Juan Scarlett, managing director of OneValley Ventures, sits down with Neil to discuss OneValley's efforts to democratize entrepreneurship and his approach investing in pre-seed and seed funding rounds.

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Full Transcript

Danny Levine (Producer)
Yeah. Well, we've got Juan Scarlett from OneValley ventures today for listeners not familiar with Juan. Who is he?

Neil Littman (Host)
Yeah, so Juan is actually a good friend of mine, someone who I've known for many years now. He is a managing director at OneValley ventures. He's been a venture capitalist and early stage investor for most of his career before OneValley. He was at passport capital. He did both, I guess, late stage venture. So you'll pre IPO growth stage companies. He moved upstream to focus on early stage. His focus at OneValley is largely I believe, early stage. Pre-seed seed stage, maybe series a types investments across various industries. I know they have a a focus on tech, but I think they do have a agnostic industry focused. Excited to have one on the show today,

Danny Levine (Producer)
How unique is OneValley and its approach?

Neil Littman (Host)
Yeah. Well this is one of the reasons I'm so excited to have one on the show today is I think OneValley has done a tremendous job in terms of building an ecosystem to support entrepreneurs. OneValley was previously GSV labs, and so they're really trying to democratize entrepreneurship in many ways. Just as I think what I'm trying to do at bio versus democratize access for investors, I think what OneValley is doing is on the other side of the marketplace, really trying to democratize entrepreneurship and build a community of support for entrepreneurs and for founders. I think they are, they have a presence in like I think 140 countries that they have. I don't know how many tens of thousands of people in their network. So, you hear the age old saying, it takes a village to raise and build a startup and they've built much more than a village.

Neil Littman (Host)
Excited to learn a little more about that model.

Danny Levine (Producer)
As you mentioned, One focused on very early stage investing pre-seed and seed. Do you think it takes a different skill set for the investor than investing in traditional venture capital?

Neil Littman (Host)
Oh, I do. Yeah. I would certainly make the argument that early stage venture capital it is it's its own unique asset class. Even within the venture capital bucket, it is a entirely different animal than later stage VC then, pre IPO gross stage. Yeah, I think it takes a different skillset. It's a different, it has a it's highly different, risk reward profile than even late stage venture. As you move upstream, the risk is much higher in terms of failure, but the reward is that much greater right to compensate for that risk right risk reward or the flip side of the same coin. I'm excited to talk to Juan A. Little bit about how he views the early stage VC as a distinct asset class and how he thinks about the investment decision process within that asset class.

Danny Levine (Producer)
What are you hoping to hear from today beyond that?

Neil Littman (Host)
Yeah, I, I'm just really excited to hear a little more about how they think about, investing from, within the OneValley umbrella, the ecosystem that they've built to help support founders. From the investor side, w w what does he look for? What are red flags in terms of, making an investment that could be, a critical points to watch out for? I think those are some of the key topics I'm excited about.

Danny Levine (Producer)
Well, if you're all set,

Neil Littman (Host)
Let's do it one, welcome to the show. I'm incredibly excited to have you with us today.

Juan Scarlett (Guest)
Thanks Neil. Thanks for having me.

Neil Littman (Host)
You and I have been friends for many years now, we share a lot of, personal interests, but also professional interests in terms of investing healthcare, particularly early stage investing. Today we're going to talk about your relatively new role with OneValley ventures, its role within the OneValley ecosystem. Before we get into that, I'd love to dive into your background. You've been an early stage investor since your days at passport capital, early stage investing, I think in many ways it is its own unique animal. So would just love to understand. What attracted you to this asset class? What you did at passport and your journey to where you are today with OneValley ventures?

Juan Scarlett (Guest)
Yeah. Thank you. No, absolutely. I've been investing in venture capital in one form or another for about the last 14 years and working in your technology research in some form, usually on the investing side for the past 20 plus years, I came to the early stage as through passport capital, which originally my position, there was really more focused on growth in pre IPO stage investment opportunities, your passport capitalism multi-strategy investment firm, and in those days was also, in addition to making a number of a public strategy, public market strategy investments was also focused on investing in late stage privates and getting access to interesting high growth private companies prior to, them making their way to the public markets like everyone does today on the public side. So, past what I've been doing that I think we're probably about four or five years prior to me joining and have had some good success and wanting to do more.

Juan Scarlett (Guest)
I initially joined to help that particular strategy. While there, started taking a look at earlier stage opportunities that were coming organically by way of, the passport broader network and by way of a passport capital that jumper banks network as well. That then led us to developing a strategy that John had already started down the path of, making some smaller private investments at the early stage. We started that then led to the development of his family office, nimble holdings, and then to, to nimble ventures itself, which is where I really started to cut my teeth on particularly early stage investments. It was really seed versus central seed rounds through early expansion St rounds. And, so from that point, probably 2014 ish through 2019 led the early stage investment operations for nimble. We're fairly active early stage investors, really working a lot with other seed stage investor partners, the traditional VC funds, and in some cases identifying through our own founder networks and investment opportunities and an executing on that strategy.

Juan Scarlett (Guest)
And, and that's some great success there. And, and I think over time, we started to look at what the next stage of that particular optical platform was going to be. And, there wasn't really as much alignment with what I wanted to do with my next stage. John and I started talking about what, what that next stage for both of us can be. And, and he was very supportive of, of resource spinning out and launch my own thing. I, I spent a little time, really looking into, launching my own fund and then actually came to meet the folks at OneValley, which was then GSV labs and really started to get to know that platform. And, and from there, I started to talk about how we could potentially develop in early stage investing platform before for one that sits on top of OneValley or collaborates with OneValley to take advantage of all the great deal flow coming through that startup ecosystem.

Juan Scarlett (Guest)
That really is what led me to, to launching to OneValley.

Neil Littman (Host)
I want to dive into OneValley, but before we do that, I want to talk about just the early stage venture ecosystem the asset class. I mean, as you said at passport, you initially focused on more growth stage pre IPO companies. I tend to think of kind of where you sit now and you're focused as almost a distinct asset class from later stage venture. Do you, do you think that way too, or do you kind of lump, all venture together as one animal and, within that, like how do you think about stratifying risk, within the early stage ecosystem specifically?

Juan Scarlett (Guest)
No, you're absolutely right. They are two very different indistinct asset classes. I, and I think, investors in those asset classes look at it that way as well. Although you will find, a number of the, the larger venture capital firms obviously have, some exposure to the very early stage in addition to a middle mid in later stages as well. They definitely look at them as distinct opportunities and certainly with different risk profiles and I, and I do at the same and having spent significant amount of time invested in both, they are incredibly different, and certainly the way you look at them, it's incredibly different as well. So, I mean, I think of early stage, certainly as, as early as, two or one or two founders or multiple founders, with an interesting idea, but when I've done nothing else, other than, talk about that idea with a bunch of people in their network and figure out whether or not they could actually get all the product that makes sense, from that early all the way through, you've got, when you've launched the product, we selling it to customers.

Juan Scarlett (Guest)
Now you're trying to figure out whether or not your metrics work and whether or not you can actually scale a scale, go to market, in a profitable way, at some point in the near term and everything in between. That that , pre-seed even pre-seed all the way up through, series a is where we, where we focus on now, that's not one battery ventures is focused.

Neil Littman (Host)
And, and won. I always like to ask this question, I don't want to put you on the spot, but right. I mean, you're a professional investor in the asset class, right. So, you know, institutional investor deploying capital. I mean, how do you think about this in terms of your own personal portfolio? We do. Do you have personal exposure to this asset class? Do you think it's too risky for individuals? Do you think there's a place for it within a well-diversified portfolio? Love to get your thoughts on that one?

Juan Scarlett (Guest)
Yeah. I, I would say that has really changed a lot, probably over the last decade. I think, for one, you really could access this asset class, as a personal investor, unless you were a high net worth individual and an accredited investor, now there's obviously a lot more platforms, certainly like Bio-Bridge that give investors, individual investors access to this asset class in a very meaningful, real way, which is fantastic. I do think Pluto as if you're an investor, a personal investor, look at your portfolio, if you're looking at a portfolio of the restaurant opportunities, certainly I think early stage, deserves to be part of that portfolio. I think your own appetite for risk, really dictates how much that's a that's the class should be, and as part of their portfolio, but, but in my own personal one, it certainly does. It certainly does it, does, it does exist within it probably a little too much, just that exposure.

Juan Scarlett (Guest)
I closest to this ecosystem and closest to the founders, I've always obviously had a, the ability to access some great founders and in some, in some cases certainly put some of my own money to work, in very small amounts, but certainly as both angel and obviously as participating, alongside my own investment efforts, both OneValley and in prior firms as well.

Neil Littman (Host)
W one, let's take a dig into OneValley . So, so you mentioned sweet spot is identifying pre-seed seed stage opportunities. I mean, you guys have built a, I think a really robust network of entrepreneurs, of innovative innovators, really this global ecosystem, I guess I would call it for lack of a better term. Can you talk about that ecosystem and how you guys are trying to really democratize access and democratize the landscape for entrepreneurs?

Juan Scarlett (Guest)
Yeah. Thanks. So thanks for that question. Yeah. So, so absolutely I think the ecosystem is, is absolutely very vibrant and a lot larger, I think, than a lot of people would think. Even that I knew at the time when I first started to get involved with, with one bout of the company, but it, it was launched back in 2012 as by GSP, as GSP capital, which was, GSV stands for global Silicon valley. Even from those days, the idea was at GCP capital, which is, which was a a multi-strategy investment firm that launched GSP labs as its early stage innovation arm. Even back in those days, the idea was to bring this incredibly vibrant ecosystem that we have always seen in Silicon valley to the rest of the entrepreneurs around the world and the rest in the investor community around the world. That was the original idea in GSP lab was that you, that very early stage platform within that, within the GSP capital ecosystem and, originally I believe GSP labs was really more focused on providing enterprises enterprise partners of GC capital with access to innovative technology and innovative technology processes in a variety of different ways that over time grew to this set of resources that the GSP labs now, OneValley built specifically for founders and early stage startups.

Juan Scarlett (Guest)
And, some of those resources included, at a basic level, coworking spaces in multiple cities, an online platform, but both offline and online platform that included, startup education, ledge, ledge base of best practices, a community of, of tens of thousands of other founders that were able to be accessed, access to mentors and advisors and access to investors that were interested in early stage. Also, a program of 80 plus events every year that included. We started education and networking events, fireside chats, pitch nights, focused on various themes. Also again, that access to enterprises for partnership opportunities for stage startups as well. Over time, they also developed, a B2B solution that further enlarges the ecosystem that OneValley supports. They, this, this passport online platform that they have that, that has been now used by, I think it's 35 to 40,000 startups that are active on the platform currently directly.

Juan Scarlett (Guest)
They're accessing these different resources in a variety of ways, but they also supply that platform and provide that platform passport S to other businesses to enable their own startup community building and businesses like universities, foundations, other large enterprises that are trying to activate their own, startup started ecosystems in their own sectors and then also other investors as well. So, all those other resources, what are the resources that are applied as well. The guys that went out would kill me for not mentioning is that, the startups who actually access the platform and subscribe to the platform actually also get access to what they call perks that's perks, which are these, incredibly valuable discounts on enterprise applications and business applications that start already used or want to use obviously access to, AWS and Azure and Google and then a number of different applications like air table and Brex, et cetera.

Juan Scarlett (Guest)
And so all those things are available. It starts in the platform and are being used by source and platform. And, and again, in a very direct way, that ecosystem includes, 35 to 40,000 startups in their founders now directly. Then, the foundations and universities, et cetera, who are using the pathway or less, then also expand that the reach of that ecosystem by another 150 plus thousand founders worldwide. It's a very vibrant ecosystem that has over as over the last kind of five to seven years, birth, a lot of different and amazing startups that historically when valley has not invested in it, hasn't had a meaningful way to invest in. That is what led to the, the founding of OneValley ventures.

Neil Littman (Host)
Well, I, I actually didn't realize the ecosystem was even quite that big, as they often say, it takes a village to raise a startup. I think you guys have built more than a village, more like a mini city, if you will, and, across different geographies. I think the other thing that's super important to realize is it's, it's great to connect entrepreneurs and super important to connect entrepreneurs with, advisors and other folks, but it's really also important to connect them with peers, right? Entrepreneurship can be a lonely road at times. So, having a network of peers to talk to it can be really critical as people are going through the rollercoaster ride of entrepreneurship, because there's, there are always ups and downs. It's never a linear path. So that's really cool. I want to now talk about what you the venture part of what you guys are doing.

Neil Littman (Host)
Can you, can you talk about your evaluation process? What you're looking for in terms of, making an investment, we have a lot of entrepreneurs who are listeners of the show. We have a lot of investors as well. What is your evaluation criteria that you're looking for to make investments in companies that come through your ecosystem?

Juan Scarlett (Guest)
Yeah, yeah. So, so when I should say we have a fairly broad mandate, the companies that we invest in don't necessarily have to be sourced directly from OneValley. Although we certainly believe that, that we have a distinct advantage and being, within the OneValley ecosystem to defining those incredible companies before other investors do, but, but we also will be looking at other investment opportunities out at originate outside of the OneValley ecosystem, and then using the one value system to support those investments as they mature. But, but in terms of the types of investments that we're particularly interested in, we're really looking, like every other, probably early stage founder or investor, we're really looking for, really dynamic founders, that are, that are really attacking these very interesting problems in massive or potentially massive markets and in a differentiated way. And, and more specifically, we don't necessarily have a, a sector focus, I would say, but certainly would just by way of the way technology has developed over the last, your last five to 10 years, every company that we see that we're going to be highly interested in is going to be using AI and machine learning in some meaningful way to deliver, to either develop, deliver, or create distinct advantages for themselves and their customers.

Juan Scarlett (Guest)
That's really a baseline has to be there. Then, certainly, as we look up to go to themes that we're very interested in the kind of future of finance, which of commerce surely the future of health, or are very interesting themes for us who show up at work, which I think has been a big one for everyone over the last year. Kinda kind of future of transportation and logistics. Really the different ways we think, technology will in some form or another either change or enable, any enable changes to those, those different themes. I think over the next five to 10 years are really where we're focused on. But, but again, we have, we have a broad mandate and we'll certainly look at opportunities that are compelling outside of those areas as well.

Neil Littman (Host)
As you think about evaluating new investments, I mean, you, you talked about the, the team, the founders, but do you overweight, market or team or the technology more so or less so than, the other. So, some investors say, market is my most important thing. If the market's not there, then it doesn't matter who the team is. Other folks say, the team is the most important thing and others say, maybe it's the technology. There one of those that jumps out as the most important to you?

Juan Scarlett (Guest)
Yeah, that's a great question. And, and you're absolutely right. I think they're generally, if you talk to early stage investors, they typically will have a pretty big opinion one of one of those things. We'd have to think about our evaluation processes. There's really focusing on the four P's and you mentioned two of them, people, product potential and predictability, and people obviously being the founding team, your product being, what they're serving up to customers and then potential being the market and their predictability, that kind of encompassing almost everything else. The business model, the go to market, the financial performance, if there is any at that at the pre-seed or seed stage, which typically there isn't much, but that, but that's typically the way we think about it, those four major areas. We certainly do overweight people and potential more, just slightly more than the product predictability, although your product comes in a very close third, but among people and potential, I think we lean more towards people.

Juan Scarlett (Guest)
We definitely like to see, very strong founding teams, ideally with relevant experience in, in the market sector that they're, I think they're going after with a clear knowledge of the product technology that they're developing and a real, real view of what they believe their market to be and where, and how it will evolve over time and how their solution fits into that market. That that's really, really important to us. That's not to say that we think the founding team needs to be complete, at the pre-seed or seed stage. It usually isn't. But, but certainly, if there, if, if the founding team does have, those elements out of the gate, typically that piques our interest. Certainly on the potential side, as you mentioned, we certainly love to see big markets, but as you also note, as you also would note, a lot of times we don't know when companies are launching a new product, it may be a very new product and in a market that isn't quite there yet, or at least it's not quite clear who the market, who the, what the market is or who the product is, or, but again, if a founder has a good view of what they think that will be over time, and we can get there on that view with them, then that's pretty important to us.

Neil Littman (Host)
One, how about the flip side of that coin? You talked, you just talked about what you look for, how about red flags or warning signs, or, deal breakers. Are there certain things that you see that pop up time and time again, that, or you say, oh boy, you know that's a warning sign. We're going to steer clear of this one.

Juan Scarlett (Guest)
That's a great question as well. Well, I don't know that there's necessarily a hard deal breakers other than honesty, I mean, we certainly want, founders, we wanted to foster open communication between us and any founders that we engage with. We understand that founders are obviously, selling their company and selling their vision, but we want honesty and, certainly there's some overselling and that sometimes there are some drawing of the line between overselling and honesty, but we want honesty honestly, about their background, particularly, and, and certainly honesty honestly about the company itself and where they've been and where they're going. But, but that's probably the only major one. I mean, I think, otherwise, when we think about why we haven't made investments, it's typically because one of those kind of four major areas we think about the four PS, because we didn't necessarily believe in one of them enough to score them a high enough.

Juan Scarlett (Guest)
One of those areas to make it, to make the, I think that's what makes sense from mark, just from a scoring mechanism. Typically it's from the founding team perspective, it's do we believe that the founding team can actually execute on the vision that they're telling us and if they do we think that ex the execution then will lead us to the next major milestone for the company. Again, if they continue to execute, then does the combination of those milestones, you'll build a company that looks at the track that in five years, if we don't believe that, then obviously that, that kills, that kills an investment.

Neil Littman (Host)
Yeah. I want, I think you bring up a good point and I've seen this numerous times, right. Where the honesty isn't there, or there's a misstep from the founder in terms of, divulging their background or career history or whatever it may be. You you instantly lose credibility and trust. Once that trust is gone, it's almost impossible to rebuild that bridge. So, you know, the.

Juan Scarlett (Guest)
That's exactly right. When you think of particularly when you think about investing at this stage or any other, but certainly at the very early stage pre-seed and seed stage, these are the relationships you're building that you expect to have, if not for the remainder of your career, certainly for the next seven to 10 years, then you're going to, if the company is obviously still operational and still, so moving forward, those are long-term relationships. You want to start them off on the right foot. Certainly being honest and open at the outset on both sides is key.

Neil Littman (Host)
Yeah, no, I, I think you're right. I mean, in many ways, these, these relationships are like a marriage, right? It's, it's a very, long-term in nature. It's just the nature of these investments. One, I want, wanna circle back and dive a little more deeply into the concept of, risk re maybe risk adjusted return, how do you think about, whatever you want to call it, a net present value or the expected value of these types of investments, ? Cause I I'm, I've become obsessed with the decision making process. As you think about making an investment right there's, there's the risk. The flip side of that coin is the reward. How do you think about as you're making a decision evaluating th the risk and then also the upside and what type of upside are you looking for with your investments? I mean, the, is it a typical 10 X plus return?

Neil Littman (Host)
Are you guys looking for some base hits or singles and doubles in there as well? I'd love to dive into that in a little more detail.

Juan Scarlett (Guest)
Yeah, absolutely. On the risk side, we look at it in the multiple different ways, certainly from the company standpoint again, where we are looking at market risk product and technology risks, one on the market side, will the market actually be receptive to the product, certainly on the product side, can they actually develop and launch and deliver the product to market? Then, then there's the risk of actually a performance here? Can they actually, once they actually get to market, can they actually find customers and, and execute in, in a profitable way. Long-term obviously that's not the case for early stage companies, but, but at a base metric level, can they operate profitably in, in, in selling that product to the market and are they really delivering value to their customers, such that they ideally have some pricing power so that they're not getting eroded over time?

Juan Scarlett (Guest)
So, so we certainly look at those as very meaningful risk in addition to, that, the people risks, the founding team risks, how long has this team working together? Do we think they, they themselves connect you cause again, dependent teams, those are marriages as well. And, do we think, do we believe in this marriage, do you think they can operate effectively together? So those are all very key risks. I mean, look at it at the outset. If all those things are no acceptable risk, then we look at, okay, well, what if all of these things are acceptable? What do we think the value of this opportunity can be over time? That's then where we start putting pencil to paper on, okay, well, what is the size of potential market now? What do we think it will be at five years, seven years, 10 years? What, what penetration do we think the company could have into this market and how much of the market can they take?

Juan Scarlett (Guest)
And, and obviously we're just kind of all of that significantly. It's okay, well, if the company can get, if the market is X size and the company can, and it can attain Y penetration, then what do we think the value of the revenues that they're going to generate in five to seven years be, at that time. And, and it is that meaningful, does that then give us a, a meaningful exit on our investment today and whatever following investments we do in the company, at later stages at the post-season series, they stage serious piece of age pension as well. That's how we think about it. In terms of those of, our target multiple, certainly, very similar to other, I'll tell they're very early stage ambassadors. We certainly are looking for companies that have that potential to be, one away winners in their market. And, and even these days, a 10 X return at, for an Och company early stage investment doesn't seem like a whole lot these days, which speaks to, I think the, the, the way the venture landscape has evolved, even just over the last year and a half to two years, in terms of the types of exits that we're seeing in, in early stage, late stage venture.

Juan Scarlett (Guest)
But, but certainly that, from a fun level, that's what we're looking at. We're looking at, fun level returns of, of eight to 10 X. That means then that we need to have the ability then to find, a few of those really, companies that can really hit it out of the park and return the, from the, the fund multiple times over. That means that, there probably needs to be a triple digit return or to that. So, so when we look at investments, that's do we think with this could be a triple digit return and return the whole fund multiple times over. That's the way we look at it. And yeah. And so we break down our process. That's what we're thinking about, the whole way, the whole time.

Neil Littman (Host)
Yeah. And, and one, I think there's, I mean, there's so much to dive into there and I, I I'd like just to, I guess, take this opportunity to zoom out because you've talked a lot about the, analysis, thought process that goes into making an investment, but I think that can, that is true for life. Right. And, and just decision-making processes that we use to make a lot of everyday decisions, right? What is, what is the risk? What is the potential reward, right? What is the tail risk? And, I, I don't want to go off on too much of a tangent here, but, one, you and I had a very good friend, Ben, who was killed in an avalanche about two years ago. And, and I think about Ben all the time. I think about, the, the tail risk and, Ben was one of the smartest people that I've met, one of the most caring and generous individuals.

Neil Littman (Host)
I was really mad at him for the longest time. It's like, why are you going out and taking that risk of doing, hiking in the back country and, and, and putting yourself in that position. But, Ben was an extremely smart individual. He is, he was a professional investor. So, he knew the risks going into that. So, I, I think he just assigned a very low probability of a bad outcome, but I, I, I always think about that. And, for the longest time I was angry, but I realized, Ben was a risk taker in his life, and that is part of what made Ben, and he grew up skiing in the back country. So he knew the risks. I think he just assigned a low probability of, of that type of terrible outcome happening. But I don't know. I mean, I still have trouble wrapping my head around it.

Neil Littman (Host)
I, I mean, I'd love to hearing.

Juan Scarlett (Guest)
So, so yeah, you're absolutely right. I've been, was I like you think about them very often. He was certainly one of my favorite people in the world. So, but I think you're absolutely right in the way that you're thinking about it is that, and Ben will tell you this as well. I mean, I think again, I had multiple conversations about things like this, I mean, I think there's, there is a certain value that people, assigned to do different things in their lives. It's, and a lot of that is based on what you get out of. If you're a thrill seeker, then you assign out very high value to, to seeking and, and engaging in that particular thrill seeking activity. And, and yeah, you're absolutely right. And, you think about what the downside is, if things do go horribly wrong and, and certainly he did as well, but yeah, you typically would think, an avalanche would be a low probability event if you're taking particular steps.

Juan Scarlett (Guest)
Well, one in general, but, but then if you're also taking particular steps, then you can decrease that probability further. So, so yeah, I mean, that, that's certainly something that I think about a lot, certainly as a waist to him, but also as it relates to my own decision-making in life as well. And, and as and you're probably more like me in that, we're probably more on the conservative side. Now that they're your parent, I know that you're more conservative. I've been at Baron longer. I've certainly been, certainly more conservative with regards to the types of activity that I engage in as well, both, both personally for my own recreation, but then also in my professional life, I certainly think about, how, how the next thing that I do, how that will impact your, the next 10 years for not just me, but for my child as well.

Juan Scarlett (Guest)
So, all of that leads back to, well, I'm launching an early stage fund, isn't necessarily the most safe thing to do, but, but what I do, I think again, there is a certain enjoyment that I get out of the work that I do. And that means a lot to me. And, and I think at least in this manner with OneValley ventures, I think there's a lot of, there is this incredible ecosystem that already exists at OneValley venture, is that a lot of early-stage investors don't necessarily, get, get access to when they launched their initial funds. You're usually out, really relying on your own network or relying on your ability to go out and find, these little incredible nuggets out there in the startup ecosystem. So, yeah, so I think you're absolutely right in that the way I think about my life way, I think about my professional life and the way I think about investing, absolutely assigned risk to everything that I'm engaging in and sound risks to the companies that I'm evaluating.

Juan Scarlett (Guest)
We, at the investment stage to figure out well, is that worth what we think the reward will be in five to seven or 10 years.

Neil Littman (Host)
Right. Obviously the critical component is what probability to do you assign to that risk, right? It, is it a 10% chance of failures at an 80% chance of failure, right. That's where the rubber meets the road, but, I, I go back to sorry, go ahead one,

Juan Scarlett (Guest)
No, that's a great point as well, in, in, in the way I think about that, I think the way a lot of Asian bachelors think about that as well is, you think about, the way a company matures over different stages, right. And had to print that seed stage. Okay. You're thinking about, okay, what does the next 18 months, 12 to 18 months, 24 months need to look like for this company to be successful in the next 12 to 24 months, such that, at 18 months, they're going to be able to go out and start having good, meaningful conversations with investors at the next stage, series eight, who will find this attractive, and then you do it all over again and, for TSP for the CDC and put the series D so I don't think necessarily as at the seed stage, as thinking about, the risk of failure over the next 10 years for this company, I think more about what does the risk of failure over the next 24 months?

Juan Scarlett (Guest)
Let's talk about how we get the company to, those next major milestones that will then launch into the next stage that will then launch them at the stage after that that's the way I break it down.

Neil Littman (Host)
Yeah. And, and one, that's a really, I think it, critical distinction is you break it down into those more near term milestones. I mean, it's like the age old saying, right. How do you move a mountain, one pebble at a time, one rock at a time. Right. So what is that next de-risking factor? That's gonna allow the company to go out and raise that additional round? One of the things that I started looking at more and more for our own investments is the ability of, future investors to get excited, to understand the, for us to sign for the technology. Right. It's not just that we have conviction about investing in the company and the team and the science, but will they be able to sell their vision to someone else down the road and get someone else excited about it? That something, it sounds like that's something that you guys think about and your decision-making, but it, how much do you think about it?

Neil Littman (Host)
If, if at all.

Juan Scarlett (Guest)
It, no, we think about it all the time as well. That's absolutely right. We think about, again during our or process, we think about, well, what progress does this company need to make in the next 12 to 24 months to ensure that the next stage of ambassadors will find, this opportunity as compelling as we do. And, and, and also that, we will also be in that stage of investors. We will also be thinking about making the next investment I've had seen as well. So, so that, that, that's absolutely something we think about in that as part of our initial evaluation process. Now, the big risks, multiple big risks there, one being, the company's ability to actually hit, some of those major milestones that we think they need to hit, to unlock that next stage of capital. The, the other big risk is, well, does the market both, from a technology perspective and also from a venture capital perspective change during that time, because as as you've been working with your capital as well, people's mindsets about different areas that are they're attractive changes fairly quickly.

Juan Scarlett (Guest)
And, and so, within 24 months, you can certainly have a big change in how investors think about particular, areas of interest. You could also have a market that could become too saturated. You could have, a ton of different, competitive threats that they come to market during the same time as your company. And, and maybe they reach that next stage before your company does. A lot of the investors that you would have targeted, they've already made their place. They've already made investments. Now, some firms have started to make multiple investments in, in, in the same category. And, and I figured out a way to make that work for them, but we assume that's not always, that's not going to be the case. So, so there is a certain amount of projecting and forecasting it where we think the market will be, in the next several years.

Juan Scarlett (Guest)
And, and do we think the company can actually get there before others do so that's,

Neil Littman (Host)
Well, one, we could probably literally talk for the next two days about all these topics, but I, I do want to wrap things up and just ask if you have any advice for founders, for entrepreneurs who are looking to go out and raise a pre-seed or, or seed stage round.

Juan Scarlett (Guest)
Yeah. I mean, so my biggest advice is always, obviously believe in how does he believe in what you're doing? When you are going out to raise, make sure you're targeting investors, to know primarily to save your own time, because so many founders, end up spending months and months of time really targeting the wrong investor and taking meetings with the wrong investors. Do, certainly do some research on, the, the investment, the investor fit that you think is right for you then, and then target those investors as much as you possibly can. And, and, and when, and certainly whenever possible, reach out to those investors, as much as possible until they start responding to you. It draws for me, at least personally, it doesn't necessarily require a warm intro to reach out to me personally, but, but for other investors, sometimes they do. So, if there's a potential connection you can have with your network, certainly try that.

Juan Scarlett (Guest)
If you don't have one, then just be persistent.

Neil Littman (Host)
And, and one, that's a perfect segue into a folks who want to learn more about OneValley or OneValley ventures, or get ahold of you. What's the best way to learn more and get in touch with you.

Juan Scarlett (Guest)
Yeah, well, so you can get in contact with me directly@oneatv1valley.com. And, we can, you can learn more about OneValley itself or the ecosystem, and certainly access all the amazing resources are there. The ecosystem has to offer@v1valley.com and, and you can also find our venture page there as well, if you want valley.com backslash ventures, and yeah, please feel free to reach out and absolutely receptive to helping out in any way we can.

Neil Littman (Host)
W with that one, I would like to thank you for joining me on the show today, and a really great and wide ranging discussion.

Juan Scarlett (Guest)
Thank you so much for having me. This was awesome. I really appreciate it and really appreciated the Myra what you're doing with bio verge. Certainly obviously we should all the best and, and the best of wishes, obviously with your upcoming arrival as well.

Neil Littman (Host)
Thanks, Ron. Appreciate it.

Danny Levine (Producer)
Well, now, what'd you think?

Neil Littman (Host)
I think that was a great discussion with Juan. I think we covered a lot of territory from early stage VC as its own distinct asset class. I think you heard Juan dive into a variety of reasons why that is the case and how it's different from even late stage venture. I was excited to hear about the, the breadth of what OneValley has built in terms of their ability to support founders and entrepreneurs and help them, connect with advisors or strategic partners, or, an ecosystem of other investors. So I think that was really exciting. Then, you've heard one, and I talk about just applying the decision-making process to life in general and how we can take some of what we've learned from the investing side of the equation, too, just general decisions in life. I, I think that was a really, really important topic touch on.

Danny Levine (Producer)
How do you think having a platform like OneValley has enhances its investment opportunities, but also mitigates its risk?

Neil Littman (Host)
Yeah. Dan, I think it does both. Number one, I think it serves as a, attraction for founders. I think it must increase their deal flow tremendously because it attracts founders to this ecosystem of support. Of course, within OneValley, right, that support ecosystem will actually help create successful companies. So, they're not taking a spray and pray approach and are saying, here's my investment, goodbye, good luck. They're actually trying to nurture companies and help them become successful. It's almost like a, I don't want to say a self fulfilling prophecy, but I mean, in many ways it can be right. You're attracting high quality companies because of the ecosystem and that ecosystem is leading to good outcomes for investors. I think it's, it feeds on itself. And so there's that virtuous cycle there.

Danny Levine (Producer)
Does the emphasis won places on the founding team surprise you given that founders are often not the executive talent that ultimately takes the company past larger venture finances.

Neil Littman (Host)
No it doesn't. You heard one talk, I think very articulately about the concept that, they're not planning, they're not necessarily applying a, a failure percentage to the company over its entire lifetime. What they're doing is they're breaking it down into different trenches. What it does this company have the right team in place to reach the next critical milestones to allow for that next traunch of funding to attract a diff different investors to meet those milestones. Right? It's not that the founding team needs to be the founding team that might take a company public, for example, they need to be the right founding team at this time to deliver on the milestones that will help get the company to the next level. And I think that is really critical. I, I really appreciate one's thoughts behind that. Within that framework, you heard them talk a lot about, the emphasis on the team and F the full team doesn't have to be in place at the pre-seed or seed stage, but they, they need to have the right types of people.

Neil Littman (Host)
They need to have be thinking about the positions that they need to fill to achieve their growth objectives and meet them milestones and all those types of things. So, no, it doesn't surprise me, but I think it was really valuable to hear his perspective in terms of breaking down the risk, across the spectrum of growing and scaling a company.

Danny Levine (Producer)
A lot of compelling innovation is coming from unproven talent. I think back to the earlier discussion you had with indie bio founder, Arvin Gupta, andy bios, Pope Bronson, and they're focused on graduate students, rather than the guys running an academic lab. Does it take an IFR, does it take having an eye for, and proven talent, or is it a recognition that what it takes to get a company to the next fund financing or proof of concept may be a different type of talent than getting a product to market or having commercial success?

Neil Littman (Host)
Yeah, Danny, I mean, I think that's a really critical question. And, I think there's a variety of different types of founders, of CEOs that can help create a successful company depending where that company is within its lifecycle. Just, a brief example from the Bio-Bridge world, right? We see a lot of, scientists turn entrepreneurs who are maybe the CEO initially, because they're the founding scientist and they are closest to the technology, and that's what that company needs at the seed stage, but that's not going to be the right person to bring the company, post series a or to commercialize a product. And, that person would better suited as a chief scientific officer, for example. So, there's the right skillset for the right time. I think what you heard, Juan talk a quite a bit about was, making sure that the right team is in place at the right time to meet the company's objectives and near term milestones.

Neil Littman (Host)
Not that it has to be that exact right team, that's going to stay there forever. So, I think w w what are Armand and poet talked about is, giving the, the younger generation, the young scientist turned entrepreneur a chance, and that's something that we fully support at Bio-Bridge as well. Those folks oftentimes are the ones that understand the science and the technology, the best are the ones that can go out and raise that seed round. Are they going to be the right folks to be in place to raise a series a or series B maybe, but oftentimes not. That's a conversation that investors need to have with the founding team early on,

Danny Levine (Producer)
As an early stage investor yourself, do you just come to accept risks? Do you look for ways to mitigate it? Do you think of it in the context of the life of a company or the life of your investment?

Neil Littman (Host)
Yeah. It's another good question, Danny. I mean, yes, you definitely, I would say you almost lean into risk as an early stage investor, right? I mean, that is, if you understand where, venture capital and particularly early stage venture capital, sits within the broader ecosystem, like this is risk capital. Like we should be taking big risk with this money, and we should be expecting big results, big returns, game-changing technology. If that's not what you want to do with your capital, you should not be investing in, in early stage VC. So, yeah. And, and there's a couple of different ways of thinking about it. One is, you want to push companies and entrepreneurs to constantly, de-risk what they're doing, and that's one way to achieve value, right? I mean, the more risky kill, the more value you create in many instances, but there is such a thing, as de-risking your company to such a degree that there's almost no value left, right?

Neil Littman (Host)
If you're constantly trying to de-risk everything, then maybe you de-risk away that big market or that big outcome. You definitely don't want to see that. It is I think a fine line that needs to be walked in terms of de-risking it enough showing enough progress, but still having that outsized return potential. So you can't de-risk everything away. In fact, we like to see entrepreneurs taking big risks at the early stages.

Danny Levine (Producer)
Well, until next time.

Neil Littman (Host)
Thanks, Danny.

Danny Levine (Producer)
Thanks for listening. The bio verge podcast is a product of bio Virginia Best platform buttons, visionary entrepreneurs with the aim of transforming health bio Berg provides access and enables everyone to invest in highly vetted healthcare startups on the cutting edge of innovation from family offices, registered investment advisors, and non-accredited individuals to learn more, go to bio verge.com. This podcast is produced for bioburden Bible. Use it for this podcast is provided the Curtis with Jonah Levine collect.