Maxine Minter: Okay. Three, two, one. Hey, I'm Cheryl. I'm Maxine. This is First

Cheryl Mack: Check, part of day one, the network dedicated to founders,

Maxine Minter: operators, and investors. If you want to be a better early stage investor, this is the show for you. So TLDR,

Cheryl Mack: if you don't want to suck at investing, listen up.

Cheryl Mack: Today we have Dan Gavel. He is a man of many talents. Uh, he has run a fund previously, he also, uh, runs the Black Sheep Capital Fund, as well as the Flock Syndicate, and even better, he also does his own angel investments. Um, what I love about Dan is that every time I talk to him, I learn something, not just new, but unique and different, and...

Cheryl Mack: He comes up with ways of doing things that I just would never have thought of. And I'm really excited to actually dive into a couple of those topics today.

Maxine Minter: Cool. Yeah, me too. I, one of my favorite, favorite things when I catch up with Dan is he's just like, no holes barred, just really down to earth, natural.

Maxine Minter: And I do actually think that allows him to be way more innovative in the way that he invests. Because it's, there's no pretense to it. You know, there's less of the kind of ego, pomp and grandeur and just so much of the like. What's a great return? Who are great founders? How can I best support them? And just always good for a laugh.

Maxine Minter: He just nails the like classic down to earth Australian persona for me. And I'm so excited and grateful that you are joining us on the pod today. It's

Daniel Gavel: called growing up in the country. We're a different sort of folk.

Maxine Minter: Yes. I do. I mean, I think the Australian country. Some of my best, best humans and best friends in the world grew up in the Australian country.

Maxine Minter: I just think it strips away all pretense. It's such a full on environment. Yeah, I

Daniel Gavel: think you can get very caught up in picturing the definition of what Australia is like within 20 kilometers of like a major city center, right? Like as soon as you get out of there, the world, like Australia is such a different place.

Daniel Gavel: It's like, it's great. Like, you know, I loved growing up. Without having to lock the doors, without having to wear shoes, without having any parental supervision. You just get put, you get put in, well you get pointed in the direction of the back paddock of a friend's farm in the morning and you come back in the afternoon.

Daniel Gavel: Like probably the first time I learned to understand risk. It's like, yeah,

Maxine Minter: that is. That's actually a super interesting,

Cheryl Mack: like, way of understanding, like, well, these are risky activities and sometimes the

Daniel Gavel: risk materializes. And you, as with venture capital, you're like a great, your brain's a great machine learning tool where each time you do something really stupid, you don't do it next time.

Daniel Gavel: Like for most people to say, put the hand on the hot plate, it was for us, don't chase the snake. Don't go next to the, don't tip. A cow sort of . .

Maxine Minter: I love that. The like question of what was the, the, the first time you engaged with risk to or to not tip the cow cow

Daniel Gavel: to pick up the rounds snake or not to pick up the rounds?

Daniel Gavel: Say, that was a very stupid question. Yeah.

Maxine Minter: Wait, did you pick up the, yeah. Like did you pick up the browns mate? I must know before we move on from this,

Daniel Gavel: Yeah. I did.

Cheryl Mack: You did. I know. I can answer that question. Dan

Maxine Minter: totally picked up the brown

Daniel Gavel: snake. Yeah. Yeah. Did not end well.

Maxine Minter: Incredible. Oh. Ouch. Did you, did they, they bite you?

Maxine Minter: Which for the context here, for anyone who's, uh, watching or listening and not Australian, a brown snake is maybe our most venomous. Maybe other than Taipan. Taipan. Taipan is the most venomous, which, you know, we are, Australia already has a great reputation for being a country where everything bites and

Daniel Gavel: kills you.

Daniel Gavel: Everything kills you. Even the VCs.

Maxine Minter: Yeah. So the cliff notes are Dan picked up our second most valid mistake, got bitten and lived to tell the tale. And now chooses to be a venture

Daniel Gavel: capitalist. I've noticed though, which was a more painful lesson in risk that or the GFC as a financial planner.

Maxine Minter: Yes. Ouch. Ouch.

Maxine Minter: One of the things that I have been really I'm impressed to see and one thing I'd love to kind of hear your thoughts on is the way that you think about risk going all jokes aside, I actually think you do a wonderful job of building from first principles and through that have identified a couple of strategies in the ecosystem that are really clever.

Maxine Minter: So I wonder, maybe we can kind of start there as an on ramp. Wait, do we not want to ask our first question? I'll build it in. I'll build it in. Yes.

Cheryl Mack: Wait, what was the first thing you invested

Maxine Minter: in?

Daniel Gavel: Yeah, they actually link, right? Because I think everyone's attitude towards risk and like in financial planning, it's all come from this for me, right?

Daniel Gavel: It's not about like how much you can understand the risk you're taking. It's more about your capacity to accept that risk and what it means. to a broader picture, whether it's to your investors personally, whether it's to your business, you know, from an investor standpoint, everything you take investment you do, you're going to be judged on by everyone in the industry, your investors, your startups.

Daniel Gavel: So I actually started in small cap mining. Like the first investment I bought at age, I think 12 was Mount Eisen mines. So like I, Was part of like one of those, you know, like the Commonwealth Bank used to do the fantasy stock picking competitions, like all the way back when, and I sort of been involved with that and I think mom and dad were connected to, it's like, I want to say like a Morgan's, you know, mom and dad stock broker who'd basically pick an ETF for you and go, Oh, this is the top 20.

Daniel Gavel: Look at us. We're great stock pickers. So. I was part of that and got to be excited about like the process of investing and understanding and I think it must have saved up some birthday money and soccer refereeing money or whatever and I think I bought like 1, 500 at the time in Mt. Eyes and Mindshares and wow, 12 year old.

Daniel Gavel: Nice. Yeah. Got my first exit at age 16 or 17 when it was bought out by a BHP or someone so I was like feeling pretty. Stoked about myself. And then I think it also started from there where it was like that initial, like. concepts of do I do this risk because I think a like I've had an investment sort of mind at that point or do I like buy that new cricket bat or like soccer ball or whatever and that was that first risk versus reward.

Daniel Gavel: Sort of thing. And I think I've carried that, you know, all the way through since then. Um, and I think over time from, you know, I think my second investment was like a property, like with mom and dad when I was like 19 and again, like I was lucky in that they were very, they bought half of it and probably paid the deposit looking back.

Daniel Gavel: So, uh, you know, like, so I think it's defined over time and, you know, even at Blacksheet, since we first started. The, our attitude towards it has changed because our position as a fund and that has changed quite a lot, you know, and I think you have to be aware of. Where the ecosystem's at as well, um, and how that impacts it.

Daniel Gavel: And again, it's more about being able to accept it, right? Like we would love to be series A investors because I think that's the best price, probably easiest place to pick at the moment, but I can't afford it. So like, like, you know, when we came into the ecosystem, like a 250 sort of to 500 K check, you were like.

Daniel Gavel: Half a Series A, or at least like a big dog in a Series A now, you sort of laughed at the door and said, Oh, we've got a little bit of leftover. We'll sprinkle you some. So we've accepted that and the risk of going earlier, but that also speaks to where our team's expertise is. So we're pretty happy with that.

Daniel Gavel: And where our portfolio is at, at the moment, you know, it all gets baked in over time. If you look at our internal documents, I think the last internal strategy document is like version seven of Blacksheet, where every year we sort of take a look back and go, how much do we want to spend? Where's the markets at?

Daniel Gavel: What do we think the next three to five years are going to look at? And what's an appropriate investment strategy in front, like beyond that? And yeah, we could probably invest more if we wanted to, but we're investing the amount that makes sense to us for now. Prepare for, we think like three years from now.

Maxine Minter: Oh, that's super interesting. To dive into that a little more. Coming out of one of the conversations we've had previously, obviously at CoVentures, we're chasing a lot of, you know, all of the companies we invest in need to have 100x return profiles. So like, have to see that kind of big moon shot. Uh, requirement for us to kind of get excited about it, depending on kind of where the entry value is.

Maxine Minter: And you shared in the past, you know, your unit economics, you can actually make wonderful returns off kind of 200 to 500 million AUD exits. Sure. I think the way you think about. Kind of entry price, exit price delivery. Really great return profiles in that range is, is super interesting. And maybe intersects kind of pause, think about the market every single year and be like, yeah, this is where we think it's going.

Maxine Minter: This is where the opportunity is in this market.

Daniel Gavel: Yeah. And look, it also plays to where your head's at. Right. I think so broadly, what you're talking about, I guess, is, is our pre seed seed philosophy of. Great founder, you know, this is broad stroke, great thematic, great problem being solved. And we really look at companies to go, can you get to a 10 million revenue target?

Daniel Gavel: And beyond that, everything for us is upside. And I think it's unique because if you can get a pre seed company to 10 mil ARR, and this is just picking a number out of the air, right? Like in a reasonable timeframe, you should be able to say you're. You've got a 150 mil company there, which would mean sort of, cause we don't, we get in circa 5 to 10 mil I think would be our average.

Daniel Gavel: You can get a 10x there pretty comfortably if you can, and I think the pathway to 10 million by the way is getting clearer than in that hyper growth, like growth at all costs. Time you have the last couple of years, then you end up with a great company. And in our experience, at least a couple of those, once they get to that point, we'll grow beyond that and be your power wall.

Daniel Gavel: And we're quite comfortable. Like our target is sort of 10 to 15 X because like, you know, the difficult thing for us, cause we're evergreen or the good thing for us since we're evergreen, we're not always chasing like a singular fund metric, everything counts towards it. So, you know, and that speaks to the benefit of having.

Daniel Gavel: Been lucky enough to make some good investments. We can be more risky when we want to. We can do investments which we think are No, I wouldn't say steady as she goes, but like probably more de risked without the big return potential because we're comfortable that they'll get a return. Um, and, and that sort of matters a lot to us.

Daniel Gavel: Yeah. For

Maxine Minter: folks who haven't heard that term before, evergreen, can you explain a little bit more kind of what that means and also how you got there?

Daniel Gavel: How did I get to evergreen? Have a really good friend and a business partner who's been very supportive of us over time. So we're unique in that black sheep's LPs are our GPs are our only LPs.

Daniel Gavel: So only really my business partner and I have money in black sheep. So there's no like stack of investors behind that. Um, and we will, we made a call early on that to build a long term business. We will have to sacrifice CapEx for a fairly. Extended period of time while we seeded it to give it the opportunity to grow where it is today.

Daniel Gavel: Um, and because we've been able to take that approach, we've been able to slowly build an evergreen part of that is we will, we don't ever have to go out and re raise capital. It's just a singular fund that money will recycle into and out of as we get returns and make new investments over time. Um, in the non.

Daniel Gavel: Our world, um, like black sheet world, you would generally put sort of a quarterly unit price against that and people where you value everything internally and people can come in and out whenever you want as soon as more like a share as opposed to a VC fund, which will get to like. The 30th of June, that's the closing date for first investments and no more money can go in after that.

Daniel Gavel: So evergreen and just sort of eternal, like just keep going. Yeah.

Cheryl Mack: Thanks for defining that, Dan. I think it's important. Yeah, we, we do have a good audience of, um, of newer investors who are coming in and wanting to learn as well. Um, what I think, one of the things I think is really interesting, um, just to pull on that thread a little bit more is that like you do.

Cheryl Mack: a number of different things across the board. So like you run the Black Sheep Fund. You also run the Flock Syndicate. Black Sheep Flock for those at home getting

Maxine Minter: the joke.

Daniel Gavel: Um. And my personal shepherd portfolio. Yeah. And

Cheryl Mack: then you, uh, you also have your personal angel portfolio. Yeah. You know, most people, and I, I, I, you know, I have the benefit of knowing you, you ran the fund, you started angel investing, then started with the fund and then moved to the syndicate in that order.

Cheryl Mack: Um, so I'd really love to understand actually first, what was your first angel investment? And then maybe we can double click on like, how do you run all three? And like, how do you decide what to, to, uh,

Maxine Minter: put money into?

Daniel Gavel: Yeah. Our first angel investment was a. Queensland based mobile payments company. Oh, I give the name, but like, I mean, it wouldn't be that hard to work out.

Daniel Gavel: Um, look, it was a good learning curve. Like you, we talked about it, like maybe we committed too much, maybe.

Maxine Minter: What was your first learning check size, Dan?

Daniel Gavel: Uh, half a million.

Maxine Minter: For, uh, adding 20 grand and Maxine, yours was? Mine was, uh, two and a half grand, but it was orders of magnitude, many orders of magnitude

Daniel Gavel: smaller.

Daniel Gavel: The things you wish you knew, right? Talking about that risk profile. The things you wish you knew, like our, our understanding of how that market worked changed pretty quickly and we adjusted. But look, as much as that was. Probably just a bit of a insane first play and unfortunately it probably didn't work out the way we wanted it to.

Daniel Gavel: It got us into an ecosystem which we've been very blessed to be part of, and I think that's part of it in going like, if we hadn't have learnt From those first few investments and started to refine our system, it would have been a really painful journey, but I'm very happy for like every investment we make, we get better, we get better at the post investment work.

Daniel Gavel: Um, and I think it is part of that just we, cause we review and change all the time we've been able to, I think, keep ahead of. Like getting outside of our risk comfort zone, you know, and that was sort of when we were less VC, more angel and over time we've transitioned to more of a VC style operation where we've got a team and a, like a process of how we help companies and a much deeper DD process.

Maxine Minter: But

Cheryl Mack: it's interesting that you run all three still at the same time. Like, I feel like most people go from that transition of like angel to maybe running a syndicate to only running a fund, whereas you still do all three. Like, how do you manage those three together?

Daniel Gavel: Um, partly they cross over like the, the fund, the bigger fund that we had full circle is now fully invested and it's in harvest mode and there's a couple of crossover portfolio companies.

Daniel Gavel: So that's a bit easier. The, the flock is actually. Great. Cause it augments black sheep's ability to participate in the ecosystem. Um, in that, like, you know, we've got what we like to write as a standard check. And then if we put that alongside the flock fund investment, we actually get to be a bit more significant piece of rounds, which gives you like access to more deals and, you know, makes it more worthwhile, you know, for one of the.

Daniel Gavel: For a pretty terrible term, like to get out of bed and actually do this every day. Like I think beyond below a certain point, there's just not the incentive to actually want to be deeply involved with founders and startups, which is probably why the syndicates and the flock fund come in because more and more.

Daniel Gavel: As tech is becoming more forward, particularly in the last six months, I'd say that's escalated again. There's people that want to participate in this ecosystem, but just don't have the time, but have the money. And I think the syndicate models and the fund models. to a degree are a great way of participating in that.

Daniel Gavel: And I actually think probably the, the smaller syndicates and, and, um, funds like Maxine's are almost more palatable because often the check size is a little bit less to get in, um, the sophistication around the investors. They can be comfortable that. but still be comfortable they're working with people who have been doing this and understand what they're doing.

Daniel Gavel: Um, and like, of course, Aussie Angels, which I can conflict and go, I'm an investor, so I love the solution. Um, everyone should use it by the way. Yay Aussie Angels.

Maxine Minter: Us too.

Daniel Gavel: Like that, that gives people a way to, I guess, do the dip the toe in the water, get exposure, get comfortable. With managers who know what they're doing and people who are generally passionate about them and it gives both people who want to, you know, progress into bigger roles in VC the chance to see what it feels like for them, which cost us a lot to learn.

Daniel Gavel: Like we were lucky enough. Well, we were lucky enough to sort of hit a couple of good investments early, which have meant we're like a plus over one DPI. So like distributed income sort of thing. So we've returned the fund. Then. We sort of like, we, we had a good learning because it was sort of funded in that way where I think the, the giving a broad stroke approach to seeing different types of investments at different stages through earlier funds and syndicates is actually a really good way for people to test if it's where they want to be without having to do a big commitment like, you know, half a million, um, I think would be what some of the bigger funds are asking is a bare minimum these days.

Daniel Gavel: Yeah, absolutely. Plus you just bluntly can't get into the, probably most of the funds that most people think they want to get into. So, yeah, yeah, yeah.

Maxine Minter: I do, I, it makes me think we had, um, Julie Anderson Firth on here. And she was talking about building euphemia and kind of family offices. And she mentioned this kind of tidbit of the kind of, uh, standard advice for folks looking to build a kind of, uh, diversified portfolio.

Maxine Minter: They should have about 20 percent of their wealth in alternatives, including, of which VC is one. I mean, I think I could probably say for all of us, uh, and most people in this ecosystem that you're heavily significantly above that. But it does open the question for me, I wonder how much of Australia Like the ones who are in the privileged position to be able to build a diversified portfolio, how many of them actually like directly hold any alternatives, let alone like venture.

Maxine Minter: And I wonder over time, like how that will change. My observation of the Australian ecosystem is it's growing at such a crazy rate. Pace. Like it's growing so quickly. It's moved from like relative obscurity in 2016 through to now the sixth largest employer in Australia. And I just, it's, it's going to be awesome to have a front row seat.

Maxine Minter: And I imagine, you know, the flock will get to watch a lot of that as a syndicate, as people look for that on ramp into learning more about this space.

Daniel Gavel: Yeah. Look, I think most people's investments are through super in like a managed style, growth balance. So they would just never know. Like what's in there?

Daniel Gavel: Like, funny enough, like I had a friend complaining and I'm not speaking in a silence or I had a friend complaining about like the Qantas thing and going like, Oh, I hope they go broke. And I'm like, man, you know, like probably 85 percent of Australia is exposed to Qantas investment, right? Like, he's like, no, they're not like anyone who holds super is in Qantas.

Daniel Gavel: So if they go screwed, then people's super gets hurt, right? Um, it's like, I think it's a very. Privileged way of thinking, and I've often been a subject of this where I actually think people beyond my direct line of sight actually give a shit about tech and what's going on. Like it's our ecosystem likes to think it's like world changing and it probably is in a lot of directions, but in most people's day to day life, they just wouldn't even.

Daniel Gavel: Think about it. Like it would, this is something that is beyond the realm of what matters to them. And you want more and more because obviously like, I would actually prefer people to pay more attention to where tech is going in terms of changing lives and how lives are going to be impacted more so than the investment side of it.

Daniel Gavel: Because there's people that will always be out there to do that. And, but I also think it should be democratized a lot more because, you know, I think there are a group of people that would want to get into it. Like. Crypto is a really good example of people wanting to get into, you know, innovative assets.

Daniel Gavel: I think you should solve for people who want to be more heavily involved at a smaller amount. Um, cause you know, there's that old age old argument of casino, crypto, why not tech, right? Like, well, what's the difference? Um, But yeah, my personal philosophy is I would just really like to see people be more aware, like, of what's coming to them.

Daniel Gavel: Like, I met with a high end, top tier litigation lawyer the other day, and I was talking to the sort of legal tech that's coming, and there are a lot of people, even in their own ecosystems, that are blissfully unaware of how... What's coming for them. And I think that would probably be more important for someone's day to day life.

Cheryl Mack: We might start getting a whole bunch of lawyers joining Aussie Angels just to get into the next legal tech deal that comes along.

Daniel Gavel: Maxine and I both do legal tech to sign up to Aussie Angels.

Maxine Minter: Yeah, exactly. Exactly. Yeah. Yeah. I mean, I will say, having been in those big, big firms, that. Tech has been coming for the big firm for a really long time, but they've put up a really great defense, I've got to say, like they do a great job of not adopting it.

Maxine Minter: Oh, look,

Daniel Gavel: I don't, I don't even mean just in relation to like taking, yeah, it's the adoption side, right? It's not about like taking their jobs, like as an ex financial planner and stuff, you can see the sort of, Efficiency driving, like upskilling, like all that sort of stuff where in very margin driven businesses, if you're not doing it, you won't compete.

Maxine Minter: Yeah, 100%. Yeah, I've been amazed at their ability to not focus on margin. You know, it's like, net dollars to them don't care about margin. I'm like, this stuff really matters. Your client cares about it. And they're like, well, they're still going to buy legal services and we are still going to maintain a monopoly on it via the bar association.

Maxine Minter: And charged by the hour. Yeah. Yeah. And charged by

Daniel Gavel: the hour. But I mean, like all these things are coming, right? Like, and I'm not saying doctors get replaced, but doctors may become more like customer service. Or customer support than actual front line, right? Like, there's, there's AIs that have passed the, I don't know what the equivalent of a doctor's certificate is, like the bar equivalent for doctors in the US.

Daniel Gavel: The bar, the bar exam. Yeah, the equivalent, like, so, and over time, they'll get much better at diagnosing than a normal doctor. Right. Again, I don't think it replaces it, but it definitely changes how their role, how I'd be thinking about my role if I was a doctor. Mm.

Cheryl Mack: Speaking of, like, Uh, health tech and, and other kind of crazy futuristic things, I'd really like to like maybe double click a little bit on like, how do you decide whether something gets invested in by the fund versus goes to the syndicate versus just as like a personal Dan Shepard, uh,

Maxine Minter: investment.

Daniel Gavel: By and large, there's two filters, like one. Whether my business partner, Paul, is like interested in the concept at first and whether it fits the, what the fund looks like, and it probably more second, more blunt answer is how much DD I want to do. Okay. Like, I mean, it's true, right? Say

Maxine Minter: more about that. Less DD goes to Angel, I'm assuming, or less DD goes to Paul?

Maxine Minter: Sure.

Daniel Gavel: Less DD goes to Angel. To like my personal syndicate, which has been set up as this is very much on a thematic of, I love the idea. I love the founder. It's probably batshit crazy. And it's a lot earlier in the piece or it's related to something that like really resonates with me, right? Like, so I'll give you an example, um, of where that would happen.

Daniel Gavel: So I invested the pre seed check in a company called Layer Licensing. I had, so it's basically taking real world IP and selling it into metaverse web three sort of development studios. I made that investment, like wrote, uh, committed in the actual first meeting because I was meeting, telling the ratchet, the founder, I've known ratchet.

Daniel Gavel: For years, since he was like the first, um, sling sales employee at Go1, so I'd seen him sort of expand like them to the U. S. and the U. K. and, and the good work he sort of did. Yeah. He told me a story about, what's his name? I want to say Travis Barker. Is that like a singer? Maybe? Potentially.

Maxine Minter: I am like so bad at pop culture.

Daniel Gavel: Anyway, insert big singer that people who are probably age 15 to 18 really like. And he is telling me how in Fortnite they shut down the whole game for 10 minutes. He didn't in game concert and they sold like He made 10 million in digital merchandise sales. And I was like, wow, holy shit. Yeah, kids, kids are crazy.

Daniel Gavel: Well, kids will spend money on stuff like that. That is something which I think could be a very big industry ecosystem. I by no way plan on going away and doing the research to prove that I like Ratchet. I really liked the idea. It made a lot of sense. So I wrote a personal check. Um, and Paul wasn't super interested in black sheep.

Daniel Gavel: And, um, so that's where they sort of fit. Like, because, you know, my philosophy is if you don't get it from that first story or that first little tidbit of information, it's just going to be too hard to sell to you at that point anyway. Um, and it sort of leads to what sort of investments are right for syndicates versus funds versus whatever.

Daniel Gavel: So we, our most recent fund. We're structured around, there's a world where people really want to be invested in those pre seed companies that we were finding in our syndicates that were getting really hard to get support on because you get the common questions of, Oh, what's the revenue? How do you differentiate?

Daniel Gavel: Like, I mean, how can any tech at a pre seed stage be like super differentiated? It's more like the potential. to differentiate and what can they build over time. It's easier to bring people into a pooled approach to that than it is to do it one by one by one.

Maxine Minter: That's super interesting. I wonder, I mean, do you think you would be able to run that strategy, those kind of three parallel...

Maxine Minter: Tracks. If you had a different fund structure. What I'm thinking about here is for fund managers, you generally have some kind of requirement that your investments go through that fund or anything that's kind of on thesis that goes through that fund. I've seen a couple of versions of this actually in the ecosystem.

Maxine Minter: And so. I think it's not a kind of hard and fast rule, but I, yeah, how do you think, is it because you run an evergreen strategy that you can run those in parallel?

Daniel Gavel: It's because my business partner and I have like, we've been friends for so long, and we have a trust that's like, I know. I know what needs to go into Blacksheep and I know what shouldn't and we always run everything through Blacksheep first anyway, because without the Blacksheep brand, my personal brand doesn't get deals, wouldn't get deals, right?

Daniel Gavel: So like the ownership of the pipeline for me is to Blacksheep. So. You know, in, both in terms of the layer licensing and the sort of super crazy medical one we're doing at the moment. They both went to Black Sheep first, and if Black Sheep hadn't wanted to participate, they could have, but I've also from time to time topped up on top of.

Daniel Gavel: I'm personally on top of stuff that Blacksheep's done because I really believe in it and have a strong, stronger thesis in it. So we do follow that sort of hierarchy, but it's also because we have that system of, you know, yes, no, before we sort of work out what channel to take it down. And that's sort of, again, being expanded because of solutions like Aussie Angels that allow me to do a personal syndicate because I wouldn't be able to do that if someone wasn't doing the admin for me, right?

Daniel Gavel: Like, so, um, in the same way other tech models couldn't have existed a year ago because the technology wasn't there, this sort of personal syndicate for me couldn't have worked without something like that. You know, Aussie angels or angel listing, you know, us. Yeah,

Maxine Minter: it's such an inflection point for the ecosystem, I think, and the kind of activation of.

Maxine Minter: A longer tail of investors into the ecosystem, the transaction. I mean, I think it's classic, right? The transaction cost goes down because it has been systemized and it's got a lovely UX on it. And so the number of people that can participate and the innovation that happens on top of that has been just such a pleasure to watch in a very short time.

Maxine Minter: Um, you know, platforms like this have existed in the market. So exciting to kind of continue to see. And I really like the strategy you have of running a syndicate alongside a fund. Like I'm starting to see more and more people do that. Um, I think it, especially in this moment in the macro cycle. There is significantly more demand for investment than they are dollars being deployed into the ecosystem, at least on the last page book that I saw, I think the Delta was about 20 billion in last quarter that 20 billion more demand for investment into startups and there is capital investing in startups at the moment.

Maxine Minter: And so wonderful opportunity to kind of support founders with more capital. Yeah,

Daniel Gavel: look, I mean, everyone's going to have a different point on that though, right? Like I actually don't. I mean, it's just the way, I guess, not Survival of the Fittest, but it's like, how many companies that were getting funded?

Daniel Gavel: Two years ago, probably like deserved funding in the great long term scale of things. And look, I, I think it's important, but I've always been a very big, like I've always said the, the good companies will always get funded, like no matter how much, it's just maybe like how much they're getting and what you need to look like to get it.

Daniel Gavel: That's changing. But it's super exciting. Like, you know, we're seeing more founders who have actually coming back and investing. We're seeing more and more people spinning out of companies. Like, you know, we, what we love about say go one is it's becoming like a Canva Atlassian of an ecosystem that is creating people who want to be founders out of it.

Daniel Gavel: Like, and. I think that's one of the most under reviewed part of the ecosystem. Like, that's something that we should be nurturing a lot harder. Because, I don't know if you guys saw it, but like, I mean, if you were at Lessie and, or at Canva, it was just like, oh yeah, sweet. Yeah, cool. Like, automatically you get money because of

Maxine Minter: this.

Maxine Minter: No, you see that all the

Cheryl Mack: time. Like founders were like, I'm ex Canvets. Like, cool. How much do

Daniel Gavel: you want? Um,

Cheryl Mack: but that wasn't the case. Like, if you looked at that, maybe four years ago, that probably wasn't the case. Um, we maybe had it lasting at that time. So now it's like, but more coming. Yeah. If GoOne is the next company that that's happening with.

Cheryl Mack: Yeah.

Daniel Gavel: And it's more about the more we build an ecosystem where that's happening, that's just going to make us such a stronger and stronger, you know, overall, because people have done it. Like it's one of the second time found, like, you know, everyone's either once a second time founder or someone who's been there and done it before and seen it like, and, and it's great because often there are ideas that came out of these companies.

Daniel Gavel: Like, you know, we go on, we've seen a few that are sort of around. The edge of tech space, which is nowhere near it, which is great, which is great as well, but I think that's a really strong thing for the ecosystem and that will feed into, you know, those big companies with touch wood, but companies like go one and that have big exits.

Daniel Gavel: So like our. Our future of angel investing in our future of getting better because, um, you know, I'd hazard that the Silicon Valley ecosystem got better when operators were investing in companies and helping them grow. And it's sort of like a cascading upward effects of. Like people getting more support and having a much better chance, but the current market is like exactly where we love to invest.

Daniel Gavel: Right? Like it's slower. Companies are being much more thoughtful around it. Like I met with a company the other day where we had like sort of a conversation to what we talked about all the way back where it's like, well, do you want to grow to be? A billion dollar company, or do you want to own more of the company at 400 million and have had a much more not steady as she goes, but it's a different journey of building a more capital efficient business than that to get to a billion dollars is no easy feat.

Daniel Gavel: And you can do it like you really can, but like. It's, it's not easy and it's not a, it's not a journey every founder should or could go on. Um, so I think all these little parts of the ecosystem are making it like super exciting to be part of it now. Like, it's great. Like more people know about tech, more people are wanting to invest in it.

Daniel Gavel: Yeah, absolutely.

Maxine Minter: And one of the things

Cheryl Mack: that I've noticed you do really well is around like you find companies that are kind of in that space or potentially even the moonshots and you get excited about them, but often because you said you're writing the smaller check. Yeah. But you then, like, you, you kind of take the lead position and that to me is just like, when you told me how you do that, I was like, I need to figure this out.

Cheryl Mack: So like, explain how do you lead without

Maxine Minter: leading?

Daniel Gavel: I mean, this comes down to, I just don't really believe in the traditional, like, what a lead is. Right? What is a lead? Like, Maxine, if you, if you would say to me what you, what do you think the term lead invested mean? I am

Maxine Minter: not going to be good at answering this cause I agree with you on it.

Maxine Minter: I think there's like, I think that especially at pre seed, I think it's a different once you get to like seed and series A, like the level of diligence you need to do to kind of fully de risk it and be able to say like, yeah, hand on heart, we did, you know, hours of diligence here. We did all of the background checks, we did all of the legal, all of the accounting DD and like.

Maxine Minter: Yeah. We're ready to underwrite this price. Absolutely. But at precede, I think it is a Misdemeanor. Yeah, like what are you diligently? I have invested in multiple companies where the company doesn't exist until the check is written There's literally nothing I could DD So I I could rant about this for a bit I'm more interested in in how you think about

Daniel Gavel: it, but that's the exact answer that is that is the exact answer Answer like who fucking knows, like if I had to break it down to what I think the lead is, whoever's the first one to put a number on a term sheet and give it back to the founder that makes them happy, like, and then some in our, in our world, we're like, well, in the case of the one Cheryl was talking about, I was super passionate about the company.

Daniel Gavel: I had a deep belief, like you said, just as I'm an instinctual investor, right? Like, and. Probably the thing we always say is like, I'll probably know at the end of the first meeting, how much chance it is investing or not like the rest is just proving, like I think founders get a bit like misled to think DD is a process where you're like working out if you want to invest like an hour for us, it's the opposite.

Daniel Gavel: Like we, I really want to invest and then I'm going to spend the next couple of weeks. Trying to prove myself out of it, like talk myself out of it. So it's more of like the other way we try to get to know as quickly as possible. So in this case, like, like there was a sense that no one, few people wanted to be involved, but no one wanted to be there.

Daniel Gavel: I thought, you know, in this world for precede, like. VCs were out of the question, I got that. So it needed to be someone with a bit of sophistication that would put a number on a piece of paper and give them the chance to go structure up something around it. Because at that point I didn't really give a shit who came with us.

Daniel Gavel: Like, luckily a good friend of mine came in and stuff. But like, I didn't really care who came in. I just had a passion for the company and wanted to give them a shot. And that shot meant I had to have a conversation with the founder and go, your valuation is too high. How much you're raising is too high.

Daniel Gavel: If you bring both those down, I think you'll give yourself a much better chance of raising and just moving on with this and, and give yourself like a much better chance of growing into a company. Um, He did that. He then had the chance to pitch a much different version of the company. And like, there's a whole set of work behind making sure the financial stack to the new numbers and whatever, but it meant people who weren't interested because it was too high and to whatever meant could actually have a look.

Daniel Gavel: Cause there's a number on a piece of paper and there was a timeline that this was going to happen in. And I think that really more reflects the world when I came in to VC then. Other way around the definition of the lead just turned into who was going to write the biggest check. And I don't necessarily think that's the case.

Daniel Gavel: Um, it's the person who wants to build the relationship with the founder and do what it takes with them to get it across the line. But I actually think the lead is probably for me more important. Post investment than pre, I think it's a post investment term, not, not a pre investment term. 100%. Is who's going to lead it, who's going to be the devil's advocate, the voice of reason, put in the resources to like, actually.

Daniel Gavel: give them the support they need. Um, to me, that's the lead. That's, that's more where I focus on the lead. And that's not always the person who writes the biggest check or the person who leads the pre due diligence stuff. Absolutely.

Maxine Minter: Yeah. I'd be interested to know what you think about this. I feel conflicted about it, this version of the world where, like, a bunch of people want someone else to lead so that they can draft of that investment.

Maxine Minter: I, I accept that it is a reality of our ecosystem, and I accept that it is an important part of the way that rounds come together and momentum happens, but a conversation I would really love to have is, like, From a bottoms up fundamentals, if we accept that early stage investing is a non consensus sport.

Maxine Minter: Yeah. I don't understand, I would like someone to kind of take the counterpoint for me here and explain to me why following is a great strategy.

Daniel Gavel: Because you can't get the conviction to actually make a call yourself. Seriously, like if you, if we were in that and I had to go, Oh, like, no offense for using your name, Maxine, but I need Maxine to price it and, and give a price to it and write a first check for me to be comfortable with it.

Daniel Gavel: Like, fuck that. I'm not doing that investment because I don't have the conviction to actually go, I know what this company is worth. I believe in it. And that's why I can write that check Cheryl, because like, I don't. I don't care what anyone else is thinking about it, I know what I believe about a company and I know if I want to invest, and in that case I knew if I wanted to invest, I had to force something to make that round happen.

Daniel Gavel: I'm just not a big believer in, like, that, I get it when it relates to, like, this round isn't gonna happen unless someone with a much bigger check comes in and kicks it off to give it a chance of rolling, but in a smaller round... That's not so much there. See, I would maybe

Cheryl Mack: play, like, a little bit devil's advocate there, because I am the one that, like, typically, I'm

Maxine Minter: on the other side, I'm Yes, perfect.

Maxine Minter: I was gonna say that was, like, the worst, like, defense or counterpoint. It was just you and me, and just being like, Yeah, yeah, we agree with each other. No, no, no, I will

Cheryl Mack: I will defend it, because I You both know, I send you stuff all the time where I'm like Hey, I really like this, but

Maxine Minter: I just, yeah, that's true.

Cheryl Mack: So there's two things. One is I often know that I really like something and want to invest, but one is that I just don't think I believe in the price, but I don't know what the right price is. So like, I have a sense that that's not the right price, but I don't know what the right price is and I don't feel comfortable setting that price.

Cheryl Mack: And then the other thing is if I'm not running a big enough check, then like, I just don't know if. If I do agree to something, then the round is going to get filled by someone else because, and then if I write the check, then they can't fill the round. They don't get enough money and they die anyway. So like, I think from our perspective, it is helpful to say, look, I really love you.

Cheryl Mack: I really want to invest, but I don't think I can do it at this price. Go find somebody who will value this and set, give it a tick mark and

Maxine Minter: then I'll be

Daniel Gavel: in. I mean, but that's just the internship of. VC and, and investing, right? Like it takes time to get the confidence to, and a number of deals to be able to do that.

Daniel Gavel: I get, I get it as well. Like it's just a positioning thing. Cause we've read rounds before, I've had these conversations a bunch of times. I'm pretty. Comfortable with it. And in fact, I'm going through it again now.

Cheryl Mack: I need to sit in on one of these, Dan, please, that I can get that

Maxine Minter: confidence. Cause all I, I'm like,

Daniel Gavel: I mean, look like, but I know you well enough to know you could get there.

Daniel Gavel: And I think it's like a, just a confidence blocker, like, or, you know, because I also think where you send the deals and stuff is not quite at that point. Right. Because we have a few people, you just call it like you're. Thought group, like where you just want someone to talk to and, and give you a sense of where is sort of the conversation is the next level where you're like, I have the conviction now to want to make an investment and I need to find a way to make this happen.

Daniel Gavel: That's sort of the trigger for me to go into that, that call to action. It's not. Before that, it's like, I am really strong that I want to make this happen. And it's that, it's that big driver to go like, well, if I do something, this isn't going to happen. And I always say this may not happen. And that's the other thing is zero risk to me because you're like, well, we'll do our best, but I'm telling you, it's not happening.

Daniel Gavel: If it doesn't happen, there's no round because we've got. The condition precedence around what that money would have to look like. And it's just about giving it a shot because we are closer to the ecosystem than probably like they've seen more than pretty much every founder, right? Like a lot of founders, I just think.

Daniel Gavel: May not. And this is probably pretty prevalent last year where you heard your mate raised for 55 million with 6 revenue. Um, it's sort of like the, you're close enough to know where the market's at more than a founder. And sometimes you just got to inform the founder of that. And I think the other thing is, is, and we are, we do this sometimes as well.

Daniel Gavel: Probably not the greatest for it. It's like, sometimes I don't think founders are given a fair assessment of why a no is a no. Like, you know, because if, can a VC really go as a no, because I just don't think this is ever going to be an idea that works. No, you've got to give the San Francisco yes, where it's like, Oh, not, not right now.

Daniel Gavel: I like what you're doing. Not right now, but let's keep in touch to the next round. Like that is a no, by the way, to anyone who's listening. Yeah, you know, I think that it's just a conviction thing to go and look to be fair, it has, it doesn't happen all the time, but if you spent enough time getting up that level of conviction on a idea, it's just fair.

Daniel Gavel: It a chance. Yeah.

Maxine Minter: I do also think, to kind of underline that point, Cheryl, like I think if you try to lead a round with a too small a check, or, like it's a bit hard to lead it with a syndicate because you don't have certainty on how much Yeah. you're going to be able to deploy. I think like, you can't really lead around there, right?

Maxine Minter: I think it'd be really hard to lead

Daniel Gavel: around. Unless they want to underwrite it. Right. Yeah.

Maxine Minter: Yeah. Which, um, Matt Allen has a wonderful story about Mr. Yum, where he did something similar. I think he, he terms it a whoops yay. Yeah. He, he did end up running. Yeah. He underwrote it personally. Yeah. He's doing his first investment into Mr.

Maxine Minter: Yum and like. Wow. What an investment. Yeah. But you know, when he first did it, he kind of took it to market. He was like, yep, we'll, I don't think he was leading, but he was filling in an allocation. But I do think like, you know, there's a minimum check size below which it's harder to use that as a catalyst for the round.

Maxine Minter: But I do think like for us, smaller funds or for those listening, who are wanting to think about. Kind of that strategy or let's say a family office who are kind of writing pretty meaningful checks. Um, I think there are a lot more rounds that could be catalyzed in the kind of after work term terminology as opposed to led Correct.

Maxine Minter: That I think at, at pre-seed. Um, that's exactly the right

Daniel Gavel: way to think about it. Agreed. The, the concept of a party pre-seed is definitely coming back. Yeah. Like just grouped investments where. A million dollars. There's plenty of people like, you know, we're in the same tech size range, right? Maxine is, you can probably find four or five of us more like generally more easily these days than you can someone write a million dollar check.

Daniel Gavel: Yeah. You know, and there's also, I guess a lot of, there's a few of that bigger VCs who are actually wanting smaller checks to lead, you know, and take or leave how you do like that sort of deal sourcing for future rounds strategy there. But I think like it's a, There are people who will write bigger checks and want to write bigger checks behind a lead because they just want someone to do that because they're either out of country or not their core, you know, let's say the family officers who it's not their core built strength to negotiate and frame up

Maxine Minter: deals.

Maxine Minter: Yeah, I think the art of the negotiation in these deals is a really interesting one. you want, especially right now while the market is moving so quickly, you know, being in those negotiation conversations, it's a, it's a time to set norms between kind of how you will work for the soundbar, how you will, and the team, you know, how you will approach difficult conversations, et cetera, but also to approach it in a way bridges.

Maxine Minter: And if in that early, I don't know if you, I'm sure, actually, I'm confident that you two would have heard a lot about this from the companies that you work for. They are sometimes during these negotiations, investors can go a little bit too hard and actually bruise relationships in a way that doesn't serve long term.

Maxine Minter: So I think for, you know, as folks are thinking about how do they do this? Well, making sure you, you thread that needle of like thoughtful caring, but also Direct and the hard negotiator.

Daniel Gavel: And look, everyone views this differently, right? But we have a, you know, founder friendly, everyone wins approach, right?

Daniel Gavel: But as a pre seed investor, we're very much aware of the impact what we force on a founder makes down the line. Um, and also understanding like what, if you put it in pre seed gets washed away at the next round, if it's like. It shouldn't have been in there in the first place sort of stuff, like stuff that, you know, we, we sort of at the early stage, we don't need preferencing.

Daniel Gavel: We don't need stuff like that because like, and a lot of preference stacks, the precede people, it just gets what if you put it in the first round by like a series C it's so washed out any way that it was basically impractical to negotiate it in the first place. And if you're not prepared to lose it all as a precede investor, you might want to like.

Daniel Gavel: By BHP or something, I guess, not, that's not financial advice.

Maxine Minter: I was going to say like, go, go up the risk curve, like get a seed or a series A.

Daniel Gavel: You know, like know where you're at, right? Like it's, uh, for us at PreC, we understand it's all or nothing. And we sort of bake that into the way we approach early deals. Like, so, you know, when you get asked the question, safe or. Full subscription docs, not that different really anymore. Like it's more whatever people are comfortable with.

Daniel Gavel: We won't argue stuff like that. It's like, let's just get it in, get it done. Because none of the stuff that you have in shareholders, and again, this is probably like more out there, is like most of the stuff in shareholders agreements and that is Basically not worth the ink it's written on anyway. Cause like no one's going to like chase you up if you don't do a quarterly report.

Daniel Gavel: No one's going to like, half the stuff is actually unenforceable anyway. So like why get caught up on it? Yeah. Like, you know, unless you're prepared to put your reputation on the line to take down a founder, most of it is like pretty irrationally in there, I think. Well, yeah,

Maxine Minter: 100%, 100%. This is actually maybe a good segue into, uh.

Maxine Minter: The question that we ask everyone, uh, at the end of, uh, chats with them, which I feel like we might have some juicy, a juicy one here, but what is the biggest, big kind of moment, a moment that you were like extremely ballsy?

Daniel Gavel: I put all my money into crypto two days before the winter.

Daniel Gavel: Um,

Daniel Gavel: probably I would actually say the biggest one was we did was turned out to be probably our most significant investment in two days. Whoa. Turned around in two days. From first being advised to the ideas. A weekend, I was like, was going away for the weekend and I got a phone call, I think on a Friday, Saturday morning, we were in a meeting with the founder.

Daniel Gavel: Sunday afternoon, we'd written about a half a million dollar check.

Maxine Minter: Wow.

Daniel Gavel: You love that number. Yeah. And to be fair, there was some like serendipity in there around like my business partner from the other from full circle had done DD on the company before that had a relationship with them and it was making up the difference, but we had those two days to make the deal or not do it.

Daniel Gavel: So we had to get really comfortable with doing it and like, you know, that company is now not insignificant.

Maxine Minter: Wow, that's amazing. Do you know what the multiple was on that

Daniel Gavel: investment? Um, but what we've made on it now, that's a very good question, Maxine.

Maxine Minter: And, uh, speaking of half a million dollar

Cheryl Mack: checks, um, what happened to that first

Maxine Minter: half a million dollar check

Daniel Gavel: that you wrote?

Daniel Gavel: Yeah. I, yeah, that, um, got turned into gold and robbed by the Italian mafia in Milan. Oh.

Maxine Minter: Spicy. It's so spicy.

Daniel Gavel: Found a mistake. Like, look, I don't know what was going through his head. Like there was a, you know, that was back in the days where founders used to think the way your capital raised was to fly around the world, spend 35, 000 visiting everyone in the U.

Daniel Gavel: S. knocking on 150 doors. They were in desperate straits. They got sold on a con on a deal with the lawyers on their side, on our side, all sort of said that looks okay. What you can't control is the founder having a brain fart and doing something very stupid. In this case, they took the money and Oh dear.

Daniel Gavel: Took half a million dollars, converted it to gold and Took it across the border from Switzerland to Milan and were subsequently robbed in a hotel room.

Maxine Minter: Wow. Wow. Wow. That is nuts. Holy crap. See why

Daniel Gavel: don't do D. D.? Like, fuck, it doesn't matter. It doesn't

Maxine Minter: matter because you do D. D. and it could still get turned into gold and robbed by the mafia.

Maxine Minter: Look, and

Daniel Gavel: it's a crazy story and I really feel for the founder because, like, obviously to get to that point, there was something really, like, there was a level of desperation that you just couldn't have seen coming. Yeah. Yeah. And look, like, again, like it was a shitty situation for us, but we, we don't focus on it because like, we still, again, we don't invest in that company.

Daniel Gavel: We're not in the ecosystem. We don't make the great investments we've made. We don't meet the great people we've met. And this is nine years. Past, you know, eight years past. So like a lot has changed. It doesn't hurt as much anymore. Gold price has gone up. So there's some on one, right? Like, um, yeah, look, it was difficult to go through, but I have, I do feel for the founder because that must've been pretty challenging situation to get to that level.

Maxine Minter: Yeah. Yeah, for sure. And I, I think so indicative of the way that you think about it, right? Like take big swings, do everything you can to de risk it. If risk materializes, like that is the nature of the business that we're in.

Daniel Gavel: Yeah. Yeah.

Maxine Minter: Not the like. You know, walking across land borders with gold, but like taking big risks and things go wrong, but structuring the way you make investments to be able to absorb that downside and still return an amazing, amazing return.

Daniel Gavel: Look, and it's big picture thinking, right? Like you could get super caught up and jaded on that, or you could go like, honestly, that's like chapter three of my book. So fuck yeah, I'll make some money back on that at some point. Um, like.

Maxine Minter: I'm into it. I'm

Daniel Gavel: here for the book. I wouldn't say that exact situation is part of the game, but like equally I've seen, I've seen, you know, people lose money quick and stuff because it's, it's a naturally risky ecosystem to be in.

Daniel Gavel: And we accept that. I would prefer not to have that happen again. But, um, at the same time, like, you know. We're in the nature of risky businesses. We are very much aware that, you know, it hurts, but we've always been big picture thinkers and going like, you could get caught up on that or I could like, you know, go home and spend time with my son and not ever think about it.

Daniel Gavel: So like. Yeah, I choose to fair

Maxine Minter: enough. I love that about you, Dan. Thank you so much. Thanks for having me. Thank you so much.

Cheryl Mack: As always. We've learned so much and had a laugh while doing it. You've been amazing. And thank you for your

Daniel Gavel: time. Find me on Ozzy Angel.

Maxine Minter: Yes. If

Cheryl Mack: you want to join the flock, you can, or Dan's shepherd personal investments.

Cheryl Mack: Uh, you can find them on Ozzy Angels.

Daniel Gavel: Awesome. Thanks for having me, guys. Really enjoyed it.

Maxine Minter: Thanks, Dan. Thanks, Dan.