The $10B Playbook Most Founders and Fund Managers Learn Too Late

Speaker A: Relationships are critical. You can't do anything without relationship. And that means you've got to meet the right people at the right time.

Speaker B: Here is a question for you. Who is harder, uh, to get money out of a billion dollar institution or a single angel writing a small check? My guest today knows both answers. For 10 years, Sam sat on the founding team of Motive Partners. $8 billion under management. And then he flipped aside. He built his own company called Opus, the Founders Club with a huge waiting list. They have a princess on board. They raised 2 million in the seed round, bought a competitor and built their own fund.

Speaker A: I bought my local pub in London. An investor customer gives you a dollar and they expect $3 back.

Speaker B: How do you build your network? Do you have like a strategy for that?

Speaker A: For every successful private equity firm that's formed, there are 10 that die. If you want to invest in rocket ship businesses, you're never going to get double digit ownership in that business in a million years. Simple question is, are they a killer? Are they willing to walk through walls, particularly when the times are tough?

Speaker B: And if you are listening right now, not subscribed to my podcast on YouTube or Spotify, please make sure to hit that button. This podcast is still new and it would mean a lot to me and my team. Thank you so much for listening.

Speaker A: Sam.

Speaker B: Um, it's such a pleasure to have you here today. Thank you so much for taking the time. I know that you visit the Super Return here this week in Berlin, so I just want to start with a question ask you. How is it going so far? How is your week?

Speaker A: Uh, Nicholas, firstly, thanks for having me. Um, this has been already the highlight of my week because it's doing something not with someone in this suit, which is what Super Return is. There's a lot of men and women all wearing expensive suits, talking about a very different topic. Um, but it's been good. Yeah. This is the biggest, uh, industry event of the year. Uh, you see it's the GPS and the LPs, so the capital raises and the capital allocators. Um, and it's back to back meetings followed by events and parties every night. So, uh, it's a full on week.

Speaker B: That's amazing. And when I met Sam outside, I already said, oh, you look so cheek. But here in Berlin, if you walk around this week, you actually see so many people who are very chic who are wearing suits and everything. So, uh, sounds like a perfect event for fundraising. And um, I have one question now. If you go to a dinner party, um, here at the Confluence and you introduce yourself. How do you introduce yourself?

Speaker A: Yeah, at the conference? Uh, it's very straightforward. I'm here representing Access holdings, which is a US private equity firm. I'm uh, one of the four members of the leadership team, um, soon to be five. And uh, I raise money, uh, I look after capital raising, investor relations, marketing and brand, which I believe is very important in this industry. Uh, uh, and then also have some responsibility around value creation as well.

Speaker B: That's amazing. And Sam, would you say there's actually one word of phrase right now that people use in fundraising specifically for funds, um, where you would say, okay, this is like overused. This is just like a buzzword, or it's a little bit stupid maybe.

Speaker A: I, um, think there's really a kind of ah, fraction between two parts of the industry. Um, you're either raising money for a strategy that's focused on technology, so it's asset light, or you're raising money for a strategy that's asset heavy. Um, and that is becoming a very big point of contention. AI is the buzzword that kills everyone. But it's also the most important word because it is transforming every industry. And even if you don't believe that AI is going to transform the things that you invest in, it will transform the things that you are investing in for the person that's buying your company. So maybe not in a five year timeframe, but in a ten year timeframe. So, um, yes, the investment strategies are really important now.

Speaker B: Got it. And before we jump into the details and uh, we will speak about Sam's background and uh, every step he did in his career in a bit, uh, I just want to provide some additional context. So actually Sam and I met because you reached out to me on LinkedIn, um, when you raised funds for Opus. And OPUS is a community, uh, global entrepreneur community. I'm actually also part of it. So uh, thank you by the way, for reaching out because at this point that was exactly what I was looking for. And um, my experience so far was just amazing. I went to Croatia, I went to Cape Town. I missed you in Cape Town, by the way.

Speaker A: Yeah, it ah, sounded like an amazing trip.

Speaker B: It was so great. You have to join next year.

Speaker A: Yeah, I will, I will. We're so lucky to have you as a part of the community at opus. And maybe that's a good place to start. What is, uh, opus? I have the privilege of uh, chairing the organization. It's a, um, community for early stage entrepreneurs from sort of Idea to Series A typically, um, and we call it the founder verse. But really it's made up of uh, three core components. The first is a, uh, global competition called the Easys, the early stage Entrepreneur of the Year awards that we do with Investec. Um, this year those will kick off in Q3. There's a $250,000 uh, prize for the global winner and we take all the uh, category winners to Davos. So uh, it's a pretty cool competition.

Speaker B: That's amazing. We just have to say that right now because we have a lot of people listening who also raise funds or who want to build their venture. So if you are listening right now and you hear about this award, please make sure to follow Sam and of course follow me on LinkedIn. And uh, you will be sure that you get updates about the award and then please apply because I was there last year and visited the party. It was amazing as well.

Speaker A: The second part of Opus then is the core community. That's the membership model. Think of it like ypo, but for early stage founders. Um, and what makes a difference, uh, or different to other communities is really the intent. There are tons of communities out there where people say, um, yeah, let's meet up and we'll have beer and pizza once a month. And it fizzles out after not very long. We've invested millions of dollars. We have a team of 25 people, uh, we throw 300 plus events a year from meetups through to Davos. We took 50 people to see the King in Jordan. We do founder houses all around the world, all sorts of stuff.

Speaker B: And you have a princess on your board.

Speaker A: We do indeed have a, uh, princess.

Speaker B: Princess Beatrice. You have to tell me later how this worked out because I'm super curious. How do you get in contact with the princess?

Speaker A: She's a very good friend. She's been an amazing, amazing supporter. She's an extraordinary individual. Uh, and so yeah, we're very lucky to have her involved then. The thing that really differentiates Opus, and we're launching soon in Germany and I'm excited to bring this technology is when you build something with intent. Communities feel magical but they don't come together by magic. Um, you have to build with intent and that technology creates the infrastructure. So we have Ah, a WhatsApp tool called operator. Think of it like Body, but in a closed loop environment, uh, where you can ask it anything and it will make introductions. At the moment it's making thousands of introductions every month. Um, tens of thousands of prompts are being asked of it and it operates autonomously so that allows us to have high touch frequency with, ah, our members, ah, our founders, adding value, creating serendipity for them, um, without having to have a team of 100 people servicing them. So it's really, really powerful.

Speaker B: That sounds amazing. I actually also have to test it out. I will do that later because tonight, uh, we also have an OPUS event here in Berlin. Another reason why you are here and even more exciting for me that we have the kickoff actually for this region. Um, but let's maybe focus now a little bit more on the beginning. And I would like to take you a little bit back now, some years back, um, and I saw when I did my research that you worked at Barclays in the beginning and you were part of the trading floor there. So, um, how did you then come to basically found your own community? Like, what was the thinking behind that?

Speaker A: Yeah, firstly, thank you for asking the question. Um, I was never particularly bright at school and the only thing that ever kind of got me anywhere was just hard work. Um, and I am addicted to working. It's an obsessive, uh, thing. Ah, I think I probably have a form of OCD and I apply myself 110% to everything. Um, from a Barclays and trading standpoint, I was no good at it. And I stuck it out for a long time because I felt like it's what you should do. Um, and eventually I resigned and went to help run a fintech company with a friend. Uh, and from there, uh, we tried to sell the company to, uh, a large U.S. corporate. Um, they didn't buy it. Another large U.S. one did. But the person running that company, uh, called afterwards and said, do you want to start a private equity firm together? I enjoyed meeting you through that process. And so I agreed. And we built a private equity firm called motive partners, uh, 10 years ago, 11 years ago now. Uh, and we had a good degree of success there. Um, raised, uh, not far off, $10 billion in total and lots, uh, of amazing rich learnings. And through that process, uh, having been part of the formation of something big, I realized one simple thing. And that was, uh, anything I've ever achieved is really because of other people. Um, that is always true. It's true for you, it's true for me, it's true for everyone at Opus. And with that in mind, um, knowing that someone's always got to say, yes, relationships are critical. You can't do anything without relationships. And that means you've got to meet the right people, uh, at the right time, uh, and you've got to build something that's based on trust and credibility and mutuality and respect. Um, and you can't do that immediately when you need something because that's transactional and people see through it unless you have something they really desire. So, um, we built Opus with a view that early stage founders all have very similar challenges and could help each other to go further and um, faster and to create that uh, serendipity that you need. Um, uh, when you have a challenge or you're raising money, uh, how do you find the right person at the right time? And that's what we've built.

Speaker B: I love that. I just saw also that you started OPUS in the end of 2020. And uh, that was um, actually quite after Covid started. So was there um, a connection between like Covid and then why you started the community then at this time?

Speaker A: Yeah, so the idea was born around then. I wouldn't say we really did anything meaningful probably for another two years beyond that. Um, and then we really went for it. Um, I put a lot of my own personal money into it. Uh, we raised some money as well. M. I think it might have been 2023. We raised some money. Um, and that really was the kind of proper beginning of doing this properly. Um, and uh, yeah, never look back.

Speaker B: Amazing. Now you mentioned before the one private equity firm that you started basically from scratch. And I think this super interesting and probably not a lot of people know how to start a private equity firm and build it up from scratch and raise so much money. So I don't want to speak now about all the details, but how does a process look like to start a private equity firm from scratch?

Speaker A: Yeah, Ah, it's a good question. Um, and the simple answer is, uh, you can't do, uh, it alone. Um, and you can't do, uh, it without a reason to exist. You have to have earned the right. Uh, I hadn't earned the right, so that wasn't um, something that I brought to the table. But, uh, the guy, the true founder of Motive, uh, who I was, uh, starting it with, Rob Havert, uh, was a very, uh, impressive, proven entrepreneur, Belgian by heritage, and he, uh, had built a handful of very successful businesses in the financial technology space. And we were investing in financial technology. So the idea was we were going to build the most specialized financial technology firm on the planet with the deepest set of capabilities, um, combining, uh, and creating a unique model. And that model was, uh, we call it the IOI model. Investing, operating and innovating. And those are three divisions at the firm that we still have today. At Motive, uh, even though I'm no longer an employee at the firm, uh, that is still the model and you have to have the right to exist. And the right motive was a unique model with a laser focus on financial technology capability.

Speaker B: You know, it's interesting because, um, yesterday I met a friend, um, whom I met actually in Cape Town. And also last week I went to a paddle event in Munich and um, I met there also some cool investors and founders. And these two people I met, they all told me, we want to start our own private equity firm. We want to buy like mid market companies here in Germany or SME companies. I'm just wondering, like, do you think there is a maximum cap of private equity firms so that can exist? Because in my bubble I hear that all the time, like, we want to do private equity, we want to start our own fund. Like, what do you think about that when you hear that? Is it realistic?

Speaker A: No, I think for every successful private equity firm that's formed, there are 10 that die. Um, and don't make it. Uh, it is exceptionally hard and a lot of people think it sounds good. Um, but it's a really, really tough industry. You have to have the right capability and expertise. You can't just be operators. You have to bring people in who understand the private equity industry. There are a lot of nuances that if you don't speak the language and understand what's coming around the corner, you're going to find it very hard to survive, let alone to thrive. Um, and we'll talk a little bit about it today. But private equity fundraising is very, very different to raising money for an operating business. It's a totally different ballgame, perfect transition.

Speaker B: Let's speak about that as the next step. But before we do that, what would you say is like the most crucial, difficult rule that you have to fulfill when you start a private equity fund? Is it capital raising, so investor relations, what you also do with your position right now at Axish holding, or are there also like other things being operationally, for example, fully involved in the companies who are part of the portfolio? Like, what would you say is the most crucial position in the beginning?

Speaker A: That's part of the complexity is that all the roles are crucial. Um, whether you're. You think about the fundamentals of what a private equity firm does. It raises money, it finds deals, it, it executes deals, it builds value and it exits the business and it raises money and it finds deals. And that cycle, uh, is not sequential. It's all happening all the time, all at once. Um, and it requires very different skill sets for every different piece of the puzzle. Um, and there are parts of that that AI can create efficiencies with. And then there are parts that have to be, um, truly human and need that human intervention. Uh, and so do I think the industry is going to change? Yes, that's a question we should come to, uh, a little bit later. What does the private equity firm of the future look like? M. But the fundamental, I believe with private equity that people need to remember is what your product is. Your product is performance. An investor customer gives you a dollar and they expect $3 back. And so that performance is your product. Um, and you need to use your strategy as your raw materials to create that product, your people, your strategy, uh, and the execution of what you say you're going to do. Um, and if you forget that, which many people do on the journey, um, then you're going to find it hard to exist because you need to generate dpi, you need to give dollars back to your investors and that' continue to raise money.

Speaker B: That's super interesting. When I personally think about private equity fundraising versus startup fundraising, there is one big part missing. Because if you do private equity fundraising, from my point of view, you are selling a team, you are selling, um, what they achieved already, for example, with previous funds. But if you raise funds for a startup, you have a product, but you maybe don't have like any achievements already or any traction. So how do you see that? What is from your perspective, the big difference then between startup fundraising versus private equity fundraising specifically, since you also raised for Opus, but also then for private equity funds?

Speaker A: Yeah, the similarity with both is you're raising on a promise, a promise of the future. Um, if you're raising for an operating company, as a founder, you're raising against a vision, um, and a belief that you can achieve 100 million of ARR. Uh, in private equity, you're raising for a blind pool fund. You haven't made the investments yet. So um, again it's on a belief that the team can execute against, um, that investment strategy. However, um, the relationships that you're creating, uh, on the private equity side, ah, are complex. You're asking for money typically from institutional investors. Sometimes that's money that was the retirement funds of the people of a country or a profession, teachers, firefighters, um, sometimes it's an endowment, um, or it's a family office or whatever area it may be. Uh, they are long term relationships. They invest in a fund for typically 12 years. And that means that uh, you're going to spend a lot of time with these people and you've got to deliver on your promise. Um, typically when raising money, uh, on the private equity side, um, I think about what is the promise that you're delivering to the investors, uh, and what do you need to ensure that they understand that if you get wrong they won't give you the capital. Um, and it comes down to the seven Ps Ah, so Super simple to remember. The first is product. What is the product you're selling, what is the strategy and where does it fit in their portfolio? The second is the performance. Can you, uh, ensure that you can at a minimum benchmark, generate 25% gross IRR and 2.5 times gross MYC? Um, the third is people. Why are these the people to be able to execute against the strategy? Fourth, uh, is place. Where are you investing and what are the macro and micro trends, um, geopolitical, um, economic, social that are going to be prevalent over the next 10 years and particularly through the investment period. The fifth is process. How do you process, uh, all of those different activities within the private equity firm? Uh, especially how do you find great deals origination. They don't just land in your lap, you have to go find them. Um, and how do you build value? What are your value creation levers? Um, the sixth is purpose. Why do you exist? The world does not need another private equity firm. Um, everyone knows that there's uh, now more private equity firms in the US than there are McDonald's, there's 15,000. Um, so what is the purpose of the firm? Um, and that doesn't necessarily mean how does it make the world a better place. But particularly when you think about what's um, the story that the LP is going to tell on their side as to why they should do make the allocation. And then the final one is pipeline. Um, if you're asking for $100 million and you can't tell them what you're going to invest in and you can't give examples of deals you like, um, in lieu of actually having done the deals, um, that's going to be a challenge. So you've got to be able to demonstrate what are the deals that you like. And right now you could say, Sam, what's in the pipeline? At Access Holdings, I could tell you five deals that we have relatively progressed right now in microscopic detail because I know that that's what the LPs want to talk about when I go back to Super Return later this morning.

Speaker B: I love it. Thank you so much for the value already. I Think that's very interesting. Now if we look at the typical timeline between um, fundraising for private equity versus startup, what would you say is the biggest difference? Can you do like startup fundraising in a way quicker time or is it somehow comparable?

Speaker A: Yeah, you can, um, the average fundraise. So I was with a placement agent yesterday, uh, and I asked what's the average time frame to raise a private equity fund? 24 months. Oh, many take a lot longer. If you can do it within 12, you're crushing it. Um, it's a long and arduous process. Um, and typically uh, people are raising money and there's things that maybe make the uh, LPs, um, eyebrows lift a little bit. Um, they may be raising a fund that was a lot bigger than the last one. And so you get concerned that maybe the strategy has changed a little bit. Um, maybe they are raising money before the performance in the prior fund has come through. Um, maybe they're raising money when they haven't generated enough dpi, enough distributions to paid in capital. Uh, and so um, it can take a long time. On the founder side, historically, um, I think it really comes down to the momentum of the individual, uh, and the traction of the business. And um, someone I know yesterday, uh, was telling me you've got to create a fire. You've got to create something that's white hot in a very small space so you can show the traction, um, before you start to capital raise as a founder so that there's real demand for it. And it's a theater, it's an art form, uh, raising money. You've got to build something that has scarcity value. Um, you've got to build something that people have FOMO that they, they don't get into. Um, and uh, yeah, it's, it's uh, it's, it's definitely a theater.

Speaker B: I think the FOMO part is actually super important and um, I hear that all the time like people who sent investo updates and who really use like also some psychology tricks, they are able to close maybe in a couple of days if they do it right and if they already some verbal commitments they received. So I think being able to create this additional format definitely helps for startups and for private equity funds. Now I have one question Sam, that is more related to networking and this is actually something I wanted to ask you tonight because I think it's, it's super interesting. In our firm right now, the biggest challenge is actually building deep and warm relations to investors and I feel you need so much time, you need to spend a lot of energy on that. You need to follow up. You need to provide a lot of value to these investors and you need to keep them warm every month, basically. And I was wondering, like, in your position, since you spoke about these giant institutions, um, who maybe manage like pension funds, I can imagine that building a relation to them is even more tricky than to maybe a venture investor. So I was just wondering, like, how do you build your network? Do you have like a strategy for that?

Speaker A: Yes and no. I think it comes more naturally to some people than to others. Um, and it's critically important, always with a network, to put yourself in someone else's shoes. Why should they care? Why should they want to hang out with you now? Yes, it's labor intensive. So you've got to be willing to invest real time. If you're not going to invest real time building a network, don't bother. Go try to do it on your own. Because it is a labor of love. And you've got to be addicted to using your phone in today's age. You've got to be quick to hit people on WhatsApp to send them a note to know that they're thinking about you all the time. You got to remember things.

Speaker B: So that's what you did before we started the episode, when you went to

Speaker A: your phone 100% all the time. And you got to let people know that you're there and you're thinking about them and that you're a different breed. Human beings are inefficient, um, and think lots of things but don't often action them. And so, um, we've all been there where we think, uh, about something that's important to someone. Um, an operation, a birthday, uh, uh, a grievance, uh, a, uh, victory, a win. And you tell yourself, I'll be sure to message them to let them know I care. And nine times out of 10, you don't do it. So you have to get programmatic about this stuff. Otherwise you just fast and loose. Uh, and I use all sorts of different methodologies from, I have reminders set in my phone. I write on my hand with these, specifically these pens because they don't wash off when you wash your hands. Um, and that just on Monday, Tuesday night, I was at a dinner and I left with five different things on my hand and got back to my hotel room and started knocking them out. And then the, uh, the other big one, um, is social media. Now the single best way to build a relationship with someone is for that person to feel like they Have a lot of touch points with you. In the absence of being able to spend many hours a day with an individual person, one of the best ways to do it is for them to see the things that you are up to and to feel like they have a connection with you. And social media is a great way to do that. Now I don't have Instagram or TikTok or Facebook. I used to have Facebook. I got rid of it. I felt like it was a time suck. But I invest heavily in LinkedIn.

Speaker B: I know, I see that.

Speaker A: And it pays dividends all the time. I have a coffee with someone and they go, yeah, it looks like you had some really cool stuff. Or, I saw your trip, or, um, how was Super Return? They live vicariously through their screenshots. Human beings are doing that everywhere, and you own that channel. Um, I've had people come up and say, yeah, we're connected on LinkedIn. We've never met before. Uh, and that's really powerful. And then you can use it to form new relationships as well. Ah. I was, um, on an airplane eight years ago and, uh, a ba flight. And I watched a documentary called General Magic. If you haven't watched it, watch it. It'll change your life. General Magic is the story of Mark Porat and a team of engineers from Apple who in the early 1990s, built a telecommunication device that didn't exist. It was the iPhone. Effectively, they built everything from scratch. They built the first example of cloud, they built intelligent agents, they built the emoji, they built the first keyboard on the screen. Oh, wow, all these things. Um, and then Apple eventually ended up taking the IP and building it, uh, and crushing General, uh, magic. Mark, uh, is one of, I believe, the most important inventors in living inventors, uh, the people that built the actual iPhone and Android sat on desks next to each other at General Magic. And when I watched that documentary, I wanted to meet Mark. So I reached out to a couple friends who I knew him and asked them for the introduction, and it just didn't come.

Speaker B: This is so interesting, by the way, because on Tuesday, I just told you about that. On Tuesday I had another podcast episode. And the guest there, he also said that here's a strategy that when he doesn't know a person, he always reaches out to three other persons from his network and asks these people if they can introduce him at the same time to one person.

Speaker A: Warm intros are always better.

Speaker B: Yeah, but then if you do it just one time, it's okay, but maybe they will not care. But if three people reach out and then say, you need to speak to Sam now, then it's obviously two of

Speaker A: them might do it and one might not. And, yeah, you got to play the numbers. The two people I reached out to didn't end up doing it. So I reached out to mark directly on LinkedIn. Um, fast forward now, and he's on the board at Opus. He's an advisor at Access. He's got one of the greatest minds I've ever come across. Um, uh, and has an incredible view of the future of superintelligence and where the world is going. Um, and that was something that came out of a movie I watched and a LinkedIn message. So, um, yeah, it's all about proactivity at the end of the day.

Speaker B: That's amazing. And when I think about networking, I also think that there are so many ways to actually become better and keep your network warm. So, for example, the events I just mentioned previously, um, when I went to play some Padel, the connection with so many people was great, but it's like nobody was following up or sent me, like, a WhatsApp message after that. Or same with Cape Town. Like, I built some great connections, but some people, I think they are just so busy, and then they don't think about, hey, would be maybe nice to send, like, a WhatsApp message and say, hey, it was a pleasure to meet you. Let's stay in contact. Let's maybe do a call now. And I think this is something I would really recommend anyone who is looking to raise money to focus on that network even before you raise. And I personally also don't like to start building a network when you need it. So you should do it beforehand. You should provide some additional value and then always keep the people engaged, send messages. So exactly what you just said.

Speaker A: The general rule of thumb is always offer. I try not to ask for anything. Um, and offer, offer, offer, give, give, give. Um, it's a great way to build trust and do it authentically. Um, uh, but the second you start to get to know someone, you're asking them for things, they see through that. Human beings don't like that. Um, so, yeah, I think give, give at least three, three to five times before you ask for anything.

Speaker B: And, Sam, by the way, I see you also as a master of networking, so that's why I ask you a lot of questions here. So I have one last question on the networking part, and then we will move on to fundraising for Opus. Um, do you have, like, one person where you believe this person is super strong. Like in networking, where you try maybe to learn, uh, from this person.

Speaker A: Yeah, yeah, yeah, absolutely. There's a chap that I, um, worked with and worked for, uh, early on in my career who unquestionably is the greatest relationship builder I've come across. Um, unquestionably. Um, and I learned lots of different things from him. But one of them was, what are the tools in your kit bag that you can offer people? Um, and they're super varied, by the way. A podcast is one way, one tool in the kit bag to get to know someone. Um, another one is, um, and I'll rattle off a few examples, and some of them are small and some of them are big. Um, I have three books in my mind that, uh, I purchase for people, depending on what they say in a conversation. And I go, okay, this person, um, is interested in technology. I'm going to send them Tim Berners Lee's recently, um, written book. Um, and then I write on the inside page and I also tell them they can find my name on page 365. Um, I bought a pub. Uh, this was an expensive, uh. You did? Yeah, I bought my local pub in London. Um, super useful because I got to entertain people there all the time. So that, that was a, uh, useful tool.

Speaker B: Wow.

Speaker A: Um, if you join a members club, get close with the membership leads because you can then offer memberships to your friends. I mean, I've got millions of examples of this. Uh, with Opus, one of the greatest, the greatest catalyst in my career was going to Davos. And with Opus, we now take up to 50 people each year. And when I meet someone I like, I offer them a place. I say, yeah, come, Come to Davos. Um, so there's think about what. And I've never actually just written them all down, but I've probably got 30, 40 different things that I think through and do, um, yeah, do something similar. What are the tools in your kit bag to build relationships?

Speaker B: That's amazing. I have to say, I love the pub most because it's so special. I never heard about that before. Um, but if I go to London next time, I definitely will go to your pub. Let's. Super cool. All right, Sam, Um, let's speak a little bit about the capital raising process from an operational perspective. And, um, maybe we focus now a little bit on Opus, because that was the most recent round you raised last year during summer. Right. So how did the process look like from your side? How did you get started?

Speaker A: Yeah, this was by no means a textbook fundraise. Um, so we assessed how much capital we thought we needed, and, um, we ended up, uh, writing down a very long list of people who I know, knew and trusted me, uh, who shared similar passions around supporting entrepreneurship. And I wrote to them all, uh, and I wrote to them and said, this is what we're doing. Um, I can send you some more information. If you'd be open to, um, backing it and me and our mission, then, uh, we won't let you down. I've put together an amazing team to deliver on. Uh, was a short fundraise. Um, it was maybe three months, and we raised, uh, $2.2 million. Um, and I guess the reason it was short was everyone I went to was someone I knew. Uh, and again, reputation and network are built over many, many years. Um, some of them I'd known for 20 years.

Speaker B: You know, Sam, there's one question I always wanted to ask you here as well. So raising for a typical technology software is one thing, but raising venture funds also for a community is another one. So I would love to know, like, why did you decide that you want to raise actually for community? And also, was that something where you got a lot of pushback from investors or a lot of questions like, why do you need the money for community?

Speaker A: Yeah, uh, raising money for a community focused business is a lot harder than it sounds. Um, typically when you put together a fundraise, uh, you know this better than I do, but I would always think about what is the problem you're trying to solve, what is the solution to solve it, how big is the problem in the market, and why have you got the team to be the ones that are going to successfully solve it? I kind of always build any fundraising deck against that. With a community business, you aren't solving an acute problem. Um, and it is something that I think to a lot of people, um, has less, uh, logical commercial fundamentals. The business model is different. A lot of people didn't understand it, but they understood me and they understood what I'm, um, here and I believe on this planet to do. Um, and that's to bring people together to, uh, help ultimately unlock value in their respective journeys. And, um, we wouldn't have been able to raise that money if we had only targeted venture capital firms as an example. I don't think any VC would invest in the business. Um, it's just not the profile of what they look for, and they typically don't understand it. Now, what I do believe is that, um, what we've built with Opus, no other VC could build or has built none. Not even the big, the big guys. Um, we have thousands of high quality founders on the platform. They're connected through technology. They're unlocking value independently and autonomously through the technology we've built. And we're putting them in the right rooms with the right people all the time. From their living room all the way through to the world stage at Davos. No VCs doing it. Not one VC planet. And they all talk about value creation. And so we decided that we weren't going to raise money from VCs, we were also going to become a VC. We're going to build the value creation engine that doesn't exist for founders and then we'll also build an investment platform alongside it. So we built the investment platform, uh, and, uh, that's called day zero. We've just made our first investment. You did? Yeah, we did. We haven't announced it yet, but I can tell you a little bit about it. But, but I'll be discreet. I don't, uh, they haven't announced it yet.

Speaker B: The podcast will go out in like four weeks. So we still have some time.

Speaker A: We have some time. Um, but yeah, uh, and the person that we've invested behind is an extraordinary talent, like once in a generation. The best pitch I have ever seen by some distance.

Speaker B: Did you record the pitch?

Speaker A: I did not record it.

Speaker B: Too bad. I would love to see it.

Speaker A: He'll do it. I want him to come and do a, um, pitch practice, uh, session for founders. Because he is so good. Um, he won a very big award recently, um, uh, for his pitch. A16Z backed him early on.

Speaker B: Now I know whom you mean.

Speaker A: Okay, Axel backed him early on. Um, yeah, the guy's phenomenal. Um, and a fantastic capital raiser.

Speaker B: Now if you look from an investing side, because here it's getting really interesting. Like, what are the most crucial factors for you, how you decide? Okay, I need to be on the cap table. Like, what are the factors for you?

Speaker A: I'm not a very good venture investor, so that should be the first thing I say. I've made a lot of early stage investments. Directly, I've made maybe over 50, um, and indirectly through venture funds, hundreds. Um, and I'm not very good at it. I am much better now. Uh, I sit on the investment committee. I don't chair it. Um, and the bar is much, much higher, much higher than it ever has been. This particular business will do 30 million plus of ARR at the end of its second year. Um, that's a benchmark I now don't want to undershoot. Um, I want to find the rocket ships and there aren't many of them that grow at that kind of pace. They are unique assets but that's the bar that we want to invest behind. And I'll put half a million dollars into any company that's growing at that pace. Um, but you've got to find them and that's where OPUS is so unique it helps us cover a ton of ground. Our early stage Entrepreneur of the Year awards helps us find great companies as well as champion um, the companies. So uh, that's another useful tool in archiback.

Speaker B: Yeah. Isn't there actually also a business model behind that? Because when we now look at Opus and we already spoke about a couple of parts, how you also generate revenue with that. Um, we have the membership fees, we have of course some events or like partnerships. But um, do you also see that investors for example are a, ah, potential business stream for you because you have access to the best talent in the world and you can give them potential access and tell them, hey, invest with us, co invest with us, but maybe you get some better terms or anything.

Speaker A: Um, yeah. So when we built the. So I didn't want to raise a venture fund for Day Zero, um, firstly I would have had to have raised it and I, I don't have the time to do that. Um, but it's also really hard to raise a venture fund. So uh, we appointed Jeff Lynn as the chair of Day Zero to run it. Um, Jeff was the founder of Cedars, the original crowdfunding platform. So he understands syndicate related models. And um, we hired another founding team member, Lamide from Octopus Ventures who's a superstar. Um, and they lead on it but um, they haven't raised institutional grade funds before. So decision was to not do it as a typical fund structure. It was to do it with a pre commitment pool. So we raised a good amount of money into a pre commitment pool from existing OPUS investors on very friendly uh, terms. And in the syndicate we will do between eight and ten deals in Syndicate 1, uh, and 50% of each deal approximately will be from the pre commitment and the rest will be from a community of about 350 high net worths that we have. Um, and that's how we do the deals. So it's kind of deal by deal. Now truth be told, um, having raised a lot of money into fund structures before, um, it's much more attractive. The only reason it's not attractive is because you don't have a management fee. But the management fee on a $50 million fund is small. Um, and it's probably not worth the headache and the heartache. Um, the benefits are huge. We don't have to deploy capital at a rate. We can wait and wait. If this syndicate took five years to deploy, so be it. We're just going to wait for the best deals. You don't have that luxury with the fund.

Speaker B: Yeah, that's true.

Speaker A: European, um, waterfalls are really penalizing for the team. It takes ages to get carry out of a fund structure. Not with this model. We can just pay, carry deal by deal. Uh, and there's a handful of others. There's less administration on it, less complexity. Um, so it's a good model for us.

Speaker B: Sounds like the perfect model. Yeah. And Sam, you mentioned already now that um, you're maybe not so good in choosing the best investments, but still I would like to hear are, uh, there was there like any particular reason why you maybe passed on a specific deal, that you maybe heard about the terms or in the pitch you met the CTO and you thought, okay, it might be not the perfect team fit? Um, was there anything like that?

Speaker A: Yeah, all the time. We have quite a, we're a young investment platform with day zero and we're kind of still figuring it out. We have a, quite a narrow um, mandate and if something's not within that mandate at this moment in time, we don't want to waste anyone's time uh, talking about it. So um, yeah, we're saying no a lot, um, because we're looking for a certain type of asset and I was speaking with a VC earlier this week, uh, who I know very well, but I'm an investor with them and they said, yeah, we like to have double digit ownership in the businesses we invest in. That to me makes no sense. If you want to invest in rocket ship businesses, businesses that are absolutely crushing it, you're never going to get double digit ownership in that business, not in a million years. Um, and so you may end up finding deals that get you kind of the 10 to 15x. You're never going to invest in a business that's 100x because you'll never, because it'll be too competitive. Um, and so you've got to be willing to take a smaller piece of a bigger pie I think in those instances. And the valuations are high and they're super competitive and you've got to be willing to put yourself out there. Like the best deals will not just fall on your lap. You've got to go out and seek them um, one deal, uh, that the team are about to start looking at, um, is, uh, a company of a Formula one driver. I saw. I was watching Drive to Survive. I saw him on the show. I wondered which Formula One drivers have businesses. I looked him up on LinkedIn alongside a number of other Formula One drivers, and I sent him a message, and that was the start of the conversation.

Speaker B: Wow. LinkedIn really seems to work for you.

Speaker A: It's an amazing platform. It really is. Yeah. Um, so you got. You got to be hungry to go find them. Just follow Harry Stebbings. The guy's an animal. He, Harry finds deals in the craziest

Speaker B: places, but I think it's also because of his media arm, to be fair. But it's, again, like, it's going back to the same thing. Exactly. Like, his podcast is just amazing. So also, to the people who are listening, definitely check it out. It's great.

Speaker A: Um, same with all these people, you know, and people like to knock them.

Speaker B: Them.

Speaker A: Um, but Harry is a force of nature. Like, I don't think this industry has ever seen Stephen Bartlett. People love to hate the guy. Poor guy. Um, but he's done some amazing stuff, and he sees deals that, uh, I will never get a look in. So it's interesting.

Speaker B: Now, since we speak about investors, I actually have one question that I always ask to my guests, and that is like, do you have any red flags when it comes to investors? And it could be, like, a potential lp. It could be also a venture investor. Are there any wet flags where you would tell founders, hey, if an investor does this, then be careful and don't accept their money?

Speaker A: I think it just comes down to reputation. Would you want your name alongside theirs in a press release? Would you want people to know that you had dinner or drinks with someone? I think just the basic logic around, is this person reputable? Um, and, um, will they help me when things are hard? Um, not just when things are good. I think, uh, just some basic litmus tests. Um, I think on the other side, there are red flags with founders that jump off the page much more proactively. I think if an investor has real money, that's also a red flag. When they don't have the money, they've earned it, they've won, and they've demonstrated that they can do it. Uh, with founders, there is no threshold there. You have all sorts of people trying to raise money, and there are loads of red flags, I think, with early, uh, stage founders that you need to keep an eye on. And I guess the simple question is Are they a killer? Are they willing to walk through walls? And particularly when the times are tough, can they wake up and just go and crush it even when the world is against them and they've got a month of Runway in the bank and so on. Um, and that's what separates winners and losers in this industry. So many companies you hear about, you read their stories, had those do or die moments.

Speaker B: I spoke to an investor some weeks ago and the investor told me that he usually scheduled calls very late in the evening on a Friday. And then he sees on the reaction of the founder if he wants to back this person or not. And I think there are actually a couple of these little tricks investors sometimes do to see how committed you actually are to run the business. Do you have similar tricks?

Speaker A: Uh, yeah, generally, yes. I will always offer calls on a weekend and lots of people say, uh, can you do Monday? And I'm like, no, I can't because I have other things going on.

Speaker B: I think also always, if we have our conversations on WhatsApp, we always write on the weekends or something.

Speaker A: Yeah, yeah, yeah, exactly.

Speaker B: So you can invest in me. That's not a problem, Sam.

Speaker A: Yeah, exactly. Uh, the weekends are great times for meaningful conversations.

Speaker B: Sam, I have a couple of last questions now and it's now again related to the future. So Opus waste already around and I think we both agree that the community market in general is like super fragmented. Like I see that there are some communities in this city you have maybe something that is more on a national level. Um, some are more category heavy that for example, you have a community just for robotic companies. So I was wondering if your plan in the future might be to acquire more communities like what you did with Embark. And also then related to that, do you think you will need to raise another round or will you just grow Opus from here?

Speaker A: Great, great questions. Um, I'll start with the last question first. I would like to, uh, bring a. It's less about raising the money, it's more about bringing an individual in. I would like to bring in an individual, uh, of a very specific profile that can help us really build something iconic. Um, and I have a view on the type of profile that would be. Um, but, uh, I think we are on. We're exactly where we should be. Um, we built an amazing team, amazing technology. Uh, every day I hear about the wins from the Opus community and it's, it just is the most incredible, heartwarming thing. Um, and we can do things other people can't. Um, we can get invitations from royalty to Go to countries, we can put founders in rooms they would never normally be in. And that's a real privilege to be able to do that. And I want to do more of it. So I think we will probably, um, seek to bring in, uh, an individual and I would like that individual to view this opportunity as their equivalent of a Schwarzman Scholarship or the Milken Institute or, uh, Schmidt Futures. There's no ego here. I want to go shoulder to shoulder with someone who can build something iconic that changes the world. And early stage founders are our future, I believe, um, in the world we're living in, where unemployment is at a five year high and graduate recruitment is at a ten year low, um, we have a fundamental problem globally and entrepreneurship is a way for us to teach people how to fish. Don't wait for a job, go create your own job. And I want to make sure that we're there to support the founders that need it. Um, and so, yeah, I would love to find someone who shares that passion and can help us pour some fuel on the fire. Um, but it would not be a traditional fundraising round.

Speaker B: That was the question. Yeah, perfect. Um, and maybe we have some people who are listening right now who think they might be the perfect fit to reach out to Sam. Sam already said that LinkedIn works perfect for him. So you can also do it the other way around. Reach out to him on LinkedIn. And if you are maybe a founder or an investor and you want to join the coolest and best community out there, then definitely reach out to me because, uh, I will start here and do some more cool events in Germany very soon. Or of course if you are located in UK or somewhere else, you can directly reach out to Sam also. Thank you, Sam. My last question of the day for this episode is, um, a little bit more broad, but I love your experience since you raised for both sides, private equity and startup. So I want to know, like, if you would give one piece of advice for people who maybe want to start their own private equity fund versus people who want to raise for the startup, what would you say is the best advice you can give for each category?

Speaker A: Yeah, uh, it just, it all comes back to people. Um, always don't ever think you can do it on your own. The only wins you will ever have today and for the rest of your career are going to be because of other people. So focus, focus on the relationships, um, don't make them transactional. If you're going to be in the private equity space, build a world class team of people that have done it before. Um, and if you're a founder, start, um, raising money. When you're not raising money, don't suddenly put together an advisory board because you've just started your fundraise. Um, think through how you can build that network way in advance of it so that you can not be transactional.

Speaker B: Sam, thank you so much for joining this episode of Dealmakers and Fakers. Really, really appreciate that you are here today and looking forward to our event this evening.

Speaker A: Me, too. Thank you very much for having me. Nicholas, it's been such a pleasure. And, uh, yeah, keep up the good work. Uh, people need what you do.

Speaker B: Thank you.