Mat Vogels (00:10)

Well, Josh, welcome to the podcast. Could you start with giving us a little introduction about yourself and the fun?

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Josh M (00:18)

Sure, I manage Champion Hill Ventures.

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close to $100 million under management across a number of entities, including a fund three that we're investing right now.

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I've been in venture now for 17 years and this business started as a side hustle about 11 years ago. I started doing SPVs on the side of my day job in the industry and then I turned it into a real company about eight years ago and that's who we are today.

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Mat Vogels (00:45)

Sorry. I love that. I, I'm a huge fan from afar of, of champion hill. And I think any founder that goes and looks at the website, the brands, the companies that you've invested in, I think that there's a, there's a lot to like. and it's one of part of the reason why we're excited to have this conversation today. Can you shed a little bit of lights, if you can, on the types of companies that you are investing in and perhaps the stages and check size range and some of those.

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little details there.

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Josh M (01:14)

Yeah, absolutely, thank for the kind words. So we have historically always been a deep tech investor, a bias towards atoms not bits with a handful of different vectors along which we look for ideas.

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You know, so we've always looked for just large problems hiding in plain sight as we say, things that for whatever reason have not attracted solutions, have not attracted capital or founders, but which perhaps should and could be quite valuable if somebody does solve them. We've also had an interest in just things that Silicon Valley is less familiar with, industries that Silicon Valley might be less familiar with.

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industries that perhaps are primarily located in other parts of the country that your average early-stage investor in the Bay Area does not interact with. Another great vector along the same lines is just to ask yourself, is taboo in California?

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understanding that the vast majority of early stage risk capital in this industry is domiciled in the Bay Area and so what is your typical person there not allowed to think about. That's just a great way for idea generation to happen. And so this has led us a number of areas over time.

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We're probably most well known for defense. And I would say that in the period of time that was sort of, I'd say seven to three years ago, we really nailed defense investing really before a lot of the market was thinking about it or had rotated into it.

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that continues to be an area of interest for us. know, was before in venture, was in the Marines, you know, have a lot of operational experience and just get a lot of things in that domain quite viscerally, as does my research partner Robert, who was also in the Marines, although he was in the 80s.

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Having said all that, we're interested in number of things and we have done a number of things over the years. Today, I would just say at a high level, what is fundamentally anti-mimetic within Deep Tech? What is fundamentally a zero to one type idea or founder, but that could be a large business?

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more specifically things that I've been just personally churning on lately. think anything that touches population growth is extremely interesting. The decline in birth rates, which has been going on now for 25 years.

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and is a global phenomenon and seems to possibly be accelerating is I think one of the largest problems as a society, as a civilization that we have today. So that's extremely interesting. Going out from, and we've made some investments around that I should say as well, going out from there into just health broadly, what I call vitality.

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There seems to be a difference today between the nature of the stack that people use, people who are into performance and into taking care of themselves, the nature of that stack and its legibility to the healthcare system. There's a massive chasm there. That's very interesting. A lot of things that are in the stack that people use, you know,

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and idiosyncratic basis are often quite heretical to the medical system as it exists. That's also extremely interesting. So these are just areas for idea generation, health span, performance optimization.

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this is quite interesting to us and we think there's gonna be a lot of great activity there over time. one step further into the realm where you could encounter some FDA risk, would say human enhancement is on the horizon in one form or another. And so, depending on what the company might be and what the opportunity might be, that could be interesting.

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Going in a different direction, I think as a society we have what I have termed portal fatigue. Portal fatigue, know, none of us want, nobody wants the N plus one SaaS subscription, whether you're a business or an individual or a household, nobody wants that. Getting your portals to talk to each other, or getting the right information from one to put into another.

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I want these things to be seamless and to happen without me having to touch or look at a screen and I don't think I'm alone. So that's just an interesting vector for, you know, idea discovery and founder discovery. I would also say this is one of my...

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you know, flights of fancy, you might say. But I have a little bit of a prepared mind around anything that conceals...

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something whether it's physical or digital concealment we live in this world of pervasive and growing surveillance of all kinds all the time everywhere everything you know I have have satellite companies that can take very very you know radar radar pictures of my house and one day they'll be able to take radar video I would imagine why not and

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And so just anything that conceals, that hides, whether it's a person, a thing, digital activity, I think that's just quite interesting as an idea, vector. And then of course we have a few defense ideas too. We've done defense for a while, so we have a little bit bigger. But those are just sort of the things that are most top of mind for me kind of over the last six months.

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Mat Vogels (06:21)

love it.

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I love that. love how broad it is. And I think that it's always interesting. And I always tell founders, if you can find, there's kind of no middle ground. I think, I think you can find investors that are very hyper-focused and whatever it is that you're building. if you're a biotech founder, finding investors that hyper-focus in biotech is great. But I also think that there's incredible value in having investors on your cap table that have maybe a specific thesis or rough kind of idea. You know, they're not necessarily.

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investing in the next enterprise, AI, SaaS, along with these super advanced bio technologies. They have some thesis that they believe in a better world or new technologies to make America great again, all these things, but.

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Having that broad sense, I think is a valuable trait that founders should look for. So thank you for painting that picture. I know some of the companies that you were mentioning and there's some great ones in there. Evan over at True Anomaly is one of my favorite people. He's a fellow Coloradans as well. So I always love seeing investors and investing in some of those spaces. let's dive into maybe a little bit on the VC side itself. I think what...

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One thing that I see founders constantly asking or unsure of is what is it like to be a VC? think when you're a first time fundraising founder, the three F's, which is a very common use case that we see for folks coming in, they have no experience or understanding of what it means to be a VC. Could you share maybe a little bit for some of these folks that don't understand? What is your favorite part about being a VC? And then also what is your least favorite part about being a VC and like opening the door a little bit?

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to potentially some of the highs and lows that you can have in this job.

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Josh M (08:14)

Yeah, my pleasure. You know, I'd say my favorite part is sort of the social aspect to this business.

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You know, anybody can, in a hedge fund, sit at desk and press buttons, right, and make trades. But this is an extremely social business, particularly, even more so at the pre-seed stage. I didn't answer your question there earlier. You know, we are a pre-seed or inception stage investor investing as early as possible. There's nothing too early for us. Do anywhere from 250 to a million bucks.

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we can flex as needed. I would say the earliest stage is particularly social. We have this, even with other managers, there's a sense of co-op petition between other pre-seed managers where you're sharing deals and also somewhat competing.

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And so very social and I like that you just build very deep relationships both with other managers and with founders themselves. And that's really great. And then you get to watch and observe as these very talented founders build pretty incredible teams to accomplish what people didn't think was possible or what they thought was difficult.

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And it's really incredible to see hyper growth, Where something goes from two people to 100 in 24 months or something like that is pretty incredible. I also really like, just we get a tremendous perspective on what's coming next. You can't get too high on your own supply, so to speak. You just have to have an open mind that you could be wrong. The future...

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will be different and very agitated in ways that we don't expect and understand. Having said that, I think as an investor you get a very broad perspective on just society, on trends, the future, and that's just very rich and rewarding. My least favorite part of the job, that's a great question, I would say...

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look we gotta manage a lot of service providers right? I've got three different sets of accounts that I gotta crack some skulls from time to time or make sure they're all talking to each other or whatever so that can be frustrating from time to time but that's just part of the job.

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Yeah, I would say that's the downside, right? Everybody thinks, it's so sexy to have this money and be able to invest it, and nobody thinks about hiring an auditor or that.

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Mat Vogels (10:37)

Yeah, think one of the things that founders maybe don't realize is that.

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their fundraising and going through that process and talking to VCs. VCs also have VCs known as LPs where they're investing into the funds. And there's a process very similar to founders where you have to be accountable, have the fiduciary responsibility, which means doing all the books and there's a lot of hoops and things to jump through. So you're exactly right. Some of the logistical pieces of running a fund are, are, are really difficult. And I have known many of investors that

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certainly like solo GPs and early stage smaller funds that walk away because of that. They're like, I just, it was too much and it's not, I can't do it anymore. And then I'm just gonna go write angel checks or something like that. But yeah, I can understand that being a big pain for sure.

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Last question before we dive into some of the fundraising pieces. What...

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do you think makes a good investor and even kind of taking it to a personal level, what do you think makes you and Champion Hill a good investor to have on a cap table? So they could be the same thing. You give the same answer for what founders should look for in a good investor. And that's also what you offer, but they could be different as well if you want to have two answers there.

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Josh M (11:54)

Sure. I think a good investor is going to have some kind of prepared mind, at least a little bit, around what you're building. we used to say back when I started my career as an LP, we used to say we were looking for experienced investors who were fully engaged.

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and that could apply across a partnership of a few GPs or it could apply to just one person. So if it's a few GPs, you want to make sure you have the old and experienced and the young and hungry in the partnership and that there's good chemistry within that partnership. If it's just a solo GP,

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experienced and fully engaged. They're hungry, they're working hard, they're not spending all their time designing their beach house or whatever it might be, managing the vineyard. You want somebody who is in the height of their career and really trying to put points on the scoreboard.

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And I think the best investors, even after they've had a lot of success, are still pretty deep in the weeds. They're not outsourcing their diligence. They're taking the calls. They're going deep in the models. They're coming to the answers and to the realizations themselves. And so, yeah, a prepared mind.

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experience, engagement. think chemistry is really important. You're going to be, presumably, things are going to work, in which case you're going be working together for 10 years. Obviously, if you're working together that long, that means it's worked very well and more capital has come in and more investors around the table. as an early, very, very early investor, you may get a little further away from the business.

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just you have something that the others who come in later don't have, which is time series data on the business and that has a lot of value, right? So chemistry, right? I think those are all important. And then I would maybe lastly say just the, you know, be sensitive to chasing a brand versus the person you're getting who represents the brand, right?

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There's lots of brands in this business at the earliest stage. know, an early stage startup is essentially in a way, one way to think about it is renting the brand of the fancy firm that might be leading the round. That's one of the reasons why that's valuable because nobody's heard of the startup, but everybody's heard of the venture firm until a few years later where that maybe inverts, right?

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But maybe the person representing that brand is not somebody you like hanging out with, or maybe they are, or maybe they have no power in the partnership, or maybe they do. You have to think about those things, right? So those are just some high-level answers. then for me, I'd say why pick me?

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Look, experience, I'm kind of the grand old man of pre-seed. I've been in the asset class a long time. I started as an LP. I know where a lot of bodies are buried. I do not have aspirations to exit this stage. I really like the pre-seed stage.

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And so as time passes, my knowledge of working with startups at this stage will continue to compound and it already has compounded. So hopefully that's valuable. I think I have an ability to think really big. That's what people tell me. I think really big and that's valuable.

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table. And then lastly, just as far as interaction style goes, I do my best to have a hands-off user interface, if you will.

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operating model.

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is air support. I'm air support, you're down in the trenches, I'm not gonna bother you, I'm not the bright idea fairy, but if you have a problem, will do my best to help you solve the problem. And if I can't, then I'll get out of the way, because again, you're in the trenches and I'm just the F-18, but I'm an F-18 with a big network and network leverage, and if you're trying to get in front of somebody, planning the next fundraise, trying to close

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Mat Vogels (15:23)

I love it.

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Josh M (15:50)

a hire, whatever it might be, then maybe we can help. So that's how I think about it.

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Mat Vogels (15:54)

I love it.

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That's a great balance. And I think that it's more rare, I think, than founders would think. But every now and then you do have an investor on your cap table. That is the idea fairy. And you'll get texts or calls at crazy hours or whatnot. It's like 3 a.m. and I wake up and I have a text from an investor with the incredible next great idea that I need to implement on my go-to-market strategy. And what'll happen is I don't respond or something and then you'll have two weeks later, like, did you implement that?

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Strategy that I that I sent over so and for any VCs listening don't do that It's it's not as appreciated it is it is tough for founders because at the same time we feel like As a founder when you raise capital from VCs that you're our gloss. There's this weird thing So when when you ask founders to do something, even if you're just giving ideas It can sometimes come off as like we need to change our whole focus on on doing that So I think the air support is a great analogy there I think that's exactly what it is and maybe the last message to founders

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is you need to take advantage of your investors when you can, especially if they're offering. So if you have a Josh on your cap table that's offering support and help, it's amazing to me how often founders don't seek it out. And I think it's for the same reasons. It's they're a little intimidated. They don't want to admit mistakes or that they don't know what they're doing. But I find that the best relationships, because you are in this for the long haul,

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are going to be talking to your cap table and the investors that are willing to help and actually having them help. So it's great to hear that you guys are on that train.

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Josh M (17:22)

Thank you. Yeah, that's right. I agree with all that.

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Mat Vogels (17:25)

Perfect, so we're gonna dive into what I like to call the three phases of the fundraising process. If founders are watching this and they're visiting the site, it's most likely because they are in the fundraising process. And one of the things that we realized is that there's not a lot of content out there for founders to better understand what it means to go into this fundraising process, especially at the pre-seed. So part of the questions that we'll go into now are to add a little bit of light, maybe some hope and some tips and tricks on how they can shine.

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during this process. We're gonna split it into three different waves. One, we're gonna call get in the room. How do you go from, I have this idea, I have this pitch deck, how do I actually get a meeting with the Josh or Champion Hill? The second is you landed that first meeting, how do you impress the people in the room to continue the conversation and go into that next phase? So it's a short step, but it is just.

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making a good first impression and having everything ready for that phase. And then the last one is just getting it over the finish line. So you've made some good impressions. You've had maybe multiple meetings. What does it like to go into the diligence process? What does it like to have those kinds of conversations towards the end and filling up your round? And then we'll have a couple of questions at the end that are more what happens next? Cause that's another thing founders never think about or understand. It's always focused on the fundraising process, but there are some things that can make it a little bit easier right after the fact. we'll, we'll dive into those.

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Let's start with getting in the room itself. When you're thinking of a founder, they're waking up, they have an idea. Do you have any advice or particular feedback you'd give to somebody on how they should look for a VC? Obviously there are resources out there and they can find these lists, but what is something that some of these founders can do in finding the right VC to even reach out to in the first place?

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Josh M (19:10)

Yeah, I would say if it was me and I was starting at zero, I would first sort of my founder buddies to say, know, who are the, I reach out to my two to five founder buddies who are closest to me and say, who are the three to five firms each that you think are who I should be talking to? And then I would like,

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you know, I would go look at is are there aspirational deals in the very broad, you know, domain that I might be in. Are there aspirational deals that, uh,

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you you could look at the sequencing of capital over time and say who were the very first investors in these aspirational deals and how can I find them? Anyways, I would make a list, I would try to make a list doing that type of research.

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try to get to at least 30 line items, right, or 20 to 30 line items before doing any outreach. And I guess my main point there is I would not rely upon some

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list that's been curated by somebody else and just solely rely on that. Like I think that's a great resource. You can look at that. But you know, that's a broad generalist resource. You want to try to tailor it back towards yourself. And then I also think you should very much discriminate based on stage. I give everybody the advice not to go to the multi-stage firms right off the bat. I think, you know,

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in many cases going to a multi-stage firm you only get one bite at the apple and if you're going to ask for that bite at the apple you want it to be for 10 or 20 million dollars or more you don't want to go to fill in the blank multi-stage famous firm to raise your three million dollars seed this is what i tell everybody if i'm at the point where they haven't already done that but many of them do it anyway but i would not do that

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If you're successful raising your first round, they're going to come to you. They're going to hear about it come to you. So I would try to develop a curated target list.

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And there's gonna be probably a lot of firms on the list that you may not be familiar with, but people have told you that they're good, people that you trust, and that's valuable. And then I would try to get warm intros. I would almost always try to get warm intros. think that is almost always better, 98 % better. 98 % of the time, that's better than going cold. Now I will say cold is okay.

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There was a period in my career when I had to do tons of cold outreach and I built relationships from that that I slept today but you know the yield is like one out of a hundred right and

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It's just not a great, it's not an ideal use of time. And so I would say if you go cold, it needs to be in a concise, highly scripted message, but then which is also tailored to the investor that you're approaching to say why you're approaching them and how you heard of them. And even like, you

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whatever it might be, like why? Because I get all kinds of cold stuff in and most of it you can just tell I'm one of a thousand that they're reaching out to and there's no nothing there. Yeah, so I would just try to spend the time to go a little deeper than just.

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you know, whatever, the Midas list. I would go much deeper than that. I would try to be a little more tailored, try to use my own network to get in front of groups and I would not rely on multi-stage firms at the earliest stage, the very first round. I would not rely on famous multi-stage firms.

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Mat Vogels (22:44)

That's great advice. I think all of that, you mentioned some, good tips on how to get in front of some of these folks as well. Is there a wrong way? do you ever see maybe it's advice that you're seeing other founders giving each other or the way that some of these founders are trying to get in some of those early meetings? Is there a wrong way to go about doing this process?

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Josh M (23:02)

I would say no like wrong way springs to mind, but I would just say like, you they're Yeah You don't you don't want to do that but Look if you know somebody that you'd like to talk to is gonna be at some event and you're gonna be there too There's nothing wrong with that, right? ⁓ I would say what what rubs me the wrong way like I guess would be like

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Mat Vogels (23:07)

Maybe showing up at your house unannounced is maybe crossing the line a little bit, but yeah.

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Mmm, of course.

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Josh M (23:26)

overly excessively salesy techniques that are that make me feel like I'm on a used car lot and not you know building a relationship that might last 10 years those usually rub me the wrong way right

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Mat Vogels (23:38)

Yeah, and I think that some of the, you mentioned cold outreach is fine, but if you are gonna do that, to not be that used car salesman, write something that feels real and be authentic with it. We get hundreds of emails per month in submissions and pitches, and you can tell right away when it's the de facto blanket, hello blank name.

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I've been following you and company name for quite some time and it's like those that those don't they just don't work. So you need to be able to be honest and authentic. So I agree. The no use car salesman is a good one.

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Josh M (24:13)

That's right, exactly.

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Mat Vogels (24:15)

Are there any pieces so in that if you're doing go ahead.

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Josh M (24:16)

I will say

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one comment. Sorry. One more comment is simply I almost always take calls with college students who reach out because they have in most cases they have no network. You know they may not have found or buddies to ask. They may not have anything of that. And also

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they are in a phase of their lives where the next three years they can have a vertical type trajectory depending on what they're doing and who they are.

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And so like it is, it does not behoove anybody to be dismissive of college students. College students who are founders who are looking for funding. College students who are looking for job, that's a different story. Like I have a canned speech. I have a canned speech I give. But yeah, I'll say all that.

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Mat Vogels (24:57)

Yes.

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Nice.

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Yeah, I agree. I think there's the young minds and university systems we find even on the company side. I think there's a lot of innovation that's going to come out of these universities over the next five to 10 years, and it'll be exciting to see those. So I agree. That's a good one. So if you are a fundraising college student, there's some angles in here. What about in some of those cold outreach emails and things, what are some of the specific things that folks can include in that email? Like should they include a pitch deck is a question I get all the time.

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Josh M (25:21)

That's right.

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Mat Vogels (25:30)

Are there particular metrics or things I need to include in the email to get you more interested to click on it? What are maybe some specific things as it relates to what you're looking for in those cold emails or even if it's a warm intro, what are some of the things that'll help get you excited into scheduling that meeting or wanting to click in more?

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Josh M (25:51)

Yeah, when I get a cold inbound, I'm typically looking for, going back to what I said earlier, know, anti-mimetic, zero to one. I'm looking for novelty in some combination with some kind of pedigree that indicates that their founder product fit or founder market fit would be high.

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So what are they doing? Why is it different? Do they have the backgrounds to pull it off? That's less about metrics. If I get something that says, we've 247 % in the last four months or whatever, that doesn't mean much to me. That just feels like sales buzz, whatever. But who are they? What are they doing?

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Why do they think they can pull it off? Is it interesting and unique?

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The very next thing I'm gonna do is just to go to LinkedIn and see who we know in common, right? Like who do they run with? Who are their people? Are they surrounded by winners that I may know? They could be surrounded by winners I don't know, of course. But that's just like the next step, just kind of looking for, you know, you're just always looking for ways to find diligent shortcuts, right? And social proof is one of them.

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You can't put too many eggs in that basket, but it does help.

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Mat Vogels (27:09)

Love that.

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Yeah, I think the novelty is a big one. think sometimes founders aren't as specific or in some cases they're almost too humble. So they'll say that they're building something or it's a sales pitch. We're reinventing the way that people think about AI. It's like, well, okay. You need to be specific and novel. I love the idea of, of making sure that you're making it easy for people to maybe get to know you. So whether it's linking to your LinkedIn or having a profile, making it easy for folks to find you and then making sure that when they do find you.

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that you're optimizing those profiles, if you can, to the best of your abilities and making sure that it feels impressive. I love the idea of who you're running with. think that's a great way of looking at it. One thing that we get a lot of is with the pitch deck itself, is there a particular slide in the pitch deck that you think is the most important that founders maybe either forget or not, but what is the slide in particular that you're looking for leading up into the first

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meeting.

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Josh M (28:07)

Yeah, this is a great question and I didn't answer your other one which was should the deck be in the cold email? It can be, it cannot be. I prefer to get a deck. Like the first question I'm gonna say is this is interesting, can you see it send a deck if there's not one there? But yeah, what is important in the deck?

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Mat Vogels (28:13)

Mmm.

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Josh M (28:26)

I think it depends on what the company is. Sometimes it's details around market insight or product insight that they have that are just unique observations or perhaps insights into human psychology. If it's a strange sounding market, then details around TAM. Is the TAM here as big as it needs to be to have the outcome that we want to have?

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that could be important. So depending on what they're doing, I don't want to say which page of the deck is most important. The founders are the most important part of the whole thing, but it's also quite difficult to have... I can't tell you that having this incredible founder page in the deck solves that part of the equation, right? I think that the evaluation of the founders just happens in real time on calls or in person.

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Mat Vogels (29:01)

Hmm

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Josh M (29:17)

And then in terms of like, what are least important pages in the deck, I kind of dismiss pages of advisors.

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You know, where you say, here's the two founders, here's the first hire, and then here's our, whatever, two to six advisors with fancy titles or pedigrees or backgrounds, and maybe they're famous or whatever. That never means much to me. Like, if they haven't quit their jobs to join the company, then who cares? Or if they aren't planning to, right?

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You know, we have a Nobel Prize winner, a four-star general, and the former ambassador to Germany or whatever, like, that means nothing to me.

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Mat Vogels (29:48)

Hahaha.

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Josh M (29:54)

That just means maybe you're too well networked for your own good and perhaps actually you're just memetic chasing trends, right? And so I kind of tend to dismiss those things. If they're investing after-tax cash, if it's like a four-star general who's putting in 100 grand, right? I don't know that that is ever happening, but that's more interesting, right? So yeah, I'd say that's the least important slide to me.

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Mat Vogels (30:20)

That is a big

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one. think advisors sometimes it feels it's almost a predatory. It can be a predatory environment and I see a lot of founders where they've had these advisors or people that reached out on LinkedIn and it happens. So if you are a founder and you have people reaching out to be advisors and sometimes I see it as a red flag and I've seen investors that think of advisors especially if it's someone who you look at you go, well they haven't really done anything. It's not a good choice of an advisor so to speak to brag about it.

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or put it on there can sometimes be a red flag, especially if it means in the earliest of stages as a founder, you've given up equity and a cap table and then that can make things complicated. And I've seen founders that already have a board before raising money with some of these advisors. So I tend to say the same thing with founders of unless they are very strategic, they're well known and you trust them and have known them and they're going to be true value ads. That's fine. But sometimes I feel like founders too early will start stacking up advisors.

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Josh M (31:15)

That's right.

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Mat Vogels (31:18)

and it's not always the best choice.

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Josh M (31:20)

That's right. Exactly.

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Mat Vogels (31:21)

One thing that we get a lot of, and I'm a designer by trade, and so I have a little bit of a biased opinion, but I like to ask it, is a well-designed pitch deck important? Does design matter when you're receiving or looking at a pitch deck?

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Josh M (31:34)

Yeah, think it does matter. think the information in the deck is more important, but the design and the presentation does matter. And it kind of depends on the context. If something is really raw and early and they haven't been fundraising and they jammed the deck out last night so that they could talk to you about the idea, then that's fine. You don't need...

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whizbang graphics or whatever, right? But if you're running a process, if you're running a process, then you should have a reasonably appealing deck that shows you've put some thought into it. I think some of the design choices that you make kind of reflect who you are, right? And you know.

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It's not that hard to, if you're running a process, not that hard to go find some design talent to spritz it up, right? Even if you're just starting with words, know, black text on white background. You know, one thing I developed over the years is I have an aversion to decks that have Calibri as the font because it's the default font in PowerPoint.

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Mat Vogels (32:21)

yeah.

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It's so true. think that having that in there, yeah.

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Josh M (32:34)

So I just say like, you know, they didn't even go past.

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They didn't even go past the default font here. Maybe they're super geniuses, but I don't know.

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Mat Vogels (32:42)

Yeah, I always point people, I fiverr.com, there are...

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good enough designers out there for $10. mean, you could get a whole pitch deck done for under a hundred bucks. And the argument that I always have with design is that, we do receive hundreds of pitches. see hundreds of decks per month. If you do have a well-designed pitch deck, I can guarantee that it will have a higher chance, maybe not, you know, double or three X times more likely, but a slightly higher chance of just having somebody go through more slides or even look at it to begin with. And then it also is important to, if you have a

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Josh M (32:55)

Yeah.

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Mat Vogels (33:15)

design deck I think it's actually easier as a VC to surface or see the information that's most important where if I see a poorly designed deck it's more work for me to have to dig through find the content the text the numbers that I'm looking for and that's what's important I think on the design side.

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Josh M (33:32)

That's right, that's right, I agree with that.

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Mat Vogels (33:33)

So let's say

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I've knocked it out of the park. I've impressed you enough with my cold outreach email. My deck looks good. I'm going into a meeting with Josh and Champion Hill this week. What should I think of? What are you looking for as a VC in that initial founder meeting that me as a founder can start preparing for?

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Josh M (33:54)

Yeah, really, obviously we're gonna be analyzing the business idea, the market, all those things, but I'm really looking for who are they and why are they doing this, right? Why are they doing this? If they can build a multi-billion dollar business, presumably they could be doing a lot of things. So why is this the one thing they've chosen? What's gotten them excited? Why are they fit for it? You know, another thing I like.

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sometimes is like how long have they labored in obscurity in this idea maze or how long would they labor in obscurity, right, if it takes longer than they think. I like to ask, know, are they breaking a rule? What rule are they breaking, right? An industry rule, some sort of

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common, conventional wisdom type rule, what's contrary if anything about what they're doing, what do they know that others do not know, what have they figured out that others have not figured out, particularly others who may have been working in the space, whatever they're trying to solve for a while, and then how do they know, whatever the answer is, how do they know it?

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have they tried every other solution and they know all the pluses and minuses or the capital market is ignoring the trend and they figured it out and so that's all mainly about the founders these are just things I try to tease out and then just the

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the problem itself, how acute is the pain point? it such an acute pain point that if you have a good product and you can solve it, then the fish are gonna jump in the boat, so to speak, right? You're gonna feel such insane product market fit that...

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it'll just take off and run or are you gonna have kind of a convincing process where you have to make the case that it's a great idea to buy it, right? Which is less compelling.

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And then on the capital side, how much capital do they have to raise over what period of time to build how big of a business, right? I almost always ask this, it's three variables there, so it's, everybody has to stop and think a little bit. But this is very valuable to know, right? We're at the first round, how many rounds are there gonna be, what do those look like, what's the staging of the money, what does that get us to? Yeah, and then I,

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like figure out do they lift they lift weights on regular basis

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Mat Vogels (36:06)

Do even lift bro? Yeah.

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Josh M (36:08)

This is interesting indicator.

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Mat Vogels (36:10)

It is. That actually would be a good micro fund. It's like you're only investing into founders that lift on a regular basis. And even then they got to send in their squat reports and the weights and those types of things. That'd be honestly, that'd be an interesting case study. actually might seriously think about about how that could actually work. Cause there's probably some correlation there.

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Josh M (36:30)

that from one of my own founders who says that's how he makes angel decisions.

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Mat Vogels (36:33)

Nice.

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that's smart. I love that. That's great. That's great. How much do you squat, bro? Yeah, you got to come in and show me before I let you write the check. I think that's great.

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What are some of the, during those meetings, what is a green flag that when you see a founder with this trait or what they're saying, how they're presenting that gets you excited, you're leaning in and want to invest.

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Josh M (36:57)

Let's say they're thinking big, which you have to listen for and tease out. You just ask the question, hey, how big can this be? Everybody's going to say, oh, it could be huge. They're going to tell that to the investor, right? But you have to listen for the little things that they let out along the way that indicates that they're really swinging for the fences.

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That's a great kind of green flag. I think a good sense of humor is always a benefit, right? When the chips are down, they going to have like a, you know, be able to just kind of laugh about it and keep going? Maybe even little bit of dark sense of humor, like we can develop in the military.

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Mat Vogels (37:37)

Yep.

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Uh-huh.

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Josh M (37:38)

and

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ability to appreciate that. Yeah, and then just other references. When I say anti-mimetic, have they heard that before? Like just things where they might key in on things that I say that just indicate maybe like a shared cultural awareness of how to think about startups, right?

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Mat Vogels (37:57)

On the other side of that, what is a red flag that when you see a founder present this trait or in this way, it kind of gets you leaning back a little bit and you're counting down the minutes until the meeting's over.

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Josh M (38:09)

you know, excessive name dropping for FOMO purposes.

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that doesn't really do it for me. usually feel the opposite. You know, in many cases the name will be dropped and I'll say, yeah, I know that guy. If I text him, what's he gonna say about you? But like, know, I don't know, pick a, pick a, I don't know, pick a famous tech.

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Super Angel, Guru, famous tech person type, you know those folks have a totally different set of return hurdles than a venture firm does, right?

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not picking on them. mean, if I shut this down and retired, I'd be in the same boat. What I mean is a venture fund has to return the whole fund before carry gets generated. That's not the case if you're just investing personal capital. You might be thrilled with a 10X. You might be thrilled with a 10X. And so there can be some misalignment there. So I don't necessarily know that it means as much as people might think it means to say,

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I don't know, just pick on somebody like Naval. Naval's a great investor, a great guy and so forth. But I don't know that it means that much to say Naval's investing, are you in or not? I don't know that that means a ton. There's a signal there of some kind that's interesting, but I don't know that it's like, wow, yeah, I got a wire today.

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Mat Vogels (39:29)

Yep. There's the FOMO.

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kind of creep is definitely something I see founders do quite a bit. And I think the biggest piece of feedback there that I see quite often is don't lie about it. It happens a lot. So like where founders will, lying is maybe not the right word, but maybe they ran into somebody at an event and then they're putting them in their pitch deck as somebody that was very excited about what they're building. And to your point, it's a small community. VCs typically know each other decently well. And to text another VC or somebody, we're willing to work with each

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other on those things. And they'll be the first to admit, I don't even remember that person. And it's a double negative. It's not worth the mention if they cannot sing your praises. So you definitely don't do that. It's a it's a major red flag and can bite you almost 100 % of the time. I've never seen it work in your favor if it's something that you're trying to push on. So I agree. I think that's a that's a big one.

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switching or kind of the tables a little bit. What are some of the questions that me as a founder should ask you as a VC during those meetings? So let's say that things have gone well before we hang up. If there's time, what are some of the questions that founders should ask VCs in this process?

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Josh M (40:39)

I would say you should be evaluating the VC in the same way.

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know, what types of successes they've seen in the past, of their successful deals, what do we remind you of? That would be a good question, right? There can be a rich answer there. I would also say like, it would be very useful for more founders to think about how they present the company and the opportunity.

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by working backwards from what returns the venture fund of the person that you're talking to. If we put a million bucks in today, let's say we need to turn that into $100 million.

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So what has to happen for the million dollars that we put in today at the price that we're roughly talking about? What has to happen for this to be worth $100 million, including some dilution along the way, right? So that implies a certain size of outcome. And so then just work backwards from that. To get to that size of outcome, how many customers are we gonna have, whatever the business model is, how many customers are we gonna have?

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Like, what's the sale cycle? How long would it take us to get to this? How much capital do we need along the way to get there? So I answered the dilution question. I think if founders can put themselves in VC's shoes, I just don't think, this is not difficult. I just don't think a lot of people know how to do it or think about it. It's not difficult at all. But if you can actually work through that sort of mental model yourself and present the opportunity that way.

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I think it pays huge dividends because it allows you to talk to the investor in a better fashion with more confidence. So that's something I would do.

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Mat Vogels (42:16)

I love that. That's great. So let's pretend that again, knocked it out of the park in these meetings. Champion Hills understood you're interested. Let's move into the diligence process phase. So this is typically, it takes longer, I think, than founders think. They assume it's going to move fast. Sometimes it does, but it can be a real drag in the middle and it's certainly not guaranteed. Can you maybe shed some light for some of the founders out there of what happens during this process?

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where let's say Champion Hill is interested, but you need to get to conviction. What should founders be prepared for during this process? And it's probably a big answer, but what should they think through as they go into it?

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Josh M (42:58)

would say for us.

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We try to come to rapid yeses.

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generally it turns into sort of we're chasing down and getting comfort and conviction in like one or two things, right? Like, you know, maybe there's like a little bit of market work we want to do to like, we're sold on the team.

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think they can do it but we want to go do a little bit of market work on our own. Alternatively, like we like the team, we think they're great, but maybe we need to do some reference calls on them just because of the channel that they came in. Like maybe the channel is a little less warm. We just want to know who they are better, know what makes them tick better if we can. But meanwhile we're not worried about the market. We know the market's great, right?

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maybe we need to try the product or maybe we need to go try other products. Maybe we need to go try competitive or the incumbent products to just understand is the opportunity, is there as little competition as we think there is, right? Maybe it's worse than we think it is. And then I think meeting in person is important. It doesn't happen all the time.

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That's how the industry at this stage has evolved. But if you can make it happen, you should on both sides, right? Yeah, so just being willing to get on a plane and make the day trip and even meet in the middle of the country if you have to. You can meet in the DFW airport. But I think that's important. When you have the time and the window to pull it all off, I think that's important.

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Mat Vogels (44:18)

Yeah. Yeah.

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Yeah, the face to face piece is an accelerant for sure, especially if you can meet in person. There's so much that you as a VC can understand and learn about a founder during that phase. The hard part I think about this phase too is different VCs are going to have different things they're looking for. And I always call it, it's a race to conviction. Your job as a founder during this phase is to get

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these investors to conviction, meaning that they're convinced they have some sort of conviction that your product, your vision of the future could be a reality. And there's going to be a bunch of variables. Some VCs might have one thing that they're looking for to get to conviction. Your job is to figure out what that is and then drive them to it. In other cases, and there's no right or wrong way, some VCs are going to need more conviction. They might have a laundry list of things, but your goal is to during that process, figure out what that

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means drive them to it, give them everything that they need and have that relationship back and forth. The one thing that can happen during this phase, and I'm curious your thoughts on it, and I'm curious about how often maybe you see it, because I think it's common with good deals when a founder gets to the point where they're getting close to being maybe oversubscribed, maybe they are oversubscribed and they're kind of in the final phases of picking.

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What are some of the things that you mentioned earlier, what makes a good investor, but maybe as they're approaching the finish line and they only have a few different spots open, what is some advice you should give to founders that are thinking about these decisions and should they increase the amount of money that they're raising to squeeze people in? They're gonna get a lot of pressure to do that. What type of things should they look for in those final investors that are maybe coming in if they're trying to pit them against each other?

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any advice for founders that hit that, because it is common with good founders. It's a nice problem to have, but I find that it is the actually the most stressful part of the fundraising process is that phase. It's the all of a sudden the tables have flipped the founders now in a little bit more in control, and it means that they have to potentially let some people down. And it's kind of a good problem to have, but a problem still.

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Josh M (46:29)

Yeah. I would say the things I would think about would be who do you get along with the best and how well can they help with follow-on capital and so specifically you know who do you think are your most likely sources for your next one to two rounds and then

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who, the people you're talking with, how many deals have they done with those other firms, right? And who specifically do they know at those firms? that's really important, I think. Because when the next raise happens, I think the more that you run it as a very planned process with your entire existing cap table engaged, the better the outcome will be.

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And in terms of just like, you know, should you increase the size of the round and so forth? If it's a very small round and you're comfortable taking a little more and you're comfortable with the additional dilution, then you know, it's not a terrible idea just to have more champions out in the marketplace helping you. Alternatively, you can say, look, we...

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talked about it, we're only going to take you know four at 16 and that's it. But you you can stay in touch with others and the beauty of safes is that you can tuck more capital in.

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time, can say, we're probably going to be in a position to add another million bucks over the next six months, probably at a slightly different set of terms, but why don't we just keep getting to know each other and see how it plays out. The beauty of safes is you can raise them on a rolling basis. Obviously, that can turn into its own whole animal to manage. There's a couple different ways to think about it.

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Mat Vogels (48:02)

Yep.

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You mentioned the, I see this commonly. I did this when I was fundraising as a founder where we did the safes in multiple tiers almost, and we made that clear going into it. Is that something that you'd recommend to founders? There's obviously some pieces on the back end of it that make it a little more difficult from a cap table management when you do raise a full equity round. But I found that it is a decent strategy to add a little bit of urgency and to have this tiered structure.

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But I've also found during that process that a lot of VCs don't like it. It's really difficult for a VC to get, know, last week it was this price and even if I missed the boat, I don't want to write a check knowing that last week it was 10 % less. What are some advices? As founders go into the fundraising process, a tiered approach is something that is in some cases recommended. What are your thoughts on that? Should founders think through that?

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Josh M (48:56)

Yeah, just think if you do that, I agree.

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say 12 I thought you said eight he's like no no eight was last week Josh typically I mean that's gonna hit different personalities typically for me it typically makes me want to walk right just say like well this is a far more transactional person related to how relationship-driven I am and hey maybe I missed this one I'll go find the next one

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But I would say look, yes you can tier, and it really just depends. I would say like, you could say we're gonna raise up to 500 at a low cap, and it's mainly gonna be friends and family and angels, and that's just the way it is. And then we're gonna raise the next two million at a different cap, and that's gonna be more of the institutional pre-seed round. And then if you're,

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If you're the investor and you get there early, might say, look, I want to take the rest of the 500, whatever's left, and blend that with the 2 million that you had in mind. Or you could propose something else, right? It just depends. But yeah, would say, generally speaking, it's a turnoff for me if somebody says, we... Yeah, I remember, I had a founder...

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We actually made a couple of very high value intros for him and then he went a little quiet on me and then he got back and he said, hey, the round's kind of full now but you can take 100. And I had indicated like 500 and I was like, no man, I'm out. This is a bad signal of who you are as But no big deal.

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Mat Vogels (50:32)

Yeah.

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Yeah.

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I think, yeah.

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Josh M (50:37)

I'd say you gotta be, I think it's best if you can tie, it's best to tie increases in value to milestones of some kind, right? And the milestones other than we just raised money.

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You know, like a product milestone, a customer milestone, right? And time helps as well, right? Like if the price is 10, fast moving early companies, well, in six weeks, you could presumably have done something pretty important, hired another person, closed a customer, built a product, whatever. Maybe now the price is 14 or whatever, you know? That's the price you're asking for, right? You might not get it.

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Mat Vogels (51:14)

Yeah, I think that the important part that I tell founders is to be open and communicative the whole time. can't, you can, but to go to Josh and say, hey, you know, we haven't spoken, know, Josh is coming back from, you know, two days ago, you said it was this and now it's this. You can't.

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really do that, you should be very vocal and adamant about keeping all the investors in the loop because those relationships, not that they're tarnished, are only damaged if it feels as though it's happening in an ego-driven way or a not nice way. if you can keep it above board and everybody's involved, I tell founders to treat it as, hey, we're going out to raise, let's say, know, one million at this valuation.

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We have some plans, if we reach that, if we were to raise another 500K, which we could do to achieve these milestones in addition to the minimum that we need at a million, we don't wanna take as much dilution. So that extra 500K, if we get to that, will probably be at this valuation. So just having these mentalities of, you we're raising this at this, but if things go well and we are oversubscribed or all these things.

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then we might have these other, these pieces there, and then just keep investors involved throughout that process. I found that that works out well. There's at the end of the day, there's also really no clear cut way. It just depends, which is the famous VC answer. But if you can keep investors in the loop, that's at least one easy way to manage it.

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Josh M (52:40)

Exactly, that's right. That's exactly right.

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Mat Vogels (52:43)

What is one of the thinking about this phase, so during that final step in closing the round, you mentioned some perhaps ways that founders can mishandle those situations. What is a common mistake that you see founders make? And maybe during the entire fundraising process as it relates to closing the round up, what is a common mistake that you see founders make that folks listening can avoid?

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Josh M (53:05)

I would say kind of in the same vein of what we were just discussing, like being too greedy on terms, right? A little greedy makes sense. That's human nature, I would expect it. But, know, re-trading the terms at the last minute or attempting to, you know, just being a little too greedy on terms, you know.

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Yeah, would say that can make you reevaluate the entire opportunity.

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Mat Vogels (53:32)

Yep. Agreed. Let's say we've gone through the process. We've raised our capital. Congratulations. We're all happy. What is something that you should expect as a founder with the relationships that you have with the investors on your cap table? How should founders think about the relationship immediately after, but then ongoing? What's some advice you can give there?

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Josh M (53:52)

Well, I think this isn't always the case, but it's probably usually the case that the excitement level is probably never as strong again as when a VC makes first investment into the company. And so your job is to build a rich kind of multifaceted relationship with your cap table so that they can be up to speed when there are either important decisions or tough decisions to make.

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which means just regular basic updates, right? You should put yourself on a cadence of a monthly or six week update, you know, and then after a while, after you get going, you can drop to a quarterly type cadence. And I would say like in my experience, like generally if a company goes kind of quiet, sometimes it means things are really amazing, but usually...

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just busy but usually it means something's wrong.

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It's much better to ask for help early. Bad news doesn't get better with age. And so I've gotten the text on a Saturday that says, do you have five minutes? And it's never five minutes when you get the text on a Saturday. it could be, we just got preempted. What are your thoughts? Or it could be, I need to fire my co-founder.

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Mat Vogels (54:58)

Mm-mm.

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Josh M (55:05)

You want to have those conversations. You want to say, okay, what's going on? Let's talk about it. Let's kind of work through this.

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Mat Vogels (55:10)

Yep, and building those relationships is great.

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Josh M (55:11)

But

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if you're sending that text out and the investor hasn't heard from you since they wired the money seven months ago, then it's harder for everybody.

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Mat Vogels (55:25)

Yep. Yep. Exactly. what's a common mistake that you see founders make immediately after the raise? So they've just raised their first round of capital. It's a new world for a lot of these founders. What's a common mistake that you see that these founders can avoid?

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Josh M (55:39)

I would say just continuing to be primarily in fundraise mode. As everybody says, you're sort of always fundraising. Yes, that's true. You're always selling. Yes, that's true. But you have the money now and you need to be building something. so, continuing to hang out in the market.

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I would advise against too much of that. Also, I would say some founders, maybe they wanted to raise three million and they only got 1.8 or something like that. And then they're frustrated, so they kinda keep hanging out in the market and maybe they go back to others who passed sooner than they should, stuff like that. It's just like, look.

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you've got the 1.8, you gotta make it work with that for a while. When firms have passed on what you're doing, you have to give them probably at least nine months before you show it to them again.

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just because like if you don't then it's gonna be like, well I just saw this thing three months ago, right? Like how different could it possibly be today? Like you need to distinct progress and time has to pass before you go back. And.

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they need to probably feel more FOMO than they did before, if that's possible. So I would say just like, you've got the money, then you should probably go kind of dark and to the outside world, you're updating your cap table, but to everybody else, you're kind of going dark and you're just building.

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Mat Vogels (57:15)

Let's end, final question on a high note here. You've invested in some incredible companies. What are some of the traits or characteristics that you see in some of these founders or teams or companies that you think a lot of these founders that are just getting started should look to to emulate? Are there any patterns or things that you've spotted in those winners?

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Josh M (57:35)

Yeah, I would say deep, deep knowledge of a market or a problem set that for whatever reason nobody is exploiting, nobody else is building it. You mentioned true anomaly, that's a great example. Andrel's a great example, Flexport's a great example, Umbra is a great example just of...

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companies where the founder had very, very deep technical knowledge of an area where there were not many other venture-backed for any of a number of reasons, right? And then just being bold and audacious to go do it and go make it happen. I'd say it's better

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better to go very deep in one area that nobody else is thinking about than to kind of be in the scene and in the mix and

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who are all working on their stuff too, like I think just being a couple of steps away from the flagpole so to speak is very valuable. know, being away from the hype cycle. You can be in the Bay Area physically, but being intellectually away from the hype cycles is extremely valuable.

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Yeah, I think those are just high-level thoughts, right? This is how you land on something that is truly novel and maybe even monopolistic in nature.

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Mat Vogels (59:01)

I love it. Thank you, Josh, for, for taking the time today. This was, think, very helpful. A lot of founders are going to really appreciate it. It's great to get to know you a little bit more and everybody should certainly go and explore champion hill. all the answers you gave today were great to help these founders in the fundraising process as well. Where can folks find you follow you any final CTA big news or things that, you want to point people towards?

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Josh M (59:27)

Hey, thank you so much. This is great. I appreciate it. I appreciate what you're doing here. A great resource that Harpoon's putting together. Appreciate you doing it, no, know, Champion Hill Ventures is the website. You can find me on LinkedIn. can just email me, you know, get an intro if you can. But yeah, thank you so much. Just great opportunity. Really appreciate it.

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Mat Vogels (59:53)

Absolutely my pleasure. You have a good one

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Josh M (59:55)

Okay, take it easy.

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