I first met Avantika Daing, a General Partner & Managing Partner at Plum Alley Investments (and Tedx Speaker!) while she was onstage at an Entrepreneurs Roundtable Accelerator event. She was there to share a bit about Plum Alley’s Investment thesis as well as unpack six pitches live from early-stage companies.
Let’s level set a bit so you understand Avantika’s and Plum Alley’s mission, which revolves around an important number that hasn’t moved much in years, despite a lot of effort - 2%.
According to Pitchbook, in 2022, companies founded solely by women garnered just 2% of the total capital invested in VC-backed startups in the United States. Plum Alley only funds gender-diverse companies and works to create an ecosystem to help them not just get funded, but to grow and succeed. That’s one of the reasons I wanted to bring Avantika on, to share some of her ways of thinking strategically about funding as an investor, how Plum Alley is working to create a more sustainable funding ecosystem for diverse founding teams, and how she coaches founders to be more strategic about funding, too.
Watching Avantika on stage peel back the layers of the onion (one of her favorite metaphors!) on a company’s story in conversation with a founder and work to understand the company’s potential was fascinating - it’s a tremendous act of intellectual rigor and curiosity. Her questions also reminded me that founders can make an investor’s job a lot easier through more powerful and intentional storytelling.
Another powerful metaphor that Avantika came back to in a number of pitches was the idea of a Basecamp.
In other words, Avantika, as a funder, wants to know: Is your company building a core technology or defensible market position (a basecamp) that will provide you with multiple paths to success?
Avantika acknowledged that a “single story” about how your company will “win” or “summit the mountain” is powerful, but she was clear that she prefers companies that are creating a powerful “basecamp”...why? Because:
🏒A “many shots on goal” strategy can help create longevity and increase options for success.
I’m so grateful that she was willing to have a longer conversation with me on the record to explain her ideals about storytelling and the basecamp-summit metaphor.
She also helped peel back some layers on another idea she loves to coach founders on: “Dressing their cap table” for sustainable success from seed to IPO and well beyond - since capital needs don’t stop at IPO.
I love how Avantika’s metaphors shift, refocus and redesign the conversation about pitching, funding and sustainable success for startups.
Enjoy this conversation as much as I did!
Links, Quotes, Notes, and Resources
Avantika's Tedx Talk: There is No Balance. There is Juggling
Daniel’s LI post on Avantika’s Entrepreur’s Roundtable Session, highlighting key questions and perspectives from Avantika, including the “base camp/summit” metaphor.
Summary
4:10 Data shows that less than 2% of companies that went public over the last five years were female founded
7:02 Plum Alley’s Venture platform will provide portfolio support, plug into investment world, and move the needle for diverse entrepreneurs, investors, and institutions
19:36 Avantika explains her concept of "Dressing the Captable" which involves strategically thinking through who to give equity to and who not to give it to, in order to set up a company for success
25:26 Thinking about the long-term arc of a conversation when it comes to venture capital
29:35 Avantika proposes a platform approach where the best investments stay within the platform and create the highest level of investor returns
Key Quotes
Minute 2
Avantika Daing:
So the number that's been existing in the VC world is about the percent of venture capital funding that goes to female founders. That is the 2% number that has been historically referred to. What we did at Plum Alley, and this is partly leaning on my two-and-a-half plus years of operating experience, plus having taken a company public, directly being responsible for two IPOs, indirectly being responsible for another IPO. What we're looking to do is look at the IPO landscape, and work backwards. And the why behind that is about disrupting wealth realization. It's a word we made up, and what wealth realization really means is wealth creation, and then distribution. Wealth is often created by generational wealth, so you're born into it.
Or the other alternative is to have a technology company take placement in the IPO market. So those two are usually the trajectories. Not the only, but usually the trajectories for wealth creation. What we are looking at is taking that further, into wealth realization, and really changing the face of IPOs. So the 2% number you mentioned is important, but it's a new narrative, and that 2% number to be very specific reflects the 1100 plus new IPOs over the last five years that occurred on New York Stock Exchange and Nasdaq, where only 2% of that, female founded IPOs.
So if you look at it from moving backwards in what needs to be done, we realize very quickly that the needle hasn't been moved, and there's some very ingrained systemic biases that exist that need to be changed from the perspective of wealth realization, to really move the needle on redistribution of capital on any aspect or spectrum of diversity.
Minute 18
Avantika Daing:
I'll just quickly plug in. About 70% to 80% of female founded companies, specifically, exit through an M&A route over an IPO. And I have a whole theory about that which is, look, none of it's easy. So, anyone, congratulations to anyone who can take it to an M&A stage. But the stakes and the motivations are not aligned. And so, bankers and founders are motivated to take the nearest, quickest exit, versus having the right mental capital infrastructure, platform support for taking it further for a handful more of years. Somewhere between two, five and 10. It's not easy to staying on that IPO route, and that's the needle we need to move
Minute 52
Avantika Daing:
I would probably say the two things are learn to say no to your customers, as well as investors, to be hardball on your strategy.
And there are two different types of strategy when you're ... One is focused on revenue. If you are a multi-year SaaS contract with a hardware component build in, and you've got customers saying, "Well, I'm not sure I want to pay for three years. I want to do a pilot for six months, and I don't want to pay you, and then I'll scale up, and then I'll do a contract for one year." You got to walk away from that. There are ways in which you can accommodate that, but you cannot be creating exceptions, especially early on. It's a flip of mindset, and it's nerve wrecking to think ... Most people think early on, "Oh yes, I've got a great enterprise. Logo, top 500 public company coming, why would I want to keel over?" Well, you need to set precedents, and you need to set the right precedents. You have to be a bit strategic.
I'm not saying you shouldn't accommodate for those asks, but be strategic in how you create that construct. So, for a pilot, you build a pilot in. If they like the word, "Pilot," you give them pilot, but you make it monetizable. If they want to backhand, you have to understand, again, peeling the onion back, understanding where their motivation is. And the motivation there is, large enterprises like to say, "We want to first test you, and then backend payment." How do you build that into a construct of establishing your contract, and the nuances that go into the contract that set you up for monetization.
There's a component of learning to say, "No," with a creative element of accommodation. And then the second part of, "No," is to your investors. Early investors ask for side letters. They ask for preferences. You want to set yourself up for success for later rounds, and you want to be conscious of what construct and precedents you're setting with your investors now. And having conviction and motivation on yourself in not reducing your valuation, or not wanting to give up too much ownership, whatever it might be for you as a founder or founding team, sticking with your narrative is extremely important.
Minute 56
Avantika Daing:
And then, the last thing I'll say is very important. It's not done enough, and it's completely underestimated, which is think two steps ahead. Also, a different version of peeling back the onion. But if you're raising seed, think about Series As and Bs. If you're raising As, think about Bs and Cs, and why? Look at the market today.
Some of our portfolios that we've worked very closely with when they were raising the Series A, we very quickly came in and we said, "Now is the time to bring in non-dilutive capital. Meet, they're friends of ours, X, Y, and Z that are interested in funding you. Giving you a line of credit, giving you a debt vehicle if you're a Series B," bring that in. Unfortunately, you're not thinking that, because you don't have a need for it. [inaudible 00:56:58] Founders would say, "Well, I have a runway of 18 to 24 months, why do I need to think about that? I've got to runway for 36 months. Why do I have to think about it?"
"Yeah, great. I'll take the introduction, but I'm really not going to lean in. I'm too busy now trying to close my [inaudible 00:57:14] later." Well, later becomes too late, because you cannot time a situational market. And a situational market for us is a COVID. A [inaudible 00:57:25] for us is consideration towards a down market. And so, to manage situational markets, when you are doing your equity round at the back of it is the time to come in and put creative financing vehicles in place. You may never need it. You may end up paying a bit, which could be the downside. But frankly, you're never going to lose out on using, and having that as a backup in creating financial health. And really, frankly, drawing that back to your own mental health in using it as a tapping mechanism.
More About Avantika
Avantika Daing spearheads Plum Alley’s strategy and investments towards deep tech and novel science companies with gender diverse founding teams. Plum Alley has raised over $60 million across 30 companies including Mammoth Biosciences, Einride, Air Protein, AiFi, Diligent Robotics, One Concern, Shine and Biobot Analytics. The Portfolio boasts of two unicorns and one exit. Plum Alley offers LPs and individual investors the opportunity to invest in diverse early stage private companies that are transforming the world.
Avantika brings proven leadership across business functions, operations, and executive management for both start-ups and Fortune 1000 companies. She has a unique combination of an institutional grade reputation with a grassroots approach to building enterprise software, customer focused GTM, and platform businesses.
Avantika’s experience in private and public companies covers the healthcare and technology sectors. Her professional experience spans nearly 30 years, as both an executive and a founder, with responsibility in management, product development, business development, operations, M&A and IPO. Prior to PA, she was the Chief Revenue Officer at Jopwell, Andreessen-Horowitz backed. She served as the Chief Growth Officer at Zomato/UrbanSpoon, Temasek, Sequoia, and ANT Financial funded, which grew to $1.3 Billion in valuation during her leadership. She also founded a venture-backed, international SaaS marketplace. Avantika was the first commercial employee at Eyetech Pharmaceuticals, where she helped grow the company to IPO (NASDAQ) at a $735M market capitalization in 3 years.
Avantika is a TedX speaker and speaks on Venture Growth and Entrepreneurship, Investing in Female Founders, IPO, and Intentional Investing. Avantika currently is on the Board of TiE, New York.
FUll Transcript
Daniel: Well, welcome to the Conversation Factory. I hope we can have a good talk as the title of my book goes. Listen, I was really excited to host this conversation with you. Partly because that experience at the ERA Round Table when they did that process for the final pitch, where everyone stood up who wanted to pitch a company, and you could ask a question of any of the group to sort of filter out. No crypto exchanges. And the statement you said is, "If you do not have a diverse founding team, if you do not have a female on your team, sit down."
I got goosebumps. I still get goosebumps thinking about it, because it's such a powerful statement. I want to just start there, because of the number 2%. It's a really important number, 2% of female founders of all of ... In the VC IPO exits, and regardless of all of the efforts that people have been putting in over the last years, that number hasn't moved a lot. Can we just start there, and say why is it important to move that number, what's been done and what aren't we doing that we ought to be doing to shift that number?
Avantika Daing:
Well, let me start by first saying thank you Daniel for having me here, and giving me the time and the airspace, if you will, for having this conversation with you. I will say my engagements with you are very exemplifying of your topic, of your book, of a good talk. I'm really looking forward to-
Daniel Stillman:
Thank you.
Avantika Daing:
... the hour here. I'm sure we're going to be jumping around on many different topics, but excited to at least bring to the surface some of the questions that the world at large should be asking, but more specifically certain industries, such as the venture capital industry, the entrepreneurship industry, the ecosystem at large, towards supporting entrepreneurs. Thank you for picking that up. That wasn't orchestrated. It just kind of came out, and it came out very naturally, and I didn't overthink it because of what we do. And so I'm going to start there.
I'm one of two founding partners of Plum Alley Growth Venture, where we focus on investing in frontier technology. More specifically deep tech and novel science. So far our stage focus has been Series As and some Bs, and I'll get into why we've been conscious about coming in at Series A, versus either before or after. Our investment thesis, in addition to being focused on sector and stage, is wrapped in a gender mandate. I say wrapped in a gender mandate, because we don't start there. We look for gender diverse teams after we've identified that there's a sector, an industry, a company we want to invest in, a founder we want to invest in. And after we've done our diligence for a Series A company where we can see the line of sight of initial revenues having a trajectory towards scale and growth. And so, our thesis is very specific in our thesis of investing in frontier tech, supporting gender diverse founders.
We also do ourselves a favor as pickers, as VCs, investing in early stage companies in cutting out the noise. And by [inaudible 00:04:55] I mean cutting out, seeing too many investment opportunities, trying to find that needle in a haystack. But also, cutting out the noise if you will, with complete due respect to all my friends who've participated in elevating the narrative around diversity at large. Be it driven through ethnicity or gender, is cutting out the noise of where the rubber meets the road. And if I can take another quick minute to just explain what I mean about that?
Daniel Stillman:
Yeah, totally.
Avantika Daing:
We've been, and being very analytical in my upbringing and in my career of 25 years prior as an operator, plus converting into venture for the last six years in a professional manner, we've seen a lot of support and narrative. More now in the last three, four years, than ever before on diversity at large.
And that narrative comes from a complete shift in our society, supported by COVID, BLM, MeToo, a handful of other, I would refer to them as platelet shifts in our societal thinking. The new generation, I've got two kids that sit in it. They completely challenge traditional thinking, but it's also been supported by capital. You've got large banks, you've got large institutions who are putting somewhere between half a billion to a billion at work on a diversity thesis. You've got folks like us in VC at Plum Alley. But also others that have different ranges, and sort of USPs, their uniqueness in why they support gender, or diversity, or ethnic diversity at large for investing. So, a lot of capital, a lot of support, a lot of social fabric reconstitution happening in our society. However, when you look at the data over the last 10 years, and we slice the data over a 100-year period, over a five-year period, and then over a two-year period to understand if there are any sort of blips, peaks and troughs that would also tell a separate story.
And if we look at the data over the last 10 years, it's really sad to say that we haven't been able to move the needle. And I'm saying the collective, "We," right?
Daniel Stillman:
Yeah.
Avantika Daing:
And so, it begs the question which is, well, what's been happening? Because there's been a lot of energy, a lot of support, a lot of capital. And I think on the capital front it's easier to talk to, because data is data, is very binary. We're seeing that there is a good amount of distribution. At least in the venture space, of capital in early stage. And by early stage, I mean pre-seed and seed, going to gender diverse founders. So about roughly 23% of venture over the last two years goes to gender diverse founders. We've got data over five years and 10 years, two years is the best looking data, which is why I'm sharing it here.
But unfortunately, as you look up the value chain, as they say in VC, which means Series A, Bs, and later stage getting to liquidity and IPO, where wealth realization, wealth creation really happens, we see that number being halved and further reduced, right. So, in that 2% number you mentioned, it's important to clarify that there's a narrative that's been existing in the VC world for a long time now, which they do refer to the 2% number, but it's a different 2% number.
So the number that's been existing in the VC world is about the percent of venture capital funding that goes to female founders. That is the 2% number that has been historically referred to. What we did at Plum Alley, and this is partly leaning on my two-and-a-half plus years of operating experience, plus having taken a company public, directly being responsible for two IPOs, indirectly being responsible for another IPO. What we're looking to do is look at the IPO landscape, and work backwards. And the why behind that is about disrupting wealth realization. It's a word we made up, and what wealth realization really means is wealth creation, and then distribution. Wealth is often created by generational wealth, so you're born into it.
Or the other alternative is to have a technology company take placement in the IPO market. So those two are usually the trajectories. Not the only, but usually the trajectories for wealth creation. What we are looking at is taking that further, into wealth realization, and really changing the face of IPOs. So the 2% number you mentioned is important, but it's a new narrative, and that 2% number to be very specific reflects the 1100 plus new IPOs over the last five years that occurred on New York Stock Exchange and Nasdaq, where only 2% of that, female founded IPOs.
So if you look at it from moving backwards in what needs to be done, we realize very quickly that the needle hasn't been moved, and there's some very ingrained systemic biases that exist that need to be changed from the perspective of wealth realization, to really move the needle on redistribution of capital on any aspect or spectrum of diversity. Sorry, that was more than you asked for, but I just-
Daniel Stillman:
No, that's the big picture, and I want to go into the leaky bucket. So two things that I was thinking about is, one is, is the falloff rate from seed to IPO higher for females? Or in diverse teams, are they not accessing capital later on in their cycle at a worser rate than male founders? Is that what you're also saying, is that the decay rate from seed to IPO is faster. And so, this is why when you talk about intentional investing, and thinking about a platform approach so that the bucket isn't leaky, that we're actually getting people from seed to IPO successfully across the whole lifecycle. Is that right?
Avantika Daing:
You're absolutely right, and I've heard the argument now in my current role as a VC over the six years, but also in my role of being an entrepreneur, and also in my role of being an early [inaudible 00:12:44] of a very large biotech and technology startup that IPOed each for a billion, and then double-digit billions. Where it's the wrong question to be asking, and the wrong question to be asking is, is there enough supply? Do we have enough high quality, diverse founded teams to be investing in at late stage? For private equity to be involved, for venture capital to be involved, for investors that look for a higher liquidity profile Series B and beyond to be involved?
And I think it's the wrong question, because I don't believe that, that is the stopgap, or the bottleneck. If you look at, and I don't want to spend too much time because that could be a topic by itself, but if you look at where the talent pipeline begins, the talent pipeline begins, especially in frontier tech investing, which is a sliver of all of tech.
It begins at the education level. It begins in undergrad, in masters. If you look at the percentage of students that have female students, excuse me, going into STEM. Be it medical fields, bio-engineering fields, genetic fields, pure engineering, new age, new materials, applied materials, and kind of new age degrees, if you will, that are relatively new opportunities that didn't exist about 10 years ago. We're seeing an influx of talent, and that talent [inaudible 00:14:23] ranges from 30, 35%, all the way up to 50%, right?
If the talent pool is strong, and the startup community is strong, then rethink the question you're asking. They're inherent biases. Private equity looks like a certain type. Venture capital that does late-stage venture capital looks like a certain type. They sure don't look like me. They short on sound like me, right?
Daniel Stillman:
Yes.
Avantika Daing:
And I would encourage everyone to look at my LinkedIn to see what I look like. But I'm a woman of color, that is a first generation immigrant, that had to earn my stripes, was not fortunate to go to tier one ivy-league schools, at least for undergrad. Got the opportunity to do it for postgrad. And so, my story is not very linear. And [inaudible 00:15:16] speak for the best founders out there. It doesn't have to be ... We've invested in MIT startup founders. We've invested in Nobel Laureate founders. We run the gamut, right? The point to be made is that where we come from, we're not born with the systemic biases by default, of me and my partner looking very different, coming from different continents, having different experience.
She's a Wall Street queen, having spent three decades there. I'm an operator, so we bring diverse experiences to the table, and we don't bring those systemic biases. Our thought process is different, which means that our [inaudible 00:16:11] is going to be different. Now, one can argue that we bring different sets of biases.
Daniel Stillman:
Sure.
Avantika Daing:
And yes, that's true. You need those to balance out the systemic biases that exist. When you talk about the leaky bucket syndrome, you are absolutely right. I think we're seeing a good amount of energized funding in venture, supporting diverse founders at early stage. Even at Series A, [inaudible 00:16:35] we see a very marked decline when it comes to Series B. And then, we continue to see that decline to half its rate and beyond as we look at Series C, and later stage.
We really, it's not just we need to, we have to, because if you think about it from an economic viability perspective, as an economist would, the economy is not set up at a fundamental level for sustainability. You mentioned platform, and I'm going to come to that. And what we mean by that is that there is no product out there, AKA, a platform, that can support the lifecycle needs of diversity at scale as diverse founders go through the different lifecycle needs of capital from early to late. [inaudible 00:17:34] beyond capital, finding the right partners for support pre-IPO. It doesn't matter, we kind of refer to it as a ecosystem support.
It varies. The type of services, consultation, business development, capital that you need from stage one, to stage two, to stage three [inaudible 00:17:55] vary. And so, the idea is to create a product, a platform that supports that, that eliminates and prevents the leaky bucket syndrome that happens in venture. But in that, also creates a fabric for setting up economic viability, because if you play the platform forward, and you provide the right kind of capital construct, but also ecosystem support construct, then these founders, diverse founders that actually are able to IPO and prevent the shortcut into M&A, are able to create wealth and then pump that back into the platform. Thereby, creating a cyclical cycle of wealth realization.
I'll just quickly plug in. About 70% to 80% of female founded companies, specifically, exit through an M&A route over an IPO. And I have a whole theory about that which is, look, none of it's easy. So, anyone, congratulations to anyone who can take it to an M&A stage. But the stakes and the motivations are not aligned. And so, bankers and founders are motivated to take the nearest, quickest exit, versus having the right mental capital infrastructure, platform support for taking it further for a handful more of years. Somewhere between two, five and 10. It's not easy to staying on that IPO route, and that's the needle we need to move-
Daniel Stillman:
But the payoff is huge, if they can-
Avantika Daing:
Payoff is huge.
Daniel Stillman:
If they can strap in for a little bit more of that. There's so many layers here that I want to peel back, and I want to think about what messages founders need to hear at what time. I want to put this all in the context of conversation, because that's my ax to grind. Certain VCs only want to be having certain types of conversations. "When you're at this stage, come talk to us. When you have this, come talk to us." And after that stage, or before that stage, there's no conversation to be had. What you're talking about is pulling back and saying, "We want to be able to continuously be in dialogue with you across the whole process, to the finish line." But then also beyond. That's in our last conversation we talked about. Even after IPO, how do they learn to grow their company?
That's what I'm thinking about is what a founding team needs to know to learn to be hearing what's easy or hard for them to hear at each one of those stages. That a platform would be saying in their ear, "Now you're ready for this. Now you're ready for that." Where do you feel like the dips are in that process that a platform can deliver the right messages to them? One I just heard is, "Wait a little longer. We can get you through this period to the next stage," and that sounds like a really powerful message. What else do they need to hear that they are not getting as without a coherent platform set of messages?
Avantika Daing:
Before, Daniel, I answer your question, I just want to say two things on the topic of conversations. All good VCs have conversations. They actually start having conversations with potential ... With entrepreneurs and potential investments early. All good VCs are in the business of having conversations early. The second thing I'll say, it's actually a good thing for VCs to have an investment thesis that's specific, right, because you really need to focus on portfolio construction to drive portfolio returns, to then focus on investor returns. All of that is very important, because your track record in terms of investor returns, it gives you the power and the stage to stand on to keep doing it over and over again. And more of what you need to do. Whether it's venture straight up, or to disrupt venture in some shape or form. So I think-
Daniel Stillman:
Actually, can we hold back to that one for one second? Because when you talked about the conversational skill of an investor, I was floored, and I'm continued to be floored. I went to ... The month before you went my friend Sim Blaustein from Bertelsmann-
Avantika Daing:
[inaudible 00:22:55].
Daniel Stillman:
So standing on stage ... We're sitting on stage, which I know you didn't want to do, and having a series of pitches, of varying quality. And then, asking really, really insightful questions to peel back the onion, and to get what's really going on, I think is a phenomenal conversational skill. I don't know how you ... I mean, that was an-hour-and-a-half of ... It's like watching a symphony. Really, the ability to consistently find the nugget, to ask the right question. I mean, I don't know if there's even a question. It's more of a-
Avantika Daing:
I had a ... Thank you.
Daniel Stillman:
Bravo.
Avantika Daing:
Thank you for that compliment, I appreciate it. I had, and I say this to kind of show my own naivety of not having grown up here, which is as I came off that stage, I had a wonderful gentleman present himself to me, to congratulate. He made the comment that I presented as an oracle. In my head I was thinking, "Is that a compliment, or what is an oracle?"
Daniel Stillman:
Yeah, it is.
Avantika Daing:
And so, I called Deborah, my partner, and I said, "Deborah, I just got called an Oracle. What does that mean?" And she's like, "It's a good thing, please don't be worried." And she mentioned the notion in this culture being called the Oracle of Omaha, and I was like, "Wow, if even one person could appreciate what we bring to the table in the jobs we do, in that manner ..." I was very touched, and very humbled. You mentioned peeling back the onion. I say that to my team. I say that to founders. I'm constantly throwing that cliche, and jargon, and maybe it's a cultural thing, and I need to come up with a better-
Daniel Stillman:
Onions are a very important-
Avantika Daing:
Visual, right? Being Indian, it's a core thing, and everything we eat and do along with turmeric. But peeling back the onion is very important. Now the reason, going back to your point about having [inaudible 00:25:05]-
Daniel Stillman:
What is important about peeling back the onion for you? What is it? Because it's not just jargon, it actually means something to you, right?
Avantika Daing:
It does. I think what it means for us is two things. One is that we can actually have conversations for four years before we come in and we invest. We don't have a thesis that we have to know you like some other institutions out there, for a period of 18 months or two years. We don't have a rule book, or rules towards that. But it so happens, if I can just deviate real quick.
In our portfolio, now 30 companies having deployed over 85 million with a portion of our fund of 25 million, we're coming in relatively soon to having putting a hundred million plus in the market towards our investment thesis. And a portfolio of 30 plus companies, majority of our investments it's just so happened pure serendipity, not orchestrated or planned, that we've known the founders, the co-founding team for a period of 18 months, I think, is the shortest. To about four years is the longest. And the reasons why we've held those relationships, a lot of it has been working very closely.
Some of it has been fairly superficial. Kind of waiting, knowing we needed to come in, but waiting for the right moment so that the portfolio construction ... To your point about, "Come speak to us when you're ready to fit our mandate over a certain stage," being Series A as a starter investor. Part of peeling back the onion is really giving us the ability and the platform in a different way. Not the way that we referred to earlier, to constantly have these conversations with founders, and technologies, and products that we'd like to support via capital.
And so, over time, part of peeling back the onion means you start with a very early conversation, but then as you go through time, or as you go through the depth of your investment analysis, your diligence process, you should go deeper and deeper. That's one part of the meaning of peeling back the onion. The other part of peeling back the onion really goes to something that our investment committee looks at, which is as the founder, the entrepreneur peels back the onion towards their technology, and what they're solving for, how does that go from base camp to summit, right?
Daniel Stillman:
I'm so glad getting to this. I definitely wanted to connect these two ideas. This is perfect. I think it's such an amazing analogy, because you need that when you're talking about a core technology. Because that's part of your thesis, right? Is that you want to find what is at the center of the onion.
Avantika Daing:
Right, and the center of the onion could be the base camp. Could be something very binary that may not excite venture capital at large, but still has a multi-billion dollar TAM. But as you go from the base camp to the summit, and you layer in all the additional value-adds as you expand either horizontally across multiple markets or areas, or you expand deeper, and deeper in a horizontal play, you're rising up the summit, right? You're rising up to the summit rather. And so, those are these extra layers that come in. Peeling back the onion I kind of use in different ways, but more in a very binary perspective.
It's often to encourage our IC, but also our entrepreneurs and founders to say, "Anchor me on something simple. Let me first understand where the monetization opportunity is, as you first go-to market, and then layer in the other monetization opportunities that expand your go-to market. Taking you to the craziest idea. Such as, for example, we've got the founder of Open Water coming in and presenting to our investors, and unfortunately you're not here on Friday at [inaudible 00:29:42] in New York at 12:00.
And she, Dr. Mary Lou Jepsen came from, the professor from MIT Lab. Former Oculus, Googler. Worked with Sergey, deep tech, disruptor. All power and mighty to Mary Lou for having done many firsts in her career. Her base camp at Open Water is pretty simple, which is to create a portable, affordable, accurate, highly sensitive diagnostics towards stroke detection. The reason why is the first four minutes of detecting stroke is extremely important. It's the number two cost in a healthcare system. She's really trying to address it from an economic perspective, but also from a humanity perspective.
But as we look at base camp to summit, this company and Mary Lou has the skillset to drive this technology into being a non-invasive brainwave therapy communication platform. Simply said, disrupting Neuralink at its own game.
Daniel Stillman:
Wow.
Avantika Daing:
I'm not drilling a hole in your brain. It's a ways to go, and there are many steps on the way. Neurodegeneration included. But understanding your first step in, versus how you scale and grow, and having a methodology to that madness is important for us as investors, and especially for growth investors as they come in to support.
And so, when we bring it home, and we put it on a platform, I think coming back to your earlier question about is this what the platform is, does it allow for a continuation of a conversation? Yes, of course it does. But the platform is actually much more than that. The platform is a grouping of products that exist today in the marketplace. It's not that it's so novel that it doesn't exist, but where the novelty comes, in is that it doesn't exist on a single platform. And what I mean by that is that we have direct investment products out there, multiple syndicates. Some Known, some unknown as syndicate leaders. That's a product that sits on the platform to provide direct investment opportunities. We have sidecar products that exist in the market. A sidecar co-investment vehicle will sit on the platform. We have funds, and funds of funds that sit in the market.
Some funds do operate on a platform where they manage lifecycle from early stage funds, to opportunity funds, to secondary funds. And so, we're going to have multiple funds that sit on the platform. And then, we have the ecosystem support about bringing in the right consulting partners, the banking partners to provide creative non-dilutive vehicles to support different stage growths of capital needs, but also supports in non-capital relationships and engagement. The platform is not just about taking the conversation forward, but also making sure there's a product that meets your needs as you grow and scale. And then, the last plug I'll give in terms of the why for a need of a platform that really sets up the economic future, is that the inherent element of a platform is that your performers rise.
So by investing early into a company that's continuing to perform and provide the track record needed, that investment opportunity specifically will continue to move from one product to another, albeit on the same platform. You are actually creating a multiplier effect on investor returns by continuing to support on a single platform your risers. Similarly, it's equally important to recognize that the non-performers get eliminated very quickly because they don't have the ability to rise within the platform.
And so, there in itself, you are providing capital protection for investors while alongside providing diverse products with different liquidity profiles. Tell me an investor is not going to be interested in a platform that's able to do all of that.
Daniel Stillman:
And that's diversification at its core. In our conversation earlier this week when I asked you what are some of your favorite ways to design a conversation, you talked about dressing the cap table, and it seems to me like this is a way you coach founders to build their own platform. I see this engine in you that is thinking soup to nuts, that tends to think end to end. Has that always been your lens? How did you learn to value that type of broad end to end thinking in your work?
Avantika Daing:
Mileage. On Friday, I was one of the speakers for NYU's PE VC annual summit, and Micah from Founder Collective was there as well. Him and I were having a little chat in the corner as he was closing out the conference as a closing keynote speaker, and one of the things we were talking about is the mileage that folks like him, and me, and my partner Deborah, and others have accrued.
That gives rise to a sense of what's perceived as judgment, but it's judgment that comes with decades of experience. For me in particular, while I didn't appreciate it when I was going through my various twists and turns in my career, switching industries, switching functions, switching roles from P&L to innovation, putting out a corporate, to an entrepreneurial journey, back to corporate, back to entrepreneurial journey, I appreciate it now. Because that diversity of an operator's experience, and that mileage of 25, 28 years allows individuals that have that construct ... And I want to take it away from it being a singular conversation on me, that are able to very quickly join the dots, and venture is known as joining the dots. And the quicker you're able to join the dots, and the further the dots go to the top right-hand corner, you want to jump in with a sense of eagerness from a capital investment opportunity. But the ability to understand where things are now, and then how do you dress around it. And in specific, I think you mentioned dressing the cap table.
Daniel Stillman:
Yeah, because I'd love a good recipe. We should definitely talk about that.
Avantika Daing:
Right, I think I focus more on the cap table because of our gender mandate investment approach. It's not an investment thesis, but it's a mandate we have. And we look at the cap table early on, even when we're looking at seed companies, to understand where does the founder sit now? What access do they have from a network perspective? What's driving their thinking, for example. And I'm just taking this as super high level. If a founder is bringing their friends, and family, and they've got a network of really well known family offices that can carry them through later stage of capital needs, that's wonderful. But that doesn't allow them to diversify, to truly become attractive to venture investors, especially at later stage.
You want to think through dressing the cap table at the right time. Now, not all of it's going to happen at seed or Series A and Series B. There's a right time and a right place to do this, but it's a conversation we have with our founders early on, and we like to give them the sort of direction, and at least instill some amount of conversation to your point, about putting the bugs out there, in their head. Which is think through who is your deep pocketed investor that's going to take you through early stage to mid-stage?
Who is the growth stage deep pocketed investor that you'd like to see come in? Who is your strategic investor that is your customer, and will also be interested in taking an equity stake on your cap table? Who is your venture, early seed investor that has the right reputation to potentially bring in their network and attract some of these other caliber of investors or categories of investors that I've mentioned? And then one in particular, which is my favorite is investors that haven't had an IPO experience, often think that finding the investors that take them to IPO is their last capital need, and that's not true. Companies that go public or post IPO still have need to raise capital.
And so, you need to think through based on where you are for Series A and a Series B company, who is that type of investor. And often enough it's not VC. It can be, but it's often enough not. Who is that investor that's going to take you to IPO, but will also support you post IPO for your capital raising needs post [inaudible 00:40:41]. And those [inaudible 00:40:43]. We have great relationships. So part of it is making sure that the dressing of the cap table, the thought process starts early. We come into Series A. Part of the reason we come into Series A is because dressing the cap table is extremely important. Sometimes we look at the cap table, and even if it's a technical Series A company, we'll say, "Sorry, your lead investor coming in is a family office that's highly motivated by impact, and we love that, but it is not the right lead to be taking you from Series A and B, and beyond.
We will actually request a reconstruction of the cap table into a co-lead coming in, that will have the right construction in place to take them. And a lot of setting up the cap table at Series A prevents kind of preventative maintenance management, if you will. A lot of problems that act as bottlenecks when you reach a Series B or beyond growth stage. And some of that is you need a different mindset of [inaudible 00:41:53].
If you are a water analytical company, which we have, and one of my favorite founders out there, the company's called Ketos, K-E-T-O-S. Amazing investors that have been supportive, but the cap table needs to be constructed, now moving forward in a different way to really bring in the investors that have the ability to think through growth capital and monetization for a company that gave roots in impact. [inaudible 00:42:29] talking about water, and water quality, and quantity, right. So as a company grows, and as the personality of the companies change, and as the technology rises up the value chain into enterprise monetization, how do you evolve the cap table and the investor mindset behind it?
Daniel Stillman:
I feel like I need to quote my mother in every podcast, because she listens to most of them, so I get to say, "Hi mom." She always says, "Start as you mean to-"
Avantika Daing:
[inaudible 00:42:58].
Daniel Stillman:
Hi mom, "Start as you mean to continue," and this is a really fundamental mindset. The idea that, Oh, I will get that investor to take me to IPO and beyond when I am at a later stage versus thinking about the end at the beginning, and setting yourself up for success seems like a really valuable subject to coach your companies on. I could see why that's one of your favorite ... It's a recipe to say like, "Are we dressing this cap table well?"
Avantika Daing:
[inaudible 00:43:34].
Daniel Stillman:
And just stepping back and saying, "Is it designed with that in mind?"
Avantika Daing:
Can I interject with-
Daniel Stillman:
Yeah, please.
Avantika Daing:
... one [inaudible 00:43:40] real fun example that actually-
Daniel Stillman:
Please, of course.
Avantika Daing:
... [inaudible 00:43:43] unintended on your point about a recipe. My comment earlier about knowing and working with a founder for four years is a company, the parent original company's called Kiverdi, K-I-V-E-R-D-I, I think. The company we invested in is Air Protein, Dr. Lisa Dyson, look her up, fascinating. Grabs carbon from the air, so helps with a lot of carbon climate tech, ESG oriented problems. Not problems, solutions. But takes that carbon capture, reproduces it into protein. Chicken protein, fresh protein, and others to make it edible. Taste, smell, look, feel starting with chicken.
Daniel Stillman:
That is dressed, that's crazy.
Avantika Daing:
Now the story, and I'll give you the nutshell, because I think it's interesting, so I'm stealing a little bit of interrupting your airtime here, so apologies there.
Daniel Stillman:
No it's your airtime.
Avantika Daing:
Deborah Jackson, my partner got introduced to Lisa. Lisa leaned on Deborah in the early years to help guide her. She was looking for venture capital. When I got involved, we looked at Kiverdi. Deborah continuously worked with Lisa for the years leading into her becoming what we call Venturable, which is also a version of dressing the cap table to getting there. And Kiverdi continues to exist as a separate company in a licensing structure. We knew while it had many shots to go, and it had a lovely licensing application across industries, gas and oil, fishery, like important industries that needed disruption while creating a further longevity towards limited renewable resources, so, huge. But we knew venture would not touch it, because of its go-to-market monetization towards licensing, but also towards the setup of the industry.
And so, over the years of chipping away with what would be the right strategy, Lisa, Dr. Dyson, finally landed on creating a separate company called Air Protein with a very specific go-to market. Two words, focusing on edible, consumable protein to the end consumer. We could create a monetization as they have done with enterprise partners. They've got EDM, which is the largest ingredient provider and distributor, as a strategic investor both on the equity side but also on the customer side.
They've got enterprises on the cap table, so they're able to expand into a B2B monetization, and they've got the right engagement with retailers. Think large FMCG type distributors to end customers, but also retailers as in shopping retailers-
Daniel Stillman:
That's fascinating.
Avantika Daing:
... that are lined up and ready to come in at the right time. I mentioned that because I wanted to be tongue-in-cheek on your pun about the right recipe, because here she really had to think through putting the right recipe, pun intended, but also she had to think through the right construct of the creation of a new company, and then dressing her investor cap table, which is very different in look and feel to cover her original company.
Daniel Stillman:
It's interesting. Going back to the base camp and summit metaphor, is this a summiting opportunity for her? She has the base camp technology, and she is thinking what is a real path to growth and success given the technology. Is that a fair reuse of that analogy?
Avantika Daing:
Yes. I think her base camp for Air Protein is chicken, to be specific. There's a horizontal and a vertical play as she rises and climbs the summit. The closest in sort of going deeper into our vertical play, is expanding from chicken, to fish, to meat. And there's a reason why she chose to do meat later, or last. The market already has some options out there, but for other reasons as well. I would encourage you and the listeners to take a look at some of her TED talks, but also she speaks at different VC summits, and she explains that.
I don't want to take that away from her. The other part of her rising from base camp to summit is expanding her customer stakeholder. So from being an ingredient player, to being a distributor, end product, to enterprise such as retailers like Whole Foods and others, Krogers. Also, to FMCGs distributors, but also ... Think Burger King or health foods like [inaudible 00:49:10], that meet the customer with the end product.
And then, finally, being a brand direct to the end consumer. And these could be all scale opportunities for her. And then, frankly, if you want to expand it even further as you look at all the different magic that can happen at summit, is taking a technology just Kiverdi did, and expanding it beyond food. Into beverages, into lifestyle. And then, if one needed to take it all the way into oil and gas, you could, but you've already got a company that's doing that at a licensing basis.
Daniel Stillman:
Yeah, it's so interesting to think about all of the different ways in which you can take that core idea, the core technology and the founder's desire to make something from it. And you and Deborah just sort of chipped away that old Michelangelo and David metaphor just to find that core value proposition that was investible and attractive to bring multiple stakeholders together. I mean, that's crafting the core. You peeled the onion all the way back, and you found a core value proposition that could really start a whole new conversation, which is tremendous.
We're sadly running towards the end of our time. One question we haven't asked that I want to ask is around the different types of coaching and mentorship that founders need to be hearing as they grow their companies. When we think about this platform, when they're getting past their cap table being dressed, when they're starting to go towards growing their company, what non-monetary advice, coaching, mentorship do these founders need to hear most at those critical junctures as they grow in your experience?
Avantika Daing:
That's a loaded question.
Daniel Stillman:
Fair.
Avantika Daing:
I say that because I think female founders, diverse founding teams have a different set of considerations to be transparent. That they may not have a natural place to bring up, to ask without having a sense of a label being put on them, or a taboo being put on them. There's a very open and, well, I don't know how open it is, but there seems to be a conversation happening on founders' mental health at large. It doesn't matter what type of founder you are. White male or otherwise. I just don't know how authentic it is, but I'm glad it's happening. What we deal with is addressing a lot of that at an authentic level, but I'm not sure that, that's what I want to end this conversation on. I would probably say the two things are learn to say no to your customers, as well as investors, to be hardball on your strategy.
And there are two different types of strategy when you're ... One is focused on revenue. If you are a multi-year SaaS contract with a hardware component build in, and you've got customers saying, "Well, I'm not sure I want to pay for three years. I want to do a pilot for six months, and I don't want to pay you, and then I'll scale up, and then I'll do a contract for one year." You got to walk away from that. There are ways in which you can accommodate that, but you cannot be creating exceptions, especially early on. It's a flip of mindset, and it's nerve wrecking to think ... Most people think early on, "Oh yes, I've got a great enterprise. Logo, top 500 public company coming, why would I want to keel over?" Well, you need to set precedents, and you need to set the right precedents. You have to be a bit strategic.
I'm not saying you shouldn't accommodate for those asks, but be strategic in how you create that construct. So, for a pilot, you build a pilot in. If they like the word, "Pilot," you give them pilot, but you make it monetizable. If they want to backhand, you have to understand, again, peeling the onion back, understanding where their motivation is. And the motivation there is, large enterprises like to say, "We want to first test you, and then backend payment." How do you build that into a construct of establishing your contract, and the nuances that go into the contract that set you up for monetization.
There's a component of learning to say, "No," with a creative element of accommodation. And then the second part of, "No," is to your investors. Early investors ask for side letters. They ask for preferences. You want to set yourself up for success for later rounds, and you want to be conscious of what construct and precedents you're setting with your investors now. And having conviction and motivation on yourself in not reducing your valuation, or not wanting to give up too much ownership, whatever it might be for you as a founder or founding team, sticking with your narrative is extremely important.
It's important because it's not a one-time engagement that an investor or VC has with a founder. To your own point, Daniel, about a conversation. This is a conversation that's going to go on for months and years. Good VCs like to engage with their entrepreneurs for a period of 18 months and beyond. Smart founders like to begin that engagement earlier. And so, we want to make sure that you're not flipping from right to left and accommodating just because you're desperate on a capital need. And then, the last thing I'll say is very important. It's not done enough, and it's completely underestimated, which is think two steps ahead. Also, a different version of peeling back the onion. But if you're raising seed, think about Series As and Bs. If you're raising As, think about Bs and Cs, and why? Look at the market today.
Some of our portfolios that we've worked very closely with when they were raising the Series A, we very quickly came in and we said, "Now is the time to bring in non-dilutive capital. Meet, they're friends of ours, X, Y, and Z that are interested in funding you. Giving you a line of credit, giving you a debt vehicle if you're a Series B," bring that in. Unfortunately, you're not thinking that, because you don't have a need for it. [inaudible 00:56:58] Founders would say, "Well, I have a runway of 18 to 24 months, why do I need to think about that? I've got to runway for 36 months. Why do I have to think about it?"
"Yeah, great. I'll take the introduction, but I'm really not going to lean in. I'm too busy now trying to close my [inaudible 00:57:14] later." Well, later becomes too late, because you cannot time a situational market. And a situational market for us is a COVID. A situational market for us is consideration towards a down market. And so, to manage situational markets, when you are doing your equity round at the back of it is the time to come in and put creative financing vehicles in place. You may never need it. You may end up paying a bit, which could be the downside. But frankly, you're never going to lose out on using, and having that as a backup in creating financial health. And really, frankly, drawing that back to your own mental health in using it as a tapping mechanism.
Daniel Stillman:
That is tremendously powerful advice, a month ago. So with our literally one minute left, is there one question I have not asked you that I should have asked you?
Avantika Daing:
It'll be a question, but we won't have time to answer it, which is-
Daniel Stillman:
Well, for the next conversation.
Avantika Daing:
... are motivations aligned in the VC industry?
Daniel Stillman:
Well, it sounds like the question is posing that it's maybe not.
Avantika Daing:
You're right, it's not. And that's why there is a inherent need for a platform product presentation to be existing in VC to bring those motivations together.
Daniel Stillman:
Well, I mean-
Avantika Daing:
VC industry, if you don't mind.
Daniel Stillman:
No, no, no.
Avantika Daing:
VC is an [inaudible 00:59:14], your point about the leaky bucket. We create the leaky bucket syndrome. We're in the business of creating the leaky bucket phenomenon. And what I mean by that is as VCs we come in for two touchpoints. Some of us come in for maybe more because we've got the capital power through a dry powder, and we really like how the growth of a company's happening, and we found the needle in the haystack.
But by construct of how venture invests, and because we're thematic, and because we're stage driven, or driven through various constructs of our investment pieces, we only come in to touch an investment between one to two points, sometimes three and beyond. And by default of that, we are creating a leaky bucket. Where we're letting loose, and letting go of our investments that we've made, and we're unable to support it because of lack of capital power, or because of lack of the right platform that will allow for the growth engagement to happen.
Daniel Stillman:
And that's intentional investing at the core. Changing the conversation. This is tremendous. Thank you so much. I want to make sure you have plenty of time to get to lunch. I'm really grateful we made time for this conversation today. Is there any place that people should go on the internet to learn more about all things Avantika, and all things Plum Alley, besides the power of Google? Any place you'd like to send people?
Avantika Daing:
Thank you for asking. I have a horrible social profile. So I am unfortunately not on Instagram. I am on Twitter. My Twitter handle is @AvantikaVC. I'll spell that. It's A-V-A-N-T-I-K-A-V-C. I am on LinkedIn, and I'm fairly active, so if somebody sends me a message or inboxes me, I will respond in some shape or form. And then, our website is plumalley.co. So not com, but co. Plumalley.co. We are putting a new website up, so that should be up in the next two months. And we hope that the conversation that we've had here today would be reflected in that manifestation of plumalley.co.
Daniel Stillman:
That is so exciting. Thank you so much for this time. This has been a beautiful conversation. I appreciate your generosity, and I look forward to the next conversation.
Avantika Daing:
Yes, and safe travels to you. Thank you for allowing for a very natural, authentic conversation to happen, and look forward to engaging further.
Daniel Stillman:
Awesome. End scene.