Today's show is going to be twice as good because we have twice as many guests. We have David Resnekov and Don Stalter from GFC here. David is our local GFC colleague in L.A. and Don Stalter is the U.S. partner for GFC responsible for all U.S. investments, as I understand it. GFC is Global Founders Capital, which is a $1.2 billion dollar fund, but they write seed and pre-seed checks and then continue to invest in later rounds. David and Don, thanks for joining me.
So let's start with David, I'd love to hear from you some of the basics of GFC. What size checks you guys write? How many investments per year are you doing? And a little bit more about your follow on investing strategy.
Of course. So I intend to check size. I mean, you know, we will write checks anywhere and precede around from hundred K all the way through multi-million dollar checks. You know, as rounds progressed. So the idea is for us to back is really, really strong entrepreneurs on right when they're getting started with the idea of investing around after that, you know, all the way through IPO, M&A.
But you. We have no problem in, you know, leading multiple rounds in a row. I think that's one of the big things that's going to separate us from our other funds. And yeah, I mean, past that, you know, just so just pausing on that.
Supposin that's a most people. I mean, there are other lifecycle investors, but usually if they do the A, if they lead the way, they won't lead to B. And that's why you're different.
Unlike other funds, we don't have strict ownership targets for our initial investor. You know, we don't need to grab the 15, 20 percent, you know, whatever the whatever the target is upfront. You know, our idea is to really build with the company, you know, and we partner with a debt fund as well.
So we really think of ourselves like the one stop shop for startups when they want to work with us. And, you know, we'd like to have a very much a working relationship with the company flew back around their capital needs. So just want to always have an open dialogue around, like, hey, look, like, you know, if we get this many dollars invested and get us to the next step in the lifecycle, you know, that's really the conversation we want to have entrepreneurs.
Got it.
So it's like when we were talking with Greycroft, Greycroft says that for under a million dollar check, they don't need to go to their investment committee, which I thought was interesting.
Do you guys have. So, David, if you get excited about a deal, do you immediately rope in Don? Do you guys rope in other people at GFC or how does your sort of how does the process work? If I'm an entrepreneur approaching you for a an early, early round. Yeah.
You I think one of the unique things about GFC is just the level, just how entrepreneurial entrepreneurial we are as a fund.
And I think, you know, very much that's just empowering everybody to really pursue the deals that they capture to them.
So I guess a typical process would be, you know, if I if I meet an entrepreneur, you'll have to have conversations with them, especially in the early stage. You know, we like to have multiple people from our team. So you've got a potential investment. You know, assuming, you know, everything is checking out, then. Then we'll loop and we'll loop Don, you know, other members of the organization at large.
Can I get anybody together on a on a final call and then we'll come to a final decision. Yeah, dad. I can kind of elaborate a little bit like I would say, if the deal is kind of very vertical specific, if it's like a health care opportunity, for example, we have a health care head now, Sean, based in San Francisco, or it's a deal's got an orientation towards France, for example, you know, with members of our French team or Germany, for example, if it's a cross-border deal we have now, we have Israel partner.
So we have, you know, geographical as well as vertical expertise. and how many people then Don are part of your team?
Yeah. So on my team here in the US, we have five folks. We also have a roster of really awesome interns.
I don't really know how many partners are at GFC?
Yes. Globally, we have more than 10 partners. And we have partners across Europe. We have partners across Asia. We have partners in Latin America, Canada. You know, the businesses is growing and it's really, really exciting. And I think, you know, the ambition is to be able to look at a deal kind of in every every corner of the galaxy. That's how I see it. Pretty exciting.
That's great. That's great. And so if you're leading a deal, let's say in L.A., for example, does someone have to pitch to all of the partners or does it go to you? And as David said, you're entrepreneurial. You get to be empowered to lead the deals in the U.S. You want to lead. And are you responsible for all the US? I said that there was no that was so.
The way that it's set up is, you know, our partners or partner in Israel, for example, if he finds an exciting opportunity in the US, you know, maybe it's something that we'll collaborate on. But effectively, like he'll, you know, take a board seat. You know, folks from our French team or German teams or teams like all over the world, like they can do deals kind of anywhere, which is very, very empowering.
That's cool. And do you guys all come together or does does is it Oliver Samwar or does he run into you? How do you all stay coordinated, I guess? How do you do collaborate?
We collaborate on almost a daily basis. We also have the opportunity to collaborate with our debt fund on a daily basis. We can bring anyone we want into kind of the IC.
You know, I think it's it's something where if we want to be strategic, we want to be thoughtful about making sure that the founder really understands us and the value that we can provide.
Then we'll we'll host them with the people who can support the business.
That's that's really it. And I think, you know, all over and, you know, the. Samwars. They make themselves available sort of at any point in time, which is absolutely incredible. I'm super intrigued. I mean, I. They are sort of larger than life characters in my brain at least.
I think, like, you know, while we're an institutional fund, we very much actually can entrepreneurial fund where, you know, instead of being, you know, financial engineering oriented organization, although we're capable of that, you know, we're not you know, we're not necessarily trying to kind of squeeze out a return or, you know, trying to optimize.
Instead, we're trying to really support the founder every which way.
And so if I'm looking to raise my early-stage money, you guys will come in. Product at times, right? Absolutely. Yeah. That's great. There aren't that many people who say that.
And then the idea is that they do you think about your reserves strategy in the same way that someone else would?
I mean, I think the opportunity to provide additional capital to a company, you know, in in the cases, you know, need or in the case of, you know, additional acceleration, is is there. we just want to be able to support our companies and back up the truck when it when it needs to be the case
And how many companies do you have in your portfolio now? And also, is this are you investing right now at a fund I or Fund II.
I've forgotten that you might have a lot of companies eyes were wrestling out of one fund. And we've invested in I want to say, I don't know, David, maybe one hundred and twenty companies. I haven't really double clicked on that for a little while. We've been so busy.
But I think we're up to about 120 in the U.S. at this point. Wow. 120 and that's in this one fund. Mm hmm. Mm hmm. And is and maybe you explain it to me before but is your one fund. Is it? It's all one pool of capital.
The one point something billion is one pool of capital that the Israeli people, you know, all around the world.
But the hundred twenty companies are sort of in your within your pool sort of pocket.
I mean, a sensible way to think about it is like we're managing them. You know, we're it's we know you bite off more than you can chew if you don't have kind of the right focused team for a particular kind of portfolio. And and I think we'd be very, very overwhelmed if we didn't have, you know, the team that we have in place to manage this portfolio.
Yeah. I mean, I think I told you that my impression of David. Sorry, David, but is that you're always on the go. You're always moving.
And I think if you've got a hundred and twenty companies, your portfolio.
Explain it. Do you have any, like, words of wisdom for other VC funds that are trying to manage huge portfolios?
Because you guys must you know, you have a large portfolio for a not huge team.
I mean, one thing I would say and David, you know. Let us know what you think. But you got to really, really, really love what you do. You know, that's true. Yeah.
That's good. Totally. I was just talking with someone about burnout and I was saying burnout does not happen by working really hard. Burnout happens when you're working really hard and not loving what you're doing and getting frustrated. Yeah.
I think luckily we back some pretty awesome people, but it was really like a ton of fun to work with. So, I mean, it's just fun at this point. I mean, you know, as we as your portfolio matures, it's been it's been very rewarding. You're saying that companies grow along with. That's great. I'm so in L.A., David, you're now in L.A.. But I think you moved from the Bay Area. Is that a true statement?
Yeah, yeah, absolutely. So when I first joined GFC, I was in the Bay Area with Don and then I'll be back in May last year, something around like somewhere on that move down to LA.
Got it. Great. And so you guys have a fairly GFC has a fairly heavy LA presence, it feels like, because Sarra is also in L.A.. You know, are there are there for a large global fund?
Why spend so much time in L.A.? Yeah.
Oh, so one L.A. is just an amazing place to be
But do I think, you know, we're we're very much making a bet on L.A. as an ecosystem.
And then also it's just very exciting to be able just to backs companies that have a competitive advantage because they our based in LA. I mean, if you look at our portfolio, you know, something like the Skills, which is like an e-learning platform both times. Vladek knows that every contact leads to that. You know, it's a business that very much should be built a way Mothership, which we're really excited about. You know, last mile logistics very much should be in L.A.
Prema that as a lifestyle brand deathwish be in L.A., Italic also there should be in L.A..
So so you're somebody there is there are you know, L.A. has one of the what, the largest port in the U.S. So a huge need for logistics. Amazing media presence. So there's some companies meant to be in L.A..
Do you think? And yet if you look at like absolute number of dollars or number of companies, L.A. is dwarfed still by the Bay Area. Do you think there's certain things that need to get going in L.A.?
Where would you say the lever, the biggest levers are to really catalyze the L.A. ecosystem? I think we're going to see it more and more. Given the amount of exits that have happened recently, large exits from L.A. companies, but I think just really giving that sort of underworld of angel and precede financing really established is going to help a lot. I mean, if you if you spend time in the bay, you know, you're just inundated with just everybody is an angel investor.
Everybody's investing in their friends. Yeah. Many I'm sure you saw coming out of Google, you know, somebody leaves Google and goes and starts something. You know, they get their friends and Google to invest in it, get them off the ground.
You know, at least I haven't found out that's happened in L.A. It leads to the greed to the degree it's happening in San Francisco yet.
And so as that starts to change and it is changing and as tech becomes much, much more a part of it, I think we'll start to see that transition.
Maybe I'll just turn this to Don. Don, your background, you came in contact very early with the Samwar brothers.
Tell me tell me about the history there. Yeah.
Like, OK. So I was working with the Growth Equity Fund in London. I moved I was in college in Berlin during what I was at the University of Chicago. And I learned German. I loved Europe.
Through one of our managing partners met the Samwar Brothers in London and it turned out that they were building a variety of different businesses. Those are early days. I don't even. Not entirely sure it was Rocket Internet. It was just more scrappy entrepreneurs building these businesses and was brought in to help build a company called CityDeal, which we started in London and in Berlin.
And, you know, effectively it was a daily deal website, but there were a ton of those kind of at the time off the back of the success of Groupon and LivingSocial in the US. But even if you came to you, us at that same time, like there probably 20 or 30 other similar businesses across California, New York, the Midwest, kind of everywhere. And so, you know, it was very, very opportunistic and very smart in terms of the timing.
I kind of enjoyed the buy side, but literally this was right off the back of the financial crisis in 2008. And our pace of investing was not fast. And I wanted something fast. And so know I was in my mid 20s and I wanted to just do something, not something out of a park type story. And it was just like invigorating to work with such great operators.
And we you know, and this was you and one of the Samwar brothers. We're starting out in the early days. Yes.
And Chris Moore, who started AutoOne, which is like a large used car marketplace in Europe. Don, don't don't forget, I know a lot about used car.
You. So you do. I know you is an amazing guy.
And it was just like a roster of like amazing people. And you know, what we ended up doing was you can see all the news and Republican race where we actually use roll-up. You worked with Groupon and then you know their businesses across Europe and Italy and Spain, in Eastern Europe and then in Asia where, you know, it was like, come in, let's figure out if it's the perfect fit.
You know, let's streamline the business and let's turn this into a global sort of behemoths. And then at the same time, again, all you know, in Business Insider etc, LivingSocial was nipping at our heels to put it lightly. Erin Battalion, the CTO at the time, was sort of constructing strategic angles on taking over the universe with LivingSocial. And so it was it was almost like a fairy tale. It's kind of amazing. It was a totally amazing experience.
That's that's my reputation of rocket area, and I think you're saying this is a little pretty Rocket days, but that they have this amazing ability to execute an amazing operators who just turn these businesses, you know, into these huge growth engines.
Well, it was a lot of that strategy. Well, a lot of those businesses roll up plays or where they operationally intensive. And did you get any operational ball, you know, playbook handed to you?
Absolutely both. I think the thinking process that is sort of I subscribe to sort of the playbook that I subscribe to is around just really tracking metrics.
And KPI is from the very second that you start something, the very second that you spin up an internal or external function, meaning like you'll have time series data or you'll have data to make key decisions within the first month, two months, three months that you're iterating on a business and you're making smarter decisions.
And in KPI is aren't just GMV and net revenue and they're not just PNL. You can be creative around your KPI as you can be creative around your OKRs.
RS I mean, you were at Google Minnie, so I mean, like you've seen this. It's it's that you can create a lot of ways to measure things. How did you get that wheel spinning enough to actually have the metric to measure?
Yeah, I mean, we were super creative. One of the kind of funny stories back in the day and, you know, Chris couldn't corroborate this is you know, we when we stood up the Web site, we wanted to drive traffic to the Web site. And I remember going out and taking ten thousand pounds out of the bank and your British pounds GBP and buying Starbucks gift cards and then listing them on the website for a fraction of the price that I actually paid.
Chalk it up to marketing budget. But, you know, we acquired a lot of traffic and we managed to sell quite a few vouchers.
So just saying, oh, we've got a deal at Starbucks today, had that good strategy.
I think we did. We accidentally did some of that Shift selling, you know, ten thousand dollar cars for nine thousand dollars.
But we're giving people a discount, you know. Got it. OK. So you you really got to know you got to know the Samwars really closely then. And how related is GFC to rocket Internet? Like it's got I still it still has. Oliver is still running GFC, right.
Well, it's separate, but I would say, you know, if you look at, you know, rocket Internet to a public company that owns your variety of e-commerce businesses and portions of those businesses, et cetera. I think you were a private capital fund and you were exclusively focused on investing. You know, that said, like we have the resources of a Rocket Internet to help support the growth of businesses,
There's no like rhyme or reason, I would say, to like a conveyor belt out of business necessarily. Like we believe that everything should be done in a customized, curated, you know, ad hoc fashion.
I think I'm just like incredibly proud and excited to be part of this amazing team. And I think, like, we're a global family. And I think, you know, our goal is to be a genuinely supportive and help people succeed, because that's the most fun thing that we possibly do.
And so, David, let me bring you back into this. Like, how did you get it? How did you end up at GFC? What was your process like? How did you guys meet? Yeah.
I said it's a very, you know, San Francisco Tech scene story, I guess. But as I was in a different fund for a couple of years called Green Beiser Capital, I said early stage contact find in San Francisco. And you just through sort of the San Francisco Tech network, actually met Don at a happy hour one day.
And I think, you know, it must have been probably six months that I know we just ended up being on the same networking events, dinner parties, all those sorts of good things. And we got to the point and I really enjoyed working with him. I mean, I think the GFC way of investing and now you get an opportunity to look at just about any type of deal you can ever imagine, ever, you know you know, you don't any geo you can imagine.
It was very cool. And then so. And the upkeep presented itself hopped over.
That's great. And do you think, like for you personally, do you do it with their learning curve from where you were in terms of our things done differently? You know, are you looking at a different stage, companies, anything like that?
Yeah, actually.
So, you know, I guess one of the big learning curves, I think there's just times with time is because we are so generalist, just kind of get, you know, internal benchmarks in my head.
And I like if I'm looking at an Ecom company vs. fintech company vs. a SAAS company, whatever, the case may be, just kind of getting up to speed very quickly on what is a right sort of company for GFC.
Can you share more on that? Because I think that is a challenge for entrepreneurs. Then also to know, yeah, if I'm an e-commerce company, what are the nuances that that make it more of a GFC sort of company?
So my feeling is if we feel like we could work with the founder operationally day to day, then that's business that we would probably want to invest in.
And that sounds. Cookie cutter, potentially, but that's genuinely how we feel. Yeah, I have the same feeling, but but the feeling of who you want to work with, like I notice at TenOneTen, we really like working with nerdy people or I do at least when you say people you like to work with.
Do you have certain types? You're like. Yeah. This is a consistently good. Type. Like Ben Savage at ClockTower. I was like. He likes investing in associates from VCs firms who've left to start companies like that's a that's a persona he likes.
Do you have any of those? I thought, partner. I mean, I think like for us, it's just about it's about alignment. Like, do we feel like it's someone that we could spend time with that we would enjoy working with? I think nerdy founders. I think absolutely. I think, you know, super friendly founders. Absolutely.
Like, you know. Can you sell? Can you sell? Do you have charisma? You know, like quantitative metrics driven founders, you know, it gets us very excited. I think the one thing that I think is really important, especially in these sort of oddball times, is these tough times is just resilience. And I think that's something that we sort of try to really attribute to the founders that we're looking for right now.
How do you help build resilience, if you will, because you said that was a key characteristic.
And maybe some of it is talking and listening.
I think it kind of is. I think it kind of. Yeah, I really like talk listen, because we're we're out in the world of investors all day long. And then, you know, entrepreneurs are hunkered down, focused and, you know, so we can we can share information. We can create a certain level of transparency, predictability. And and we can I think we can help build, you know, if not if not resilience, a certain level of like transparency and confidence around what's going on.
Yeah. Yeah, it's a it's been a mix, though, talking to people about whether they're. You guys are still investing right now through the crisis, you haven't sort of had to set down things. Everything about valuations differently.
Yeah, we're probably a little bit more thoughtful. I think. And one of the things is it's harder to do diligence when you're not able to visit an office. And you know, when you're not, you're not able to. It's it's hard to extract raw data analysis and times because it's a business that services restaurants or whatever those restaurants might not it provide the data. And so, you know, there's a whole variety of different kind of challenges. But we're still we're still we're still active and we're very excited.
Great. So as far as just onfor, there is an L. It sounds like you're still open for business. Is there any distinction about what you guys focus on versus like? Sarra is also in L.A.. How do we know? Doesn't often or know if they have a certain sort of company. It's it's a to go in this direction versus that direction.
I think we're all working together and like looking at different things together. But I think it's more like, how do we how do you manage and how do we manage the pipelines? How do you manage the portfolios?
You know, it's a software business. You know, maybe Kendrick out of San Francisco, for example, is a good supporter. It's an open source business. You know, in particular, if it's a healthcare business and maybe it's Traum. So I think it really has to do it's like, you know, just the ability to help manage and support that portfolio. It until I didn't really get too much of your guys's backgrounds. I don't want to miss out on that.
I don't know where you from. As I was asked, what are your parents do? How do your friends describe you do?
Give me a David on the spot.
Yeah. So I'm from Chicago originally. So my mom is a public defender. And my dad runs he runs his own business. He has for as long as I can remember. So I stayed in the Midwest for college. And in college in Ohio. And then immediately went out to San Francisco. And now you are investing. So I was going to ask the how do your friends describe? Because I love that question. But really, I should ask Don, how do you describe David?
David, how do you describe Don?
You start do it or should I call it? I mean, scrappier is Hosler, I know. That's why I keep saying I'm crazy all done. How do you find all these good deals?
Yeah. I feel you've got to be pretty scrappy hustler in this business. It's actually surprised me how much it is. A scrappy hustle sales business.
And Don, you're also Midwest, right? Your Minnesota. I'm from Minnesota. So cute, efficient. And.
I mean, does that make you nice? Are you nice? It's just like being from Canada.
I think so. I try to be nice. You know, I try my best, you know.
Well, where? Tell me more about your background.
Well, we like in high school was I like I was I played a lot of videogames. I love online games. I sold enough in the way of virtual items on eBay from a game called Ultima Online to buy my first car.
David, I see you around a lot, Don. I see you in L.A. a fair amount, too, which is exciting to have such such a good presence from GFC. But so I'll just wrap up and say thank you guys for coming on the podcast.
Thanks so much, Minnie. This is awesome. It's so much fun.
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