She led numerous investments at FTX Ventures and Lightseed Venture Partners and led a multi-billion dollar media business at Discovery and operations at Welcome.
Amy, come on out. I know we're going to walk all of you out, but I'm going to go through one at a time. So, Amy, please come on out and grab a seat. Amy, yeah, that's it. Come on out. Grab a seat. You should sit right here. That's great. I'm just going to go through and give you some context so you know what kinds of questions. Joining her is Talia Abramitz. She's the managing partner at Deote Ventures, a $150 million corporate venture fund that she helped launch in 2022, before which she grew the firm's AI business into a hundred million dollar book of business. Come on out, Talia.
And you can grab that seat there. I'm just making sure I can hear you all on this ear because I got my sister in my ear. And then rounding out the panel is Panache Ventures, Mike Sigielski, who he's going to correct me on that. I've just known him as Mike. Mike has been a familiar face here at Startup Fest for years. He built and exited both Ibwave and Beltron Technologies, joined 500 Startups Canada as a partner. He's been the chair of the Az Quebec and a board member of Niko and is now chairman and managing partner of Panache Ventures. So come on out, Mike.
It's Sigielski, right? Okay. So I have a bunch of questions for all of you. But I also would love it if any of you submitted questions. So, if you've ever wanted to get a straight answer from an investor about what's really going on, scan this, put in your questions. I'm going to watch them here, but I'm going to get us started. Tell me what really happens in a partner meeting. Go ahead. You can do it first.
I can start. So our investment process is usually we're doing partners are doing diligence and then it usually all culminates into an investment committee presentation by the founder in front of our entire investment committee. And then right after that, we go into the IC meeting and the founder is no longer in the room. And we're really just kind of driving into the guts of the business, what are the biggest concerns.
So the founder leaves and then you go straight into the...
Yeah, exactly. And it's usually after about an hour, there's like a yes or no from there. And sometimes there might be we need more information.
Okay. How about your meetings?
Yeah. So, this is I guess post a founder coming in and presenting. I'd say for us, we let the juniors sort of start with what they think.
You want to hear how they break down the problem and how they see things. So you're growing your team through that process. And then I would say pretty quickly, you kind of, some of it's instinctual. You either like the problem, you don't like the problem, you're familiar with the problem, there's a fit with your fund. You kind of know pretty quickly. It's like next gate or not.
Do you have a thesis that you kind of compare it against in real time or you just kind of know?
So we definitely have a thesis at Deote Ventures. So, is it the right stage? Is it aligned to the verticals that we invest in? Are they selling to enterprise? So certainly there's some criteria, and if it doesn't meet that criteria, it's right away it's not a fit for us. And then there's different degrees within that criteria. There's different degrees of likability and attractiveness within that for sure.
So do you have like a checklist or do you just kind of know it? I'm curious how for a lot of people say we have an investment thesis, but then when I talk to them over five beers, they're like, 'Yeah, we just kind of like them.'
Definitely a checklist that's ingrained in your brain. I wouldn't say anybody's pulling it out and going yes, yes, no, no. And I think it probably gets refined over time as you see some pattern recognition.
Have you ever had a junior partner say something that you were like, 'Oh my god, we completely missed that.'
Probably nothing that immediately comes to mind, but for sure, we don't all see the same things. We all see things a little bit differently. So for sure, everybody looks at the problem a little bit differently. Someone's looking a little bit more at the founding team, someone's looking a little bit more at the problem. And so you hone in on what you know and what you're familiar with. And other people do the same. So for sure, that's the beauty of diverse teams.
It's just interesting because so many people say, 'Don't waste your time with the juniors. Focus on the senior partners.' But they're, in your case, the junior is setting the stage. You want them to be able to... 100%. Yeah. Wow. Mike, tell me about Panache's partner meetings.
It's a bit crazy. What we want to do, we wanted to write the first institutional check for founders in Canada. So we see 3,000 companies a year. So we need to move fast. Our investment committee is every week. Everybody's involved in a team and investment committee. We're trying to run it fast. We will see north of 3,000 companies, invest in 15. Short investment memos, quick investment memos, very lean and mean sort of approach. And it works very well. So first check, come and see us in Canada.
So I mean it's interesting, we have a different perspective. So you're like first check, quick and dirty, large volume, find out quickly, first money in kind of stuff. You're more enterprise, can we help them as a corporate venture partner? And then you're a growing company, do you fit our thesis? What? Typically lead rounds. Everyone from seed through Series C, right? Okay. So you are doing seed rounds. You're just... But you're not doing like angel level stuff. What's a typical small round for you?
Oh, man. I mean, Silicon Valley seed rounds are like probably 5 to 10 million. So our lead checks probably anywhere from... It's like starts at 3 million and then for larger rounds, our lead check might be like 50.
I need to show you pictures of seeds at some point just to so you remember what they are, right? It's like a pumpkin seed round here. Yeah. Mango seeds. Yeah, absolutely. So, when you have a startup that you want to understand, what's like the first red flag? And I know that sounds like a cliche question, but you're in the partner meeting, everything seems to be a fit, and then something comes up and you kind of, in your gut, this meeting's over. We could just stop now. What is that for you?
I mean, I would say by the time you have an IC meeting presentation, it's kind of rare, although it does happen when a founder totally bombs it. Usually there's been intensive diligence before that, right? The way that we're structured is we have 10 partners. We're all very thematically focused. And so similarly to Talia, we are pretty thesis driven because each partner is responsible for different theses. So it means that we probably have met with most of the companies in that particular space and we've rounded out the diligence before they present. And the presentation is kind of almost like a check the box because it does culminate in a vote from the partnership as to whether we go. At the end of that meeting, you're getting money or you're not. Yeah, pretty much. But in terms of before that in the process, I would say probably founder fit is the number one reason why we would pass on something. We are trying to invest in the company that we think will be a winner in that space, and if we're not sure about that, or they don't have a vision, or just from a metrics perspective they're not leading, then that's the most common reason why we back out.
Yeah, I'd agree with founder fit. Once they've made the meeting and come through the door, they somewhat fit the thesis. So I would say that the biggest reason that we turn them down is their approach to that problem or they're not the right people to tackle the problem.
So everybody heard this before, founder friendly, founder first, blah blah blah. But at our stage, very early stage, it has to be about the founder because there's not much history. But one thing we are adamant to look into is scalability, quick scalability, because what we're looking for is a next unicorn in Canada. And if you can't scale quickly, it can't happen. One of the questions I ask sometimes, not all the times, to the founder is, okay, I want a quick answer. If you get a $50 million check from a buyer tomorrow morning, do you sell? And if he says yes, you're out. If he says no, no way, you're in. If he says maybe, that means you're going to take the check. So you're out. So we want to build a hundred million, billion dollar business, right? So that's what we do.
I'll add one more thing, which is that we do a lot of references, like back channel references on the founders. And so that is one of the reasons why late stage we might actually back off from the investment. And by the way, it doesn't mean that every reference needs to be rosy because we actually find that most founders are spiky and they get along with some people. They haven't gotten along with some people historically. But we're looking for more red flags, something around ethics or just how they made decisions in a way that maybe we're not aligned with. And so we're really digging into that on the references.
Yeah, I was just going to add on your scalability point because we're all talking about how founder is the most important, and really you probably can't change who you are. So the other reason I think we say no is capital efficiency. And particularly now with AI, you expect the dollars that you have raised to go a lot farther. And so for us, your burn multiple and understanding how far you've come with the money you've raised, that's another big red flag for us.
So the stuff that Teresa Johnson was talking about yesterday, she mentioned some amount of psychometric testing. They even have this game called Kitty Kaiju that candidates play in Roblox before they... It's like a puzzle problem solving thing. And if you don't get a certain score in that game, they don't hire you. She only just made it. Interesting. They actually have a thing for candidates where they bring them into Roblox and you have to solve a maze while building a maze behind you that's harder for other candidates to play. And that's part of your testing. So they're not just doing psychometrics, they're doing strategic gameplay thinking and stuff like that. Do you do psychometric testing on your founders? Is that like a required thing for a company?
We don't. The reality is that most of the investments that we are really trying to pursue are pretty competitive, and so I don't know if the founders would be okay with that. So we don't. We're just trying, I mean, basically our job is to assess thousands of companies a year. So hopefully we have honed some sort of muscle memory around the qualities that we like and don't like, and then hope we're right a couple times. But like Daniel Kahneman says, humans are terrible, biased. We don't make good decisions. We should just trust algorithms for stuff. And yet you're saying it's muscle memory that the person will succeed. There just seems to be an opportunity in here for investors to get more data driven somehow. But as to your point, if it's in a market where a few potential unicorns have all the bargaining power, a lot of funds now use data to actually figure out who to initially meet with. And there's a lot of different signals that get pulled into data science teams, including the work experience of this person down to the detail of the velocity in which they've been promoted, speed of GitHub commits, anything you can. It's a lot of different factors to be able to pinpoint, okay, in this field, this company and this founder has some of the strongest signals because a lot of times you're investing quite early, you don't have numbers from a revenue perspective. And so we're looking at that to help us figure out who to spend time with.
So you had asked when we were talking about this, why won't that warm intro you worked so hard for save you? I think one of you brought that up in the call. Everyone says, I got to get a warm intro to the senior partner. Why is that not going to save you, Mike?
Well, a good question. Or maybe it will save you. For you? Yeah. Well, we try to have a 360 approach. We try to get a lot of people involved. So one of the things we're very good at is finding SMEs in that field and getting to talk to this person and getting their feedback about does he really know what he's talking about in that field. And if it does, you've got a customer for them, right? So yeah, exactly. So that's a good tactic because it's win-win. The startup thinks you're doing them a favor because you're introducing them to a customer and the customer could say, 'Yeah, I'll buy it.' Definitely needs to be a customer involved somewhere. Yeah, for sure.
Yeah. I like that because people do customer due diligence. A lot of times it's the VC calling a potential customer that the company already has, but in the early stage, they may not have a lot of referenceable customers. So do you have a bank? Does Panache have like a bank of go-to-market SMEs?
Oh, yeah. Big time. And a lot of our LPs are in there. And we have a system we call them a co-investor program where we bring SMEs. So we have two questions. What do you want to invest in? And what do you know? And then we have a bank of all these people, a few hundred of them.
You have a few hundred SMEs as LPs. That's amazing. Okay. Yeah.
And then what we do is we ask the question, okay, we have this company. Want to check it out with us? Yes or no? Number two is you want to invest with us if it's good? Yes or no? What's your check size? Because at our stage, between angels and right after angels, we want them in. And if he doesn't believe in it, you know...
Does that ever cause a conflict? Like if I made scheduling software and then one of your LPs owns a bunch of clinics and they decide to invest in my scheduling software, it's going to be hard for me to sell to competing clinics because I haven't invented... yeah.
