Wisconsin, Managing Partner, Siedle discussed on Edible-Alpha� Podcast

Automatic TRANSCRIPT

Right nowadays, we have a wide system of incubators accelerators, and and all the universities and all over the place you can step in as an entrepreneur and find yourself training and be with other entrepreneurs talk about it and some of these are focused on food now focused on different issues. So they're starting to be in an. Ecosystem and infrastructure to support early stage companies like beginning companies, and and but the first money that usually happens is people think about who do they know who who in the family will take bet on them, and that kind of thing so you scrape together a bit of money we now have crowdfunding which is another option. It's do you. Don't just get magic money. You gotta work hard for it there too. But there are ways to get your your early start up money, and even governments are getting into understanding that if they want to see economic development and their city state their country, they're they're starting to invest in these systems. Also, so it is there is a bit more of a now let your competing with so many more impassioned entrepreneurs. So you go through that stage. And you do what you have to to get enough money. And and and prove the concept get brand developed or your whatever you might not be. A consumer product. But you gotta get the first stage is done, and then you can start talking to people that are angels. And angels tend to be folks that okay? The founders of those early companies are now investors in lots of other early stage companies as they get their success, and they maybe sell their company or or raise a lot of money or get very profitable their favorite. Investing is often to go back into the industry that they came out of. So there you get you get a lot of angels that way and other angels are people that made money, maybe they're retired now, and they find it really stimulating and engaging to listen to pitches of younger companies, and then maybe to get advised a get involved as an advisor or board member. And so you move into that kind of angel and Siedle. Level and seed money is like you do with seeds to grow food people believe that they put fifty thousand dollars or a hundred thousand or twenty five thousand and seed now, and you get into big technology might even be a million dollars. Sounds crazy. But it's real, okay. So you get through that phase. And then you get to the venture capitalist. Typically. Yeah. So in in here in in Wisconsin, we when I did tears way I had to raise fourteen million because I would build a plant, right? So I had a lot of dead and that too, but I had to raise a couple million. And we don't really now this was two thousand and eight kind of that timeframe we didn't really have we definitely didn't have a dedicated venture fund for for the sector here, but we had private equity, folks. And we had some I guess you'd call it family office folks, who who were the people who really understood like, maybe they sold they as you said they made money because they sold the family food business, which we have a lot of that in Wisconsin. So that those were those were my investors, and they were they were definitely acting like angels. Right. They weren't organized into any kind of fun. There wasn't. It was me. Aggregating a bunch of individual people right to that equity. And so so in in the world, you are operating in right now, you have a staff that helps you evaluate things. And you raise is it rate is the money raised into a fun. Then when you're when in for venture capital like you. Yes, we are affectively doing the aggregation that you did as an individual do it professionally. So we put together a pool of money. We go out, and we're now working on our fourth one, you go out, and you talk to everybody that you can figure out who has money you got connections to can get introductions to get in front of. And you pitch your case. So we are an entrepreneur as tariff was we are renewal funds and our product is we will get we will create a portfolio of companies in the issue areas that we're focused on and you don't you don't have to do anything about just you benefit from from our work and our goal is to make you an above market rate of return. And if people in venture capital can prove that to the investment were to the bigger investment world. Then they take that next part of the ecosystem and can be the ones who come in. We call ourselves early growth stage. And we won't we look at companies that are already at one to two million of sales or larger. And so that's often where venture capital fits in in the food world roughly that scale now because of the increased demand for organics, and and clean food. You're seeing competition from the products from the retailers, and the outlets, and then the venture capitalists are competing to get into the things that are that look like the most likely to succeed. And so it's there's this kind of food chain that venture capital, you mentioned private equity and family offices. And so there there are actually these if you're not somebody that works in these worlds, you can't believe how many pots of money, they're actually are. Right. That are that are out there hunting, I have a friend who's who's managing partner of private equity fund around here that is in our space, and he he's came back. Back from expo west last year. And he said, I was it was so depressing. Just because everybody I know who is got money for the sector was there. It was like. He's like there's so many people doing investment in our sector now, which is so amusing to me because I I work so much with entrepreneurs, right? Who feel like there's no money anywhere. This is a a lot of the way the world is and you till you and. You know, if you just you just kind of come up with a good idea yourself, and it looks like a barren landscape, you you get yourself into the ecosystem of different issue area or different heart of finance or something like that. And then you go to conferences that have you can go to venture capital conference. That's got thousands and thousands of different venture capital funds. Like who knew they were. All there. It's crazy. That's right. Yeah. Yeah. It's crazy. So what do you look for in companies? Like, you said you were you were doing tasting some stuff today. So you care about the food, right? You heard me say we are mission venture capital, right firm, and that organics and environmental technologies, and we also talk about healthy households. So green greenhouse soldiers. It's a low toxic kinds of or no toxic kinds of substances so mission. Venture capital is meant to send a signal venture capitals. Gotten a bit of a bad reputation with the entrepreneurs, and it gets called vulture capital. Right. And that has to do with the fact that people that are driven to maximize every penny. Just like the tra- probably is. But their job is in finance can be pretty rough and tumble historically. So with any investor you want to interview them as much as they're interviewing you, really 'cause you're you're getting into a kind of a marriage, right? Right. And you wanna be sure when you get married you choose well, and that you're with partners that you wanna be with so mission. Venture capital, though, we can't that doesn't prove that we're easier people to deal with on on the surface of it that you have to go get references and meet and talk and ask good questions, but mission venture capital signals that we what we care about. I is that the product or the service actually matter to making the world, safer, cleaner and more fair. So that's all we screen out or screen for the best actors, and that is that's not just a group of smart sales people who figured out that there's a hot trend and they jump in. I wanna know what the actual values and meeting and purposes of the entrepreneur. Why are you doing this? And you're telling me a story of how you're going to take this company to hundreds of millions of dollars. What are you going to do with your success? Like are you going to use financial success to reinvest in a better world, or you know, what are you going to do? And so as much as possible. I an hour firm one understand the motivation, and the the real depth of of caring that's going on. Because there's a better chance that you're going to just like you're worried about a vulture capitalist. I'm worried about an exploitive entrepreneur who doesn't really care, and it's just right? Try to make a bunch of money. So that's the match that our firm needs. I we trust you you trust us. We think you're doing something that matters. You you feel proud or at least prouder of the money you're gonna get for Maas rather than somebody. You don't believe in or trust? So that's at the base of it. After that. It's we're the same as any other investor in the sense of. Do you know what you're doing? Are you able to build a team are your emotional, skills and your human skills, effective for dealing with conflict for dealing with stress and pressure? And

Coming up next