 Okay, now get ready because I'm sure this next speaker has some stories to tell. We're about to hear from Phil Bronner, who's the general manager at Ardent Venture Partners. The venture capital paradigm was completely redrawn with the shift to remote work. An industry that revolved around handshakes and meeting rooms had to quickly adapt to the virtual first way of operating, but not only that, strategic priorities suddenly changed. Ardent invests in early stage startups that are building the future of work. In other words, they're in the business of predicting the future. Now, Phil will explore how that business was affected by a pandemic that nobody predicted and what the future of VC is going to look like. Welcome. My name is Phil Bronner. I'm a venture capitalist with Ardent Venture Partners and I'm delighted to be at remote work by GitLab and I am going to talk to you about how venture capital has changed in a remote world. The agenda for today, I'll start off and give you an overview of Ardent. Then talk through venture capital and sort of a day in the life and what we do and how that has changed based on remote work. I'll do the same for early stage companies and talk a little bit about what they looked like pre-COVID and what they look like now and what I expect them to look like over time and then end with some final thoughts. First, Ardent Venture Partners. Ardent is an early stage fund. We're based in Washington, D.C. and we focus on funding companies outside of the Bay Area. We believe talent is more distributed than ever based on things like remote work and we believe the beneficiary of that trend will be emerging tech hubs across the country and that's where we focus. We're early stage and so we focus on funding companies at the series A. These companies tend to have early product market fit, early revenue and are just starting to scale. We invest two to six million in those companies and those companies tend to raise between seven and 12 million dollars in their round. We also fund pre-seed companies and so these are the earliest stage companies. This is an individual or a team, they often have an idea, they have early product, they may not have quite sold at the customers yet. In those companies we invest anywhere between 250,000 and a million dollars and we invest in rounds that tend to be between one and five million dollars. Ardent is a thesis-driven fund and our theme is the transformation of work. To us, that looks at how automation technologies are fundamentally changing the way work gets done. There are three sectors that we focus on. The first are vertical applications that leverage an automation driver. Vertical applications focus on either an industry like financial services or healthcare or it can focus on a functional area within the enterprise. Let's take inventory management for example. The key for us is really focusing on companies that leverage an automation driver. We think of automation broadly so we love AI and ML and robotics but we also focus on things like marketplaces or digitization of the business process and big data or low code, no code. Any of the things that are fundamentally changing the way these industries and companies work. What's really important to us is that the strength and power of that automation driver is so strong that it changes the key success factors in the industry and enables new leaders to emerge and we're often searching to hopefully find those next emerging leaders. The second area is the future of work. The future of work is really looking at really labor's relationship to the enterprise and how that's changing. We look at obviously the way employees engage with employers. We also look at various forms of consulting from gig economy workers to passion economy workers and sort of everything in between. We also focus in on tools that support enterprise employees and we spend a lot of time around developers because we believe the work that the technical work that companies need done is far greater than the development talent that's out there and so we're constantly looking for tools that make developers more effective. We look for solutions that train new developers and we look for platforms that enable folks who aren't developers to do developer work like low code and no code. As we mentioned, industries and companies are changing based on automation drivers and with that the tools, excuse me, the skills that companies need to support the new way of supporting worker changing as well. We look at re-skilling, we look at retraining, we look at recruiting, HR, things that enable companies to keep pace with this new way of doing work. The last area we focus on is security and again, we look at it as it relates to the way work is changing and so 10 years ago, we were all sitting in an office and our servers were in that office and so having a firewall around the outside with access controls for employees once you were inside made sense but when folks were working remotely and the servers in the cloud, that doesn't work anymore and so you need to have things like application level security or securing data at rest or evaluating third parties that you partner with to ensure their security model is similar to yours so that you don't leave open a back door. So those are the areas that we focus on. I have been in venture capital for over 20 years as I mentioned, I co-founded Art and Venture Partners. I started out as a VC in 1999 and I was with the firm for about 15 years. We had about 650 million under management. I invested about 100 million of that. I led 16 investments, worked on a total of 20 and I was with that firm for about 15 years. During that time, I also co-founded a company that I ran for a number of years, I moved a chairman of that back in 2017 and then I started to invest on my own account. At that time is when I connected with my now partner, Phil Hurgett, who also was investing on his own account. He was a longtime VC as well. We started doing deals together and that led us to raise the fund. I'm married, I live in Washington, I have three kids, two of which are pictured here and I feel very safe with my son's Nerf gun protecting us all. So let's start off by talking about venture capital and the venture capital process. So venture capitalists raise capital and they have a pool of capital that they then invest in individual companies. And so the first phase in that process is raising a venture fund. So venture capitalists, the first phase if you look over on the left is fundraising. Venture capitalists raise money from university endowments. They raise money from high net worth individuals who often have family offices and family officers are individuals who manage the money of that person. They invest in funds as well. Pension funds invest in venture capitalists and there are other folks who invest in venture capitalists as well like corporations, etc. So venture capitalists first goes out and raises money from those people. They then close that and they then go out and look for companies to invest in. So the first phase in that process is to start to network. You know, they want to learn about new ideas. They want to learn about new companies. They want to meet people so that they can support their company's post-investment. The next phase then after you network is you start to generate deal flow and that deal flow leads to you sourcing new opportunities to invest in. Venture capitalists will often meet or engage with a thousand or 2,000 companies in a given year, but they may only spend time on 50 or 60. So it's a small percentage of the companies that they meet that they actually spend time on doing due diligence, which is the next phase. So the next phase in the process is when the venture capitalists does research on the company. And that often is a back and forth process where the venture capitalists are requesting information from the company and getting to know the founder and the founding team and the management team. At the end of that diligence process, the venture capitalists is a much better understanding of the company. But that company also has a much better understanding of the venture capitalists. And if they both agree that they should go in business together, it leads to the next phase, which is doing the deal. So in this phase, the venture capitalists and the company engage in a negotiation, which often deals with a number of deal points. What's the valuation of the company? How much is being invested? Will the company set up a board? And will the venture capitalists be on the board? There are a number of issues that go into structuring a deal between the venture capitalists and the company. In this case, let's assume that they come to an agreement and they now decide to go into business together. It's important to note that when a venture capitalists invest in a company, it's often an early-stage company. And so that venture capitalists is involved for many years to come. In some instances, that can be five, 10, and even 15 years. We often talk about the sort of deal as a marriage. And many folks think of it that way because there's a lot of ups and downs. So after they agreed to do the deal, the venture capitalists invest in a company. The final stage is the post-investment, where the venture capitalists partners with the company to help support them to grow and hopefully lead to a successful outcome for all. So that is the process. It starts with fundraising, boosts networking, sourcing, do diligence, doing the deal, and then post-investment. So now, how has this changed as a result of COVID over the last 14 months? So let's first start with fundraising. So when a venture capitalist raises a fund, they often will meet with 100, 200, potentially 300 different investors to identify the probably 30 to 50 that invest in the fund. And often, many of those meetings were in person. So when venture capitalists are raising money, they're on planes, trains, and automobiles going around to meet with a lot of these investors in person. During COVID, this wasn't possible. So many or all of those meetings moved online. So what was the implication of that? So on the positive side, many of the meetings, first meetings specifically, that venture capitalists have with potential investors are unqualified. So you may meet with someone and travel to meet with them in person and find that they're not interested in meeting with or investing in your fund. So it's inefficient. But with Zoom, it allows you to first cast a much wider net so you could meet with a broader set of potential investors and sort of qualify their interests before spending more time. Now, the negative of that is, once qualified, you weren't able to meet with that individual in person and form a deeper relationship with them. And so if you were meeting the investor for the first time over COVID, it was really difficult to get them to invest in the fund. So in the future, what do I think will happen with fundraising in venture capital? I think it'll be more of a hybrid approach where folks will look to qualify a potential investor over Zoom. But once they identify that that person is interested in investing in the fund, they'll then look to meet with them in person. So the next phase is networking. So how has networking changed? So before, VC's network all the time. And so they were often meeting with executives, leaders in the industry, potential customers, potential partners. And often those meetings were in person. You would look to have coffee with those folks or meet with them at a conference. Sometimes they would take place over the phone, but many were sort of in-person networking. So during COVID, you couldn't do that. And so networking really moved virtually. So folks attended conferences online, leveraging platforms like AirMeet. And then they also leaned into virtual sort of platforms for networking, whether it was Twitter or LinkedIn or Clubhouse or a Telegram group or a Slack channel. And those became the way that you met new people. So there were a number of implications to that shift. So the first is that the world is now flat when you move to digital forms of networking. And so the geographical constraints that you had when you were meeting people in person were gone. Friction went way down for virtual events. And so it allowed you to attend a much broader set of events as opposed to before. As I mentioned, Twitter, Slack channels, Telegram lists, Clubhouse, all these sort of virtual networking platforms became much more important and folks really leveraged them to meet new people. And the implication of that is you met a much broader set of folks, many people that you would never have met with networking the way we've done it historically. And that group hopefully was much more diverse than it would have been in the past. The other thing that was interesting, as events moved virtually, the line between asynchronous events and synchronous content and synchronous content sort of blurred. So when you think about this conference, is it an asynchronous conference or a synchronous conference? And since a lot of that sort of synchronous content that became asynchronous was recorded, it just led to a dramatic increase in the amount of information that was available. The other thing I would say is that in this virtual world of networking, content is king. And when you look at effectively networking in a virtual world, it's very different than when you're meeting people face to face. And so leaning in on content and folks that are very effective and have a skill set in that, they were very effective in networking, meeting new people, and ultimately getting to some interesting deals. And I think that is opening up the world of venture capital to folks with a new skill set. Some of the negatives, as we move to this sort of virtual world of networking, there was sort of connection overload. I found that I was meeting a broad set of folks across all these platforms, and it just became very difficult for me to manage. I attended a number of virtual networking events or virtual conferences, excuse me, but I found them to be very helpful for content, but not necessarily for meeting new people. And then also as I met a much broader set of folks, and I met them virtually, but I found that the relationships were more loosely coupled. So they weren't as tight as some of the relationships that I've formed in person. So what do I think will happen in the future? I think it's going to be a pick your poison. I think some people will be just very effective at networking virtually and will continue to do that almost exclusively. Others like myself will probably pick more of a hybrid approach, where you'll look to leverage some of these virtual platforms because we found them to be pretty effective over COVID, but also go back to meeting people face to face. And I think there will be others who will just stick to old school networking and find that to be effective for them as well. I do think having the skill of being able to really manage your loosely coupled relationships and the ones that you want to keep tight is going to become really important because the number of people that we're all engaging with went way up over the last 12 to 14 months. So now the world of networking moved virtually and you're starting to meet people, your geographic limitations went away. That led to your geographic limitations going away for sourcing as well. So historically, your network leads to your deal flow. So given your network tended to be geographically constrained, your deal sourcing tended to be geographically constrained. And a lot of your sourcing strategies were in person. So you flew to conferences, as you started to identify companies, you would meet with them in person. All of that moved digitally over the last 12 months. Due diligence also, same thing. You used to do diligence in person now, moved virtually, deal same thing. So what's the implication of that? The first is, as we talked about, the world is flat, geographic constraints go away. Now with that, many firms, their strategy was focused around a region. And so folks often had to either evolve that strategy and lean in on a thesis-driven approach or really change the way they think about location in this virtual world. Digital sourcing became critical. So in addition to online networking, leveraging new data sources like Pitchbook or Crunchbase to identify new opportunities became very effective as well. And given you gained efficiencies by not traveling around to meet with companies, it just seems like the number of companies you could cover would weigh up and deal velocity went up as well. Now there are multiple reasons why deal velocity went up, like the amount of venture capital that's being invested in the market right now. But one of the other reasons is just the sufficiency gain of being able to sort of do diligence on companies virtually. So the negatives, you know, you really, it's more difficult to form a deep relationship with folks virtually. And so, you know, or it's a skill set that you need to develop over time. That's probably a better way of saying it. And when you look at the last 12 to 14 months, we were all sort of thrust into this sort of fully remote world. And so, you know, a lot of, at least the relationships I formed virtually were sort of loosely coupled. And, you know, doing diligence virtually is a skill, right? That folks need to develop over time. And so I wonder if some of the deals that were done over the last 12 to 14 months, sort of assuming that virtual diligence is similar to doing diligence face to face, may lead to challenges with that investment over time. So now you've done your diligence, you've invested in the company, now you're managing the company post-investment. Historically, that was done in person, now it's being done virtually. And in some instances, folks were still doing it in person. And the reason is because it's so critical, right? So, you know, post-investment, as I mentioned earlier, you know, it's a roller coaster ups and downs with these companies. They're very early stage companies and it's high risk. And the issue that this notion of sort of sourcing and doing diligence virtually and doing deals virtually, the issue that may bring up over time is trust, right? So when you think about an investment, you know, and a venture capitalist investing in a company, it's a long-term relationship. And at the core of that relationship is trust. The entrepreneur has to trust the VC and the VC has to trust the founder. And if you haven't had the opportunity to develop that trust through the process of getting to know the founder prior to investment, it may lead to challenges going forward. So that's something that I'm paying a lot of attention to now. So folks that plan to continue to invest virtually will probably spend a lot of time figuring out ways to sort of establish that same trust relationship that they established physically prior to. So that's venture capital and the way it's changed. And now we're going to talk about early stage companies and sort of what's happened to them given a remote the last 12 to 14 months with COVID. So pre-COVID, you had companies that were most of the organization, aside from GitLab and a few other companies that are out there, most companies had an HQ where most of the company, where most of the employees work. They may have outsourced development and they may have some remote workers, but in general, most of the workers worked at HQ. Over the past 14 months, that's changed significantly. I'd say all of the early stage companies that I've engaged with over that period of time went fully remote. And they saw a lot of benefits to that. And so the worker benefits increase in productivity, location, flexibility, many folks who were living in one area who had an interest in living to another area moved. The commute went away. There's potential for a more effective work-life balance, although everyone wasn't able to do that. Some employees ended up working more at home, which sort of ate into that work-life balance. And there were a number of benefits on the company side as well. So increased productivity from their employees, increased performance. Engagement went up for a lot of folks as well because employees saw this ability to work remotely as a huge benefit. Over time, companies see the potential to reduce rent costs. And a big issue for early stage companies is access to talent. And so specifically when you're investing outside of the Bay Area, there may be certain talent areas that are just lacking in your geography. So often, product managers are very difficult to come by. But in a remote world, you can now recruit those folks remotely. And a lot of companies found that to be very effective. So some of the negatives. So managing in a remote world is a skill set. And a lot of companies were sort of thrust into this over the last 12 to 14 months. Companies that plan to stay remote are going to have to build that muscle to make them effective. This was a huge issue specifically for early stage companies because you're growing so fast and you're dealing with so many issues. And so it's exacerbated when you just don't have the skills to manage in this remote world. It's also more challenging. So when you're an early stage company, you're sort of establishing your culture. You're establishing your values. And if you're not used to managing in a remote world, establishing those cultural values becomes more challenging. Also cycle times may be impacted. So although individual employee productivity has gone up, group productivity, if you're not managing it effectively, may not follow suit. And so again, this all comes down to being able to effectively manage in a remote world. And for a lot of folks, it's a muscle that some companies were able to develop, but others were not. In the future, I think that it's going to be a pick your poison. There are going to be some companies that stay fully remote, some that are going to really look to bring employees back to the office. Most will probably follow a hybrid approach. So they won't go back to the way it was pre COVID, but they also won't operate the way they have during COVID. And I'm hearing a lot of sort of interesting approaches here. So one is where you have folks come in a couple of days a week. And folks that are not located in the same city, you may have a certain week or a certain number of days where they fly in to be with everyone else. Everybody's sort of experimenting. And I think it'll take a few years to sort of figure out best practices for this. So as I mentioned, moving to a remote world has had a dramatic impact on venture capital. It's also had a dramatic impact on the companies that venture capitalists finance. And going forward, I think there's a lot of opportunity for new venture firms to leverage this new way of doing work. And for early stage companies to do that as well. I look forward to talking about this issue and answering any questions that you had.