how many deals are actually getting done? Does that make sense?
Bubba: Like, well, I think on a percentage basis it's lower. Yeah, because there's more coming in. So the top of the funnel, the deal flow is very large in my opinion. Yeah. It's just bombarded with deal flow.
Bubba: Hence the caveat come in through somebody that knows me. Yeah. And that will put your deck on the top of the pile. Yeah. Or meet me go to an event that I'm going to be at or something, shake my hand and then you know we can set it anyway. The, the quality of the deals. I feel like they're better.
Bubba: I think people understand for the most part that they need traction because right now if you don't have traction and you don't have any of the other plays like I'm a repeat founder, I've already built and sold this and this and this.
Bubba: It and I really think that if you're a first time founder or you haven't sold something before, you have to have traction. Yeah, I don't know how you're going to get funded because even some of those who do have, you know, some level of traction or do have an exit, they're even struggling sometimes. But yeah, like the two deals that I did this week alone, there were repeat founders.
Bubba: I've already seen them. I've already known the personal relationship, known them for years. And I could probably say this, but so Phi Phi, that helped with with Kirk, with Matt and Scott. I think, like I've wanted to back her for a long time. Sure. And no, I don't know him personally. And in an in-depth level, we've seen each other a bunch and we've talked a bunch over the years.
Bubba: But when they pitch the business, I love the business model. I do think influencers can really help that business. for sure. And I wanted to back him because I believe in him as a founder and I believe in him and his technical capabilities and who he's going to recruit to the team.
Peter: And that company, by the way, is like A-plus data, plus vitamins effectively, right. Exact really interesting play. Yeah.
Bubba: And we'll see. And it could pivot just like any of these. Right.
Peter: What's interesting is the number of companies that I've been seeing lately that have that are doing something like that is maybe it's not. Maybe sometimes it is vitamins, sometimes it's not. But like, just how important are health and leveraging AI to improve our health, generally speaking, is is like this new trend I'm seeing more and more and more of.
Bubba: I think we're starting I don't know, maybe it's just our age. Yeah, but like, I'm sure you're counting your macros. Like, you wouldn't have done that ten years ago. Maybe. Maybe you would have. I would nev.
Jon: I was single ten years ago. So dating, if you're on the market.
Bubba: That's right. That's true. But I think the older I'm getting, I'm more conscious. I am about my health anyway. So yeah, I do believe in what they're doing. The other deal. So Seer, you guys have been seeing Seer pop up circles of course.
Jon: Yeah. I didn't hear in Seer just happened.
Bubba: So thank you. But again, it's Zach, right? And his co-founder, Sonny, the CEO, Sonny Washington, have known each other for a decade. Yeah. And we used to go to the same gym and we'd see Jake all the time.
Bubba: And and, you know, is their business model like something influencers can help with? I don't know. Maybe it's an angel deal. That's an angel. Yeah, but I love them.
Bubba: I think they're just good people. They've been there and done that before. Yeah, and I know for. For the young entrepreneurs listening, that's probably really hard to hear of. Like, you have to be a repeat founder and have a successful exit in order to get funding. Well, how do you how do you begin that journey? I would raise my hand to say do a non venture back of all startup first.
Bubba: A service based company where you can cash flow, get profitability, build a lifestyle and an expertise and sell it or cashflow that to fund your next idea. To me, I like that business model. Yeah. At least for young early stage entrepreneurs.
Peter: Yeah. No, I think that's great advice for sure. And oftentimes like if you can't, if you really got to go the venture route, go find somebody who has done it before, co-found it with them, or go work for them. Yeah, right. I think those are also like good ways because like, I think there are a lot of great entrepreneurs that have started something after they've worked at a startup and that also gives you confidence.
Bubba: And that's DV for families, right?
Peter: Yeah, for sure. Right.
Bubba: Literally ten guys left Divvy and started this business. Yeah. Not guys. Ten men and women.
Bubba: And, but, and it was a no brainer. They had never started a company before.
Bubba: They were coming from the business that they were going to emulate and I was like, Done.
Jon: What do you want people to know about influence and go outside influence? Obviously what's influencing CO now that nothing.
Bubba: No influence ventures.
Jon: But what do you, what do you influence that? VC That's where do you want to be in five years?
Bubba: Yeah, I really want to help as many people as I can gain access to deals that they wouldn't have otherwise done. So I think my network of investors most of them don't have the deal flow that I.
Bubba: Or else they wouldn't come into the deal. And so I think a lot of my network primary, primarily they're entrepreneurs or they're successful executives at different companies and they're just not they're not seeing deals. I want to help educate them on what these type of deals look like, what the returns look like, what the risk factors are, and then help them understand how they can get involved if they want.
Bubba: So what does that look like in five years? Well, I've only done a handful of deals so far in this first year. I think I can double that next year.
Jon: Every deals are done in your life.
Bubba: I think I'm getting close to not 20 yet.
Jon: What's the average check size.
Jon: Yeah, my average size, like, is like ten k baseball.
Bubba: 25 to 50 K is usually what I'm writing.
Bubba: So it depends on who you're talking to. You.
Jon: I think for most for for most angels, that's not a large check.
Bubba: Well, I just I want to have enough skin in the game to where it's meaningful when something happens.
Bubba: I wish I would have put a lot more into gab, for example.
Jon: I think everyone does, Right?
Jon: How's Gab doing, by the way? I was. We're actually sitting outside Gab last night in the like, the kiln just.
Bubba: Got a brand new office.
Jon: Yeah, they moved, you know, a few blocks away, a couple of miles away.
Bubba: I think they're doing very well. They're helping so many people. And I just love their mission.
Jon: I love what Nate's doing. I love that he's.
Bubba: A great guy, and I need to get to know him better.
Jon: You don't know that.
Bubba: Well, not well. So let's get to know Nate. Okay? But I think what I hope to see it can happen is, one, I want to make a change in people's lives. I want to educate the influencer world to be able to come into deals. I don't have a number. Okay, You know how many of these people do I want 10,000 people to be doing this.
Bubba: So I want a million people to be doing this. I don't know. Okay. That's something I should put my goal list of what to do. And I would there is one caveat. I think there's another educational piece I've been talking to. I've been talking to Origin Ventures.
Jon: Okay. They're a Utah based VC foundry.
Bubba: Not Utah based. They've an office here. They have an office here. Anyway.
Jon: When Gaffney talks about them a lot.
Bubba: Yeah, they're good, good firm. They've they've got a big fund and they're doing amazing deals and are very active here in Utah. And we were talking a lot about educating specifically women in investing. And I think with my network of of more female influencers, not just from an influencer, but even just women in general, I would love, if I can, to make an impact in that segment as well as.
Jon: Clients focusing on that tier right now. Right. I think got their founder fund specifically targeting female investors too.
Bubba: That helps. And so did River Road. Okay, I'm an LP here and in Pelion.
Jon: Okay let's talk more about like the fund formation side. Well I know you're not like a fund, but like how you're doing it because I think our audience is split in two ways. You have people who are looking to get funding, but also some of our most popular content is people wanting to someday like start a fund.
Bubba: okay. Yeah. So the way the way that I did it was through SVP s P, the special purpose Special purpose vehicles.
Bubba: And you have a master SPV that essentially is the core legal structure around everything. And then you have individual SPV for each individual deal and the way I did it, I mean, there's documentation online. You can get templates and whatnot. I use a group called Savvy Legal, their local group. Okay, That helps to kind of formulate these things for you.
Jon: And it mostly specialized in the SPV.
Bubba: Now that's their, that's their cup of tea.
Bubba: And so worked with them. And then what that allows me to do is to be able to raise capital from these individual investors. They do have to be accredited investors or qualified purchasers.
Jon: Are you qualified them or are you just making them self-disclose?
Bubba: They have to self-disclose. That's kind of how everybody does it, you know.
Jon: Like you're not like looping in their account and saying, Hey, we need a.
Bubba: No. I don't know anybody who in my network. I've never had someone do that to me.
Bubba: Basically, you have to you're on the hook. If I self-disclose and I'm a credit investor and I'm not, I could get in big trouble. And so we would hope that these investors are mature enough to know that they should follow that. The legalities there and I think you can look online like what an accredited investor needs to be.
Bubba: It's something around like you have to make 200 K per year individually or 300 K combined with your spouse or have a million in net worth outside of your primary home. Those are pretty low qualifications in today's day.
Jon: Especially with inflation.
Bubba: Especially with inflation. So so you have to be accredited. Qualified purchaser means you have to have 5 million in assets, not including your primary home. And and then we have them self-disclose and then they wire the funds into our account and then we take our we take those funds as a combined unit into the company and work to the company.
Bubba: And then it's on the cap table of the company is just influence.
Jon: ADC Okay. And so then you do all the taxes and accounting and K one distribution and yeah, that gets expensive over time.
Bubba: So you collect fees.
Jon: What's your fee structure like?
Bubba: It depends on each deal, but you know the norm. The norm out there is a two and 20. This is interesting. I think this is something that not a lot of people know. So let's share this little caveat here. I'm an investor in quite a few funds and their fee structure typically is a 2% admin fee and a 20% carry.
Bubba: So let's let's do the quick snippet of what is a carry. Do you think this is appropriate for the podcast?
Jon: I mean, we've talked about from time to time.
Bubba: Okay, well, let's just hit it for a quick snip, 32nd carry is when let's say we invest $1,000,000 into a deal that's at $5 million valuation and then they sell at $20 million. So their valuation went up. And do the math. I'm not going to do it. My mental mental math here, the profit of the proceeds.
Bubba: Essentially, after you're paid back your original.
Jon: Investment, like, let's say the fund pulls in 4 million.
Jon: The excluding the initial investment of a million, you're getting 20% of that. So in this case would be probably 20% of 3 million.
Bubba: Yeah, that's right. That's exactly right. So 20% of the 3 million our profit goes to the fund and then, you know, everything else is distributed among the investors. So that's one major reason where venture capitalists can make money. And if they're good, that's where they're going to make all of their most almost all of their money there. But I think one thing that most people don't understand is that the 2% fee admin fee is an annualized fee every year.
Jon: Yeah. So what are you doing in that case? Because most funds, they have cash on hand and they're just slowly drawing it down. But in your case, you just got a one time payout.
Bubba: So we have to collect upfront.
Jon: And so 2% for ten years.
Bubba: 2% for ten years is 20%. Right.
Bubba: And so but most investors, even those who have done a lot of deals, they're shocked to realize that 20% of their investment is being withheld for administrative fees. It's little it's shocking. So some of the deals that I've been doing, you know, I can go as low as maybe it's one and one and 20 or something like that or or depending on if there's a structure where somebody else has a fee, then I'll reduce my fees so that people are being over feed.
Bubba: If it ends up being that two and 20 structure, then it feels like, okay, that's that's where the norm is. That's what normally people expect. But at SPV, I like to be below that typically, and it does vary on the deal. It depends on how much is being raised as well.
Jon: So you $100,000 check. You would take 20 grand right off the top as part of your.
Bubba: That's part of the.
Bubba: That's part of it. Now, depending like the deal that I'm doing this last week is just a 1% upfront. So that would be okay. Right. And that is supposed to cover my costs over the next. However, really, you know, time.
Jon: What do you think your cost per year per SPV is?
Bubba: That also varies a lot but you know depending on how many people you have involved in that SPV because if you have five people involved in SPV, it'll cost less. If you have 100 people involved in SPV, you've got to pay for all of those key ones to be distributed. So there is a wide range of how much that could cost.
Jon: Are you taking board seats with your investments? Because partly of the management fee, you know, that can be calculated if, if you're a smaller deal, a lot times management fee can be higher if the audience doesn't in aware. But then if you're also not taking in a board seat, then that would adjust for it too.
Bubba: Yeah, the board seats typically, but also we haven't done enough. Are you looking to.
Jon: Get into the board's position?
Bubba: Not today, but it would have to depend on the deal. Again, all of these are based on a deal by deal basis. If there is a company that I feel like I could really provide expertise in helping them and they invited and said, Look, we'd love to have you as a board member, then I'd probably consider it for sure.
Bubba: You know, my bandwidth will only allow so many of those board seats. Realistically And and if we're writing a much larger check, typically where a half 1000000 to $1000000 sized check as a syndicate. But if we're writing a $5 million check into a deal because they're raising 20 and somebody else is putting in ten and we're putting in five, they'll be the lead.
Bubba: We'll put in five. Would we want a board seat? Yeah, most likely. And so deal video deal video basis, but happy to participate. That makes sense.
Jon: Okay. That's what I don't think people like realize the dynamics. What are your costs in operating because you don't have any partners Open yourself with that. Are using it for sourcing deals.
Bubba: Yeah, I mean, I just went to an event, went to founder Khan. It's Techstars big, a group where they have all the alumni come together. And so yes, that would be like to me it's a marketing expense said.
Jon: When you're building a team that way, that's what I'm excited for. That's like things that I'm watching. I'm like, What team is going to form around? Yeah.
Bubba: I've been having some conversations and I don't want to do it alone. I just like people too much. So having some of those initial conversations, just being super passionate about it right now, the lifestyle is also very helpful to be able to just do a deal when I feel like the deal's right. And when you start building a team, you have a little bit more of a structure and it's you need the deal flow to continually be coming in in order to support this team because you got to have the fees to pay for the team.
Bubba: So I think there's I want to be very careful about that process. I don't want to ever be forced into doing and I don't think you ever will be forced into doing a deal. There's so much deal flow, but mentally you have to realize, okay, well, there's there's there are salaries on the line that have to be covered.
Bubba: And so you want to make sure you're doing the deals. So I think that's where funds, if they don't allocate all of their cash within a certain amount of time, it may push them into a deal that maybe they wouldn't have done if they didn't have to. Whereas the current syndication process, it feels like I'm more flexible and I can just do a deal whenever it feels totally right.
Jon: Does it feel like herding cats over?
Bubba: Sure. That's a huge pain point.
Jon: So my prediction is in 2 to 5 years you're going to have a fund.
Jon: Sure because then you could just do a deal when you want it. You could do your capital call. You're not having to go harass ten people on a case by case basis, because in that case each one is like a separate LP who wants in. But some is out of it, are showing up. what is it, Daniel, to show me one?
Jon: I'm going brain dead. But like, there's companies that, like, will charge people for your deal flow access or if they thought about doing that, as.
Bubba: People have pitched me on that idea as like a membership and I haven't wanted to go that route.
Jon: Daniel Paul Bell Office. Yeah, he's he was at Duolingo. that's right. He talked about he's, but I think he's part one of the groups and he paid his membership fees. He's like John they make so much money.
Bubba: Yeah, well and it should kick some of the angels butts in gear of start writing checks. You're paying me a fee to see my deal flow. Stop sitting by the sidelines, like actually write checks so I can see that there's a benefit there. And I can also see that building a community is beneficial. And so I could see that I haven't chosen to go that route just yet.
Bubba: I feel like I want to be able to somewhat prove myself as yes, as an angel. I've had some some fun wins. I've also lost and in deals that I thought would be awesome. And they they failed, which is okay. That's part of the plan, right? I'd love to be able to show a little bit more traction for me and my track record to be able to for for people to see if there was a deal for access that was a membership type thing.
Bubba: I could see that being a possibility. Could have fun, be down the road. Yes, Fund could be down the road. I'm leaving all of those options wide open. And and for me, I'm looking at this as, okay, I think I'm combining my superpowers. I hope that's what I'm doing, is combining superpowers into what I'm doing today. I hope everybody kind of finds what their superpowers are, and that's what you end up doing because you end up loving it way more, you're more passionate.
Bubba: Work doesn't feel like work, that kind of thing. It feels like I'm headed in that direction.
Bubba: And but for me, I always know that I need to get going on something first before I can, like, truly make a decision. So I've been now doing this for a while and I love it. And I think, you know, the pieces of the pie that maybe I'm not as good at administrative something or other or spreadsheet something.
Bubba: Those pieces I can I can accommodate with Rockstar team members.
Jon: Okay. How soon will that be? Six months.
Bubba: That's a good question. Between six and 12 months.
Jon: Okay. What are your hardest. Let me this is my last question then You got to go. What are your hardest lessons learned as an angel?
Bubba: You're going to lose a lot of money.
Bubba: Philanthropy maybe is what the goal is.
Jon: You look at it, call it philanthropic or.
Bubba: I mean, the reality is it is very philanthropic. As an angel, as a VC, I think it's different, right, Because you got fee and carry and there's different pieces of it. As an angel, you're not going to win I mean, you you need to do about 20 deals to ensure you make money. This is all the books. People who talk about it, they say you should be doing at least 20 deals as an angel to make it viable.
Bubba: My hit rate is a little bit higher than that, which is helpful, but you're going to lose and you're going to lose with some of your best friends that you want to invest in. And I recognize from my venture backed startup that didn't pan out, I was devastated, just devastated. It rocked my world. And and I felt like I was a complete failure.
Bubba: My reputation was gone. That and I remember my investors, Petersen Ventures in particular. They you know, we were talking they were like Baba we know it wasn't you like it's not your fault. It happens and it will back your next venture. And I remember when they said that it was like this new light of understanding and appreciation of they get it like they get.
Bubba: And it helped me overcome some of my fears of being a failure and and me not associating myself solely as an entrepreneur and as that business. It really helped. And I think if anybody out there who's gone through some sort of a business that didn't pan out, like you're going to learn more with the failure than you will a success period.
Bubba: But know that that isn't just your that's not your story. It doesn't end there. That's just a new chapter. And and you can create a new chapter. And really the idea of failing fast, that's the Techstars kind of mentality that should how that's that's how all entrepreneurs, in my opinion, should be go hard and fast. And if you're going to feel great, move on to the next idea.
Bubba: But don't get down like I did on myself.
Jon: We all get down, I got down.
Jon: When I when and if even it's not your fault. I mean, like I mean your they know you're your exploring and your paying for gold. Yeah. And sometimes you think have a nugget and you said, Hey, I found two or three and I guess there should be a vein and sometimes there's just not a vein there.
Bubba: Yeah, no, I think that's a good, good way to look at it. So as an angel, some of the hardest things I've learned isn't like, number one, when talk to the businesses have failed, the very first thing I say is like, I still love you. Like we're still friends, I still love you, and I know it's not your fault.
Bubba: And and I hope because of that empathy that there's and I feel like we've been able to grow even stronger as a relationship because I've there I.
Jon: Felt you're also included. We just realized that yeah, it may not be as easy for you as for some.
Jon: That's true. Well, but you're amazing. I know. You better go take care of your kids. Thanks for joining us on this podcast. You go to influence, obviously, if you want to learn more about him.
Bubba: Connect with him, LinkedIn.
Jon: His LinkedIn profile in the part of the show notes. So we will see you on the next episode. If you've any more questions, ping us and we'll try to bring him on again another time.
Bubba: Thanks, guys. Love is.
