 Thanks for having us. It's a great honor for us to get to speak on this stage by the warmth of the fire. So everyone knows that VC founder relationships can be fraught with difficulty. But I think we on this stage also know that they can work really well. And when they work well, they can be not just productive, but also transformative. So we'd love to spend a little bit of time, both with Daniel and Manu, on this panel, talking about maybe what some of the root causes of misalignment are, where they come from, and then what can be done to try and make that work a little bit better. So we'll start out with you, Daniel. As a former entrepreneur, I'd love to know from your perspective maybe one of the key challenges that you faced when you were in those shoes. And then what you and the team at Cherry are trying to do to address that. Yeah, so when I created Cherry Ventures, the idea was actually really to kind of create this VC that I wanted to have as a founder, since I was a user of the product VC. And a few things that's kind of quite annoyed me, along the journey, and I thought it could be done differently, was starting with the entire experience of if an investor looks at your investment and the entire process, how transparent is the process, to which extent does the founder know what the partner, but also the partnership, kind of still struggles to understand how long does the process take. That was kind of one of the things that I felt really were annoying. Another thing is over the entire relationship, the kind of lack of empathy for the hardship of the entrepreneurial journey and what it really means to build a company from scratch, which I felt many VCs don't have. This continues with things like once you are invested as an investor, are you gonna behave as a shareholder, always kind of putting his financial interest first, or are you actually becoming an advisor to the founder? Something that I had some examples where this happened, but I had also many examples where my investors put their economically interest usually first. And then it continues with very operational things like financial planning and to which extent this is put as an emphasis in the work. And we tried to do this differently and one specific example that just recently happened where I kind of had to remind myself why I'm starting doing this is you really feel and see how someone really behaves when things don't go so well, right? And usually or many times investors put their financial interest first. And so when I was negotiating a deal that took much longer than we expected with the founder that we wanted to invest in, this founder ended up approaching the end of his cash out date, of his runway. And it put us in a different situation because it was obvious there were a few things that we still had to resolve. And what we came up with was as a solution that we gave him a loan that he basically could pay back any time that he could work if we end up investing. But that is very independent of our relationship because we realized in order to make this a good deal we need more time and we don't need any time pressure. And if it works out well, it was the first kind of sign of our trust in him. And if it doesn't work out, then it does make a difference for us. Yeah, I want to pick up on this concept that you talked about in terms of the empathy piece. And one of my favorite lines about entrepreneurship is one by Sean Parker where he says, running a startup is like chewing glass. You just start to like the taste of your own blood. So it's truly this sort of mentally, physically, emotionally, completely draining, in many ways, traumatic experience. And so I think models like yours are really interesting where you've been through that yourself and then you can empathize. I guess, Manu, a question for you is where have you seen that maybe go the other way? Go wrong. So how do you take the hat of investor looking after the interest financially of both you but also the company as a whole as opposed to just the founder who you built that first relationship with? Yeah, so I have a lot of experience with both positive and negative sides of companies. I've been doing this for eight years. It's not a tremendously long period of time but in some VC circles I'm a veteran. You know, with over 60 investments in the last eight years, I think there is some pattern recognition and it's great to sit on stage and say we're all founder friendly but the reality is at Lakestar, we invest anywhere between five to 35 million into a company and at some point, we have to make hard decisions. The hard decisions occur when a founder continuously misses budget. The hard decisions occur when a founder and us have misaligned incentives or have completely diverging interests at some point and the reality is I have a fiduciary duty to be a proper steward of the capital for people that have invested into Lakestar. So I do need to see a financial return and it's great to be founder friendly. We always want to be but give you one very important instance that occurred with me. We had an instance where a company was missing budget for three years in a row. Now with that particular situation, what should we do? Should we continue to be founder friendly and always give founders the benefit of the doubt or should we say that there's a fundamentally root problem here that we need to address and that could be and in this particular situation we actually had to replace the founder and that does take a investor and a mindset to be able to make the hard decisions, to be able to act on the hard decisions because it's never easy. There's a lot of emotion in these type of topics as you can imagine. And how do you think also the factor of risk I guess plays out with regards to that relationship? So classically the venture investor has a portfolio of companies, they're spreading their bets across those companies and the founder by definition is putting all of their eggs into that one basket. So you make the point about having to take this financial lens and making really tough decisions. On the other hand there's a lot of arguments you hear from venture capital investors where they just focus on their winners because those are what are gonna return their fund and actually they don't spend a lot of time with those that aren't sort of ticking up into the right right away. For those founders it's still sort of the end all be all of what they do. So how do you try and bridge that gap in terms of risk misalignment and how to bridge that? So I mean we invest quite early at the seed stage but with our fund we have the means and also the willingness to follow on significantly and we are very outspoken when we start getting into the relationship with the founder that obviously we will follow on if things go well, if things go according to the plan or if we kind of see that the company is going in the right direction. On the opposite we also been very clear that if things don't go that well and try to be very transparent about that, that doesn't mean that we turn our back to the founder, to the company but that doesn't mean that we put less resources to the company meaning that we probably only do our prorata or even a little bit less in the follow on round and that we spend less time with the founder which not necessarily has to lead to the company to fail but I think as an investor you have to be very open from day one what's kind of the assumption you're investing into the company and I think then this is something usually a founder can deal with. At least for my standpoint I think it's about expectation management and I think inevitably the best relationships I've ever had with founders has always been where there's a clear and open dialogue and we're speaking far more often than just board meetings and what that means inevitably is that it shouldn't be a surprise to a founder when either we take our foot off the pedal and we spend a little bit less time with them or we recognize that maybe we need to spend more time to help fold up the company in a generous way to all the shareholders so that there is at least a little bit of a return for some of the angels that invested private capital as well and so we at least from our standpoint we try and spend a lot of time with not just our winners but also with the companies that are less successful however I will possibly be a bit controversial and tell you that you can ask any venture investor it's always two to four companies in a typical portfolio that generate outsized returns relative to the entire rest of the fund. Unfortunately we take risk that's our business and that means unfortunately many of the companies that we invest into will not be the next Facebook. So if you think about all the people that have put money into Lakestar where do they also want us to spend our time? Do they want us to spend our time making sure that the next Facebook is 10% better? That's where they ask us to spend our time but I think we should and it is our requirement to be very honorable stewards with entrepreneurs because you can't imagine the first failure might mean the third success for an entrepreneur so we keep backing them. And I think also just in terms of numbers you're gonna say no far more often than you're gonna say yes and to your point even when you do say yes the winners are going to be a tiny minority so the line that I really like on this is that you make your returns on the time that you say yes but you make your reputation actually on the time in which you say no and it's the same with your weaker performing companies. I think there'll be far more of them. Those entrepreneurs are in an ecosystem which is sort of hyper connected where they're speaking to each other a lot and they may go on to found really successful companies in the future so I think we live in this information rich networked society where actually being that good steward is also probably good business. I guess you mentioned board meetings and that's something that notoriously gets a bad rap amongst entrepreneurs when they think about oh gosh I've got another board meeting someone's gonna go through the travel budget in my travel item in my budget. What do you think is the secret to great board meetings? I mean do you believe in hyper transparency, radical transparency, how do you get the most out of your board? I think the most important first step to get it right with board meetings is the size of the board meeting. I think most entrepreneurs have the tendency to size step or not actually it's not only the fault of the entrepreneurs but of everyone involved. The shareholders want to have a seat on boards and the entrepreneurs don't want to kind of risk a conflict early on so boards tend to be too big and once a board is too big I think you take already the chance of having some intimacy on the board and allowing the founder to be really open and radically open and I think the key ingredient for having really insightful and helpful boards is being radically open in boards and at least I as a founder only felt comfortable when I had people on my board that I had a really trust based relationship and that I knew that they know what I'm going through and that they kind of can empathize with that and if you open up your board to too many people by nature you will lose this kind of intimacy and I think then it starts getting a bit of a funny board because you not making up things but you don't be that transparent anymore you start kind of sugarcoating things and then I think it's only a waste of people's time because then you go through reportings and I would say board meetings are not there to go through reports it should be really the time to kind of pick the brains around the table and think about the most important things for the company. Yeah and I agree completely with that and the only thing I would add is that if any of you guys as entrepreneurs have had tough board meetings just remember be as transparent as possible. It's not that because you tell us the negative news that tomorrow I make four phone calls I can sell all my shares that's not how it works. It doesn't work anyway. It doesn't work right. So you have to be just as absolutely transparent as possible so that we can make sure we get through all the things where we can actually try and help. If we don't know about it we can't help. I mean how early should that transparency start in your view so obviously when founders are pitching to venture capital firms they've got their best sales hat on their visionary they're talking about how massive their companies are going to be and then there's the classic oh shit moment after you've made an investment you have the first board meeting. I mean when should that start in your view and how much are you looking for amazing sales people that showcase that ability versus hyper transparent this is the realism of the wheels are coming off the bus most of the time. I had a really funny incident. I had made at that time one of our largest investments in Lake Star and the first board meeting I went to the company just got a cease and desist I'll sue you letter from a big giant and had missed every single number meaning they made zero revenue in that quarter. And so as you can imagine it was that oh shit moment of saying what did I get myself into? And I think the reality is it's a tricky relationship you guys have to communicate with your investors and show them the positives a little bit because you need them to invest in future rounds but at the same time if you don't tell us all of the challenges that you're having it's very tough for us to really get actively engaged to help you. And so there's a really tricky dynamic I don't have the right answer for that but I will say that it needs to be a balance of both. I can only support it I think I would recommend every founder to be as open and transparent as possible from day one. I wouldn't wait for anything and I think we all know that if we kind of get pitched by a founder that obviously he's not gonna put the bad negative things first. So we kind of discount this anyways. And also it's kind of our duty to do proper DD and kind of see the things that might look a little bit differently than he puts them. And as you already said once we in once we invested we can't get out anyways right? And even when the next round is approaching we will do everything in order to find another investor and then we would probably follow on if things kind of go more or less according to plan. So therefore there's very little downside if you are very transparent because I mean usually in most companies they are not only bad news they're also a lot of good news and therefore I wouldn't hold back anything. The only one thing I would add to your question Leiladz I always want people on the board that are smarter than I am and know the industry and have expertise in that industry for a longer period than I am. So for example we invested into a FinTech company in a space where we thought it was a burgeoning amazing growth area of FinTech and then if more VCs come on the board because of future rounds we actually at one point lacked people that had 15, 20 years of experience in that exact area of FinTech where we wanted to grow. So we went out hunting for who are the right board members that can genuinely and truly add value outside of venture investors just being on the board trying to get the number so we can protect our returns. Yeah. And I guess it does go the other way doesn't it from a sales perspective? I mean we are fighting for the best quality founders and the best quality companies so we're in sales mode as well talking about all the wild and wonderful things we do over and above the capital and maybe there's an oh shit moment on the other side when it's how does that actually pan out post-investment. So I guess I'd also really like to talk about this back to the concept of risk a little bit. Have either of you had a situation where the founders talked about of course I wanna build this multi-billion dollar business my ambitions are huge I'm not gonna sell out along the way and then a really interesting opportunity comes along for them maybe it's a 30, 40 million dollar exit for them they may be netting something that's game changing for the fund it doesn't move the needle at all. I mean how do you think about truly asking the question about risk appetite and alignment up front versus knowing that they're gonna say a little bit of what you wanna hear. So I mean I guess it's very hard to charge that from the beginning right is this guy is this founder gonna turn down a 300 million dollar offer in order to continue to build the company to a billion dollar business. Obviously most founders will tell you they will turn it down. You're only gonna see once you're there. I had a founder which also happened to be a good friend of mine that was in that situation and he had an offer that would have made him a very wealthy person and he would not have had to worry about anything anymore but obviously for investors it would not have been that outcome everyone was looking for. And one thing that helped me was that I was in a similar situation I was a founder and I was fortunate enough to went through two exits and so I could only counsel him and kind of frame him thinking about not only about the economic impact of that exit but also what about him and his ambition and what he really wanted to achieve with that company and what he's gonna do after he sets the company and how things actually look after an exit and I didn't try to convince him but at least I kind of framed his thinking not only focusing on the economic part of it but also what about what he's gonna do afterwards and what he really enjoys doing and that helped him at the end that turned out that offer and although he hasn't exited the company yet at least he, until now he's grateful so hopefully he's gonna achieve a higher exit. We also try and give founders some liquidity. Right. So if a founder gets an offer to sell their business at 30 million, let's use your numbers for example then maybe we could offer them a little bit of money to buy that house that they wanted to make sure that the kids can go to schools that they want whatever interest they have so that they can get back to actually running the business and so therefore maybe our interests are aligned. Ultimately though if a founder would like to sell the business I think we would be supportive. I mean, you know there's enough situations that we all probably have come across where you think even after that 30 million mark it could go to 500 million and then it doesn't. So I will never be sad about taking an exit. I will only hope for the best. Yeah, I think it's kind of there's so much information out there right now about what VCs wanna hear that I think you kind of hear often times the entrepreneur with a very rehearsed pitch around exit values and things like that but I think it's important to point out that these are very real situations when they happen they need to be taken on a case by case basis. I guess that the concept of time horizon is one that someone's asked a question about here in terms of two kind of conflicting trends. So one trend being that investors into venture funds are looking for liquidity, right? Like they want their money back at some point and then founders are staying private for much longer now and I think kind of not really wanting to access necessarily some of the onerous requirements on reporting that come with being a public company or selling into a much bigger company. So how do you guys think about that? I mean, how do you invest in truly transformative companies that may take 15, 20 years to play out? I mean, what do you think about in terms of those relationships and the longevity of them? But as a late-stage investor, you want to take this first? I think there is some pull from our investors to generate returns. And so we have to, as a steward of capital, we have to think about that. I do think though, if you look at data and most of this should be functionally database which is that most VC funds generate excess returns after years six, seven, eight, somewhere around that mark because you do require for an early-stage business, especially also the stages that you invest, the time horizon to build a really meaningfully big business should be and could be upwards of seven to 10 years. And so I think it has been our view that some of the best investments we would not like to even sell after IPO. And therefore, the only way to give the early-stage investors who have been with the company for seven to 10 years some way to gain liquidity for their LPs is to buy out secondary shares because I do agree with you, every late-stage company I'm talking to, you know, it's far and few between that actually enjoy going public. Yeah, I mean, we saw that recently, I guess, with Seed Camp and TransferWise, a good example of something that's just recently happened. Do either of you guys, either from the founder perspective or now from the VC perspective, have a sense for how partnership politics within a VC firm can affect that relationship between a founder and their venture investor and any anecdotes that you can share to sort of help the entrepreneurs in the room think about how to navigate that? I think it's something that cannot be underestimated because as a founder, you usually deal with this one person, this one partner, but obviously, there is a group of people behind him, his coachy piece that take decisions and that also are responsible vis-a-vis the LPs. So, I mean, in our case, we are a partnership of three, which is actually, I think, a great size because we can put a lot of attention that every founder that invest in gets to know the entire partnership and vice versa. There was one specific example where we invested in a company that was founded by a friend of mine, and I liked the business a lot and obviously, I sourced a deal, but then we decided, given the close friendship I had to the founder, I have to the founder that my partner will lead this investment and at some point, that investment things didn't go very well and there was a lot of tension and that was the point where I was extremely glad that we took this decision back then because that allowed us, on the one hand, me to kind of counsel him as a friend and very independent of the investment and on the other hand, my partner to also talk tough and take tougher decisions with him, which I think was a good decision and that was kind of one way to tackle that, for example. I think within our partnerships, the best investments we've ever made have been incredibly controversial, incredibly. There's one company in our fund where we're quite hopeful that it will pay back the entire fund. It's not what we call a unicorn, I guess there's another term for it, a dragon, yeah, but needless to say, it was incredibly controversial. I mean, we were arguing almost at one point, yelling and then we've invested into the company and now we've realized actually when you have consensus-driven only approaches, I genuinely think we don't get really outsized returns. I think the controversial ones are thinking about unconventional matters where you have dissenting views about really trying to see what the vision of the company is and where it can go and then ultimately, yes, to your question, there are some partner politics, but I think the whole basis of a true good partnership is being able to question everyone in our team. I can only support that, I fully agree. I think it's exactly those investments that create the most discussion that turn out to be the ones that are really successful and therefore, I think that's something a founder should also know that it was maybe a very kind of close decision because it only shows that in the partnership you have a very diverse set of opinions, right? And also, I guess, given that you meet hundreds and hundreds of companies a year and you'll say yes to a handful of them, I mean, how in depth do you go with those that you say no to in terms of why you're saying no? I mean, do you give them reasons and rationale? Do you engage in follow-up conversations with them? How cut and dry are you? There's a question about saying my company is not a fit, quote, unquote, with the VCs, what does that mean? That's the answer that they keep getting. I think kind of as a rule of thumb, the more time you took to get to your decision and the more time you took from the founder, the more time you should also invest in explaining the decision. And I think at the end, we are in a long-term business, so I truly believe that something we should invest in, having said that, I also have to admit, sometimes I probably invest not enough time into it. And look, we live and die by a reputation, right? I mean, we only build these businesses based on the reputation that we have, and the entrepreneurs are sometimes our best source of leads into companies. So if we don't treat entrepreneurs well, even the ones that we don't decide to partner with, then I think it does behoove us to make sure that we leave a good feeling with them. But I will definitely agree with you that unfortunately, just given the volume of content we see, there are going to be times where we have to make very short responses because we just haven't invested enough time to really get to know the entrepreneur or to make even an educated view about why we passed on the company. I mean, the reality is sometimes things are just not a DNA fit. I have no better answer for you. They're just not a fit. Yeah, that's the actual right answer. And it seems like we're out of time, but the final question that someone anonymous has asked, and I hope that the answer is unanimous across the board, a founder and a VC will fall out. It's just a question of when, true or false? I don't think this is a natural law, and I hope it's not. So I think if everything goes well, then a company, even if there are a lot of bumps on the road to get there, will have an exit and then hopefully everyone is happy and they can continue to work together on different opportunities. Yeah, I would say a bit differently. So I disagree, but I would say it a little bit differently. I think there are definitely going to be times when we have disagreements and stern disagreements, and sometimes those are the best discussions. Disagree and commit, as they say. Disagree and commit, exactly. Thank you, Manu. Thanks, Daniel. Thank you, guys.