00:00:01 moving the Neto unfound your failure of one conversation at a time I'm your host Justin Gordon and welcome to startup 2.0 by spark XYZ during each week as we give you access to some of the top investors and entrepreneurs in the country to help you think through and overcome the top challenges that startups face I think there's no better place in the country to be investing than Los Angeles what is the problem that you're solving and for who like what is that specific pain point sometimes when a company is not

00:00:29 listening to his customers and just thinks it knows better than it customers has a really really hard time finding product market fit I want to see somebody that that isn't you know this person you just feel like they're gonna they're gonna they're gonna make it work today's guest is Howard Koh a principal at Morpheus ventures which is an early-stage venture capital firm Howard is primarily focused on sourcing new investments as well as working directly with portfolio companies Howard welcome to the show I think you having me yeah

00:01:04 happy have you on here and with Morris ventures but I want to start with first is what areas is the firm focused on Morpheus is actually vertical agnostic I think we primarily focused on kind of early-stage technology companies they range from let's say quote unquote C stage two series eight is through Series B I tell people all the time it's more about maybe than what the cheque size that matters a little bit more and that dictates kind of what type of rounds they should kind of look at us for our

00:01:33 typical checks size is between like one to ten million I would say our sweeter spot I mean our newest one is probably anywhere between three to five three to seven million okay I'm in for a check sighs yeah and what is coming that you investment thesis of Morpheus Mattress I think the biggest thing I think we we always look at is scalability is is this an opportunity or this is a market that is sizable right and and a lot of times we're looking at kind of companies were you know you can reach a quarter billion

00:02:03 dollar-plus type exit opportunities so by definition the market sizing aspect of things yeah is probably the biggest thing that we look for as a either a disqualifier or as certainly I think a hurdle to kind of get across yeah and with morphus too and what is kind of like the due diligence process that you kind of use it at Morpheus measures um I think you know one of the biggest things frankly I think I think with all venture funds the team is the biggest thing that we certainly evaluate against

00:02:33 and you know as part of that we try to spend as much time I think with the CEO and Founder the founders the management the executive management as much as we can obviously a lot of times these these processor affair ly shortened or abbreviated because about by just by nature of kind of timeframe wise but we try to really spend you know multiple kind of sessions with these guys really understanding how they think about things and not just about just trying to get you know data points for the business for the company itself a lot of

00:03:09 times just getting more familiar I think with with the founder so but obviously I think we're still looking at Marc opportunities I true address will mark it you know things of that nature compared landscape and whatnot but I think the biggest thing is really trying to get you know a better feel I think for the founding team yeah I definitely deeper into that in a second but also going back just so you said different check sizes you have an arranged a little bit but jumpy between the rounds going from whether to proceed to series

00:03:35 a or Caesar excuse be like what are the big kind of biggest hurdles or challenges between those types of things as well yeah I think there's definitely different I think hurdles obviously between the seed and the series and and between an A and the B I think probably one of the biggest hurdles between call it the seed to Series A is can you really define a good product market fit right I think that's kind of what at least for us yeah that's kind of one of the biggest things we look at that differentiate between

00:04:05 more of a seed versus a series a where a seed obviously there's you know maybe there's there still in the park development yep so it's gonna be harder to see you obviously product market fit but as you get closer to and depends on you know you know whether it's deep tech or was more kind of our software or technology-driven business services type of thing you know along that spectrum I think there's probably slightly different expectations but I do think for the most part you probably have at least an early sense of a good product

00:04:36 market fit for a series day and obviously I think between a and B is just a matter of you know just strong KPIs yeah right are you in that growth trajectory are you still figuring out go to market right yeah I'm type of thing yeah makes sense and then with the DOJ's process too I mean what the business different founders you're looking at you're evaluating I mean what are some those things that make the team themselves what makes them stand out to you is you looking through all these different companies I think to some

00:05:04 extent and that's so much like that one thing stands out I think you know maybe more of what kind of what we're looking for right I think you know first and foremost I think we look for I think founders that are transparent write as much as you can because to some extent it's it's a it's a trust fact that goes both ways sure right and we we also try to be as transparent as we can yeah even during their our diligence process of kind of where they are in a diligence process kind of what do they stand kind of where and and and kind of

00:05:35 we madad eel that's closeable or whatever the case P but it also comes to the other side right which is for us to be as helpful and because we take we take pride in in terms of being much more hands-on with our portfolio companies most of us have operating backgrounds we take Beauvoir operators perspective and really working with the companies kind of post investment right and and because you know that's part of kind of what we try to provide to risk mitigate the company side and as well as for us

00:06:05 we we want to know when there's problems right we don't want to offer you have the founders or if it's me obviously a problem we want to be helpful in solving those problems right we're not there to kind of bludgeon them over the head when there's a hiccup kind of in their path in their journey we want to be as helpful as we can and we can't be helpful I think if the if the company is not as transparent so that's I think that's one thing but I think the other thing is depending upon kind of you know

00:06:32 what you what this company needs moving forward right and whether or not certain companies are more capital-intensive than others for example yeah and that sometimes takes a certain type of fountain founder right that can raise success of fonts right I mean you can argue that you know one of the biggest reasons for success early on was the fact that Travis was just an awesome kind of fundraiser Yeah right he literally out capitals like almost almost competition especially at this earlier stages so whether that's what

00:07:05 requires skill set or not I think it's a matter of matching a skill set to what the company needs moving forward whether that say you know a sales guy who really knows how to penetrate Fortune 100 customers or it's a capital game where you know there's not as big of a differentiator per se it's just who has more firepower right and I think it's really matching those I think skill sets is I think I'm much more important yeah I'm kind of in that similar vein just looking at a different way as well I

00:07:32 mean there are certain things that are an automatic know for you or like almost certainly like no isn't Majan looking at hundreds and thousands of companies like are there certain things that are kind of like okay now move on next like I'm just curious are there anything like that as well or it's more so just like the fit with well obviously we see a lot of companies in terms of you know a very cursory level where let's say we don't really even you know let's say you have a phone call with a company I have a

00:08:01 call with the company this is there's just so many variety of things that that that kind of could knock them out at that stage it's almost I think too varied too diverse but I would say at least the ones that kind of get to a point where we actually have a conversation with them type of thing I think a lot of this just you know do they really understand their market do they really understand their product do they really understand this better than anybody else right you know we as venture capitalists some extent we're

00:08:33 somewhat jack-of-all-trades to some degree we're looking at such variety of kind of type of opportunities so we really rely and we're really investing in those in those guys or those founders that they just know much more about that space that the industry more than anybody else obviously including us yeah right and I think that's I think the biggest kind of disqualifier if if we ask two questions down and the they should know yeah right all of a sudden you know that it's just you could see the the the depth of knowledge is not

00:09:08 there or lacking I think is what is one aspect I think too is pardon the pun don't a bullshitter yep right there's a lot of guys who you know you ask a question he flat-out doesn't really know but still gives a pretty you know BS type of answer right and and you sort of know it right and and be it because we just happen to know I think it's some additional data points yeah or frankly as a simple Google search would have like in 30 seconds would have disqualified that person's response right I think that's a that's another

00:09:47 kind of just easy like kind of a night you this qualifier but certainly one of those things were it's hard to recover from right I'd rather have somebody says like I don't know but I'll get back to you I'll look into and get back to you right yeah but that's okay and then you're not gonna know everything right but to back to the poll point of being transparent and whatnot if he's kind of you know BS he means on this now what's next right what's next right how much work do I have to figure out all the

00:10:16 time to kind of peel the onion a little bit right and and frankly I think we just don't have the time kind of for that and sometimes that time is so critical important for especially early stage companies yeah and with this process too I mean how how long does this process take office it's not like a set thing of how much how long it takes but for founder's we're watching and like wanting some context like how long does your kind due diligence process you can take I think it just depends I think

00:10:42 it's going to depend on I think the industry right if it's something that is more that's a green field versus something that is kind of more of a lazy business that you're trying to call it disrupt or transform you know use the utilizing technology be more efficient or or whatnot so there I think there you know a little bit different I think data points that you're able to gather quickly yeah type of thing and for the most part look at least for us we try to at least get to whether or not we believe there's something there that we

00:11:21 want to kind of get there within like three to four weeks type of thing and we'll try to indicate that to the companies right that hey we're sort of getting we may not me or not be there yet type of thing but you know we're in the right trajectory we really think there's something there we're going to try to kind of you know at least propose something anything in in your term or we'd say look this may not be a good fit and frankly I think you know we're also trying to triage sometimes really well kind of time is

00:11:53 the one thing that we can't scale yeah at least from our side so we try to as expediently as possible kind of go through the ones that make sense obviously there's a lot of times I still fall through the cracks because just everybody's inboxes are just like insane right and so we try to do the best we can but I think for the ones that I think we're that we're really on we try to be in regular communication with them so they can really figure out in three to four weeks kind of where they stand yeah yeah look haven't been the

00:12:25 entrepreneur myself on the other side I can appreciate kind of being on the limbo right on the other side yeah I sometimes a quicker no is actually a better than then even a much longer yes frankly sometimes because that could be three months down the road for but so no but you have something else that you could be more of a burden hand so I never you know dissuade I think entrepreneurs from saying I always wait to hold out for me per se like look if it's a burden has a burden hand and you can make that decision but I'm not gonna

00:13:00 kind of you know pressure you to do one or the other you're gonna do what's best for kind of you guys yeah and with more concession to I mean what is it about then that makes you guys send our different from other ones there's somebody venture capital firms now and different accelerators incubators day what is it about Morpheus ventures that it's a value adder makes you stand out for yeah I would say that I think to kind of a point that kind of we touched on a little earlier which is you know almost

00:13:23 all of us have have either started a company or or run a company before yeah right and most of us on the scene on on the senior investment team side we've all done that right and so we tend to view from a much more like I said before on operators perspective we roll up our sleeves I think probably a little bit more so we get into the weeds of you know social structure Commission type plans right we go down to go to market strategies we interview kind of alongside the CEOs for executive management positions

00:14:00 especially early on I said when the team's not complete so we and some of the other points were like how do you price enterprise software right value extraction is a very challenging thing right you know for enterprise software companies right do you have 10 going through that process of its sometimes more art than the science per se and you're trying to get as much data points as much experience as possible and trying to figuring you that out so I think that maybe a little bit I think more not say unique per se but certainly

00:14:34 I think you know a lot of the other firms may not take that perspective yeah and maybe not as much the hands-on kind of aspect I think with the companies that we do and that's probably maybe born out of the fact that we typically end up end up leading or co-leading around so most of time we're on the board of directors you know so we you know we take that pretty seriously we take that pretty too you know pretty much the heart and selfishly it's to also risk mitigate yeah right kind of our investment right so we tend to kind

00:15:07 of work with companies and invest in companies where we can be kind of more helpful than just simply the capital side yeah and how many companies have rough there you investing in here um I think what we're looking to do I think going forward our newest one is probably closer to call it anyway between 6 to 10 investments somewhere around that you have that range so we take him I think a little bit more of a concentrated portfolio kind of approach yeah we don't write too many like 200,000 quarter-million-dollar half

00:15:39 million our checks type of thing I think when we're committed to companies we're committed to the companies that's what we spend so much time yeah you can do that at that point you can actually have the time to actually do that right versus you have a portfolio you do 20 investments a year and you know how do you allocate the time to really be able to kind of spend with them to kind of help them kind of get to that next milestone so that's something that we that we're very cognizant of and so every time we look at an investment we

00:16:10 look at it as that means that's one less investments that we can make during that period of time obviously there's going to be kind of natural kind of natural selection turn and what not been proposed throughout the life of the fund right that's why I like yeah I think in any year right we're very cognizant of the fact that you know you we are resource limited yes right do so much from a human capital perspective exactly and with that to you having an operating experience an entrepreneur experience

00:16:37 like on your actual team then I'm worse than those challenges that you typically see with working with these startups in your portfolio's a lot of times I think the CEOs and the founders just don't realize how much of a time suck HR it like really is right I I caution them or warn them yeah a lot I think doing our process especially doing our closing process even even before it that don't be surprised if 40 percent or if not majority of your time is spent building your team right and I think especially

00:17:17 for the ones who are so used to being also the beedi guide the lead sales guy for their product that lead visionary every kind of for their project Lee everything for their product that they now have to rely on the team that they're recruit that's their and that they're recruiting to do a lot of that alongside of him and and and they have to be able to just be able to step back yeah right be able to let go right and I think that is a challenge that a lot of happening especially founder CEOs I think have to

00:17:53 come to kind of an understanding of and and say okay that I'm willing to do that or else it's so hard to scale a company right how do you go from a company who's seven people to company has 50 people doing you know 20 30 40 50 million dollar-plus and kind of revenue it's just remarkably difficult to do right without that next layer yeah type type of management and I think that's the biggest challenge I think that I see when I work with kind of my companies yeah that the founder CEOs really have a tough time what

00:18:28 knowing that - I mean what what are those conversations like with with you and these founder CEOs like were to try to make them understand that exact point where do those conversations like what are you trying to tell them I'm curious about that - I think it's very iterative right it's it's they're not gonna almost say go yes I get that of course that yeah a lot of them a lot I'm still want to micromanage yeah right they want to kind of be involved in everything it's their baby right right a bootstrap debt

00:18:54 to you that they've like you know let's wet in tears all right and so the it does take some time and I think the the ones that can get out of that she'll I think a bit more it does help the company overall because to some extent your runway is limited right the amount of capital raised is limited and to some extent also doing the hiring process for the executives right I think that that's a good time to continue that conversation with them right I think it gives also them more confidence because

00:19:28 we're leveling up in terms of the the the personnel kind of at the company right that they can say okay I do believe that that person who I can probably do that even better right or there will a well suited for I'm comfortable relinquish and letting go and that in that area yeah right and that's that's important I think as they start seeing the level leveling up their team yeah right yeah it gives them a little bit more confidence right to be able to say okay I'll let go a little bit here it seems like we and especially

00:20:02 if it's a collaborative process it's not us saying hey we should hire this guy right you know we generally try to serve at least I charge generally serve as assisted by a perspective a data point kind of for them we're just where they are to be helpful yeah we're not there to operate we're not there to micromanage we're not there to take over the company right we invested in them for a reason we invested him in the founder him or her as the reason why we wrote that check yeah right and so it is an iterative process you know we try

00:20:31 to kind of obviously shorten their process as you can sometimes people get it really quick and sometimes it does take some time yeah and then knowing that like obviously in your portfolio every company is not gonna be a home run they're not gonna just crush it the companies that are either are don't have to keep your eyes or just not where they want you want to be how do you have a conversation about you know it's gonna fail you know it's not where they need to shut it down like how do you help

00:20:54 them through that or help them aside like okay this property's not gonna continue I how do you have that conversation - well I think they're the realization of that is usually a progression over again it's not all of a sudden right one path oh my dear wake up one day you know this is not working sure right it's usually you know it's been three months it's been six months right of a grinder or or just nothing is really happening right right for the company and I think you do want to have those conversations

00:21:29 I think during that process hey look and you try like we're there to you know try to make it a success right we're gonna see if there's other avenues to be able to kind of get there right and so I think it's an iterative conversating they have it and I think a lot of times it's more you both come to a realization that you know this may not be the best use of their time right and and because these companies I mean that's their sole investments we have other kind of portfolio kind of companies that it kind

00:22:05 of that we've invested in right we spread our investments across the board right whereas for the founders this is it yeah right and they're making a bet with their own blood sweat and tears right yeah and to somebody say if it's not working for them they have actually much more to lose than anybody else and a lot of this I think conversations gets accelerated by simply cash on hand right if you're burning money right it's another thing when it's effectively you know you're just getting by right they

00:22:36 are there are sometimes we call them the walking dead to send a sense it zombie companies right where they're just getting by they don't really need it's hard for them to raise capital but they're not also not gonna run out of money so they can kind of just do what they're currently doing Yeah right I think those are actually has sometimes a little bit more challenging than the ones that you know what you know we gave it our best shot right it didn't happen that's what happens in early stage kind

00:23:02 of startups let's move on right and I think sometimes the simple capital in hand I think puts a finer point I think to those conversations right before my timing perspective course obviously but also from a practical matter perspective it does actually kind of help maybe that conversation along sometimes Believe It or Not exactly there's a pragmatic aspect of it yeah and then giving you a chance to cash out some of those more successful companies at Morpheus I mean where are some of those one or two companies that are really

00:23:35 crushing it at more fu spenders and like why do you think they are yeah you know I think you know if you look across our portfolio I think you know there is it's fairly diverse in terms of kind of the the areas that kind of we invested in right I think I'm one of the more in you know maybe one of more interesting ones it's like starship right it's they just at least it's more interesting you know they just for example I think I think just yesterday or the day before they just launched a new university campus at

00:24:12 Ole Miss right for robotic delivery right and we really think that you know the tunnels delivery aspect of it it's really gonna change that mean stopping the last mile but last quarter mile right of logistics right of fulfillment right and get to a point where the unit economics actually makes sense right where a user is no longer a consumer is no longer kind of trying to think between was it is it worth it to me to get it because the price point will be well why not yeah right versus a cost-benefit kind of analysis per se and

00:24:52 I think we're I think we're starting to kind of sort of get there and I think you know for better for worse amazon has certainly kind of accelerated that process for consumer expectations of fulfillment yeah an on-demand fulfillment almost so that's I think that's certainly kind of one and the funny thing is I think I would say one of our kind of I don't know how how much of a sneaky success story it is anymore safety culture right they started as basically just to check those application right but they've they've

00:25:24 grown so rapidly I think at one point they were literally growing 10 percent month-over-month in terms of just growth revenue growth I think kind of user growth and whatnot yeah we were pretty always agent we do the series a index ended up doing the series B and they and then tiger I believe did this effectively the series see okay so they've they've been just on an unbelievable ramp and if you simply look at from a sexy tech point of view you certainly wouldn't put them in that category yeah but from us from a

00:26:02 business execution perspective I'd say that you know there probably there's probably not too many companies that have that type of trajectory yeah kind of and performance projected just business but it's not just about hey users that it's but from a business metric standpoint you know paying user standpoint it's it's it's pretty it's pretty astonishing that's kind of what they were able to do yeah I mean some of us come race it yeah if they're not the sexiest companies per se but then you look at the numbers and what they're

00:26:35 doing inside oh my goodness this is amazing like I said I think you know tech for the sake of tech is really so you know for me it's not that interesting I think is fundamentally kind of what you can actually do with it right right and what you can execute kind of on kind of with it and that I think that's pretty true I think even across our portfolio type of thing yeah so even starship is like you know it looks sexy we still go back to does unit economics work yeah doesn't make sense right and I looked at the portfolio and

00:27:04 I was like that one set out right away starship oh yeah it's fun it's exciting is fun yeah and now we'll take a quick break and hear from our sponsor Breck's a big heartfelt thank you to Breck's who without their support this show would not be possible we've seen firsthand the difficulties accessing basic corporate credit without providing a security deposit or personal guarantee early on as companies grow magining expenses has become more difficult and time-consuming which is why we've partnered with

00:27:34 Breck's to offer a corporate credit card that is not personally guaranteed offers higher credit limits provides Auto reconciliation and integrates with ERPs using receipt capture Breck's is the credit card of a start ecosystem and we highly encourage you to check them out and back to the show so what industries are what areas of conde startup landscape are you most excited about right now hard um I look because we're vertically the lawsuit where we don't have any kind of specific areas where we must make an

00:28:06 investment right I think they're sort of so certain thematics I think we're looking anything much more into that we ask you just see more discussions around internally as well as come just the the companies that we're really delving more into yeah did that make sense I think logistics from a thematic area is an area that we're spending a lot more time in and we would look at the way I look at logistics I think is more not just simply from a transportation kind of perspective is really from that's a you know post

00:28:43 manufacturing out the door to the consumer or the enterprise literally getting it yeah right from that perspective right and that could be from ocean freight to port management software to warehouse management software or robotics and pick and pack fulfillment right all the way to FTL LTO with you know guys like convoys the world next Trucking's of the world and whatnot but literally is like literally everything in between right yeah and so that's yeah it's it's certainly an area I think that we're spending quite a bit

00:29:15 of time and and I think the other side is like things like digital health all right we're not we don't invest in biopharmaceuticals anything like that we don't have enough PhDs on our staff to make to make it a smart informed yeah there we go that's better that's a much better way to put it and inform decision point of view I think we it's really more how the digital the big data side the data side of things connect it can either affect outcome yeah like the care outcome and do our processes right

00:29:46 administration processes payment processes and whatnot and if you look at our portfolio and we touch upon that in a few different ways psych our health is doing it I'm a healthcare insurance perspective it's just a new mechanism in which kind of care can be provided type of thing where it doesn't change kind of the the who provides the care everything like that but does change how a consumer should seek care yeah and at a lower cost point right and it's much more to deal with the administration aspect of it a lot of

00:30:21 times more so than simply all my oh my goodness I'm gonna change I have a cure to cancer type of thing so I think there's that piece and I think bestows more on the life insurance sites more tertiary kind of involved in that but we're also in a clinical logistic automation company in Orange County that is trying to I think provide a much more efficient use of fixed assets at hospitals like there are operating rooms right or the emergency departments it's really about site time you know how many cycles can you

00:30:56 get out of the fixed asset because you know it's if you if you lose it today it's not coming back to you right right it's just is and so that type of things that we spend quite a bit of time on it I think going forward I think will apply spend a little bit more time into how 5g and called low-earth orbit can impact services software side less only on the infrastructure side per se but the impact of kind of infrastructures being available now yeah right how does that impact the different types of services I can provide it on top of

00:31:30 its be a software layer or just a services that layers on top yeah the infrastructure itself yeah it makes sense especially it's like you know Elon and Jeff are sending satellites oh yeah and and with the actual adventure landscape itself like how have you seen that kind of evolve in the last few years and where do you see that going evolving as well well I think you're seeing a lot of Cohn code later stage venture firms now going earlier and earlier earlier yeah and part of it is priced I mean from there's quite a bit

00:32:05 of capital chasing you know there's always limited sets of you know I think really good deals I would say and that and that's always been the case whether good bad or ugly marketer right but to a lot of these later stage venture guys were going and early it's just reserved them a spot right to be there when a larger financing happens yeah right and so you're seeing a little bit more of that right being kind of in effect much more so than maybe even before where are guys who would traditionally do B's and

00:32:41 C's would reach down to A's maybe even to a seed right writing a quarter million dollar check just to be on the cap so that they get the call when they're going for a larger financing yeah and that's it just to you know have a seat at the table right so we're we're definitely seeing kind of that and I think the other thing is I think there's a bit of a barbell there are ones there there are companies who could get term sheets get multiple term sheets competing offers right and there they're starting quite a bit like just get yo

00:33:13 traction right so everybody's chasing a certain group right and obviously there's I think there's there's guys in between but you're you really start seeing the haves and have-nots sometimes I think much more so and that's you know good bad or ugly that's that that's kind of pollen parcel kind of the environment that we're in now yeah everything yeah and with that too I mean with obviously them bigger funds than going down to exceed even series a seed I mean with companies that are they either have some

00:33:43 traction but have a good idea that's actually people want invest in how do they evaluate those different opportunities I think choosing an actual fund to just give them money like if they have options how what questions should they ask like how should they decide that I'd say in choosing an investment partner is like a marriage right I would say that you end up spending more time sometimes with them there even with your family they may end up spend more time with you right doing that duration right and think of it as

00:34:19 who can really be helping you move forward and really get to that next milestone I think I'd say it's more a person can you work with them sometimes life is just too short yeah right and and do you think you can have a really good product not just the fact that he's a nice guy Yeah right nice guys doesn't sometimes move the needle for you right but can you work with him and can do you think that he can be helpful he or she can be helpful for you in getting them to that next milestone right and what can they be helpful with once you

00:34:53 get there yeah right and I think that's the lens that I would always look at and look obviously you know valuation economic parameters are always I think part and parcel but I think if there's an opportunity you know to have that choice right I would look at it from same as when we invest in companies is as much the people I would say that I think on the flip side is also true you know even from the mess beside the best deals aren't always the best companies what do you mean by that you could be cheap right it could be

00:35:30 like oh hey you know well I got 20% for two million dollars yes just right okay or versus well that one's gonna cost me seven million dollars to get 15% doesn't mean that the guy you hate to money gets Winterset is it is a better investment right right that then paying seven million for 15% right you may think like what evaluation is so different you know that's just more bang for a buck but that's not necessarily true I think it I think the reverse side is I think very very much also true is if you get the

00:36:03 right partner on the other side right that can create much more astaxanthin and the day these are all paper game like like or paper paper valuations yeah what matters other than a day is kind of when you exit right you know and really given that's the end goal if you work backwards from there it's really more about who can help you kind of get there yeah right that that should matter more right I think to you and and it's really not about you know 8 10 15 even 20 percent different sometimes right and

00:36:38 the whole realm of things even on the flip side it's also true for us kind of as well right it's you know does that make sense right I think that's that's another thing if I if I was gonna caution an entrepreneur or if you have options always go with a guy who you think can help you kind of get there and a lot of times I think sometimes you can work with so the guy is a complete yep even though he's brilliant but if you can't work with you can't get that value out of him that still doesn't help you

00:37:08 right he could be brilliant but you know there's a disconnect right you want it to be I think a a something that can be productive yeah look acrimonious sometimes not not acrimonious but you don't always have to agree you actually don't want to always agree you shouldn't always perfectly agree you want that different perspective that challenges you right but I do think it's something like well he may not always be then like the friendliest guy to me but man and you know when we really get into these discussions

00:37:39 it could be heated but some stuff really good comes out of it yeah that can really move the needle for me that's actually I think even more important yeah there are particular questions that you think that entrepreneurs or founders should be asking the VCS or anything like vetting them for that like are the things that you have entrepreneurs ask you like oh okay like that's actually a good thing good to know like that they should be asking to help them in that process of choosing then you see I would always ask

00:38:06 them like Who am I gonna be working really working with like you know on a post investment basis right like who's the guy yeah right and if it's your lead investor obviously who's gonna be sitting on your board Yeah right I think sometimes people forget to ask nothing not that they forget to ask but it's not a critical point a lot of questions right there's a lot more questions yeah beyond that there's nothing I got the investment that wasn't you know obviously checkbox one to right aretha my type of thing but I do think you know

00:38:39 and sometimes you know kind of the guys they spoke to kind of doing the process may or may not be the guy that actually works with them I'm kind of kind of afterwards so I think that's critical important to actually know investment sometimes the easy part right it's really now post investment what do you got what can you guys build together I think that's always to me it's always more challenging it's exciting but it's also a challenging part okay so I think ask the question of who am I gonna be

00:39:05 working with and and frankly even if it's not your lead right find the guy who you just put on your cap table right that the reason why you took them as part of the syndicate if you had a choice yeah or as you built if you can build out your syndicate the way you would like well there's a reason why you wanted them versus somebody else right well is that guy gonna be the guy that I'm gonna be able to communicate with and how available all right your board Rose is pretty much you know beholden to

00:39:35 be you know if you do show you're beholden to be available to you to some degree but there are guys who go would go above and beyond of beyond but for the guys who aren't you know aren't they gonna be really value add as much as you thought initial so how available are they to you all right and have that conversation and understand how they work with other companies Yeah right that they've had in their portfolio I think that's a some people that sometimes don't ask that question they're just so excited about

00:40:02 just trying to kind of get to a term sheet and get to a closed deal and I get that right but some those are questions that I think entrepreneurs should ask yeah yeah and with it we use mentioned being more hands-on and Morpheus ventures then and how is your time kind of spent your personal time how you personally spend your time I day today and like in your role at Morpheus um I think as you start adding more portfolio companies I think that that time split always sometimes get more challenged right and between kind of the the board

00:40:34 directorships that you have right that your the companies are you're responsible for it also depends on timing if the company is a fundraising mode kind of time it you know it takes more time yeah right and just depending on the juncture it's kind of kind of more of a stock stop-and-start type thing so yeah I do end up spending you know quite a bit of time I think with our current portfolio companies especially the ones I sit on the board of and then obviously we're still looking for new companies right and so

00:41:06 there's a hard balance that we had sometimes I think you know sometimes it could be 70/30 portfolio knew could be and other times it could be exactly flipped it can be 7:30 just depending on kind of if the companies have hit their stride to some degree yeah that they don't need as much hand-holding we're just more haip sounding boards for things yeah right and that a lot of times we can be more efficient with time kind of management there so you know for us I think it's it's always a balance especially for

00:41:39 those of us who you know have you know kind of board directorships type of thing yeah it is a bit more of a balance yeah act managing that time and then with morphing centers how did you end up at Morpheus countries hi that's a good question you know I was born now it's good the pillar there we go so the team at Morpheus I hate me he may be one of the the interesting or maybe the more beneficial things about the team Worf is that we've been together for quite a bit of time I think almost a decade now yeah now we

00:42:15 didn't start as Morpheus we've kind of evolved into kind of institutional fund management whatnot and Morpheus is our latest fun family kind of for it so we've been together in the team kind of for quite some time before so when they first kind of I when I first joined the team I think we were much more of a merchant banking shop we were still doing much more principled investing type of thing and you know I kind of more looked after that piece but then I think as we kind of kind of got into more institutional fund management kind

00:42:49 of side of things you know I started spending much more time on institutional side at you know I was at a venture capital firm kind of before it so it was kind of you know part and parcel the experience kind of factors so it kind of naturally morphed into you know I spend now all of my time on the institutional kind of fun side of things and now we're in our second fun now type of thing so at least out of the Morpheus moment yeah Morpheus on family yeah and we mentioned the entrepreneurial background

00:43:18 operational background can you speak to how that kind of played a part into it what you do now oh yeah look you know it's funny I did venture before I did once didn't venture before my entrepreneurship kind of journey right and I would say my perspective as a venture capitalist is very different the second time around in venture capital I think the lens that you get to have as an operator yeah right building a team getting your first sale right developing vendor relationships all that stuff that I

00:44:01 think gives you I think a different perspective at the very minute gives you empathy right to what an entrepreneur kind of goes through and I'd say that you know this operator lens I I think fairly for me I think it makes me a better partner for the founders and entrepreneurs especially when I sit on their boards I understand at the very minimum or kind of what they go through I can kind of work with them kind of through that through those challenges and hopefully see around the corners that they haven't seen yet right that I

00:44:37 know it's coming because I've seen it before first and from operators but I felt from entrepreneurs perspective as well as also kind of other performance perspectives but I think it has definitely I think changed the the purview yeah and the perspectives yeah and having that perspective though to like being an entrepreneur versus VC I mean is there one that would you ever go back to and be an entrepreneur I don't know like I'd say they they excite me in both into in different ways Yeah right look I'm a I'm an electro

00:45:11 engineer right I'm an engineer by training I like building stuff yeah right I've an eight curiosity of a technology and all that stuff in a I think in a operating role in a company role you can be much more focused right on doing this one thing yeah right and I think there's there's value there it's fun doing that so you don't have to kind of go through six different you know kind of different paths at the same time type of thing and that's exciting you could build it it means something meaningful

00:45:41 I think where as a as a venture capitalist you know because we take on more of the lead role sometimes in investments we get to really build alongside of the companies and the nice part is you get to build multiple you know kind of multiple companies together right with it and so yeah you may not have the focus on one but you really also get a broader perspective across the landscape and that that to me the the innate curiosity to me it's like I'm always like to learn new things and that's actually it's actually fun right

00:46:14 because you know I I start on board of a consortium about a company and that's a lot of water clinical adjust automation coming for hospitals right on the other side yeah right you know those two for example are very different you know kind of companies yeah right and but there are just as intriguing to me for in different ways right and so I you know I don't know I don't know if I'll go back to an operator point operator role I guess it just depends I think you know life I think if you talk to most venture capitalist

00:46:48 there's no one reason or one path that people get into in venture capital right yeah it's not like Investment Banking we're just like you know it's very kind of structured and whatnot it tends to be more of a meandering path that gets there yeah right and so you know and a lot of time is more serendipitous than a planned path per se and so you know you never know what life kind of throws at you but I think for now I certainly love kind of what I do I do now on a day-to-day basis yeah and with that experience so with

00:47:20 your and the both sides of it venture capitalist perience also entrepreneur experience is there anything else you'd mentioned two founders anything else you think they should know that maybe we haven't covered yet or anything else you can think of for them one thing I always you know encourage entrepreneurs is you can't stop moving forward and and a lot of entrepreneurs who tell me well I need that capital to gotta get to that milestone I need to that a capital T just move forward and I would caution

00:47:54 them saying well if you're not getting any traction today right and if all you're gonna be doing is pitching for the next six months the same story then what's gonna change in the investors minds yeah right about the company right the best I'll give you one example literally we have a term sheet we just executed yesterday right and we had passed on the company probably about a year ago right because we thought they weren't there yet Yeah right and the company progressed right they they actually X

00:48:40 cuted on some of the things that we were concerned about right and now you know it's fast for when you're from in right we engage with them hey guys it exactly what you said you were you were able to do it and are addressed a lot of the concerns that we had right and when we literally they sang we assigned the term sheet yesterday yeah I'm kind of with them right and so I think it's that progression and I know for a fact that if they simply pitch the same exact thing to me right you know from a year

00:49:16 ago wouldn't have resonate at all right right like it would be you might as well not start the conversation right but because they had progressed there was additional data points we're like oh well okay that that bismillah gated what we were what we were concerned about right and but you wouldn't have that if you didn't try to move or and I get it some sometimes you need to capital to some degree yeah but see viewers other ways of progressing right maybe it's a strategic partnership that really gets

00:49:53 you over the hump the address to go to market concern right it's a development capital for development did you could you strike a deal because you were able to sell your vision to a guy a team that they bought in because and you gave them either options or stock and but that you were so effective in convincing them that they took very little capital upfront to kind of do it that not only goes to kind of moving forward but it goes to also your ability as a leader as a vision visionary founder to kind of

00:50:30 move the process forward you know type of thing and that's the type of also the entrepreneur that you want it back right yeah that can overcome the stars are hard right there's nothing easy about a star there's gonna be a lot of things you have to overcome it still I think entrepreneurs that have the perseverance to figure out a path if that makes sense you could all get there I think the list of the type of I think entrepreneurs to your point you know even previously when we talk about what we're looking for to

00:51:01 someone's day that's what we were looking for right as investors you want that guy who couldn't take no for an answer right who figured out a way yeah to kind of get there right because there are gonna be bumps in the road there are always gonna be pivot points those hard decisions to make right nobody's ever a straight line up up in to the right right that's that rarely ever happens so you want that guy to be at the helm right and and that goes to another checkbox you have our management team that we talk so much

00:51:34 about yeah and how how can people go connect with you and learn more about morpheus ventures yeah so so obviously you can I'm generally fairly reachable via email and I'm I try to be as as available as possible at a lot of the local events we try to be out there I mean we're not trying to hide from anybody and that's you know the funny thing is you know people are say like they're hard to reach or how to broach the funny thing is venture capitalist or I actually want to actually connect with entrepreneurs we try to make ourselves

00:52:07 as accessible as possible but we also you know hope and expect that the entrepreneurs will do the same right they are you know going to be creative about kind of reaching out to us right trying to make the effort finding kind of a touch point with us you know meeting us at an event and we try to kind of be there as much as we can obviously that's that's on our side but at least be there so that you are kind of able to reach us and a lot of times it's through kind of service writers a lot of times it's the the lawyers its

00:52:37 your accountants and whatnot that have that we have relationships with a lot of times it's a referral I think a good referral goes a long way I'd say 90% of our deals are all we Farrell deals by you know kind of people within our network and one capacity or another so it's a very relationship type business but we're also there like you know there's a couple deals like sidecar for example we actually reached out to them right I reached out to patch at sidecar you know we sort of just miss connecting a Montgomery summer for

00:53:12 example right but it was a company I really wanted to talk to yeah we reached out to them separately but because they were at least there all right I found them mm-hmm right they made I think the conscious effort of being out there right that we were able to connect right and I think things like that I think you know referral is probably the easiest way I'm always reachable by email but we froze always the best way because a lot of times they also are doing a little bit of vetting for us to see if it's a

00:53:43 good fit a lot of times it's not that you know we don't want to invest in certain things it's just it may not be a good fit kind of for us yeah and a lot of times the the the the refer therefore your Fuhrer actually knows and they are a good fit so it doesn't wasted their time the entrepreneurs time as well because it's precious time doesn't scale yeah right and if they're talking to a hundred different investors a lot of times half of it half of them they shouldn't have talked to they weren't either ready for it yeah it wasn't a

00:54:20 good fit and it was just a waste of their time that they could have focused on either building the company and we're talking more I think intimately or more in depth with the ones that would be better fits yeah comes down to the entrepreneurs to doing their homework to figure it out right yeah and then from there it's like yeah then spend your time where it matters most yeah and figure out how to get there right and you know in LA literally you could be at an event every night yeah right so many at some networking event

00:54:52 where there's an investor service right somebody it's now a fairly well networked town from a capital kind of perspective yeah right and there's a lot of guys who are well experienced with it and if you refine your pitch really really understand kind of your very pop and be able to kind of coherently kind of get that across in a very short like when people say elevator pitch it is very much that can you really understand your pocket that you can tell somebody in very short period of time like oh that's really

00:55:24 interesting you should actually connect with some like right like so-and-so right and that happens I think more so than not right a lot of people always trying to connect the dots right and they're happy to be helpful yeah that's the one nice thing about I think LA true there's a yeah there's a lot of that Howard thank you so much for taking time to come on the show today no I appreciate you guys having me thanks for checking out stir up 2.0 from spark XYZ if you want to learn more about startups

00:55:51 and investing and check us out join the ecosystem at spark XYZ dot IO