Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use.   Episode Introduction: Welcome back everyone.  Today, we have a really interesting program for you b/c I have the pleasure of welcoming to the show Tigran Nazaryan, who is the CEO of 10Web, a   Tigran, thank you for making the time to be with me today on the podcast. I am super excited about today’s conversation after learning about the company b/c 10Web has created a really interesting business model and is changing the game around the area of Web design and hosting, and is doing that through automation of an old but very reliable tool and ecosystem many of us are familiar with have used, WordPress.   10Web has a very interesting history and story and what I believe is a huge addressable market.  Tigran, I thought it would be useful for you to provide us first, with some of your background, and then we can get into the interesting story around the origins of 10Web as a company Five years before founding the company in 2017, a small team of engineers were building WordPress plugins.  This helped you identify the biggest problems in web development, leading to the formation of 10Web.  With vision to create a platform for hosting for professionals and agencies.   We built an advanced, modern type of hosting technology.   Allows automatic creation of WordPress websites and powered by AI algorithms and neural networks.   We also created our own tools for optimizing websites We are getting a lot of momentum, growing really fast… Hear is a quote from a press release after your raised your Seed round last month where you stated, "Tens of millions of WordPress websites are built every year, and an average website launch takes 5 weeks!  We wanted to bring automation to WordPress development to facilitate and speed up this process," can you expand on this? Why did you choose WordPress automation as opposed to, say, building your own website builder tools? Tigran:  Old school platform, but WordPress powers 45% of all websites built.  It is really flexible and workable.  Yet, we found the experience of creating WP websites was really painful.  Flow is time-consuming and requires some deep knowledge where many web developers don’t go that deep. Our vision was to solve these problems for web developers.  Huge potential for automation because WordPress  Here is a quote from your investor at AI Fund;  “10Web has built an innovative, no-code solution utilizing artificial intelligence to automate website porting and creation.” (Perry Wu, General Partner, AI Fund) We spend greater than 2 years with a team of machine learning engineers to create the solution.  Not a simple undertaking. You use Google Cloud as infrastructure, why?   Tigran:  We use Google Cloud for hosting.  Clients’ websites are stored.  We also use AWS, MS Azure.   There is no fundamental difference between these 3 solutions, only difference is in details. Talk about achieving 90+ Google Page speed score. Tigran:  Page Speed score is a metric defined by Google.  Important metric.   Affects conversion, effectiveness of ads, for all web pages of the site.  Technically very challenging.  Not a single plug-in or solution.  Also, WP websites are not all the same.  Helps professionals streamline website development. We offer a full, complete, turn-key solution for agencies Discuss target market and go-to-market strategy.  Tigran:   Our current focus is on develpers, agencies and free-lancers You recently closed a $2MM Seed Round.  Where are you in terms of traction in the marketplace? Tigran:  Priority is to grow.  We have thousands of customers today. How are you rolling out in terms of launch strategy for customer acquisition? Tigran:  We don’t have any specific geographical limitations.  It’s popular with web builders globally and WP is translated into hundreds of languages.  We focus on US and western Europe right now. Can you discuss the subscription-based revenue model? How do you view the competitive landscape given your value proposition of top class hosting and automation of WordPress? Tigran:  Many provide hosting and site building tools.  Competition not only within WP community but also between WP and other platforms Your competitive advantage is in the pricing and the automation, right? Tigran:   Yes, and none of the others provide a specific, customized solution to cover agency site development needs with simplicity through automation. Want to shift back to the technology.  We hear a lot about artificial intelligence (AI)…    Do you think AI will replace traditional web development or is it supplemental technology? Discuss additional capital needs and process… Capital efficient business model;  recurring revenue, high gross margins with major expenses being development and people… Tigran:  AI Fund and Sierra are Seed investors so we will consider other investors, as well Closing Remarks Tigran, what is a good way for those seeking additional information about 10Web and its products to get in touch?  Obviously, there is the 10Web website:  www.10web.io Invite agencies to sign-up 10Web, we will invite you to our Slack platform for more detailed, closer conversations. Linkedin Thank you for joining me for this edition of DVC.  I hope you found our discussion today with Tigran Nazaryan and 10Web interesting and it gave you things to think about regarding how you go about building and creating high-quality websites in the future.  I look forward to joining you on my next edition of DVC,  Thank You…

Distilling Venture Capital

Episode 020 - 10Web; Tigran Nazaryan, CEO

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use.   Episode Introduction: Welcome back everyone.  Today, we have a really fantastic program b/c I have the pleasure of welcoming to the show John Zic who is a Partner and Founding Member of EQUIAM, a San Francisco based firm that provides access to VC investments in a  John, thank you for making the time to be with me today on the podcast. I am really excited about today’s conversation about EQUIAM for a couple of reasons:  One, because it represents a true, analytics and data-based approach to investing in a basket of VC-backed private tech companies, and we’ll get into that; Also, b/c as a venture lender, the team I worked with spent many hours , days and years developing a risk assessment and risk rating model for the VC-backed companies we were providing debt commitments to. John, to begin the conversation, I thought it would be useful for you to provide us some of your background and then discuss how EQUIAM came to be… Talk about the early stages of creating this company because it’s not a new endeavor or venture, relatively speaking. Talk about the two Funds under management;  Recently closed (June 2021) the Private Alpha Fund of $50M – and you have the Private Tech 30 Fund that closed Feb. 2019;  Describe these funds and investment thesis behind them Why 30 to 35 companies in a Fund? Talk about the proprietary data-driven approach that EQUIAM has developed; not only for picking the companies in the funds, but also the ongoing evaluation and monitoring processes to make adjustments, including potentially removing an investment from the basket of stocks? Known as the Equiam Systematic Ranking (ESR), which applies a suite of proprietary algorithms to distill approximately 10,000 private companies and 10 million data points into a ranked list of approximately 30 investment targets. You’re CEO, Ziad Makkawi, believes the VC industry “should embrace the kind of AI tools it invests in.”   Expand on that… How are you able to get access to preferred shares?  What if you want to reduce no. of shares held in a co. in the Fund – how do you sell them? Use of secondary market platforms like Forge, allows EQUIAM to readily participate in private offerings of technology companies; access has not really been a problem overall… Forge used to be Equidate.  Forge is actually a minority shareholder-owner of EQUIAM, LLC According Makawi, CEO and Founder of EQUIAM, The business operates on the assumption that there is enough data out there on firms that can be analyzed and used to manage a portfolio of VC investments quantitatively. In the past, most people didn’t have access to the data or hadn’t put in the effort to find it.   We have taken a data-driven, risk-based approach to mitigate the froth that we see in the market right now;   e.g. Over-valued unicorns… Introduces a more tech-driven way of investing in VC deals.   Are you still accepting new investments in the Private Alpha Fund? How does the process work?  Accredited investors, minimum investment, etc? Potential to begin offering smaller investment sizes to non-accredited? Closing Remarks John, what is a good way for those seeking additional information about EQUIAM or perhaps have an interest in making an investment, get in touch?  EQUIAM website:  www.equiam.com Thank you for joining me for this edition of DVC.  I hope you found our discussion today with John Zic and EQUIAM interesting and it gave you things to think about regarding your ability to invest in a fund of private tech companies.  I look forward to joining you on my next edition of DVC,  Thank You…

Episode 019 - EQUIAM; John Zic, Partner and Founding Member

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. Episode Introduction: Welcome back everyone.  Today, we have a really fantastic program b/c I have the awesome pleasure of welcoming to the show Brian Requarth – who is an entrepreneur and true veteran of creating and scaling a technology businesses in Brazil and LatAm.  Brian is the co-founder and former CEO of Viva Real, the leading real estate, property technology business in Brazil.  He raised over $74MM in venture capital for Viva Real.   He merged the company with ZAP Imóveis (owned by Grupo Globo) and became the Chairman of Grupo ZAP.  He later sold the business for $550MM He now invests in the most promising tech companies in Brazil and Latin America as an angel investor.  More importantly, he is dedicated to empowering the next era of entrepreneurs in the region.  Brian, welcome and thanking you for making the time to share your incredible story and journey on the program… This motivation to help entrepreneurs in the region is done in part, through his new company, Latitud which aims to democratize access to everything an entrepreneur needs to succeed in building a successful business in LatAm. And also through your new book, Viva The Entrepreneur – where Brian seeks to help demystify the obstacles you’ll face, teach what you won’t learn in business school, and offer you inspiration and encouragement on your journey. Viva The Entrepreneur is book where Brian shares lessons learned while building his company. He shows how to manage your own psychology and your operations, be it working with co-founders, building a culture, or managing a board of directors.  Brian also reveals the secrets of scaling a business and best practices for raising venture capital in Latin America. You will develop an understanding of the most critical parts of an investor term sheet, and gain perspective into the inner workings of the venture capital game. So, I’ve read the book almost in its entirety and really want to dig into some key takeaways that struck me as I read this amazing story…  We discuss Brian’s views on being “vulnerable” and willing to hear, accept and take advice you can act on.  Brian mentions he could not have built Viva Real to its scale and success w/o the partners, advisers and board members on the ground in the region. Brian thinks about vulnerability from the standpoint of your team and trust you can build. “A lot of entrepreneurs try to shoulder everything”… “reality is you need to share the burden with your founders and the rest of team.”  Key component to success Named Entrepreneur of the Year in Brasil.  Expressed it as the “best day and worst day, all in the same 24 hours.” Brian discusses formation of Latitud in Brasil in Sept. 2020;  Decided to “Scale my advice” for entrepreneurs and investors in the region. Initially, a growing community of founders;  organized cohort-based programs.  Eventually we’ll build a community of investors and talent.   Brian funded the costs of the foundation himself.  Aggregate talent and capital to founders and investors. “I didn’t have it”  - this type of support.  It’s why I wrote the book and formed Latitud. In this interview, you’ll find out why Brian is “bullish on the next decade” in Brasil and LatAm because there are so many customer experience challenges and problems to be solved. What sectors are hot?   Brian says, “pick a sector,” really!  There are so many that are consumer-facing industries where the customer experience and customer satisfaction metrics are simply terrible.  They “scream opportunity” Every sector is filled with massive opportunities. LatAm is twice the GDP of India and has received about half the venture investment. There is now a robust Angel investing community in Brasil, seeding the next generation of companies.  NuBank will eventually go public and the wealth from that will create the next generation of Angel investors.  They are seeing the deals before institutional capital and we have that communicy We have a Fellowship for entrepreneurs and Founders.  We’ll be launching and Investor Fellowship.  Including group of Angels, then opportunity for VCs looking to dive into the region.  We have a network and hub for all of that through Latitud. Start your journey with Latitud.  “We have great momentum.” Can be as early as “ideation.”   “We are actually the on-ramp to the VC ecosystem” for investing in the region. See Latitud Go.  Full-stack where you go to find talent, capital, community. Closing Remarks Brian, what is a good way for Those seeking additional information and wishing to learn more about Latitud or get in touch?  Latitud website:  www.latitud.com Order the Book, Viva The Entrepreneur, via Kindle or Amazon.com Thank you for joining me for this edition of DVC.  I hope you found our discussion today with Brian Requarth interesting and it gave you things to think about regarding building a business in Brazil or LatAm.  I look forward to joining you on my next edition of DVC,  Thank You…

Episode 018 - Brian Requarth: CEO and Co-Founder, Viva Real in Brasil: Author of, “Viva The Entrepreneur”

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. Episode Introduction: Hello again everyone.  Today, I have the pleasure of welcoming back to the program one of my favorite guests, JP Baric, CEO and Founder at Aurum Capital Ventures, because he is my go-to source & expert in explaining and making sense of all things crypto;  BTC, crypto-mining, crypto-energy… JP thank you for coming back to join me on the show.    And to reiterate so that folks know, Aurum Capital Ventures is technology/energy company engaged in multiple aspects of the crypto-mining business. And we’re going to highlight a new Fund you’ve launched for providing exposure to crypto assets, called Lucid River Partners BTC’s Very Volatile Week: I would like to anchor the conversation initially with:   All that’s been going on in the news over BTC volatility and in crypto-asset category over the last week to 10 days; Recent price crash and negative commentary around crypto mining activity in general; Including effects of China’s announcements on banning mining, Elon Musk “poking the bear” on ESG concerns, and Jim Cramer, who gets it completely wrong, suggesting it points to the need for regulation of crypto b/c of “systemic” risk…blah, blah, blah JP, I know you’ll make sense of this for us and put it into understandable English!  What do you make of all this?  What are your initial thoughts, your take? Mike Novogratz CEO of Galaxy Digital chimed in with a short video providing some perspective and reassurance – I thought some of his comments were insightful: Mike Novogratz:  “The underlying progress that is happening in the BTC ecosystem, the ETH ecosystem and crypto in general is full speed ahead.   “This is not trading Tulips – this is trading a technology that is going to revolutionize how we transmit value to each other…” JP, what do you think?  Is Novogratz right about this? [Galaxy Digital/Galaxy Fund Mgt. - a full-service institutional player, with asset management, capital markets, and investment banking.]     Galaxy is well positioned to compete with Coinbase and Gemini around institutional funds, as well as with Fidelity on third party wealth management, as well as Grayscale on asset management. This entire business exists because of Mike Novogratz’ bet on crypto assets. Is Crypto-mining Eco-unfriendly? JP, I also wanted to spend some time discussing the energy use side of crypto-mining because, again, there is so much faulty information disseminated by folks in tech media and financial press that is just simply erroneous.   Many articles recently published are suggesting crypto-mining is not environmentally feasible due to the amount of energy used…and that this is unsustainable And China is often claimed to be a geographic center of concentration for BTC mining.  However, several bloggers and others point out this is not true at all… See Dec. 29, 2020 Forbes Article by Roger Huang, The ‘Chinese Mining Centralization’ Of Bitcoin And Ethereum Link:   https://www.forbes.com/sites/rogerhuang/2021/12/29/the-chinese-mining-centralization-of-bitcoin-and-ethereum/?sh=25b14792f669 Take-aways from Article:   The first thing to understand about this erroneous argument is: Mining pools command loyalty not based on geographic traits or even political ones, but rather, reward types, fees, and how the pool deals with bitcoin transaction fees. Mining pools might have a geographic base, but miners that pledge their hardware and their hash rate might and can switch their loyalty depending on a host of factors.   Important to look at the hash rate of a mining pool not as one monolithic bloc that can be controlled and manipulated at will, but rather as a marketplace or as an aggregator that commands a fickle amount of loyalty.  At any given time, if the rewards and technical conditions of mining pools change, there can be a shift towards mining pools based in Europe or North America — or anywhere else in the world. In addition, Miners are very long BTC;  they wouldn’t act contrary to their financial interest to damage the ecosystem. Mining pools based in China also run contrary to State policy; The People’s Republic of China has a skeptical view towards bitcoin and other cryptocurrencies Finally, Miners are also not the only institutions that matter in the balance of proof-of-work blockchains;  Nodes are run around the world.  The coders/developers that build up the framework of cryptocurrencies are distributed around the world,  With US-based institutions such as cryptocurrency exchanges and non-for-profits like the Human Rights Foundation providing funding “Ethereum Merger” announcement;  that Proof-of-Work will merge to become Proof-of-Stake, and that the benefits are energy conservation on the blockchain to confirm transactions…What do you make of this announcement?  From our October 2020 Conversation – you went into some detail regarding Energy Utilization & Economics of Crypto-Mining: JP provides a deep-dive into the interrelated metrics and dynamics of Energy and Crypto-mining.  Here is what you will learn: Crypto-currency Mining involves sourcing and utilizing the most advanced equipment, for sure, which you guys provide, but also one of the key components that has a huge impact on the cost and viability of crypto-mining itself – is the cost and amount of energy consumed – and, therefore, the energy component and its costs have a huge impact on the industry and its success. Metrics/Discussion: Terahash Rate – core measure of energy usage in crypto-mining Can predict and model the Terahash rate for mining equipment.  USD per terahash – how much we make on a USD basis - the speed of how fast a mining machine runs.   Price per terahash dropped to 7.5 cents – when BTC crashed (March 2020).  Was 13 cents per terahash prior.   Amount of new machines on the network has grown – at 8 cents per TH – betting that price of BTC will continue to rise… Miners all over the world are thus, searching for most cost-effective energy costs.   Cost/Mwh Rates in crypto-mining Old machines vs. New machines and economics Revisit the halving event from May 12, 2020 – when reward for mining was, by design, the reward went from 12.5 BTC to 6.25 BTC – Impact? Inflation Rate of BTC (1.8% infl. Rate) compared to USD inflation…digital currency has a lower effective inflation rate than the fiat currency! BTC price may be volatile but depends on what you compare it to New equip. is coming online line as fast as the manufactures can produce them.  Most are made in Taiwan and China Coming into facilities that have power in the 4cent to 5 cent range Mining Machines: The S-9s are the older;  Newer are the Ant Miner S19 Pros are  Let’s talk about your new Fund – Lucid River Partners;  What was the idea behind creating it? What will be its mandate/mission? How do folks find out more? Closing Remarks Contact Information for Aurum Capital Ventures Those seeking additional information and wishing to learn more about Aurum Capital Ventures: JP’s Twitter Account – @JPBaric Email:  jp@theminingstore.com The New Fund - Lucid River Partners:  www.lucidriverpartners.com/learn Thank you for joining me for this edition of DVC.  I hope you found our discussion today with JP Baric and Aurum Capital Ventures interesting and useful.   Stay tuned for my next Episode, where I will have a very special guest and accomplished expert on building successful tech companies in LatAm.  Brian Requarth, who created the leading Real Estate Technology Co. in Brazil, Viva Real, will join me.  He’s also an author -   Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Episode 017 - JP Baric, CEO, Aurum Capital Ventures Cryptocurrency Mining & Energy Technology

 Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world, including Fintech.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use. Episode Introduction: Today’s Episode is another in my Focus-on-Fintech Series where I provide you with a close-up look into the top companies in the Fintech sector that are bringing new innovations to the financial services market globally; In Today’s Episode, I once again highlight the hot FINTECH market in Brasil. I have the pleasure of welcoming back to the show, André Bastos, who is a Co-Founder and the Chief People and Strategy Officer at Open-Co, the largest Consumer Credit Fintech in Brazil. André, thank you for coming back to the show… André, the last time you and spoke it was October 2020 and the company was called REBEL.  After a merger of Geru and REBEL, which was announced just last month, you are now Open-Co.  But the REBEL and Geru brands remain under that umbrella… Tell us a little bit about this merger and what it means for scaling your consumer lending services business in Brasil; What is Open-Co? Geru and Rebel are both in the business of extending unsecured consumer credit, but your models are somewhat different, can you explain? A short time after announcing the formation of Open-Co, you all had another major announcement on the fund-raising side of the business; That being the closing of a $270MM credit facility, led by Goldman Sachs - very impressive  This announcement is on top of a Series C equity round with IFC and Goldman as leads, correct? Highlight your proprietary Credit Scoring Technology – Importance this played in building credibility with Lenders/Investors prior to your recent credit facility. I would love to dig into your recent post on Linkedin about the “Tony Awards and Open Co.”  I thought it was very creative, had great take-aways.  Can we talk about your thoughts, ideas and motivation for putting it together? It’s a great piece b/c it’s about lessons and what we learn from our personal experiences and how we can utilize those lessons to build our own leadership, mentoring skills, stimulate innovative ideas to improve the lives of others…and grow personally… You discuss your personal experiences in attempting to secure financing for your first home in Chicago; You even weave some Chicago history in from the Great Fire, to the 1892 World’s Fair, the rich history and importance of the Theatre in Chicago, focusing on Victory Gardens…and more; But mostly it was about learning from our experiences…and applying those learnings to improving our effectiveness and growing in the workplace The home page of your website begins with this statement; “The credit market in Brazil is one of the most dysfunctional and exclusionary in the world.  High default rates encourage traditional financial institutions to charge even higher interest rates, further driving defaults.”       And finishes the home page with this statement; “Open Co believes that the key to building groundbreaking credit products lies not only in technology, but mainly in building a relationship of trust with customers.   The time for expensive debts, bureaucracy and closed doors is over.    The future is now Open.” Historical Perspective Re Technology:  What a difference a few years makes!  I found this in my archive of articles from Dec. 2015 in TechCrunch regarding Whatsapp;   A judge in Brazil wants to shut down WhatsApp and Brazil’s Congress wants to shut down the social web next; WhatsApp was shut down for 48 hours mainly because the popular messaging platform had not cooperated in turning over user data and information in an investigation; WhatsApp is the single most used app in Brazil with around over 100 million users; Incredible to think this was happening just a few years ago in Brazil… Growth Plans for 2021-2022 – And Other… Closing Remarks:André, thank you very much for joining me today… Contact Information – Open Co André, how can those seeking additional information and wishing to learn more about Open Co contact you or the firm?  Website:  www.open-co.com.br Linkedin:  André Bastos Thank you for joining me for this Episode of DVC.  I hope you found the conversation with André Bastos and Open-Co interesting and it gave you some things to think about regarding developments in Fintech services in Brasil.  I look forward to joining on my next Episode of DVC.

Episode 016 - FOCUS-ON-FINTECH Series André Bastos, Co-Founder, Open-Co São Paulo, Brasil

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use.   Episode Introduction: Welcome back everyone.  We have what I believe is a very interesting program for you today b/c I have the pleasure of speaking with a true veteran of the Brazilian technology investment landscape, Anderson Thees, who is a Managing Partner at Redpoint e.Ventures based in São Paulo, Brasil.  Anderson, thank you very much for making the time to join me today.   So, I labeled you a veteran in tech investing in Brasil because you’ve been at it for about a decade or so with Redpoint.  I think it would be useful to begin by telling the listeners about your background and experience and then how Redpoint eVentures came about. In today’s episode, Anderson will cover,  Talk about Redpoint eVentures’ development in Brasil; You have a Dedicated Fund in Brasil;  How does this help you and how does the affiliation with Sil. Valley network add value? Ability to bring not only funding, but Silicon Valley access and global best practices to local entrepreneurs. When was Fund launched and size of Fund? We were the first fund to raise more than $100M.  Fund we raised in 2012 was targeted at a $130M Cap.   We were over-subscribed at more than $150M but we needed to stay with the $130M cap. Huge first fund – much bigger than we expected The fund is fully deployed now; Macro economy tanked and the tech and e-commerce ecosystem  We have now three unicorns with another coming…  We raised another fund of $175M in 2018 which we are investing out of today. Investment themes – what types of technologies & deals do you look for? We think of our pipeline of investments in two ways; Proactive deal flow, our investment thesis;  Second is incoming deals that come to us But always tech-driven theme plus market must be big or will become big fast Series A and B we do, Series A is our core.   Most important criterion is the founding team, especially the earlier we invest… How you approach deal flow and qualifying target companies;   Verticals, fintech, education, retail, SW B2B;   We do have concentrations in Fintech and SaaS B2B;  but this is mainly driven because of demand not due to our selection process Other: Regarding investment themes, I’d like to get your take on Insurtech and the opportunities you see there; you recently had a conversation with CQCS on this topic; Anderson discusses Insure-tech;  Insurance is actually larger than banking in terms of industry size and moving toward its own bucket in fintech; Cost of storing data, reduction of fraud, use of AI;  all affect the channels and deployment as well as how the very core product is developed and priced We discuss Rebel, now Open-Co’s closing of a $270M credit round led by Goldman Sachs What’s next for scaling fintech?  Your sense of advancements in access to financial services, the regulatory environment and macro trends?  Discuss partnership with Itau and creation of CUBO (Cube);  How did it come about and what is it? Does Itau co-invest in any deals with you? How does this partnership help you in Brasil? Closing Remarks: Anderson, thank you very much for joining me today on the program…It would be great to do a follow-up some time to get an update… Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Anderson Thees and Redpoint eVentures interesting and it gave you new insights into the Brazilian tech investing landscape. Anderson, what is a good way for those who are interested in learning more about Redpoint eVentures contact you or the Company? Contact Information Website:  rpev.com.br  Stay tuned for my next Episode of DVC…thank you.

Redpoint e.Ventures, São Paulo, Brasil Anderson Thees, Managing Partner

DISTILLING VENTURE CAPITAL Episode 014 SPECIAL EDITION – Investing in Human CapitalProjeto Sol, São Paulo, Brasil Sister Angela Mary, Co-Founder, Director Recording Date: February 24, 2021 Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.   Episode Introduction: Welcome back everyone.   So, as many of you know, this podcast covers multiple aspects of key technology trends, including Fintech, and venture capital and I even talk about over-valued Unicorns at times. Today, however, we are going to change things up a bit – b/c I want to talk about a different type of Capital that’s just as important or likely more important than the financial capital we often discuss…  Today, I want to talk about Human Capital – what do I mean by that?   As many of you know, There is an entire area, Social Impact Investing, that has been a rapidly growing trend for maybe the last 5-7 years, or more.  Impact investments are made with the intention to generate positive, measurable social and environmental impact alongside a financial return.  But today, We’ll discuss Human Capital through telling the incredible story of a very special place, known as Projeto Sol, or Project Sun or Sun Project, if you prefer.  It is located in an area of São Paulo, Brazil known as Cidade (City) Dutra in Favela Vinte.  And let me just start by saying, It has literally transformed the lives of thousands of individuals and an entire community.   It is a beacon of hope in an otherwise hopeless place…We’ll get into that. Projeto Sol has served the Brazilian community of Cidade Dutra for four decades. In 1978 Sister Angela Mary and Louis Carlos dos Santos converted a wood shack into a social centre for youth, known today as Projeto Sol – a pivotal organisation that has transformed a community long marked by drug trafficking, gang wars and police violence. Sister Angela hoped that through education, she can offer them a life beyond the confines of poverty and exclusion. Beyond education, Sister Angela has also helped residents legalise the ownership of their property while reforming & building 95 houses. So, We can say Projeto Sol is truly a family owned and operated business – but it’s in the business of changing lives and instilling basic human dignity Projeto Sol serves 250 children daily within its walls, from 5 – 17 years of age, providing two meals per day – a full breakfast and lunch.  It provides all the materials and facilities for classes in art, dance, theatre and sports.   And, it instills a discipline and attitude of self-worth and self-responsibility through education.  That’s a mere, brief summary of the Social Impact that Projeto Sol has had on the community To help me tell this amazing & powerful story of positive Social Impact I have the pleasure of introducing one of the most incredible people I know, Sister Angela Mary…who is from the Sisters of the Holy Cross, South Bend, Indiana Sister Angela, thank you very much for being here today (We’re together in SP, Brasil) to share with us the amazing journey that Projeto Sol represents Sister Angela Mary: Formative years – major life influencers for you then your arrival in Brazil and founding of Projeto Sol Sister Angela’s Story… Projeto Sol Website:  projetosol.org.br How to Participate and Support: If you are in the US/Canada; Go to  www.cscsisters.org Simple Instructions for Supporting Projeto Sol at the cscsiters.org website: On the top right of the Home Page, click on:   Support Us  → Then click, Donate Now → Scroll down, select your $ amount.  You can even make it a monthly recurring gift.  I did! Then scroll to the box, My Gift is for and select; Brazil Mission from the drop down menu.   Finally, there is a box; To provide more detail about the intent of your donation…, and simply type in, Projeto Sol That’s it.  If you are interested in and motivated by a TRULY significant Return on Investment in positive Social Impact, supporting Projeto Sol via the cscsisters.org website is an excellent way to show support. You can also send an Email to Sister Angela:  irmaangela.carey@gmail.com Closing Remarks: Thank you for joining me for this Episode of DVC, we discuss Human Capital.  Stay tuned for my next Episode of DVC…thank you.

Episode 014 SPECIAL EDITION – Investing in Human Capital

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use.   Episode Introduction: Welcome back everyone.  We have what I believe is a very interesting program for you today.  Today, I have the privilege of speaking with Kiyan Zandiyeh, Chief Investment Officer of Sturgeon Capital, a London-based [boutique] investment firm with a very unique investment strategy and thesis.   Sturgeon was established specifically to tap into Central Asia. Kiyan, thank you very much for joining me today… Let’s begin by providing some background on yourself and then an overview of Sturgeon Capital, when and why it was founded, etc. History of Sturgeon, why founded with this vision for frontier markets in Central Asia?  What is a “frontier market” according to Sturgeon?  Your website indicates “we reject traditional definitions of ‘frontier markets’ – expand on this…  Your website indicates Central Asia is a “vast area of enormous potential and extreme complexity…   I like the ‘enormous potential’ aspect – who wouldn’t.  The ‘extreme complexity’ characteristic might give many investors pause…Can you explain this further? In this Episode, Kiyan discusses the following: Describe Funds 1 & 2 Purpose/strategy of each, when launched;  $$ size of each, no. of investments to-date, no. of investments total to be made from each Fund; target technologies and target size of investment per co. on average; Do you typically lead, co-invest, or indifferent? Fund 2 – describe its focus on Uzbekistan… Other countries in the region where Sturgeon is invested? Do you leave a reserve or have an allocation from each Fund for follow-on investment to support portfolio companies through additional rounds? Sturgeon leaves about 10% reserves for follow-on investments Spend some time on how you source deals, what you are looking for in an investment in a co. for in this geographic region (game-changing tech, solving major pain points, etc.) We like market-place bus. models, e-commerce and SaaS  Can capture customer base, then capture other services… Had to solve for:  Logistics, payment solutions (< 10% Visa/MC penetration), then needed to have products on the platform that people could buy Effectively starting e-commerce businesses building from the ground up But the opportunity is huge with attractive returns, 4X-5X+ Even though we focus on “frontier” markets and regions, what we are presenting is a business bet not a country bet… Public-private partnerships you have developed and how that works… There isn’t a well-established venture investing ecosystem in these countries By product of our investing in the region, though, creates jobs, especially among youth -  So, we are adding lots of value in infrastructure, in case of e-commerce you’re helping the national logistics company become more efficient. In some cases, govt. co-invests with us, reduces impediments to establishing new businesses, etc. Where does Sturgeon’s capital come from mainly?  Family offices, geographic diversity? Are you currently accepting new investments into Fund 2?  First close in June 2020 Fund 2 will be capped at $25MM; 2/3 of the way there now. Before we launch any fund we spend 6-12 months building a pipeline, doing diligence and de-risking; then we know how much we need to raise.  Rather than raising a pool of money and then hunting for deals. Closing Remarks: Kiyan, thank you very much for joining me today on the program…It would be great to do a follow-up some time to get an update… Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Kiyan Zandiyeh and Sturgeon Capital interesting.  If you’re looking for strong risk-adjusted returns and concerned about an overheated public equity markets (you should be) and private tech markets (where you can invest in Unicorns??) and would like to understand more about investing and gaining exposure to Central Asia, Sturgeon Capital is the go-to Fund with the expertise… Kiyan, how can those that are interested in learning more contact you or the Company? Contact Information Website:  sturgeoncapital.com Company Email:  for information/inquiries Stay tuned for my next Episode of DVC…thank you.

Episode 013 - Sturgeon Capital, London; Kiyan Zandiyeh, Chief Investment Officer

Episode Overview: My guest today, Alberto Gaidys is a Brazil Fintech Pioneer.  He was involved in creating some of the first Fintech companies in Brazil, even before it was called “fintech.”  Settle in for a highly informative and detailed look at Brazilian Financial markets and Brazilian Fintech. Alberto takes you on a remarkably interesting journey through the creation of the first fintech companies in Brazil in which he was directly responsible with building. Some of the companies you will hear about include:  Grana AQUI, Brazilian Mortgages, BankFacil, and Creditas, among others. In this Episode, Alberto provides an in-depth, well-informed analyses of credit and capital markets in Brazil along with incredibly interesting first-hand accounts of the beginnings of Fintech in Brazil. Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger; Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use.  Welcome back everyone.  It is great to be back with you in 2021 providing you with the quality content you´ve come to expect and rely on at DVC. Today’s Episode is another in my Focus-on-Fintech Series where I provide you with a close-up look into the top companies in the Financial Technology sector that are bringing new innovations to financial services markets globally;   I am super excited about today´s show because, while it is in the Fintech theme common to this podcast, it will have a bit of twist.  We will focus on Brasil Fintech and dig into characteristics of Brasil Capital, Credit and Financial markets as it relates to Fintech in Brasil. My excitement is because my guest today is not only very knowledgeable regarding Fintech in Brasil, and brings a unique perspective on the role of capital markets in scaling Brasil Fintech;  but he happens to be one of the leading experts on Brazil´s Capital Markets, Credit Markets and the Brazilian financial system. It is my pleasure to welcome to the program Alberto Gaidys.  Alberto, thank you very much for making the time to join me today… I was going to detail some of your impressive credentials, but I think it´s better for me to allow you to tell us a about your background and expertise and then we can move into our topic. So, Brasil is reported to have over 400 Fintech companies in operation.   One of the most recognized names on the list is Nubank, which just raised another $400MM round in its Series G and has raised more than $1.8B since 2013.  It claims to be the largest digital bank in the world, starting with a simple no-fee credit card offering.   It has grown its customer base from 12 million to 34 million, freeing millions in one of the most concentrated banking environments in the world.  The new funding will be used to expand in Colombia and Mexico. Alberto, you are an advisor on another successful Brazilian Fintech co., Creditas, a secured lender to consumers. Creditas has an interesting back-story as it relates to its stages of development as a Fintech in Brasil…can you tell us how this company evolved to its current model and your role…? The Grana AQUI story:  (Acquired by Creditas) “Too early in the game when cap. markets buzz was not as strong…” Banco Central even looked at this co. with suspicion of its P2P lending model…expand on this… Your perspective and thesis related to all of this Fintech activity and assessment of the Fintech landscape in Brasil: Focus on disintermediation – a key objective of Fintech – related to evolution of capital markets to support it… You have previously stated that without this evolution of capital markets instruments, “there would be no Fintechs out there…”  can you expand on this?  Isn’t it also true w/o the development of these Fintech apps., regulators would not have moved to address rules and regulations allowing cap. markets to evolve? There is also the narrative that the high adoption of digital technologies by Brazilians (72% of population has a smartphone), and the huge entrepreneurial economy has led to a wave of Fintech innovation?? Closing Remarks: Alberto, thank you very much for joining me today on the program… It would be great to do a follow-up conversation if you are open to that – I would enjoy getting your input and perspective regarding continued of capital markets in Brasil and what it means for Brasil Fintech… Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Alberto Gaidys interesting and it provided you with things to think about regarding Brasil Fintech and capital markets.  Or, perhaps you are an investor fund looking to enter the Brasil market… Stay tuned for my next Episode of DVC where I will highlight a London-based investment fund with a very unique geographical approach to deal flow and investments. Thank you for joining me today.

Episode 012 - Alberto Gaidys, Chief Investment Officer & Founding Partner of Wright Capital Wealth Management & Pioneer in Brazilian Fintech; São Paulo, Brasil

Episode 011 - FOCUS-ON-FINTECH Series, Molecule Software with Sameer Soleja, CEO

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use.   Episode Introduction: Welcome back everyone.   In today’s Episode, I have the pleasure to be joined by Thomas Healy, Founder & CEO of Hyliion, creator and maker of high-tech drivetrain for traditional Class 8 long haul trucks powered by lithium-ion batteries and CNG Thank you Thomas for making the time to join me today…   First, congratulations on your public launch via the SPAC – Special Purpose Acq. Corp. which was official as of Sept. 28th.  It doesn’t seem all that long ago that we were getting introduced to Hyliion at the 2015 Rice Business Plan Competition – when you guys rolled into Houston – literally – from Carnegie Mellon with the big green Hyliion-branded truck…it was quite a prop!   In This Episode, Thomas Healy Covers Hyliion’s Journey to its Public Offering, Including: Background on the formation/launch of Hyliion Development of the “e-axle” electrified axle design; Lithium-ion/CNG design  Went public couple of weeks ago –  Came to Rice Bus. Plan Competition in 2015 – presented to over 500 people Brought prototype – goal of bringing electrification to the trucking space – virtually untapped market opportunity Semi-truck traffic is the backbone for moving cargo around the US and the globe Why did you choose a SPAC as avenue for going public?  Advantages, etc… Looked at all paths of private and going public Chose the SPAC path – a reverse merger into being a public co.    Merged with Tortoise Acquisition Corp.  Capital we brought in – Little over $500M Saw a great team in Tortoise in terms of similarities in outlook and key industry needs and characteristics Tortoise raised $235M over year ago – they pitched to their investors that they would go find a co. like Hyliion.   Their group looked at 100s of companies before selecting Hyliion – Tortoise is a big energy expertise player and particularly sustainable/efficiency drive Story behind the Hyliion name? Business Model & Business Model Characteristics Producing a fully electric truck – using an onboard natural gas generator to produce electricity and charge the battery Leverages Mega-trend toward renewable natural gas, as well Created very capital efficient business model – Hyliion is a powertrain co. working with existing OEMs like Volvo, Freightliner, Kenworth No need to reinvent the whole truck – solution and benefit is in the powertrain, leveraging great existing truck technology Infrastructure to recharge vehicles is one of the biggest hurdles and uses of capital to enter the market Our solution uses renewable and traditional natural gas to recharge the batteries Existing grid there – but hardly any recharging stations for electric trucks – so have to create the infrastructure, requiring billions of investor capital – just to set up the charging stations Two of the Tesla “Mega Chargers” actually uses massive amount of power to recharge trucks Go-to-Market Strategy…Incorporated design into the drivetrain of existing Class 8, long-haul truck Value of CNG and Lith.-ion combo Advantage of existing CNG fueling infrastructure around the US – big competitive advantage Discusses advantages over hydrogen as a fuel source How Hyliion defines your Addressable Market? Key Partner/Investor network (Sumitomo, Dana, Inc. – leading force in trucking industry – valuable partner on supply chain and also mfg.   Product is already shipped in low volume today:  Selected use-case partner/pilot examples; (Penske, Ryder, Wegmann, other trucking industry pilots & partnerships) Importance of your Partners and related network in delivering the offering; Capital Required to Grow? – It was announced you netted approx. > $500MM from the public offering via Tortoise Acq. Corp. –  Fully-funded plan with that capital – Capital to move tech to commercialization, volume manufacturing and production and scale the business.  Our capital efficient, capital light approach is leveraged via Dana, Inc. for our outsource manufacturer;  we don’t have to find or build a facility – great mfg. partner Dana, Inc. already a leader in producing product for trucking industry Discuss how you execute and get to breakeven and profitable on this capital? Competitive differentiation – Fleets care about cost savings.  Goal/bus. model is moving cargo from point A to B in most cost-effective manner possible to increase their margins. Hyliion is less expensive than diesel, certainly cheaper than hydrogen and significantly cheaper than building a completely new electric truck and the recharging infrastructure. So, Hyliion has a solution now that saves the trucking industry money and is environmentally friendly. Competitive Advantages Discussion competitive landscape, relative cost/pricing structure and how you leverage your expertise to bring a compelling value proposition Other competitive advantages, differentiation… View of Addressable Market Plans for International Expansion – Hyliion is a North American Co. for now right now with product already in Canada in addition to US traction.  Closing Remarks:Thomas, thank you very much for joining me today… Contact Information, Hyliion Thomas, how can those seeking additional information and wishing to learn more about Hyliion contact you or the firm?   [I guess referring listeners to the ticker, HYLN, would be best start, right?]    I’m typically interviewing companies that have not gone public yet – so this is new Website:   hyliion.com Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Thomas Healy and Hyliion interesting and it gave you some things to think about regarding developments in long-haul truck technologies.    Stay tuned for my next Episode.

Hyliion Holdings (NYSE:HYLN); Conversation w/CEO Thomas Healy

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use. Episode Introduction: Welcome back everyone.  Well, today I have the pleasure of welcoming back to the program JP Baric, CEO and Founder at Aurum Capital Ventures, which is engaged in the crypto-mining business.  JP thank you for coming back to join me on the show.    So, the last time we did a program was in mid-May, about 5 months ago, and I introduced Aurum Capital Ventures then as a technology/energy company directly involved in multiple aspects of the crypto-mining industry – and we delved into the many interesting aspects of your business model.  I have received a lot of positive feedback to that show – so glad you’re here to do this again… Crypto-currency Mining involves sourcing and utilizing the most advanced equipment, for sure, which you guys provide, but also one of the key components that has a huge impact on the cost and viability of crypto-mining itself – is the cost and amount of energy consumed – and, therefore, the energy component and its costs have a huge impact on the industry and its success Aurum has developed a truly innovative vision and approach to this aspect (Energy) of the business.  And I wanted to provide a platform here today for you to explore in-depth how you think about and approach the idea of generating, producing and sourcing energy at the core of   Please introduce and present this in the way you think would be most helpful and useful for our listeners to appreciate the impact of this vision Energy Utilization & Economics of Crypto-Mining: JP provides a deep-dive into the interrelated metrics and dynamics of Energy and Crypto-mining.  Here is what you will learn: Terahash Rate – core measure of energy usage in crypto-mining Can predict and model the Terahash rate for mining equipment.  USD per terahash – how much we make on a USD basis - the speed of how fast a mining machine runs.   Price per terahash dropped to 7.5 cents – when BTC crashed (March).  Was 13 cents per terahash.   Today, sitting at 8 cents per terahash with BTC at roughly $12,000 today.    Amount of new machines on the network has grown – at 8 cents per TH – betting that price of BTC will continue to rise… Miners all over the world are thus, searching for most cost-effective energy costs.   Cost/Mwh Rates in crypto-mining Old machines vs. New machines and economics Revisit the halving event from May 12, 2020 – when reward for mining was, by design, the reward went from 12.5 BTC to 6.25 BTC – Impact? Inflation Rate of BTC (1.8% infl. Rate) compared to USD inflation…digital currency has a lower effective inflation rate than the fiat currency! BTC price may be volatile but depends on what you compare it to New equip. is coming online line as fast as the manufactures can produce them.  Most are made in Taiwan and China Coming into facilities that have power in the 4cent to 5 cent range Mining Machines: The S-9s are the older;  Newer are the Ant Miner S19 Pros are 30 Juuls per terahash.   Square Announces Purchase of $50MM BTC for its Balance Sheet Here’s a perhaps diversion from our main topic related to mining & energy, but it’s related to Bitcoin and the larger ecosystem.  So, here’s some industry news I wanted to get your opinion on re Square – We all know them as the POS payment company. not only does Square have the retail app and footprint now, but they’ve also got a lot of very granular, small business merchant data. They've turned that into Square Capital and the small business lending business.  And the data on the consumer side, the spending side, the merchant acquiring side, and visibility into SMB finances to drive the business forward, creates a pretty tight loop, closed ecosystem.  Square just recently announced – put out a press release actually – that they had purchased around $50MM of Bitcoin…Now other major financial services companies have bought substantial sums of BTC too, but didn’t necessarily announce it by press release – What’s going on here in your view? This from another podcast I listen to called ReBank.  Their comments regarding Square purchase of BTC Will Beeson (ReBank):  “It's like investing in treasury assets, and you use them to run your business.  It's about 1% of Square's assets.  And I think the bigger question is, is this Square, or is this a representation of broader investment theory?  Like is Bitcoin now something of an asset class that institutional investors and traditional institutional investors are taking more seriously and are viewing either as an inflation hedge or an option on potential future upside.” Lex Sokolin (ReBank/Consensys):  “All you have to do is look at venture investments and Andreessen Horowitz with hundreds of millions of dollars in dedicated crypto funds and that being true for the long tail of Silicon Valley players as well. And so when people who want to be like Square and want to have that same outcome, or like Twitter or venture funds that want to be like Andreessen, which is by the way, 100% of anyone who is an entrepreneurship, when they see these actions being taken, they're both symbolic, but they're also inspirational.” Then, if that weren’t innovative enough, Aurum Capital Ventures is also focused on leading efforts to bring much needed liquidity and financing to the mining and cryptocurrency markets themselves…Can you elaborate on why this is important and what you are doing to facilitate attracting mainstream forms of capital to the industry? Other Learnings from Today’s Episode: Define Cryptocurrency-Mining & How it Works   The Future of Crypto-Mining Crypto-Currency and Crypto-Mining are Fully Transparent Markets, by Design The Search for the Best Equipment and Cheapest Source of Energy  How Aurum Capital Ventures is Changing the Game and Mindset Regarding Crypto-Mining and the Production of Energy Aurum is Both a Buyer and Seller of Energy Aurum is Redefining How Energy is Consumed and Transmitted Aurum is Creating Unique Investment Vehicles to bring needed liquidity – both debt and equity capital – to the Crypto-Mining and Crypto-Currency  How Crypto-Miners are Rewarded What is a Halving Event and What does it Mean for Cryptocurrency Mining? And Much More… Business Model Characteristics Your Bus. Model has Multiple Revenue Sources: Turnkey Mining Equip Deployments & hosting services;  Speed & Efficiency through repeatable process of Power procurement, infrastructure deployment, and remote management Running your own Mining servers Managed Services Selling used equipment to established network Competitive Advantages Modular, mobile equipment deployment – more efficient Rapid Payback/Utilization of “Stranded Energy” - Aurum’s mobile mining deployments profitably monetize any type of stranded energy anywhere in the world Situation where the value of the underlying collateral (mining equipment) can increase in value during life of the equip. and related financing, due to a halving event of Bitcoin Allows you to build inventory of equipment for deployment now, in advance of halving event that you know occurs approx. every four years JP Baric explains Aurum’s business model advantages relative to competitors such as Genesis Mining Closing RemarksContact Information for Aurum Capital Ventures Those seeking additional information and wishing to learn more about Aurum Capital Ventures: JP’s Twitter Account – @JPBaric Email:  jp@aurumventures.com Sign up for Investor Newsletter at: Aurumcapitalventures.com Launching new podcast called “Digital Gold”   Thank you for joining me for this edition of DVC.  I hope you found our discussion today with JP Baric and Aurum Capital Ventures interesting and useful.   Stay tuned for my next Episode, where I will have a very special guest of a high-profile company getting lots of buzz, that just went public via a SPAC in just the last few weeks.  Think electric truck technology – like big, 18-wheeler truck – industry.   That’s all I’m giving you for now.  Stay tuned… Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Episode 009 - Cryptocurrency Mining/Energy Operator Aurum Capital Ventures - (Revisit with John Paul Baric, Founder & CEO)

Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use. Episode Introduction: Welcome back everyone.  Today’s Episode is another in my Focus-on-Fintech Series where I bring you a close-up look into the companies in the Fintech Sector and the innovations they are bringing to financial services markets; And, based on the intro theme music for today’s Episode, (Aquarela do Brasil by Gal Costa) you may have guessed we are headed again to the land of Samba, Carnaval, Futebol and now, FINTECH - Brasil.  We’ll revisit why Brasil has become one of the hottest Fintech markets globally, attracting massive investor and consumer interest.   Today I highlight one of the fastest growing Fintech companies in Brasil, São Paulo-based REBEL, a leading consumer lending fintech I’ve been following for around a year or so now…(That’s REBEL.com.br) The REBEL Story To help me do all of that, I am super-excited and pleased to be joined today by André Bastos, a Co-Founder of REBEL and currently its COO, among other things;   André, thank you very much for joining me today. There are a lot of interesting and important characteristics of the REBEL bus. model I want to get into today but; To start things off, please give us some background, history on the formation of the company and what REBEL offers;  when and how you got started, and the motivations behind the creation the company.  What was the impetus, motivation? The REBEL Business Model & Business Model Characteristics REBEL services offering; Starting with a true Lending offering as opposed to credit card or payment services like many other fintech models Importance of developing your proprietary Credit Scoring Technology;  as a competitive advantage Talk about how REBEL drives client engagement and loyalty;  REBEL is taking a unique, dedicated approach when it comes to cust. Engagement – right?  With a hands-on, Human touch;    What is the role and strategy of the Financial Wellness offering? Is there a consumer finance education component to this initiative?  Why is that important? Discuss how blockchain and Machine Learning plays a critical role in REBEL’s offering and strategy…How do you utilize the capabilities of blockchain technology? Will REBEL consider secured lending in the future? Will you expand to other geographies in LatAm, elsewhere, in the future? Licensing opportunity for the credit score tech. in other geographies? Is there any unique or special story around the company name REBEL and your branding strategies? Other Brasil Fintech Companies that Have Raised Capital Recently: NuBank has raised over $800MM, starting with just a credit card offering, now valued at over $10B; Neon Pagamentos just raised a $300MM Series C round earlier this month and has raised over $420MM;  Klarna raised $650MM at a $10.6B valuation, double its prior; Offers a buy-now-pay-later in 4 installments bus. model – Mach. Learning approach Growth Prospects for REBEL? REBEL has had impressive growth:   Loan Originations nearly tripled 2H 2019 vs 1H 2019 How did 1H 2020 track? What’s growth expectation for 2020? When do you predict reaching breakeven and CF positive results? What is your addressable market?   $100B USD for unsecured consumer loans – huge! Brasil Credit Markets – Historical Perspective I wanted to discuss credit markets in Brasil historically and why the current environment is so much more Fintech-friendly than in the past – as regulators have become somewhat accommodative embracing digital solutions and competition in financial services. Provide a short historical perspective of the role of credit and equity in Brasil…Brasil has not historically had “deep” credit markets – and very expensived;  Condition of historically high interest rates… If you weren’t a large corporation with access to the public stock market, you really couldn’t raise capital or get credit/debt – you had to grow your business with cash – which means limiting and constraining your growth. Banco Central – Central Bank created a new class of financial services company in mid-2018 (sociedade de crédito direto – SCD  OR Society of Direct Credit).  What does it mean for consumers, businesses and new digital offerings? CVM – Comissão de Valores Mobiliários; Brazilian equivalent of the SEC Then, in May 2020, The Brazilian Central Bank and the National Monetary Council set out open banking regulations.  The data-sharing framework aims to foster financial inclusion, drive competition in financial services and increase security. Finally, O Banco Central is launching its own digital payment platform - PIX Regulatory Initiative Supported by Central Bank:  “The premise is that the personal data held by banks and other financial institutions do not belong to them, but to the respective holders, customers,” according to Marcelo Chiavassa, professor of digital law at Universidade Presbiteriana Mackenzie Campinas Financial institutions must begin adhering to new rules stipulating that data belongs to individuals, says Maristela Martins, country manager for Brazil at Backbase.  How important are these regulations for Brasil credit and financial services markets, in your view?  Plans for Capital to Grow – discuss only what you care to disclose here;   Capital you’ve raised in the past and who your investor partners are; REBEL just raised a substantial securitization facility end of 2019 representing a validation of your business model, technology and customer engagement;   Importance of access to other liquidity facilities to grow loan portfolio with favorable cost of capital and generate profitability;   Importance of Diversity of capital sources; Capital needs to grow and scale the business;   Are there any plans to take your business model and credit tech to markets outside of Brasil? Closing Remarks: André, thank you very much for joining me today… I would love to do a follow up sometime as you make progress, to get an update on how things are going. Contact Information - REBEL André, how can those seeking additional information and wishing to learn more about REBEL contact you or the firm?  Website:  www.rebel.com.br   Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with André Bastos and REBEL interesting and it gave you some things to think about regarding rapidly advancing growth and trends of Fintech services in Brasil.   Thank you again and I look forward to joining you for my next Episode of Distilling VC.

Episode 008 - FOCUS-ON-FINTECH Series - André Bastos, Co-Founder & COO, REBEL - São Paulo, Brasil

Show Introduction –  Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world, including Fintech.  My mission is to cut through and go beyond the hype that tends to dominate the tech and VC landscape.  And provide you with information you can use. Episode Introduction: Today’s Episode is another in my Focus-on-Fintech Series where I provide you with a close-up look into the top companies in the Fintech sector that are bringing new innovations to the financial services market In today’s Episode, I delve into and distill down new Fintech Company, Alviere, just launched earlier this month. Alviere has created and launched a plug-and-play, single-integration SW platform that streamlines and automates delivery of a broad array of financial products and services. It is headquartered in Cleveland, OH and Lisbon, Portugal – we’ll get into that aspect of the business a bit more, as well. To help me do that, I am pleased to be joined today by Yuval Brisker who is the Co-Founder and CEO of Alviere.  Yuval, thank you very much for taking the time to join me today.    Today, You Will Learn the Following About Alviere: Background behind company’s genesis, development and launch; The many “learnings” from Mezu payment app. operations;  highlight experience and pains of taking a payments fintech to market and how it laide the groundwork for Alviere; Yuval’s extensive experience/background as a pioneer in the development of B2B SaaS platform tech companies – your first having been acquire by Oracle Story behind the Alviere name…? Business Model Features & Characteristics Yuval provides details on the HIVE solution and its components; Selected use-case applications, as noted in Press Release info and other stories – examples of business users; Importance of Alviere Financial Institution Partners and related network in delivering the offering; Fact that this product is fully developed, tested and ready for market, as scale;  Discuss Revenue Model - Services, subscription-based revenue model Addressable Market – Your ready for US and Canada;  Mexico by end of 2020;  Other international expansion? Go-to-Market Strategies… Goal is to be the Amazon Web Services offering of the Financial Services sector  We also highlight Yuval’s background as a pioneer in the development of B2B SaaS tech companies;  Acquisition of TOA by Oracle (2014), Mezu payment app., now Alivere; Plans for Capital to Grow – Yuval discusses his thoughts on capital needs to grow the business; Yuval is no stranger to raising capital from Venture and other investors.  Yuval discusses some of the key objectives in that regard with respect to Alviere? Roll-out Plan for International Expansion Competitive Advantages Description of the competitive landscape, relative cost/pricing structure and how Alviere leverages its expertise to bring a compelling value proposition to clients Other competitive advantages, differentiation – Beyond traditional Banking-as-a-Service offerings; Closing Remarks:Yuval, thank you very much for joining me today Contact Information, Alviere Yuval, how can those seeking additional information and wishing to learn more about Alviere contact you or the firm?  Website: www.alviere.com   Email: yuval.brisker@alviere.com Alviere on Linkedin  Thank you for joining me for this edition of DVC.  I hope you found today’s discussion with Yuval Brisker and Alviere interesting and it gave you some things to think about regarding rapidly advancing trends in Fintech services.   I look forward to joining on my next episode of Distilling Venture Capital

Episode 007 - FOCUS-ON-FINTECH Series - Yuval Brisker, Co-Founder & CEO, ALVIERE

  Introduction Welcome to Distilling Venture Capital.  I am your host, Bill Griesinger Distilling VC is a visionary podcast that provides an insightful and informed view of the key trends affecting the VC and tech startup world.  My mission is to cut through and go beyond the hype that tends to dominate the tech landscape.  And provide you with information you can use   Opening Observations: Hello everyone, and welcome back.  I promised you in the prior Episode that I would devote this Episode to distilling down one of the most famous poster-kids for Unicorns-aren’t-real; WeWork Today, I am going to provide you the insights and analysis that the technology and financial press, investors and others have failed to deliver to you over the last few years regarding this tarnished unicorn. To set the stage though, let’s do a quick timeline review of WeWork leading up to and then after its failed IPO of Sept. of 2019:   WeWork valued itself at a cool $47B by early 2019 and, that in fact would be its valuation leading up to its announced IPO WeWork filed its S-1 and IPO paperwork in mid-Aug. 2019 After more than a few I-Banks and others scrutinized its financial condition and bus. model and “questioned” the proposed go-public valuation the Co. made some, shall we say, “adjustments” to its valuation  After some consideration, WeWork suggested it would now go public at, uh, $10B-$16B Bam!  A greater than 65% vaporization of its valuation in a matter days - amazing Cancelled its IPO in Sept. 2019 when support waned By Oct. 2019, Adam Nuemann asked to step down after discovering a few “corporate governance” problems.  He received a total $1.7B golden parachute to go away. Bloomberg opinion writer, Matt Levine, put it this way in a late Oct. 2019 piece, writing tongue-in-cheek suggested how the news was communicated to employees at the time:  It was explained, “We had to give him a billion dollars to go away because we couldn’t afford to have him stick around,”  So, his value to the Company was negative a billion dollars. Levine continues, in other words, “We can’t pay you for your good work because it was more urgent to pay your boss a billion dollars to stop doing his bad work.”  Sounds about right. By Oct. 2019, life support was needed.  The Co. accepted (as if it had a choice) a Softbank rescue pkg. where SB took control of the Co., valuing it at $8B (about $19/share, which, as it turns out, was still too high) More recently (April 2020), SoftBank pulled the plug on and backed out of a planned tender offer of an addl $3B to bail out, er, I mean plan to shore up, WeWorks shareholders. To a lawsuit; Following the termination of that agreement, WeWork Board voted to sue the only thing that was keeping it alive…SoftBank’s money.  Great strategy Then came the question;  Who should lead the Co. post-A. Nuemann?   After being led by such an irreplaceable visionary as Adam Nuemann (according to the S-1), surely a similarly disruptive, forward thinking genius would be required.  Or, you could hire this guy: in Feb. 2020 WeWork announced it had named Sandeep Mathrani, a senior executive with RE Company Brookfield Properties, as its new CEO. Wait, what?  An experienced RE executive from one of the top companies in the field? A sordid mess, I know…but this is what passes for reality now when you are dealing in the land of unicorns, right?  Things get a little distorted Let’s get back to reality and restore some meaning to this mess: I told you my main objective is to cut through the hype that tends to dominate… With a bit of cursory, basic diligence, I’ll point out and highlight a few of the basic risks of the WeWork bus. model.  Something one would have expected from the analysts, I-Banks, INVESTORS, lenders and, oh yeah, the tech and financial press, to have done – but they didn’t. It’s not really that complicated to determine what WeWork is and understand its key business model characteristics.   The First thing to point out is this; WeWork is not a tech company!  News Flash.  I know this may come as a rude surprise to many...and despite the narrative and musings of a truly voluminous S-1 to the contrary (> 350 pages), the WeWork vision and version of the co-working ofc. space business is not transforming our consciousness and vision on how we all work… What Adam Neumann and WeWork wanted you to believe, however, was that he and his firm were transforming the very way we all work and we’re “building community” fostering some new form of “collaboration,” and so on In other words, if you accept WeWork’s view of the world, it’s basically like saying your bus. model is the equivalent of “boiling the ocean.”  Doable?  How does that sound as an investment opportunity? In the real world, renters of commercial ofc. space desire functionality, convenience and flexibility at a reasonable price – All before this nebulous creating community nonsense.  It’s common sense and bottom line thinking in which any business must engage.  Again, not a new phenomenon or metric of the commercial ofc. space market, correct? The WeWork Business Model in About Two and a Half Minutes: What is the WeWork business model at its core?  How does the company actually derive/earn revenue?  Let’s examine the fundamentals. In short, WeWork creates a marketplace for commercial property that seeks to match the supply of commercial office space (from landlords, comm. Bldg. owners, prop. mgt. companies) with space users (those renting) in one place.   You know, like Regus, w/o the “cool factor” and Kambuca on tap – and, oh yeah, billions from SoftBank So, WeWork signs long term leases on properties and also purchased some properties outright, sometimes just a floor or two in an office building—and transformed it into smaller offices and workstations with common areas, other amenities and offered a basket of shared services.  Avg. initial lease term is 15 years, according to the S-1 Filing. It then rents offices and desks to individuals or groups on relatively short-term agreements, who want the benefits of a fully stocked office with some functional common areas, but without the expense of operating a full office.  Sounds reasonable.   WeWork calls it clients “Members” and sells Memberships Memberships can be On-Demand;  provide access to shared workstations or private spaces as needed, by the minute, by the hour or by the day.  “Space-as-a-Service platform. Enterprise Memberships are signed with organizations with 500 or more employees – As of June 2019, WeWork’s Enterprise Memberships accounted for 40% of all Memberships Capital expenditures relates to creating Workstation Capacity + other improvements   WeWork also has utilized the services of a few major third-party Com. RE management firms like JLL and CBRE to facilitate leasing of the space it owns or leases itself. Risk Assessment:   So, let’s step back for a moment and summarize:  WeWork incurs rent liabilities and payment liabilities for its properties that are fixed pmts. and long term.  Its revenue, on the other hand, is generated from the short-term contracts it signs with clients, many month-to-month. Let’s stop here and identify one of the major risks that becomes very obvious in the WeWork business model, has always existed, and is potentially huge?  The possibility for a significant C.F. timing mismatch between the long term, fixed payment liabilities WeWork carries on its balance sheet vs the short-term agreements with clients that represent its primary source of revenue and cash flow.   (to pay those property liabilities and cover bus. expenses) More specifically, the risk I have identified is renewal risk and/or non-payment risk.  I don’t know the avg. term that clients have signed up for;  i.e. renting monthly, for 6 months or a year (to obtain the flexibility they desire)?   SO, renewal rates are directly dependent upon a firm’s ability to provid great service, Completely independent of the mission of “transforming the way we all work, collaborate, etc.  Presents the classic CF squeeze that can occur if things do not go as planned  The rent or loan payments are due every month, fixed, for many years. (Avg. 15 years)      My diligence questions upon reviewing this business risk would include the following: What is the avg term of your rental agreements? i.e. – how long are clients signing up for space on avg? (allows one to see a schedule of lease renewal dates) What is the historical renewal rate experience?  (After all, WeWork has been operating under this model since 2014 – it’s not new – should be readily available data) Alternatively, What’s the churn or non-renewal rate?  This analysis, with the historical experience, provides one with a semblance of margins generated and whether there is EVER a path to profitability – and ability to service the lease/debt payment obligations.   So, that is the WeWork business model in a nutshell – Providing flexible ofc space with some common area, amenities and services...   How should such a company be valued?  Well, like most any company – by the cash flows that it generates from operations…right?   A basic “smell test,” that should have been a reality check, a wake-up call evident to anyone analyzing WeWork was presented by Professor Ilya Strebulav’s (Stanford valuation model creator and author) from his June 2016 presentation to the SVOD.   Again, please refer to the Show Notes for a link to the video.  I highly recommended you watch it.   Link to Video:   Presentation at SVOD (Sil. Valley Open Doors Conf.), June 19, 2016 by Ilya Strebulav, author of the Study and Professor, Stanford Univ. Grad. School of Business:   https://youtu.be/k4OtGWZ3iYI Link to Stanford University Study:   Squaring Venture Capital Valuations with Reality - Downloadable pdf found here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2955455 (Social Science Research Network – SSRN)   Here is what Professor Strebulav points out in his presentation regarding WeWork: On March 1, (2016) WeWork closed a $430MM round of capital at a post-money valuation of $16B.  That is the valuation that the WSJ and others printed and reported the next day as the “value” of the Company He notes that, At this valuation, WeWork would have represented the 3rd most valuable publicly traded ofc landlord (if it were publicly traded).   Even though it controlled only small fraction of the sq. footage compared to the leading companies in the sector.  Remember, by the time WeWork filed for its IPO, it represented that it was nearly triple that  ($47B) Such a valuation makes no financial or intuitive sense…based on what we know of the business model, as practiced by its “peers” in the sector  (Regus) – And, set against the sq. footage it operated.   This valuation it obviously what investors and some I-banks thought they could get leading up to Sept. 2019 when WeWork was indicating a $47B valuation go-public offering. A reading of WeWork’s S-1 filing, if you could stomach it, is mostly an exercise in fantasy-land thinking.   What are some of those “other” public firms that WeWork’s valuation mirrored or exceeded at the time of its S1? Brookfield Asset Management - CAN (> 152M retail s.f.;  300M s.f. ofc, hotel, apt.; Mtk Cap - $51B; highly profitable) As of June 1, 2019, WeWork’s location pipeline included approximately 40 million “usable” square feet, which it estimates could accommodate approximately 724,000 workstations.  Again, this is “Pipeline” of “Useable” s.f. not actual rented and under management square footage.   How VCs Make Final Investment Decisions: Ask any associate or partner at a VC firm to divulge one of the key criteria they evaluate before making a decision to invest in a tech company – The answer you will receive most often, if not unanimously, is;  Quality of the Management Team.  Can this team move this co. forward to success? I know this b/c I’ve been asking VCs this question as part of my investor diligence for more than 15 yrs – it’s required understanding before our venture debt group would approve making a loan to the companies we considered…VCs bet on management teams in the end… It seems this key tenet of the VC decision process was thrown to the wind in the case of WeWork…and many other unicorns.   Perhaps it was the lure of all the SoftBank dollars pouring in through a firehose?  Either way, the process was tainted and distorted.    Thus, we cannot lose sight of the unmistakable role of SoftBank in fueling this craziness – and the related poor VC decision making – in light of the bankrolling on steroids in which SB engaged – driving up the “on-paper-only” valuations of the companies in its portfolio.  While examining SoftBank’s Vision Fund activities is worthy of an episode of its own… one can certainly read all the commentary and articles on your own… Failure of the Tech Media: Yet, in May of 2019 only a few months before WeWork pulled its IPO, here was PitchBook, with another fawning piece expressing total amazement at the killer valuation growth of some of the most bad-ass unicorns, including WeWork.  They were so giddy they could hardly contain themselves.. In another Weekend Pitch edition, “When your valuation is growing by nearly $1 billion a month, you must be doing something right.”  [They were referring to DoorDash] “It calls to mind a stretch experienced a few years ago by WeWork.  Today, WeWork is reportedly worth $47 billion, making it the most valuable VC-backed company in the US.”   Amazing, isn’t it?  Again, no supporting analysis, no bus. model assessment, no risk assessment – just sheer amazement at valuation growth based upon a faulty measure of Value – the post-money valuation!   And from my last Episode, this is worth repeating - PitchBook Weekend Pitch from Nov. 3, 2019: “For a long while in and around Silicon Valley, unprofitability was what every startup hoped to achieve.  And if losing hundreds of millions of VC dollars was cool, then Adam Neumann was Miles Davis.” Really?  Are you kidding me?  This is post-IPO cancellation, post Andy Neumann is toast and post-SoftBank rescue package!   This is your expert analysis that PitchBook is charging for? PitchBook continues, “But these days, in the wake of WeWork’s sudden fall from grace, investors are feeling differently.  All those years of red ink are finally adding up.”   Again, the only redeeming thing I could take from such a ridiculous statement is that the writer even knows who Miles Davis is.  But then I realize, the whole thing is an insult to Miles Davis and our intelligence.  Miles Davis was a musical/jazz genius, a master artist.  Adam Neumann was a fraud.  And the VCs in the WeWork deal should have known this through their diligence.   Hey, I’ve got another survey question or two for the VC community that I would ask;     1) is losing 100’s of millions of VC dollars a cool thing?   2) Do you agree that every startup hopes to achieve this “unprofitability” status? That’s what PitchBook suggests…as recently at Q4 2019   e.g.  - CB Insights CEO, Anand Sanwal, opined in an August 2019 piece that it (unicorn status) is often used as a scheme to attract top talent in a very tight hiring market for key tech talent… Of course, Sanwal also said this in a June 25, 2019 presentation he gave to partners, investors, supporters:  “Blockchain is a buzzword looking for a problem…”   Another example of the disconnect… My Takeaways/Conclusions: What can we deduce and learn from all of this?   This is a bubble in private co. tech stocks – it’s an artificial inflation of valuations due primarily to a non-standard, faulty method of applying valuations – the Post Money valuation -  Bubbles can only be created and progress toward a bursting point if they are embellished and fueled by those perpetuating the non-market, non-fundamentals approach to value.  There is no more disconnected phenomenon today in private tech than the post-money valuation. Enter SoftBank Vision Fund:  They provided the fuel necessary Disappointments to share value after tech unicorns go public will be the norm, not the exception.   Luckily for investors in public companies – we don’t have to suffer through trail of tears on WeWork – they didn’t make it that far and with good reason…as outlined in this Episdoe. Not so lucky, however, for WeWork employees with worthless stock options…   My Recommendation/proposal:  All private tech company valuations should be run through the Stanford Univ. Valuation Model prior to any kind of exit – I believe it should be made an integral part of the S-1 filing process.  Or any time the value of a private tech company needs to be certified for audit or other purposes.  These companies owe it to their employees who are provided, in many cases, with near worthless Common stock or options for common.   Thank you for joining me for this edition of DVC.  I hope you found the topic interesting and useful.  I am currently working on the DVC website.  In the meantime, Please send questions and your comments regarding today’s episode to:      bill@ccs.capital   Again, check the links in the Show Notes for the Stanford Valuation Model Study and the video of Prof. Strebulav’s 2016 presentation to SVOD… Stanford University Study - Summary of the Findings – From Study Abstract: Developed a valuation model for venture capital-backed companies and applied it to 135 US unicorns - private tech companies with reported valuations above $1 billion. Valued unicorns using financial terms from legal filings, finding that reported unicorn post--money valuations average 48% above fair value, with 14 being more than 100% above.  Every Company reviewed and valued, (100% of the Sample) was overvalued to some degree – that means not one company came in at the post-money valuation utilized by the VC industry Values were calculated for each share class, which yields lower valuations because most unicorns gave recent investors major protections such as initial public offering (IPO) return guarantees (15%), vetoes over down-IPOs (24%), or seniority to all other investors (30%).  According to the authors, “Overvaluation arises b/c the reported valuations assume all of a company’s shares have the same price as the most recently issued shares.”  Even though each new round of funding effectively sucks the value out of prior rounds through seniority and superior rights, among other preferences.  

Episode 006 – UNICORN-MANIA – WeWork & its Investors Confront Reality

Host Bill Griesinger brings an informed, unbiased and invaluable historical perspective to the venture capital and high-tech world. Drawing on over 20 years experience in venture finance, working with tech companies and venture capitalists, he offers an unvarnished and transparent view of the venture capital & high-tech sector.

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Distilling Venture Capital

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