Following its $80M Fund II Close Announcement, Cortado Ventures’ Managing Partner Nathaniel Harding shares his insights and expertise on raising a venture capital fund. Nathaniel chats about raising funds in an emerging market, and how the Cortado team raised $100M in three years – all while navigating a global pandemic.
Transcript:
00;00;00;00 – 00;00;25;04
Cody Merrill
In a world where talent is evenly distributed, but venture capital is concentrated in coastal silos, smart startup money is heading for the MidCon. Welcome to the MidCon Markup — a Podcast that uncovers the inspiring stories of our visionary tech entrepreneurs and the investors who believe in them. I’m your host, Cody Merrill, with Cortado Ventures. Listen, learn, and make Your MidCon Markup.
00;00;25;07 – 00;00;43;13
Cody Merrill
Hi everybody. Welcome today to the MidCon VC Podcast. Today, we have a special edition because here at Cortado we are announcing our fund two close. We are surpassing our 80 million target, and I’m here today with managing partner Nathaniel Harding. Welcome.
00;00;43;16 – 00;00;45;03
Nathaniel Harding
Thank you. It’s a good day.
00;00;45;05 – 00;00;54;26
Cody Merrill
It’s a great day. Well, why don’t you tell us a little bit more about the announcement and where Cortado’s at, and then we can hop into some of the backstory. Yeah.
00;00;54;26 – 00;01;16;06
Nathaniel Harding
We’re thrilled to announce that fund two, targeting $80 million, we’ve now oversubscribed, and we’re closing the fund. So this is on the heels of fund one, started in 2020, which was a $20 million fund. So we’re very proud that with our investors and the support of our investors from fund one coming into fund two, we’ve achieved this milestone.
00;01;16;06 – 00;01;16;29
Nathaniel Harding
It’s a big day.
00;01;17;01 – 00;01;25;04
Cody Merrill
Awesome. Can you tell us a little bit more about how you got into venture capital? Why this work is so meaningful?
00;01;25;05 – 00;01;43;15
Nathaniel Harding
We got into this because my partners and I, Mike Moradi and David Woods, we really saw a need and an opportunity in this part of the country to build the kind of firm that we wish had existed when we were building our own companies. There’s a big gap in the amount of venture capital relative to the amount of quality startups.
00;01;43;17 – 00;02;01;00
Nathaniel Harding
A lot of great startups in the region, in the MidContinent, but not a lot of organized capital. And so our experience as founders and operators, we believe we can do something about that and be helpful capital and steward the investors’ dollars into these great startups.
00;02;01;02 – 00;02;10;29
Cody Merrill
And then as operators, can you hop a little bit into your backgrounds? And what do Mike and David bring to the table, and how does that inform what you do here?
00;02;11;02 – 00;02;31;00
Nathaniel Harding
Yeah. So my background, you know, in the early days worked for an oil gas company and then later worked for a family oil and gas company, eventually taking over operations, bringing in outside capital, becoming a technology-first company. We then grew more in those three years than we had in the previous 30 years and then had a great exit.
00;02;31;00 – 00;02;53;25
Nathaniel Harding
And this was in 2014. Also, that phase of life. I was in the Air Force working in Afghanistan with geospatial intelligence and logistics, and then later in a volunteer capacity appointed by the governor to oversee workforce and economic development. So those three things really feed into a lot of my view of the world and how we put together Cortado ventures.
00;02;53;27 – 00;03;21;21
Nathaniel Harding
Mike’s a serial entrepreneur with experience in biotech, in nanomaterials, and also as a trustee for a public pension fund. So he’s advised other VC funds on both coasts. So I know it’s his great pleasure to do this now in his home state. And then David Woods was CEO of Ditch Witch for many years during a really pivotal time during the company’s history and has been an executive coach now for the past 15 years.
00;03;21;24 – 00;03;27;16
Nathaniel Harding
And that experience is huge — to be able to bring mentorship to the companies in which we invest.
00;03;27;18 – 00;03;54;11
Cody Merrill
So lots of successful founders and operators with exits have this idea that they want to get into venture capital. But it’s not as easy as snapping your fingers and everybody starts writing new checks. How do you start a venture capital firm in a part of the country where the majority of the wealth was created in more conventional industries, cash-flowing industries, and not this high-tech growth?
00;03;54;14 – 00;03;57;18
Cody Merrill
And this story that you have to sell them on going forward.
00;03;57;19 – 00;04;27;27
Nathaniel Harding
Yeah, I remind myself that just like with the companies in which we invest, it’s not “build it and they will come.” You know, even if you build something amazing that should attract the attention of the market, in our case, building a venture capital fund or having the idea for a venture capital fund in the middle of the country, just because it’s a good idea doesn’t mean people will invest, because you really have to build to tell that story and leverage a lot of the connections and network that we’ve built over the many years.
00;04;27;29 – 00;04;54;17
Nathaniel Harding
And so, you know, for us, that meant, you know, I was very involved not only in the business community but also beyond that in the broader community. And so that network was really essential for me to understand two things: One, to recognize the opportunity — that there was a chance for us to create a venture capital fund, but also to be able to lean on those relationships and that trust.
00;04;54;19 – 00;05;21;12
Nathaniel Harding
You know, whenever you’re doing something for the first time, you really are leaning on that trust and those personal relationships. This is a track record, and that was essentially kind of like our family and friends. But then, you know, on a much larger scale. And that was a really important breakthrough for us to recognize that we were uniquely situated in this market to be able to tell that story and actually put together the capital to do it.
00;05;21;18 – 00;05;27;18
Cody Merrill
How hard were the early checks?
00;05;27;20 – 00;05;54;08
Nathaniel Harding
Very hard. So somebody’s going first. And it absolutely starts with the closest friends, the ones that are do or die, you know? The ride-or-die friends and family. And certainly, that was that was huge. And the checks may not be large. And that’s kind of how it starts. You know, really, there are so many analogies between what we do as venture capitalists raising capital and what the startups do as they raise capital.
00;05;54;08 – 00;06;09;24
Nathaniel Harding
And so, yeah, a lot of work. And, you know, I wish I could say it ever gets easy, but in any market, especially this one that we have now, it’s difficult to raise capital. And so leaning on that story is really important.
00;06;09;26 – 00;06;18;14
Cody Merrill
So you made the analogy between starting a venture capital firm and starting a startup. What is the analog for product market fit?
00;06;18;16 – 00;06;42;03
Nathaniel Harding
That’s a good question. So for us that would be the thesis, right? Since our product is an idea, the idea that placing capital in this geography but also in these sectors. We focus on energy, logistics, the future of work, and life sciences. These are all areas that have a lot of infrastructure and talent but also a great future in this region.
00;06;42;03 – 00;07;13;11
Nathaniel Harding
They’re a natural fit for the region. So in venture capital, the product market fit is that thesis. And so for us, the thesis being that we are going to invest in areas where there is a lot of talent, there are a lot of customers and there’s a lot of know-how, the networking know-how is really important, but also our networking know-how I’m talking about myself, about, you know, two co-founding GP’s, Mike and David, that we had the experience building companies in those sectors and in this geography.
00;07;13;14 – 00;07;37;17
Nathaniel Harding
Therefore we know this area better than anybody else and can both steward the capital and be helpful to the companies. So in venture capital, product market fit is absolutely what your thesis is. And then there’s fitting with that market. In our case, the market is the investors: the product is the thesis and the market is the investors — if those things can sync up.
00;07;37;19 – 00;07;49;18
Nathaniel Harding
It doesn’t mean that automatically you just get customers just like with startups, you don’t automatically get customers just because you have product market fit. But it certainly is an important condition precedent to getting started.
00;07;49;21 – 00;07;57;18
Cody Merrill
So the thesis helps, but the process as well, right? Like you have to demonstrate that you can pick…
00;07;57;18 – 00;07;58;19
Nathaniel Harding
The go-to-market strategy.
00;07;58;24 – 00;08;00;09
Cody Merrill
…good companies? Right?
00;08;00;11 – 00;08;01;11
Nathaniel Harding
Yeah, exactly.
00;08;01;13 – 00;08;01;24
Cody Merrill
Okay.
00;08;01;27 – 00;08;38;10
Nathaniel Harding
Yeah. And so be able to pick good companies. And so really for us, having our background, we know how to build teams. We know how to execute on strategy. And that was, you know, people that know us even before we started knew that was something we brought to the table and so being able to scale a team, create repeatable processes and create a system and really a best-in-class venture capital fund, that those were things that we believed were important just to run a good business, but also to be able to tell that story to investors and have them believe it.
00;08;38;12 – 00;08;41;27
Nathaniel Harding
And so far they have definitely given us that faith.
00;08;41;29 – 00;08;53;12
Cody Merrill
So what was Cortado’s track record with fund one? And then how has that contributed to greater participation in fund two?
00;08;53;12 – 00;09;22;09
Nathaniel Harding
Fund one is a top decile fund, which I’ll explain a in little bit. And there are different metrics that I’ll get into. The best way to understand if a fund is doing well is how is it doing compared to its peers, and in venture capital land your peers are similarly aged funds or funds of the same vintage. So according to Pitchbook and other public data, our metrics hit around the top 10% of all funds of the same vintage in North America.
00;09;22;11 – 00;09;54;18
Nathaniel Harding
Now, some of the metrics include IRR, and so over 30% internal rate of return, multiple on invested capital, which is now right at two times more. You also look at things like graduation rate, how many companies progress beyond the seed stage, and loss ratio, how many companies don’t make it that far. So all of those metrics and distributions to paid-in capital, DPI, those are all top decile for us.
00;09;54;20 – 00;10;20;15
Nathaniel Harding
So that gave us a sense of…you can kind of think of fund one as a bit of a pilot, right? Because we were doing something that was fairly novel. So being able to illustrate that we were on the right track was important to us but also important to our investors. And so those metrics compared to our peers, and I think if any investment has a 30% rate of return, that’s a good thing.
00;10;20;15 – 00;10;46;13
Nathaniel Harding
It doesn’t matter what the asset class is, risk-adjusted, that’s outstanding. So that absolutely was the underpinning for us to have successful fundraising in fund two. So we had near unanimous participation and increased allocation from fund one investors into fund two. But then also that network effect of, you know, now others outside of our market.
00;10;46;13 – 00;11;16;15
Nathaniel Harding
And so we now have investors from 15 states, both coasts, institutional investors, a university endowment, a hospital foundation, a regional Endowment, a state agency, and a bank. So we now have several institutional investors, which is a great sign for an emerging manager to be able to achieve that level of rigor and to attract that kind of capital. So that was really, though, built on what we were able to illustrate so far in fund one.
00;11;16;17 – 00;11;28;08
Cody Merrill
Tell us a little bit more about the difficulty as an emerging manager accessing family office capital and also the difficulties of institutional capital.
00;11;28;10 – 00;11;55;15
Nathaniel Harding
It’s often said of family offices that if you’ve met one family office, you’ve met one because they’re all very different: different sizes, different focuses, and different structures. And so really being able to get a start with a network that already knows you, then that begets introductions to other family offices and understanding what their priorities are, what asset classes, and what they’re interested in.
00;11;55;18 – 00;12;21;22
Nathaniel Harding
If they’ve invested in venture capital before or if they want to. In some cases, you know, they maybe haven’t invested in venture capital before, but the family got their wealth from an entrepreneurial background and maybe they’re first generation, so they know what it’s like to, you know, take a calculated risk and to make it. Those family offices tend to get venture capital, you know, more quickly.
00;12;21;22 – 00;12;48;20
Nathaniel Harding
And they understand that, yes, that’s how generational wealth is created. And then other family offices are more kind of like they act more like institutions in that they have a large apparatus, decision-making structure and they have a very specified allocation strategy. So if that’s the case, you need to understand how you fit into that. You could be a great fit in terms of your, you know, theme and your success.
00;12;48;23 – 00;13;22;05
Nathaniel Harding
But if the timing isn’t right for their allocation strategy or if they’re over-allocated, then it’s just not going to happen. And so figuring that out can be challenging because family offices have less public information than institutional investors. With institutional investors, it’s all more of the latter scenario where there’s typically a well-known allocation formula. Strategy and timing are important, but there are also a lot of criteria around ODD (operational due diligence).
00;13;22;07 – 00;13;52;19
Nathaniel Harding
So beyond just how does your portfolio look or how do your metrics look, there’s a whole other layer of operational due diligence where they’re looking at, you know, things down to how do you make decisions, What’s your process for a wire transfer to make sure that we can protect the financial institution? Because we have a fiduciary responsibility. And how do we ensure operational security and information security? What is our decision-making process at the investment committee level?
00;13;52;22 – 00;14;01;00
Nathaniel Harding
Who are our team members? How do we work together? So those are the different aspects of ODD where you really need to be able to illustrate the rigor.
00;14;01;03 – 00;14;12;15
Cody Merrill
What fundraising advice could you give to other hopeful VCs or just emerging managers trying to make that fund-one-to-fund-two transition?
00;14;12;17 – 00;14;44;14
Nathaniel Harding
So I would say to a VC wanting to make that transition from fund one to fund two, your fund one is very much viewed as a proof of concept. It’s more about your immediate network and then being able to show how in fund two you are setting yourself up to being institutional grade. It’s almost like acting like you’re on fund five in terms of your level of control and decision-making processes.
00;14;44;16 – 00;15;10;18
Nathaniel Harding
So doing that even just during fund one, that way when you’re at fund two, you can illustrate some of your track record in fund one, but then you can show that you are built to scale. Because as institutional LPs look at you, I mean, especially, I mean most institutional LPs, pension funds, and endowments, they are looking at an investment like this to not be a one-time thing.
00;15;10;21 – 00;15;55;22
Nathaniel Harding
They’re looking at it to be over many vintages. And so for that to make sense, there needs to be clarity that you have staying power and that you’re built to scale. And so some of that is also illustrating how what you’re doing can scale. So if your thesis is too narrow, then that can work against you. But if what you’re focusing on as an investor has scale or it itself is growing, that’s one way you can illustrate that scale, but also to show that you have consistency in your team and repeatable hiring processes to be able to grow that institutional knowledge from the founders to that next layer or next
00;15;55;22 – 00;15;58;06
Nathaniel Harding
generation of who’s to come onto the team.
00;15;58;08 – 00;16;23;21
Cody Merrill
I want to touch on something interesting that you said there, and that’s the defensibility and market position, like having the market clout behind your thesis. What is Cortado’s long-term strategy to maintain a presence in this region, develop thought leadership, and ultimately be the best aggregator of deals?
00;16;23;24 – 00;16;48;19
Nathaniel Harding
I kind of go in almost reverse order. So the thought leadership piece is really important because since we are helping to define a domestic emerging market — one of our LPs referred to it like that, and I like that — It’s important for us to develop that thought leadership to kind of bring the ecosystem along because if I were doing this in a well-established market, that work has already been done decades ago.
00;16;48;22 – 00;17;19;02
Nathaniel Harding
But since we’re really growing with and helping grow this asset class in this region, it’s important to us to be able to share that knowledge. That’s why we do things like this. That’s why we are very public with what we publish. You know, we’re very communicative with how we build. Because for this to succeed, we need to have a growing market all around us, all kinds of investors looking at different stages and different sectors.
00;17;19;05 – 00;17;41;25
Nathaniel Harding
Thought leadership is an important piece. So we’ll certainly continue to expand on that. You know, we hosted the first-ever MidContinent Venture Capital Summit in May, a huge success. People from all over the region, all over the country building on that, having a physical presence throughout our market. We have a Tulsa office already.
00;17;41;27 – 00;18;05;28
Nathaniel Harding
Oklahoma City is our headquarters, but we certainly have plans, imminent plans to expand into Bentonville and into Dallas and other places in the region long-term. So our belief is that with early-stage investing, having boots on the ground is still important. It’s an ex-military term, but boots on the ground are still important.
00;18;06;00 – 00;18;32;13
Nathaniel Harding
Because these companies we’re investing in, they’re not in Pitchbook yet. You can’t find them on databases yet. You find them by having people physically present at the different accelerator programs, venture studios, and university programs where these founders are starting to build their companies. So that’s why another part of our long-term growth plan is to see that our physical presence expands through the region.
00;18;32;16 – 00;19;06;22
Nathaniel Harding
Certainly other vintages of funds and growing with the market. So already our immediate market has grown by many measures, many times over just in a few years. And so we’ll grow with that so we can maintain our ability to lead or significantly syndicate rounds as we invest in companies, building out the team, and having that capacity to specialize more deeply into certain areas where we invest and then looking at investing in other stages.
00;19;06;22 – 00;19;33;13
Nathaniel Harding
And so right now we focus on the seed stage. We do some pre-seed and some early series. We want to work with creating and fostering an angel network. That way, there will be earlier-stage investors who can help feed more of the quality deal flow into our pipeline. But we’re also looking at investing in later rounds because as the market grows, so will the opportunities for growth investments.
00;19;33;16 – 00;19;45;04
Nathaniel Harding
Three years ago, there were very few opportunities for growth-stage investments. But because of our work and the work of others, that’s changing. So you’ll see a lot more opportunities for that in the coming years.
00;19;45;10 – 00;20;04;11
Cody Merrill
Awesome. Well, do you have any final words for our audience about how to get involved? Is the round still open? And if there are potential LPs who are interested, how can GPs best collaborate with us? How can founders best work with us? What does that look like?
00;20;04;14 – 00;20;31;13
Nathaniel Harding
We love all those things so absolutely. We’re technically able to keep the fund open until the end of the year. We do have a hard cap of $100 million — we’re oversubscribed beyond the 80 million. But certainly, if somebody wants to be a part of this as an investor, you can reach out. My email address is just nharding@cortado.ventures, but there are also other ways to get involved.
00;20;31;15 – 00;21;08;15
Nathaniel Harding
If you have, you know, smart founders or great companies, please refer them to us. Technical talent — also refer them to us because there are always job openings in the companies in our portfolio because they’re growing so quickly. We do a lot of different events, both with funders and founders. We do some big events like our annual meeting and the MidCon summit, but we also do less formal gatherings, you know, founder hours and under-500 dinners, so we can connect those who invest and those who are interested in any of that, so certainly reach out.
00;21;08;18 – 00;21;37;14
Nathaniel Harding
Also, even on this platform with the podcast, telling the stories of entrepreneurship in the region is important. So if you have a great story to tell, then reach out as well for that. And there are also philanthropic ways to be involved. And so we’ve helped start the foundation for Unleashing the Startup Ecosystem, whose acronym is FUSE, which is a great philanthropic way to support venture capital and tech entrepreneurship.
00;21;37;21 – 00;21;45;27
Nathaniel Harding
And it’s focused on just that. And so if someone is interested in helping in other philanthropic ways, there are avenues for that as well.
00;21;46;00 – 00;22;10;01
Cody Merrill
So you were just explaining a little bit about how the process has gone from friends and family to people that you knew in your professional life, people that you had met through civic engagement and picking up early checks, and then eventually you were able to raise money from family offices and institutional investors after you established more proof of concept with what you were doing.
00;22;10;03 – 00;22;29;28
Cody Merrill
But can you give us a sense of what are the daily logistics like for fundraising? How do you succeed at the sport of fundraising? If it was easy, everybody would be doing it, but it’s painful, it’s brutal, and you’re great at it. How do other people do that?
00;22;30;00 – 00;23;09;24
Nathaniel Harding
Yes. So I think there are many reasons why raising significant venture capital in Oklahoma really hadn’t happened until the last few years. And part of it was the right timing with the product market fit and the strategy. But absolutely, I now have even more empathy for the startup founders who are raising capital because of that experience. Now a little bit of background, when I was an operator and an entrepreneur, I raised capital, you know, raised private equity and through different iterations as an entrepreneur, I raised a sum total of almost $200 million.
00;23;09;26 – 00;23;47;18
Nathaniel Harding
And now in venture capital, we’ve raised $100 million for early-stage, middle-of-the-country investments. And it’s absolutely a lot of work to go from getting that first meeting to getting that first wire, because, again, just because you have a great idea and build the strategy doesn’t mean it happens. So it works like this. You start off making a list and you’re thinking of everybody with whom you have a good connection, business or personal, and you’re working your way out from that list, and then you’re thinking of friends of friends or other people that maybe fit a profile who might work.
00;23;47;20 – 00;23;58;16
Cody Merrill
Okay. So are you sending them an introductory email? A text? How are you initially saying “I’m going from operator to VC”? How do you cue that up?
00;23;58;21 – 00;24;26;12
Nathaniel Harding
It depends a little bit on how early it is in the process. So our initial list was maybe 400 people. And close friends aside, because I think we can all imagine, like with a very close friend, you just bring it up whenever. So maybe that is a whole other category. The next tier is some version of “Do you think you might be interested in hearing about what we’re working on?”
00;24;26;14 – 00;24;59;03
Nathaniel Harding
You know, we’re excited about it because of this. We think you might be interested because it aligns, or because we’re investing in early-stage companies and high-tech companies and having a great impact in the region. We think the opportunity is now. But it’s very, very brief. Really. I’m talking like three or four sentences of you just want to meet up and let you know what we’re working on. There’s definitely a balance: You don’t want to be cheeky and just be like, let’s just meet up for some unspecified reason.
00;24;59;05 – 00;25;24;09
Nathaniel Harding
But you also don’t want to come on too hard and pitch in the intro email. The purpose of that first email is to get a meeting. It’s not to get a yes, it’s to get a meeting. The purpose of that first meeting is to have a warm audience for that follow-up. There may be another meeting, or it may just be an email, phone call, text communication, or other follow-up sending whatever information they want to see.
00;25;24;09 – 00;25;49;02
Cody Merrill
So in that first email, there’s some combination of a light touch explanation of what you’re working on. Some component of this is exciting. This is something that you can be a part of. Then how do you find that angle that ties it to them personally that I think leads to a much warmer reception?
00;25;49;04 – 00;26;25;22
Nathaniel Harding
It’s having a bit of a sense of whether they would be interested in the high-tech aspect or the diversifying the economy and the region aspect, or if it’s just appreciating the entrepreneurial journey of hey, we’re backing the next generation of entrepreneurs. So understanding a little bit about what’s more of a priority for them and in some cases, acknowledging (although not explicitly) that hey, it’s okay if you don’t invest. Because you don’t want to make it too easy for them to just say like, no, thanks, and not take a meeting.
00;26;25;25 – 00;26;50;23
Nathaniel Harding
So I get a lot of value in meeting with executives in this area because we get smarter at understanding more of the sector as investors. And so giving a couple of reasons to meet, because just in case it’s not quite the time to talk about investment, there are other things to talk about. So it’s also not just so transactional that I want to meet with you for one reason and one reason only.
00;26;50;26 – 00;27;14;07
Nathaniel Harding
Because there’s more to you as a person, and I want to acknowledge that and appreciate it because a lot of times it’s not about the direct ask, it’s about connecting with somebody, sharing our experiences together, and you are going to get smarter and it’s going to help you in other ways. You’re going to get more reactions, like from referring companies or talent.
00;27;14;10 – 00;27;48;20
Nathaniel Harding
And those things are more likely to lead to an investment as opposed to saying where we’re meeting now, I’m pitching you now, yes or no. So I think that’s an important aspect. Now it gets different as you get into more of the institutional realm. If I’m emailing somebody who manages an institutional fund, like a university endowment or a hospital foundation, then there’s this very clear sense of what the reach-out is about.
00;27;48;23 – 00;28;15;25
Nathaniel Harding
And in that case, there actually is an expectation of a more formulaic approach of here’s a couple of key metrics. Here’s where we’re at with fundraising. Here’s a bit of our track record. So if you’re reaching out to an institutional investor, keep it very brief with bullet points and give a few of those salient facts. But doing that to an individual, it would be weird to say: “Hey, I haven’t seen you in a while, here’s the metrics of my fund.”
00;28;15;28 – 00;28;43;01
Nathaniel Harding
And so again, understanding kind of what bucket they fit into if they’re a so-called professional investor is like one broad bucket that I put it in. If their day job is to invest in things like venture capital, then absolutely take the route of, I want to be with you to consider allocation. Here are some stats. If they’re not professional investors, then there are other reasons to meet — in many cases beyond financial reasons that they might care about what you’re doing.
00;28;43;03 – 00;29;11;21
Nathaniel Harding
So then have the first meeting. Your follow-up is something that people think they get, but they don’t really get. And it’s also true for companies that pitch us. And so if somebody is pitching Cortado Ventures, and this is true for other VCs and other investors as well, follow-up is outrageously important because that’s where you’re able to respond to what you heard at that meeting.
00;29;11;24 – 00;29;36;19
Nathaniel Harding
So now you’re able to customize information, and you’re able to show what kind of operator you are. Are you communicative? Are you responsive? Are you transparent? Are you reliable? Do you respond quickly? And it just keeps the connection warm because that way, if and when there’s an opening on timing, you’re their first choice.
00;29;36;23 – 00;29;57;16
Nathaniel Harding
What I mean is we all have lots of things happening in our lives beyond just allocating to an asset class. So timing is so important because we don’t know what’s going on in somebody’s life. We don’t know where else they’ve invested or if they have commitments or if they have kids in college, whatever it is, and we’ll never find those things out.
00;29;57;19 – 00;30;23;20
Nathaniel Harding
So instead, when there is an opening — when somebody feels like they’re at a place where they can invest more — you want to be first in line. The way you’re first in line is that you’ve had a warm connection that you’ve maintained and you’ve kept them updated. Now we do newsletters, you know, and we actually have over 10,000 subscribers to our public newsletter that goes out every month.
00;30;23;23 – 00;30;46;19
Nathaniel Harding
But then also there are other touch points of just keeping somebody updated with what we know would be germane to what they want to hear. So that follow-up is absolutely key. And then even after you get to a yes, there may be up to ten more follow-up touchpoints to actually get to sign documents. People are busy. People forget they get started on something, and it doesn’t get finished.
00;30;46;19 – 00;31;11;14
Nathaniel Harding
So actually getting to a signature and getting to that first funding takes a surprisingly long time. I’ve noticed others who had to raise capital, and I’m not just talking about venture capital, I’m talking about anything. I’m talking even just like closing on donations for philanthropy. Just because you have a yes, an email doesn’t mean your job is done.
00;31;11;16 – 00;31;41;26
Nathaniel Harding
And so I think people would be shocked to know how much work goes into that and how many touchpoints there are from that first outreach until that first funding. And I mean, I’m talking it could be nine months and 20 to 30 touch points to get from there. I hear stories about people like…well, I did have one meeting where they interrupted me 12 minutes into the meeting, and they said I’m in $4 million.
00;31;41;27 – 00;31;59;27
Nathaniel Harding
They wrote a check on the spot. That happened one time. But that’s the thing people think of, like, oh, if I’m doing it right, that’s going to happen all the time. And that was a one-out-of-one-thousand thing that happened. You know, the other 90% percent of it — or 95% plus — is a lot more work.
00;32;00;02 – 00;32;17;10
Nathaniel Harding
And so, you know, we don’t use a placement consultant. You know, we don’t use a broker to raise capital. It’s all been through our network. And then building on our track record and doing a lot of what I talked about with that process.
00;32;17;12 – 00;32;34;12
Cody Merrill
One of our LPs has described you as being exceptionally persistent in the fundraising process. How do you toe the line between persistence and like, am I actually annoying this person? Is this harassment?
00;32;34;15 – 00;33;02;23
Nathaniel Harding
That’s a great question. I also think about it because, remember, I’m also on that other side of the table all the time, right? So we are professional investors investing in startups. We look at 800 companies a year. And so I always try to think of how I like to be treated. And of course, it’s always with respect because again, we don’t know what’s behind people’s decisions.
00;33;02;26 – 00;33;32;17
Nathaniel Harding
…the vast majority of the time. All we can go off of is stated intent, desire, and interest until they’ve stated disinterest. And so, I mean, people generally will tell you like, hey, actually I was interested, but now I’m not for whatever reason, timing, whatever, and giving someone the chance to say that is ultimately the best way that makes sense and the most respectful.
00;33;32;19 – 00;34;09;16
Nathaniel Harding
And so if somebody has any kind of stated interest, then I really feel it’s upon me to follow up on that until they say I’m not interested anymore for whatever reason. Like, that’s really fine, you know, I totally get it. Understood. You know, stay in touch, like we can revisit whenever you want — or not. And so I’m just really being upfront about it. I’m responding and respecting your interest in this, and I want to give you more information to make a decision until you tell me that you’ve changed your mind, which again, is totally fine.
00;34;09;18 – 00;34;37;05
Nathaniel Harding
And so I think that’s really just part of the job. And so, you know, a big part of my job is raising the capital to make all this possible. I get great help from my partners and others on the team because it definitely takes a lot of participants in this whole process. But at the end of the day, if it’s somebody with whom I have a connection, then I owe it to myself and everybody here to keep up with it.
00;34;37;05 – 00;35;20;00
Nathaniel Harding
Because I also understand…I perceive and I think there are lots of anecdotes illustrating that this is true…that lots of deals don’t get done. I don’t want to use too many double negatives. Some deals don’t happen not because of lack of interest but because of lack of drive. And so having the drive to persist in building a company, in building technology, or in raising capital, that’s what separates the companies or the firms that are able to cross that finish line or achieve those milestones from the ones that aren’t.
00;35;20;02 – 00;35;42;09
Nathaniel Harding
And so yeah, I definitely am guilty as charged of being persistent. But if anybody’s ever changed their mind then I think any of them would tell you that they got a response from me that said I totally get it, understood, stay in touch. And in many cases, you know, months later, they’d say, okay, now I’m ready.
00;35;42;11 – 00;35;52;03
Cody Merrill
Awesome. Thank you so much for your time today, and we can’t wait to see the great work that all these companies and funds are going to do for this community and region.
00;35;52;05 – 00;35;53;00
Nathaniel Harding
Thanks, Cody. Great.
00;35;53;04 – 00;35;58;07
Cody Merrill
All right. Thank you.