 Glad to be speaking with you today and appreciate the opportunity as well. Yeah, the reason why I reached out to you originally is, you know, I have a lot of friends who are VCs themselves. I've been in the startup scene for a long time and this question comes up quite frequently, especially as of late. And that's a question of like, should an entrepreneur and I know this is not a black or white answer, there's never black and white answers, but it's a great discussion to have is, you know, should an entrepreneur accept and take venture capital of money. And so, you know, you have experience, you have history in that on both ends. And so I just kind of want to have this natural conversation with you and discuss like, what are the pros and cons of taking VC money? Totally. So I've actually done that both ways. So right now I'm a VC at Hustle Fund, a fund that I started two years ago with Elizabeth Yen, we're up in Canada quite a bit actually. But before that, I was actually a bootstrapped entrepreneur for nine years in the education space. So I avoided venture capital. And I think my short answer for you is, and to your listeners who are thinking about VC is avoid it if you can, quite frankly. I mean, you know, there are certain classes of businesses where it makes a lot of sense to do venture capital, particularly those that are capital intensive. Let's say that the two of us want to start like a new electric car company, pretty hard to do that in a bootstrapped way. But I actually have an, I'm in the opinion that many, many, if not most businesses, even those that are trying to scale to startup speed, could potentially do it with maybe a bootstrapped model or perhaps even minimal venture capital money put in or angel rounds. So, you know, the real bummer when it comes to doing venture capital is one, it's distracting for the founders, right? You got to do both your business as well as run a process for raising capital. And that's not simple to do, you know, oftentimes, if you're early on, you're just a handful of folks, you might be a critical person that's contributing to the business, you know, as someone who's executing. So taking some time off to run VC, or run a VC process is really hard. The second is also, you're inviting a boss into your life. You know, one of the big things that I enjoyed most about running my own business was, I was running my own business. And I didn't have to answer to anyone, I can control the pace of my execution and so forth. When you're on the VC route, you know, there's an expectation that you're going to continue to raise. And we can sort of talk about the motivations behind the visas for why they really encourage founders to continue to raise. But you're expected to go at these milestones that are quite fast. You may even have a board at a certain stage, which is essentially your boss and they can fire you. They can control your product strategy and so forth. So, you know, I'm pretty skeptical about the value of VC, ironically, as a venture capitalist myself, for a lot of classes of business. So if you can avoid it, find ways of just growing your business, even if it's at a slightly slower pace, while scurrying like outside funding, that actually I think is a better long term outcome for most businesses. Have you seen stats on how many entrepreneurs, I've seen it somewhere before, but how many entrepreneurs are kicked out from their board, whether it's like a series C? Interesting. And it's not kicked out as an get out of here, but they're either bought out or there's clauses within the term sheet or contract saying, for whatever reasons, you're not the right person to take this company to 100 million dollars of revenue, goodbye. Sure. Yeah. So I think that most term sheets at a certain maturity, you know, when you're past your series B, probably has language around like succession planning or management control or board control in terms of approving or rejecting hiring decisions, including your own job as a CEO. You know, there's a belief that it's rare to find a founder who can scale a business from the seed stage all the way through an IPO and beyond. And I largely agree with that. I mean, I found actually when I was a founder myself, once we were hitting like 5 million in revenue or something, I kind of was like a crappy CEO at that point. Like I didn't know how to grow a team beyond like that amount of revenue or more than 20 people. So I was very much a pigeonholed kind of and like a really early stage kind of founder. But there are certainly cases where founders can scale beyond that. And depending on and also venture capital sometimes are really supportive of that plan too. And they try to surround you with better lieutenants, more coaching to get you to that level, because there is something to be said when a founder can see the journey all the way through through the end. And, you know, that itself is also really helpful for hiring and just building culture and so forth, that kind of longevity. But to answer your question, I'm sure it's built into most term sheets at the later stage. That was the option to do so. Have you seen within your network, you don't have to name names obviously, but have you seen clauses where there's an expiry date on the return on capital? Let's say there's a cliff like 10 years and no matter where your company is within that 10-year cliff, they're looking for a liquidation event. That's less common. So the expectation is that there's a couple of different sets of expectations depending on the fund. So for a seed stage fund like us, we're almost always designed as a 10-year life fund. So I invest in the Meers company now, and I assume that's going to take in between seven, 10 years to find liquidity, usually through an M&A event like an acquisition or an IPO. So there's an implicit kind of expectation that there's going to be some sort of an exit exit or liquidity event at that time. The more later you get, let's say that you're a series C shop or something, maybe those fund lives are a bit quicker, like between three and five years because you're much more mature and closer probably to the liquidity event at the point of entry. But when it comes to an expiry, it's not really common to see that because just because it's so hard to control something like that, it's just difficult to time an acquisition. You don't know where the market's going to turn at that time. It could happen sooner. It can happen much, much later. So there needs to be some flexibility when you're in this kind of class of private equity of not being in control of those kinds of timelines. Sometimes I see something a little bit more exotic, or I haven't seen it, but I've heard of it, which is there might be an occasion where we invest in Amir's business and he never has to raise again ever. And he's just going to grow this business into like hundreds of millions of dollars a year and then collect a 40 million dollar paycheck a year and just do that until he's dead. And that's actually a great business for him and his team potentially, but not so great for your early founders who are trapped by not having liquidity. In those cases, the couple of things happen. Maybe Amir decides to just buy out his older investors, give him a little bit of markup on their investment, and then say goodbye. Maybe there's also like a dividend model. That's also something that they've been increasingly hearing about, where we can do a little bit of profit sharing for some period of time until the principal plus some very generous interest is given back. Well, if you look at the stats, the IPO has diminished drastically since even the early 2000s compared to now. And that's why there's such a crazy high in the crypto space with tokens and instant liquidity. And so it's like, are our VCs for the most part opposed to having dividends returned if the company's highly successful? I know they're looking for liquidity event, whether it's like maybe an RTO, IPO, or acquisition. But let's say you're at a position of a company doing 300 million revenue and pre-tax profit is like 40%. So profits are healthy. Why not just take some dividends in the meantime until you have a liquidity event? Well, I think that's the problem there is actually, again, comes back to the life of the fund. So the expectation for most funds is that they conclude after 10 years with maybe one or two years of extension. So the issue is maybe dividend is a pretty good long-term model, especially if the business appears to be a going concern for many, many years. But you may not be able to pay back entirely your investors before the fund itself expires. So then you have to roll this into some other new fund and it gets a little bit complicated. Just wholesale liquidity in one shot is always easier. And frankly, this is where there's a bit of a misalignment between venture capitalists and the founders is what's good for the VC isn't necessarily good for the founder. Like perhaps, you know, for the founder to think they're thinking they're providing a great deal of dividends. But for the VC, they're thinking about, hey, I got to raise my next fund. So I got to show some real cash on cash return here. And dividends are cool, but you know, getting $100 million at once is cooler. So I can tell that story, raise money from like, you know, a sovereign wealth fund or whatever. Yeah. So that clash always has been bothersome, I think, for me personally. Where do you see the space going though? Like obviously, like I mentioned, IPOs aren't very common, but we have new forms of liquidity, maybe like Reg D's and Reg A's. I think security tokens will be interesting in the next five to 10 years will offer something. But where do you see the space generally moving? A couple of ways. So the first is there's a rise of secondary funds that are coming to bear. So you know, if you're running a VC fund like myself, even before an IPO or an exit can happen, there's a new class of funds who can come in and say, okay, we'd like to buy some or all of your shares into a team that we think is really promising and we'll negotiate this price that the three of us find amenable. And then, you know, you can get your liquidity and get your cash on cash return even sooner. I'm very excited about we're drawn to crypto quite a bit in our fund simply because, you know, even though we're in the down cycle since 2017, 2018, very long this notion that there will be other alternatives for capital raises that aren't dependent on VCs. And this is actually something that scares a lot of venture capitalists. I love this creative destruction that could potentially happen in our industry, where you don't necessarily need to go after angels or VCs as your primary source of pooled capital. The notion that like any high net worth individual or regardless of where they are geographically can just be a part of this and you can align incentives through smart contracts and like defining these rules up front. I think that is ultimately going to be the future. This is like the great dream of crowdsourcing that was meant to be. We got so close to that, so close in the last cycle. So that's I think the other path and, you know, security tokens I think are going to be one of the avenues for doing that in this next wave hopefully coming soon. And then I guess the last sort of class of capital that I'm getting really excited about our new forms of venture debt. So I've been closely tracking a Canadian company, actually a Toronto based company, ClearBank. I know ClearBank, yeah. Yeah, yeah. Andrew DeSousa. Yeah, I've never been personally before, but we're huge fans of this model, you know, so they have, they're bringing out something that isn't entirely new, but I think they're marketing it well. This financing called RBF, revenue based financing, not RBF resting bitch face, which is what I always think of big Reddit fan like me. So RBF is just like, this is not debt. It's just, you know, we're going to loan a mere $100,000. He has to pay back $106,000, but it's going to be paid back via a share of profit over some period of time or just like an undefined period of time until we get that money back. And I love it. I mean, like the founders aren't going to be giving up any equity. The bank, I guess in this case like ClearBank gets their principal back and they're chasing like a pretty reasonable yield. And I also think by the way that this is very much a good crypto use case as well over time. I'd love to see a ClearBank on crypto at some point in the future. So a lot of interesting things happening in the market to get access to capital that aren't necessarily like traditional equity. Do you think, for one, I think this is just my viewpoint, a credit and investor status needs to be updated. I think that's a big barrier to a lot of people. It's like, for example, my mom can buy a house, go into debt and mortgage and have a foreclosure. I consider that an investment, but she can't invest in my startup. She can go to the casino and blow a million dollars. That's totally fine, but she can't invest in my startup. And so I think for the crowdfunding platform, whether it's like Reg D's or A's or any type of smart contract, they need to loosen up these so-called accredited investor laws. I agree. I mean, this is actually something that I'm seeing as contributing also to things like income inequality. There is a class of investments where you have to be accredited and defined in the United States that's more than $1 million in net worth excluding our primary residence or earning more than I think about $250,000 a year in income. So it's a pretty high threshold. Most people do not have that. There's some very exotic and certainly high risk, but also high alpha kinds of investments that you can participate in suddenly, the moment that you cross that threshold that just a normal retail person can't. So the word also gets so vague. If you want to take a talk about the accredited investor rules for crypto investment in the last cycle, it's totally legal for me as a retail investor who's not accredited to participate in Indiegogo and these other kinds of traditional crowdfunding that isn't quite aligning incentives in terms of revenue outcome, but I can invest in that kind of crowdsourcing. To me, the great dream of crypto investing, particularly in the STOs in the future, is quite similar. This is just a different kind of crowdfunding. How is this really different from Indiegogo except I get a piece of the upside that's very well documented and coded. So it is kind of a bit of BS, I think as well, that there's this kind of bias. And at the same time though, at least in the United States, the people who are writing the laws are also fabulously wealthy themselves and may enjoy the fact that they are in this gatekeeper position where only their wealthy friends and themselves have access to these great kinds of investment opportunities. So I'm a little more skeptical about the incentives behind driving change here. Where I think I'm a little more optimistic though is like in Asia. So like governments Singapore, which are really trying to produce like more equitable engagement for investors beyond credit investment, they're really seriously, I think, trying to rethink some of these laws. And they might be the ones I point to as the future kind of leaders and understanding greater accessibility for retail investors in this regard. Are you familiar with the JOBS Act? Not really. So it's an exemption for credit investors. You can invest, I believe, up to $25,000. It's interesting, but the paperwork, think about like, let's say we take our mom, right? And she wants an investor to start up. She has to read like 50 pages of paper. And for her it's like, before she even begins, it's over. Like no one's going to read 50 pages. Get out of here. The law should just be, it's like, you're loud. You're loud to invest in whatever you want. And that's it. You have $100, we'll put $100 in my startup, and it'll get 0.11% of my shares in my company. Yeah. So I heard a pretty horrible perspective from a congressman on this issue. I won't name him. But there's a very paternalistic attitude that the government has about this kind of stuff. And the TLDR of what I heard was just like, so you're not allowing retail investors to participate in these kinds of deals because you think that they're not smart enough or sophisticated enough to actually do it well. And we'll bet the house on the terrible crypto project and lose all their money. So that was kind of the feeling I got was this attitude of just like, if you're not wealthy, then you're kind of too dumb to do this. And I was of kind of two minds to that. One was just like, okay, a part of me is like, yes, I sort of understand the notion of protecting people from themselves. And there are certainly vulnerable parts of the population that can be tricked by like shams. And I see that happening. But on the other hand, I take a more libertarian attitude, which is like, yeah. Yeah, but if that's the case, why is gambling allowed then? Dude, I mean, like, I don't know. Yeah. It's like, okay, well, I know we'll allow the most addictive form of behavior over here. No problem. Right. Go in there and spend a billion dollars. Go to the local Indian store and spend, you know, $100,000 on scratch tickets. No problem. But no, you can't invest in this startup. Forget about it. Yeah. I mean, my most like negative take on that with gambling is a very interesting use case to bring up, right? I mean, like, you can extend that to everything that we invest in. Like if I put my money into an index fund, that's still gambling. I mean, there's an expectation that that money is going to grow, but that's not guaranteed. My guess is that the casino lobby is very strong. Right. And like certain kinds of vice categories that seem like they could should be illegal and certain principles are, you know, if you line the pockets of the right people correctly, who's making their decisions? What advice do you have for people who might be in that position that need that large amount of capital from VCs? What are some questions they should be asking the VCs that they have relationships with? Yeah, great question. So a lot of ways we can go here. So if you decide that you're a founder who is building a business in the category that requires venture capital, then there's a few things that I think a lot of funders miss. The first is actually how old the given fund is. So this one's a nuanced, but critical one. So most funds invest all their capital in a 10-year fund in the first three years. And the thinking behind this is like, you just need to, as an investor, you need to put in your bets sort of early so that they can mature and produce cash on cash return before 10 years is up, right? So the first three years. So if you're talking to a VC and they're in year one, that's great. That means that usually there's capital available. If they're in like year three, they actually might be very, very picky about what deals they choose to fund or they may not even have the capital available. And we'll just like, this is like a terrible scenario by CSALOT. It's like they'll string you along. They'll say like, oh, I mean, we definitely want to invest. We're going to put in a million bucks. Just wait six months so we can fundraise the next fund. And then of course, you're going to miss that. Wait another six months, and then your business is dead. And who knows what the fund is too. So where in the life of the investing lifecycle for the fund is very important? The second is, you know, if you can, I guess, talk to other founders over coffee, however you can get them, to give them perspective about their own VC. So if, you know, if you're trying to back channel people on someone like myself, and then, you know, the founders are saying like Eric is like horribly arrogant and terrible and like predatory, then, you know, it's, you shouldn't take my money. Hopefully, you'll never hear that feedback about someone like myself or Elizabeth or she and the other GP and her fund. But that kind of backchallenge that kind of reference checking so critical because there are VCs that have a reputation of doing the thing that you actually said earlier in this call, which is they have their reputation around series A or B just like kicking out the founders and totally screwing them over. And that's a deal with the devil. It may be the right deal sometimes, because that's all the money that's available and you need to survive. But, you know, you got to go into that eyes wide open to protect yourself. Those are good questions. I mean, sorry, good answers. Yeah, it's interesting, man. And I get, you know, I'm still, I don't know, I've never taken VC money yet. Yeah, I work with them on a daily basis, both advising on different deals and sharing deal flow. Totally. It's a very interesting one. I'm excited. Like, you know, I'm like, like you mentioned, there's, I know some amazing firms, man, like they'll go, they'll jump backwards to help you out, right? Sure. But those are the rarities in the space. But then at the same time, I know some, as you mentioned, sharks, like, they're self-interest, they don't give a fuck. They just got to make money and a story, because we got to rate the next round and get their 2% and then get their, you know, 220 to whatever model they have. So I'm really, I'm really interested and excited in the next couple of years to see the evolution of this space and different ways that startups can raise capital, non-dependent on just giving up equity or ridiculous amounts of equity. You know, I have one more follow-up question. Actually, as you're speaking, you reminded me of that I think every founder should ask their VC. And it's actually the exact same question that I asked my wife before we got married, which was, do you want to grow old with me? And what I mean by that is a couple things. One is a reminder and recognition that, especially at the seed stage, like if Amir chooses to take my money as an investment, do we feel like there's a complementarity that we can, and a good relationship we can build over the course of the next 10 years, assuming it's 10 years, from start to exit, right? So, and it's not just implied in that, it's not just a complementarity in terms of skills or market knowledge or whatever, but also personal relationship, right? Like, do I feel compelled that, you know, over the course of 10 years, we want to grow into each other's lives, like understand, like, do you want to meet my kids and my wife and my dog and vice versa? Because, you know, all that stuff is also important. I mean, if you take on a bad VC and maybe not a bad VC, maybe like, let's say like a slightly annoying VC in year one, by year six, this could be like an insufferable relationship, right? And then doing a startup, as you know, is already hard. Why invite even more exogenous pain by taking someone that you hate? I'm so glad he brought that up. I've been in deals where I knew other investors, and I'm looking at the term sheet. I'm like, this is a great business, but I can't be sitting next to this person. And I purposely did not invest because I knew for a fact how this person is. I'm like, I'm out, I don't know money in the world will put me through this fucking mental headache. Gone. What kind of cues did you see that made you like, totally deal breaker, totally red flag? And how did you sort of pick that up and how quickly? So, for me, like, I'll do some small angel rounds myself. We have some syndicates. Good. And I'm more or less kind of a slow investor. I bet on the entrepreneur per se. So I'm big long-term instead of saying, like, for me, it's like, can I have dinner with this person for the next 10 years? And I'm betting on the person because I'm not deploying the capital to company A. I'm deploying the capital to person, right? So people always stay confused. I think I'm deploying the capital to the people, right? And so for me, it's like, hey, if this person fails, whatever, you know, for me, I write off the money. I'm not because I'm not a fun manager. I don't have to worry about it. I'm not running a million dollar check, maybe 10K check, 25K check, 50K check, angel rounds. And so for me, it's like, this person, can I have dinner with this person for the next 10 years, right? I do a little background check and I sit down with them and I eat with them. I see how they communicate. I also throw in like weird questions, you know, for me, I'm like a maverick eccentric is like, what do you think? Like psychedelics and like weird shit to like steer them off first, right? You know what I mean? But I take my time, but for me, it's not about quantity, it's about quality, man. I just want to see great people do great things. Yeah, I think very similar in terms of my approach. I'll tell you like one of my favorite things to do, especially if this is a deal that seems pretty high stakes and we have to invest a lot in each other from a founder or just even a partnership perspective is I love doing family barbecues. So the thing that I like to observe is how is this founder treating her partner, right? How are they treating their kids, right? And, you know, it's not necessarily, I think, the best signal for a lot of people because, you know, you can argue this isn't something that's as related to how they're going to run their company, but you get to see at least the soul of the person. I think it is, man. There's a saying, how you do one thing is how you do everything. I subscribe to that. Yeah, I subscribe to that. And, you know, there have been cases where we shut off a deal because it seemed like this person was like a truly an asshole towards their kids. And, you know, someone, I have kids, I love my, I love children, right? And it actually breaks my heart when I hear about kids like being hurt by their parents, especially. So it's just like, I can't shake that on my brain. You know, like it like brands someone to me when I when I see that kind of rudeness, because like, you know, we're in this business, we're doing high growth startups and it's sexy and fun and all that stuff. But at the end of the day, if everything were to collapse, like at least I got my family and, you know, they love me. And that's the most important thing in the world. And they need to be recognized as such. And I try to find that in other people that I work with whenever I can. Yeah, our good friend Jason Gayner, he runs an event called Mastermind Talks. And he has a saying, it's show me your network and I'll show your net worth, you know, like say, let's say everything fell down for me, let's say I gambled all my money through very unwise decisions. Let's say I'm broke today, right? Yeah, who, you know, Keith Ferrazian has a book who's got your back is like, what what what kind of quality of network do you have that you can pick up your phone and call people like, yo, I need your fucking help. Yeah, yeah. Add me to your your contact list on your iPhone, please in that scenario. But I'm with you, like it's it is. That's a whole nother topic. I mean, we can spend an hour on this, but you're absolutely right. And I love that mindset as well. Cool, man. I think we covered a lot. You've answered many of the questions I had. I appreciate it. Thank you. I thank you for your candor and honesty. Of course. Likewise, if people want to know more about your fund, what you do and everything, what's the best resource? The website's good. We're at hostilefund.vc. Dr. Charlie, you know, please contact us there. We look at every single deal that comes to the website. In fact, we put every we require every single person who's a who's considering investments to go through our website form. And then I'm pretty active on Twitter. I'm Eric Bond, E-R-I-C-B-A-H-N. That's my Twitter handle. And I love talking about these sort of things. You know, my themes aren't necessarily just discussing trends and venture or founders, but I'm in this journey. And I think you are too, Amir. I'm just trying to figure out how to live the most fulfilling life, right? I think it's all intertwined. So talking about running a startup as a parent, you know, that's a whole different conversation. Exactly. Very big into like understanding how what we can do to contribute to diversity, inclusion among the founders that we back. These are all topics I love. But, you know, at the end of the day, what I love about this work and probably what you get to do as well is just tell stories, hear your story, share mine. And then occasionally, the Venn diagrams overlap where there's something that we can do together. And that's when it's fun. And we love working with teams that we can align with that way. Beautiful. Beautiful, man. Thank you so much, man. I appreciate it. Thanks for the opportunity.