What VCs Really Want in 2026: Traction, Runway, and the "Signal-to-Burn" Ratio

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Speaker D: And we welcome you into another week of screen on business. I'm Dave Green, joined as always by Mr. Richard Scrushy. Richard, how are you doing this week, sir?

Speaker E: Well, we're doing good. We're doing good. Sun's out, shining. Ice is melted away. How about you guys? I know y' all really been hit hard up there in St. Louis.

Speaker D: Yeah, we were. But, uh, I think today is the last day below freezing, at least for a while. So we're going to have some 40s and 50s, maybe even see 60s here in a bit. So I'm guessing it's going to be melted, uh, away here soon. But, yeah, it is wreaked havoc on this region. And of course, uh, uh, it has been this way all over the country for the most part, and especially in some crazy places like Nashville and things that aren't used to getting this kind of weather.

Speaker E: Yeah, and. And it shut business down. And, you know, I saw where FedEx had shut down. They, uh, were unable to deliver packages and they temporarily closed a bunch of offices and everybody kind of got messed up, had to move all their appointments and businesses, so. I know. You know, it's an expensive thing, isn't it? I mean, it really does. It cost everybody money. And you saw what happened to the airlines. They, they were losing hundreds of dollars with, uh, shutdowns.

Speaker D: Yeah, it's. You know, people don't think about it if they're not in a business where the weather can really affect you? Uh, I, you know, used to run with somebody who was in the golf business, and, you know, he would talk about not just the bad weather, but when the weather report was bad and, uh, that would affect their business just, uh, in the forecast. And so, you know, to them, and I'm, I'm the furthest from a meteorologist, but a 30% chance of rain, right, to you and me, sounds like 70% chance it's not going to rain. But to a golfer who is looking at a week and sees that it might rain on that day, that can really affect their decision. So some businesses are just absolutely brutalized by weather. But it really is crazy when you stop to think about, you know, what, what the impact can be. You know, here, of course, in, in St. Louis, we always talk about the weather panic button, right? You gotta run to the grocery store and I call it. You get your French toast ingredients right. You gotta get your bread, your eggs and your milk. And, you know, the grocery stores just get crushed during that period. It's just, it's amazing how it affects business.

Speaker E: You know, about three days before the hit, I just happened to go to Walmart and my daughter had said, you know, dad, we probably might want to pick up some water. And I went and they didn't have any. It had. All the water was gone. And so, you know, I live out in the country. We have a well, so. And it's actually better than drinking the bottled water, you know. So I told him, we're drinking out of the well this week. Don't worry about it. You know, no big deal. But, yeah, you know, hey, uh, just to get started, you know, we have spent a lot of time talking about venture capital, about funding businesses, raising money and different things. I know we always have a lot of questions about that, and I wanted to dig a little bit deeper and, uh, if we could and just talk about some specifics, because people are always asking, you know, what is the investor really looking for? And, you know, I've talked a lot about that. Well, you know, your management team, we've talked about that. We've talked about being able to scale. We've talked about, you know, being able to prove that you got customers, you know, doing your number, showing multiple years of projections and, you know, what the. What is, you know, how much it's going to generate, you know, where the customers come from. And, you know, is it a local business? Can you build it into a national business? But let me dig. Can I, Can I just jump into this? I want to dig A little bit. And uh, you know they're looking for real payers, real customers. They uh, want to know that they're going to have real customers. There is a great thing right now that I saw, it's on the Internet and it talks about Sears and Roebuck and you know I grew up with a situation where my dad worked for ncr, which used to be National Cash Register. And uh, there for a long time National Cash Register dominated the uh, industry. If you went into any store anywhere, there was an ncr, a National Cash Register machine there that they would you know, run up, ring up your product on and it would print out and the drawer would open and you'd pay cash because you know we didn't, we didn't scan credit cards back then. You're either writing a check or, or you were paying cash. And it had the little drawers and you know they'd take the hundred dollar bills and stick them up under the drawer so you know, it didn't look like they had a bunch of money in there. But anyways and then ncr, you know there was a time when NCR had a, uh, had a, had a situation where uh, they, they, the board met and you know the computers were kind of an up incumbent thing and they, they made a decision. They didn't think computers were going to last and they didn't get in the computer business. And of course guess what, IBM slipped in behind them, started building computers and then NCR was behind the curve. Then they started building you know, their tower computers to try and get into that business. But they were always behind the curve and IBM built an incredible business and so a similarity and of course NCR then went on and I noticed uh, back a few years ago that NCR had the scanners at the uh, Walmarts. Now I noticed that there's another company that is doing it. So I guess NCR lost that business. I'm not really sure what happened. But anyways it's interesting to watch these companies and how the board of directors and how the leadership will make decisions that will destroy the company. And let me give you a perfect example and watching this Sears, uh, and Roebuck thing that's on the Internet right now and to talk about, you know, back when they built the Sears Tower in uh, Chicago, they were basically saying hey, we're the biggest and the best, right? They built 110 story building. I've been up the Sears Tower, I've had uh, I've eaten up there, I've made presentations to investors up there. It's just, you know, it's an awesome building. But at some point in the 90s, Sears and Roebuck got into the real estate business. They started selling insurance. You know, they had Allstate, they had the. They, they. They were doing some banking business. They were doing all kinds of different things. Their car insurance, uh, and, you know, with Allstate and all these different things, all these different businesses that they had gotten into. And they forgot about the customer that was buying the drill bit or was buying, you know, something simple or buying some socks or some shoes or whatever. And they started focusing on all these other things and their stories began to change. And I remember years ago, I walked into a Sears and Roebuck and I thought I was never going to be able to check out it forever. To get through, they had to read all these numbers and put them in and all this manual stuff. And I'm standing in line, there are people behind me and, And I just had a few items and I made a decision. I wouldn't. I wasn't going to go back there and buy anything. And I think the whole. I think everybody began to do that. And, and of course, uh, they made a tragic mistake that. And this story on the Internet was just phenomenal. They talked about the fact that when they had the Sears catalog, this was way before Jeff Bezos and, and before Amazon, everybody brought. I remember my mama buying clothes and it coming in the mail that she ordered off of the Sears Robo catalog. Well, they had, they had the Amazon model in the Sears and Robo catalog. But some brilliant leadership at Sears made a decision that that was outdated, they weren't going to do anymore. And they closed the catalog division, shut it down and quit. So people could not order. They couldn't, you know, because it was a dream book. And when we were kids, we'd flip through it and buy, mom, I want this for Christmas or my birthday. And, you know, people bought off of that. They'd pick out the shoes they wanted and the shirts and things, you know, so they were the beginning of Amazon. And they shut that down. Somebody in the top tower that was probably overpaid. No longer was. It wasn't Mr. Sears who had the visions. It was somebody else who was not an entrepreneur and did not have the ability to see the world as it really was. And what was coming. And what was coming was that, you know, Jeff Bezos saw it. So in other words, Sears and Roebuck could have been Amazon. And, you know, long story short, they missed it. So when we start thinking about, you know, I think about when I was building HealthSouth, uh, you know, the reason that HealthSouth flourish so much is that there was a change when back in 1983 there was a change in the, in the reimbursement to hospitals and it incentivized building outpatient centers because they reduced, they took the ancillary profits out of hospitals and, and they decided, you know, they were going to pay on a dot on a diagnosis and they went to diagnostic related groupings. And when they did that, it created a bubble opportunity to go out here and build cost effective outpatient centers that patients that didn't need to be in the hospital but could get the services done here. And the hospital industry kind of missed that and that it's kind of a similar thing and that allowed us to build a national company, international company actually, but national, to fill uh, in that gap and what the opportunity created. So when I'm sitting here and I'm thinking about venture capital to venture capital to today and uh, what the venture capitalists are looking for and the things. I want to dig a little deeper today with all of that being said, you know, clear metrics, clear metrics that show that, you know, what is the real revenue opportunity? Okay, what is it really? And, and then something that shows how your customers are. We're going to have repeat business or we're going to have one time customers because if you have Repeat business like McDonald's, people coming in, coming in almost daily, weekly, then you can just keep building and you get new customers to come in with, with new promotions. So uh, do you have any pilot, uh, can you do a pilot contract? In other words, um, you know, to be able to prove to the investor that what you're going to do and what you're going to sell and whatever your service or business or product is that, you know, here's a pilot thing that we did over here and these people bought it and used it and loved it. And uh, here are the results of that. And that would help show kind of the reducing of the risk if an investor, you know, comes in and makes an investment. So you know, things that you can do like that to be able to show that, you know, we can do this. But leadership, you know, we talk about leadership, leadership, uh, under pressure. So when, when you come in to speak and they start asking you a bunch of questions, how do you handle yourself? Do you, are you smooth? Are you calm? Can you present it? Do you know your business? Do you get tripped up? Do you want to argue with them? Uh, oh, no, you don't know. Anyhow, you know, uh, you got to be careful how you present, especially to sophisticated investors. And I've said in so many meetings with people that manage billions of dollars, they don't have to give you any money. They don't care. They. But, you know, if you really got something and you present it right, they get pretty excited. But there's some terms that I think are important, like a capital efficiency. Now, uh, and behind the scenes, when you make your presentation, this kind of stuff, venture capitalists or fund managers will talk about, you know, they. They want a longer Runway, then, other words, they want to be able to put this much money in, and they want it to last longer. So they're going to. They're going to be talking behind the scenes, maybe not so much with you. And they're going to say, I wonder what the Runway is here. What is it? What is the capital efficiency? How long is the Runway? And then. And then they're going to get into something that they call, um, signal to burn ratio. Okay, signal to burn. Now, signal is going to be your denominator, and your burn rate is going to be, uh. I mean, signal is going to be your numerator, and your burn rate is going to be your denominator. So the higher this, uh, number is, in other words, the higher the numerator is, uh, the less risk there is. And what that's saying is when we put this money in here, it's going to have a longer Runway, it's going to last longer, and so it's going to eliminate and reduce the risk of investing in this. So in your mind, and when our listeners are out there right now, when you're thinking, thinking about presenting to this, these. Whoever the investor might be, whether it's angel investors, whether it's wealthy, whoever it is, whether it's a fund manager, it's venture capital, traditional venture capital, whatever it is, institutional money, uh, even if it's a public company, you need to be able to present that signal to burn to them and help them understand that, you know, we put in this much money and we have this much burn. So the higher the numerator is in that fraction, then, uh, the more attractive it is to the investor. And so you know what that says when you have a high numerator? It says that there is a demand, what we call a product to market demand. Okay? So the market is demanding that product. Because if the markets demand in the product, guess what? You're going to have a lower denominator and a Higher numerator. And that's your signal to burn ratio. So you're going to be measured by that. And so you need, you're going to have to show every dollar. And basically this is what that is in a nutshell. For every dollar invested, what are we producing? You know, what, what, what do we get? So we put this money in and we get this, okay, so if the, if you got this really high numerator that says, okay, we put this money in and you know, we get this huge product return and production, then the chances are it's going to be, uh, easier to invest to get an investor and attract them. But know what else? You're going to have a higher valuation.

Speaker D: Right?

Speaker E: So we're looking at, you know, and this signal to burn ratio is kind of the hallmark of capital efficiency. Okay. It's, in other words, they're going to, those are the terms that they're going to use behind the scene when they're not, when you're not in the room. And they're going to discuss that and they're going to say, well, what is the capital efficiency? What is the, the length of the Runway here? What is the signal to burn ratio? What do we think? You know, how long. And basically in a nutshell, for us that are simple minded, how long is that money going to last before and what are we going to get for it over a period of time? So with that just kind of as a starter, where, where would you like to go from there?

Speaker D: Well, uh, Kevin from Nashville wrote in a question and I, uh, think it, it kind of applies here, which is, you know, how much traction should a startup realistically have before approaching institutional investors can, he says versus angels in his question. So, you know, where do you have to get to before you're even having these conversations?

Speaker E: Well, that's a great conversation. I mean, uh, that's a great question. And that's all over the board. You know, it just really depends on the business that you're in and it depends on the amount of capital we're talking about that it takes. And uh, look, a lot of folks have started businesses with very little money and they've been able to prove that business out. Okay? So when you're doing your calculations and you're saying, okay, we're going to start this business, you know, I'm going to need $500,000 to be able to prove it out, or 100,000 or a million or whatever it is. So if you're able to get that product out there and, or get that business open and running with proof that it is in fact something where there is a product demand and that it can work and it is scalable, uh, then, you know, you're going to have a great time raising money, you're going to get good valuations, you're going to be able to really build a national company because people are going, I mean, the investors are going to want to be part of that. So, um, it just depends on the business, you know, I mean, if it's capital intensive, you're going to need a lot of money and you might not be able to even get started. You might just be an idea. And, but look, if it's a great idea and, uh, there are a lot of businesses, Dave, that have started with nothing but an idea. And, and I think, you know, I really believe that there will be a day when some of this stuff goes the other way. You know, I noticed this morning that bit bitcoin had dropped like 40% or some huge amount. Right? People lost billions on that. I'm just telling you. And so I think the business might get crowded. Uh, I think it's fantastic right now and we're seeing incredible things happening with AI. AI is doing so much to make our lives better and easier and, and whatnot. And so. But I do believe there might, the space might get crowded. And you know, there may be a day when we start to see that come down. But really it's all about how much money does it take to get you up and operating and then what is the scalability of it and what is the long term profitability of it. And um, you know, when I look at some of this AI stuff where they put in $100 billion, you know, 50 billion, 100 billion, $200 billion, uh, you know, I'm sitting there saying, wow, how is that ever going to give the return? You know, and we talked about it last time we were on, I said if a guy put $100 million in and he owns less than 1%, right. You know, he owns like 0.003%, right.

Speaker D: Hard to get that return, as you said. Lisa wrote in from San Francisco and said, When VCs talk about traction, there's that word again. What does that actually mean today? Revenue, users, engagement or something else. You started to talk about that when you said, you know, hey, we know ultimately, right? It all comes down to revenue.

Speaker E: Yeah, Traction. You, you know, you're selling product, you've proven it, it works, it's working it. I've got a pilot product, I've got Traction, it's happening. I, uh, can show you that it works. I can show you that people want this. I can show you product demand. I can. You know, you and traction can come in many different variations in many different ways. But if you got traction, you're going up the hill, you know, it's working. It's, you're making, you're biting into it and you know, you're making it go. And, and so uh, it could come in, like I said, a lot of different ways. Uh, but um, basically it's proved out that what it is that you're going to do can work.

Speaker D: Brian in Columbus, Ohio wrote in to inforscrushionbusiness.com and said in the current environment, Richard, are investors more focused on growth or profitability and how do founders strike the right balance?

Speaker E: Well, I think that depends on the investor. A lot of the investors, uh, I mean I've met investors that are not worried about short term losses. You know, they are looking though at that signal to burn ratio in the Runway and their capital efficiency. They are thinking about that. Uh, but uh, uh, some businesses just are not going to be profitable for a period of time. I mean it's just the way it is, uh, until you have enough traction. Okay. But uh, I think they're looking at both. I mean, what is the long term profitability? I mean in one day it's got to make money. I mean they're about, let me tell you, they're biological companies out there. It's a totally different animal. They're uh, on, they're on the cutting edge of creating some new drug that will change the world. That could be, uh, that the pharmaceutical industry would pay a billion dollars to own because they know this thing is going to be huge. Right? They may spend three to five years, okay, losing money every day as they're doing the investigation work, as they're doing the research, as they're proving it. I've talked to a guy recently who's got a product that is going through FDA approval right now and he said that they had done all of this work and they came back and they said, uh, you need to inject this product under the skin of 500 rabbits and we need the results of that m. And I said 500 rabbits, why not 100? I mean wouldn't, wouldn't you like prove it in 100? I mean, 50. Why 500? But they wanted the results of 500 rabbits. Now you know who at the FDA is making those kind of decisions? I mean, why wouldn't it? 150. I mean, uh, really, what, what's the difference between 100 rabbits and 500 rabbits? But I'm just showing you, look how much money they had to spend just to do that and uh, to be able to get this through the fda. So here goes more money, more burn, right? Now here's the good news. They did the 500 rabbits and didn't have any side effects. Okay? Now the product can go ahead and get approved. Well, when the product gets approved through the FDA now, they can go out and tell the world we have a product and it does these things and it's, FDA has signed off on it. Okay? So now we can go out and this can become a billion dollar product, if you will. But they had to spend a lot of money and lose money for a long period of time till they got through all that process. So it just depends, you know, it depends on the situation. A lot of companies, a lot of businesses, uh, they open up and they start making money immediately. You know, they're very successful. They got a huge product demand, they got a low cost of capital to be able to get there. But then you have those others that just take, you're going to have a long burn rate. But let me tell you this. They may have invested $50 million, but it might be, or 100 million or uh, 200 million, but they got a multibillion dollar product. So you see what I'm saying?

Speaker D: Yeah.

Speaker E: There's an investment community out there, institutional investors that fully understand biologics, they fully understand new drugs and they invest in those knowing that there is a burn rate over a period of several years before they ever get it.

Speaker D: There's. Those are the types of insight you can get From Richard Scrushy infooshionbusiness.com and we'll get back to your questions in just a minute. But first I have a question, honest question for you guys out there. What do you do when you get ready for a first date? Would you get a new haircut? Clean the car like you're picking up some royalty? Probably overthink everything you're about to say. Well, let me give you one thing that's non negotiable before a first date and that is deodorant. And that's why I use Mando. Mando is whole body deodorant. It's safe to use everywhere, hips, feet, thigh folds, even those hard to reach areas. We'll keep it family friendly here, uh, on this podcast. But what surprised me is how well it actually works. Mando was created by A doctor Richard was just talking about people doing things that they know about. This was created by a doctor who saw that normal body odor was being misdiagnosed and mistreated. So instead of masking smells, Mando stops the order before it even starts the odor. It's clinically proven to block odor all day and control it for up to 72 hours. They've got the solid deodorant stick, they have a spray deodorant and all of it's baking soda and paraben free, which is important. And the results, they speak for themselves. Twelve hours after a shower with soap alone, the average guy's odor level is a, uh, five out of ten. With Mando, zero out of ten. Some man men try to mask it with odor and heavy scents. This stuff smells great. Mando gets the job done right. Don't Masco, mask it man. Do it. Don't mask it man, do it. You can find Mando at Walmart, Target and retailers nationwide or get the best deals@uh, shopmando.com and for a limited time new customers get 20% off site wide plus free shipping with our exclusive code scrushy. That's uh, shopmando.com the code is Scrushy. S C R U s h y for 20% off site wide plus free shipping. S H O P M A N D O.com Please support the show. Tell them we sent you. Mando's got you covered with deodorant plus sweat control. Say goodbye to sweat stains and hello to long lasting freshness. And we thank the folks at uh Mando for sponsoring today's episode. Let me get back into some questions here, Richard. We're going to go to Samantha in Denver who asks how do you prove the value of your product when you're early stage and you don't have meaningful revenue yet?

Speaker E: Pilots a pilot product, uh, find a customer that will use the product if it's a product or service. Get. You're going to need, you're going to need someone that says this. We uh, did this or we use this or we tried this and it works and it works well and we really like it. And matter of fact we're going to use more of it and uh, we're going to buy more of it and we recommend it to everybody that's in our industry. They should try this product because here's what it does. So you've got to find a pilot customer and you've got a document and that really is where you have to go with it. And if you don't do that. Uh, you know, and you can't do that, then you may not want to put your money in it. Uh, you got to have. And, you know, back to traction. That's traction, right? If it works and you got. Somebody says it works and they're legitimate and you got a reference, you know, you get two or three people that say it works and that we've used it. Um, and, and then let me tell you. So you're talking to an investor and you're pitching your deal. And the investor, Investor may say, can I call them? And you say, absolutely. You call up. You'd let them know that the investor may want to call them. And then the investor calls them and says, tell me about the use of this product or this service or whatever. How did it go and what'd you use it on and what did it do and why do you like it? And, and then, and then how much of that do you think you'll use annually or monthly or daily or whatever so that you'll be able to show that they're the need for it, you know, and that's. It's like saying, you know, uh, in the pizza business, you know, uh, every family is going to order one pizza a month. And there happens to be a hundred thousand homes in my area that I'm serving, okay? And we're going to get 10% of that business. You can calculate exactly how many pizzas you're going to sell that month. And then if you, if you've got 20 people or 10 people that are using it, and I'm just using that in pizza, it could be cleaner, it could be anything.

Speaker D: But.

Speaker E: But you put together a, uh, network of people that will say that this product is good. That's what you've gotta do.

Speaker D: Bill Manovich, I would say, go back and watch our episode with Billy. He did exactly what you said, right? He went into those hotels and he said, here, try this product so that I can test this out. Right? And he, uh, couldn't get that appointment, couldn't get the opportunity to get in to pitch them. But when people actually had it in their hand and were using his product, he was able to now say to people, not only do they think it's a great product, they are looking at the value that it can bring in terms of saving money. We talked about that with the health care involved in taking care of their employees. Employee can't come in because they have a bad back. And now you're able to give them something that scrubs, uh, things that are down low without them having to bend down. So he had the best possible traction, if you will, which was putting the product in people's hands and saying, here, use it. And you tell me.

Speaker E: Yep, yep. That definitely gave him some traction. You know, I was looking, um, at deals. Oh, go ahead. You got another question then? I've got something I want to add. Go ahead.

Speaker D: No, I was, I was going to say the, uh, question that had come in from Heather from Minneapolis, and we, uh, can answer it or you can chime in. How much weight do investors put on the founder versus the product when deciding to invest?

Speaker E: I think it's just as much on the founder as it is the product. I think the management team and their ability to execute. Because let me tell you what I've seen, uh, Dave, I've seen inferior businesses get funded because of the leadership and the team. I had a venture capitalist tell me one time, I'm not impressed with what they're doing, but I'm impressed with what they can do. And that's what can that management team do? And if you've got. And so, for example, they'd say things like this. That guy's experience is incredible. As a matter of fact, you know, he worked for XYZ company. He was a senior executive. He started with them, and they were 100 million. And when he left, there were 5 billion. He grew with that company. So he's got experience in scaling a business. He's got experience in managing a lot of people. He's got sales experience and development and. And product experience of moving product. And he understands production and yada, yada, yada. Okay, so they say, this guy, uh, here's exactly. And this. I'm a quote, a venture capitalist. He said, this guy, I don't know what he's going to do, but I know he's going to do it. And I know it will be successful because everything he's ever done in his life, he made it successful. Now he's pitching this business, and I'm not 100% sure that this is a great business that he's going into, but I'm going to invest in him because I know that he will figure out how to make it profitable. And so I saw that. And as a matter of fact, that business did become profitable. And in four years, they sold it for lots of money. And investors all made, you know, six, eight, ten times their money. So, you know, it just depends. So I think that 90, if they don't. If, if. You know, most of the time, a very Good CEO, uh, a good visionary, a good entrepreneur is probably gonna have a decent product. He's gonna have something that he believes he can roll out. So I think his value many times is equal to the product. That's, that would be my response to that.

Speaker D: Yeah. A lot of times they're deciding before, uh, you even get to the product. Right. Because they're, they're evaluating you, uh, the founder first most of the time, because that's, that's what they're going to know, uh, more about. So tell, uh, us what you were going to say about, uh, there. We have some questions about current, you know, things going on in venture capital. But I know you had had some insight.

Speaker E: Yeah, yeah, I just wanted to just, you know, so I, I've been, you know, as you know, for months, I've been studying the venture capital market and the deals that are being done and I'm really interested in that. And so there was a report that came out, uh, and the data came from PitchBook, CrunchBase, KMPG and NVCA to report in it. And basically they tallied up the annual global VC deals that were done over the last five years. And I just thought it was really something we should share on the show. And let me tell you on a global basis, meaning worldwide in 2021. And the reason I share this because you can kind of track what's going on in the world. There were 57,000 venture capital backed deals. Okay. And that was the peak in 21. 2021 was the peak. Now I'm trying to think Covid was when. Dave, what was that? 2021.

Speaker D: Uh, it started in 20, right, and went into 21.

Speaker E: Can you believe that? There were 57,000 deals that year and 21. And that's the peak because in 22 the deals declined and there was only 43,000. And then in 23 it was 43,300 and then it went down even more into 24. Last, uh, 24 was 35,686. Now get this, in 25 there were only 24,000 deals. So when you go back at the end of COVID or during COVID 57,000 deals last year, 24,000. So you got to say, well, you know what's going on with that, right? So 21 was a high watermark. We saw a drop into 22, 23. They fell off further in 24 and then even more last year. But still that's lots of deals that were done. So it was a total of about 203,000, 203,000 venture capital backed companies were started over the last five years. So uh, it'll be very interesting to track 26 and see if that comes up or see what happens. Now what's interesting too is the market, you know, has gone to an all time high. Well when the mark and you know, but have you note there are some sell offs now when there's sell offs and people pulling money out of the equity markets they will many times put the money into the venture or into the, into startup business, private equity, uh, investments and other things because I mean they're not spending that money, they're reinvesting it in somewhere else. But they take it out of the market for a reason because, and usually it's because they think this is kind of done, I'm done, I need to get out of here for a while, I'm gonna come over here and there's some opportunity, sometimes they have to pull the money out over here so they have it depending on put in over here. And so we see that happening now. Many of these companies that they're pulling this money out and putting over here are going to become public companies out here and that's going to drive the market up because of more valuation. And when we look at multi billion dollar company, 100 million 200, 300 billion dollar valuations, that drives the market up. So the more of that you see then the more you will. So that's kind of what's going on now as this just a guy out here trying to start a business. What does this mean to me? It means that this money coming out of the market, okay is going to go into potentially venture or startup deals or into investment funds. And uh, so the money there is liquidity in those markets to invest in startup businesses. So if you have something that is solid and does work and you've got leadership skills and you put a team together that does all the things that we've talked about over the many shows because you got, you got to have the right team, you got to have people that are respected, people uh, that can execute and then you've got to focus on how much money takes me to where. In other words we're back to the signal to burn ratio, right to the Runway to the capital efficiency as we talk about. So putting it together in a, in a format uh, where X amount of dollars is going to produce a pretty big return for the investor. And it's a concept now they're there again there are things that are pretty simple that are, they're not interested in you know, it might be scalable, but the margins may not be big enough. So, so looking at some of the things that they are interested in, we talked about this the other day. You know, we talked about the fintech, the building, the financial stuff. We talked about health care tech, uh, platforms that, you know, to manage healthcare operations, whether it's doctors and hospitals and services and outpatient, all the different things. Those are things. AI continues to be a big thing. But I did read something recently that uh, one of the analysts said that they're said to be very careful on the AI side because, uh, it could be getting crowded and we could see some reduction in that. So all of that is important. But uh, and then believe it or not, climate, that's an area they're saying that is always is still opportunity, uh, for business deals. But when you start talking about I'm going to build a restaurant chain, okay, that's a whole different ballgame. And uh, there's so many restaurant chains right now where I live, I can't even go around and eat at all of them. I mean, and, and I had lunch the other day, my son and I, and it was $16 a piece. And I said I'll never go back to that restaurant again. It's just too expensive. Uh, you don't want to run out and spend $16 for sandwich and a drink. And so, you know, I don't know, uh, you know, my thoughts on that is that I'm going to drive by that by there in the next year or so and it's going to be closed. Does that make sense? I mean, you see what I'm saying?

Speaker D: No, it makes perfect sense. It does. And uh, we'll get back to some more questions. I've got one coming that kind of hits on that subject here in just a second. But, uh, I know something we all have coming up and that's spending some time watching television because It's Super Bowl 60 coming up on Sunday. And that deserves a sports beta book built for the moment. Our friends at DraftKings Sportsbook, an official sports betting partner of Super Bowl 60, puts you right in the center of the biggest game of the year. And when anything can happen during the Super Bowl, DraftKings has your back. We've told you before, with early exit, if a player goes down in the first half, you still get paid out in cash immediately once your bet settles. No bonus bets, no waiting. Of course we know Seattle is the 4 1/2 point favorite over New England according to DraftKings. And they also have Sam Darnold currently as the favorite to win the MVP M. There are so many different ways that you can get in on the action. You can bet all the different props. You can even bet on who might set a Super Bowl 60 record and so much more. Here is one that I like. I put a little on this. Seattle wide receiver Jackson Smith. And Jigba, I say he gets the first touchdown in the game plus 550. So there's my pick for you. If you're new to DraftKings, new customers can bet just $5 and get 300 in bonus bets if your bet wins. So download the DraftKings sportsbook app now and use code SCRUSHY. That's code SCRUSHY. S C R U S H Y and turn five bucks into 300 in bonus bets if your bet win, wins. This is in partnership with DraftKings. Where the crown is yours. Gambling problem. Call 1-800- gambler, New York Call 877-8-HOPE NY or text hopeny Connecticut Call 888-789-7777 or visit ccpg.org on behalf of Boothill Casino in Kansas. Wager tax pass through May apply in Illinois 21 in most states avoid in Ontario. Restrictions apply. Bet must win to receive bonus bets which expire in seven days. Minimum odds required for additional terms and responsible gaming resources. Cdkng co Audio and this is a limited time offer. We thank our friends at DraftKings and hope everybody has fun watching the game on Sunday. Richard Mark from Austin, Texas wrote in. And you just started to hit on this before I told everyone about DraftKings, which is over the last five years, which categories have attracted the most venture capital? And which ones do you think are quietly falling out of favor?

Speaker E: Well, that's, again, you know, we got great, great listeners, great questions. I, um, believe that, you know, I mean, right now we're seeing this whole AI and software services. I mean these are areas that right now are huge. Biologics are huge, new drugs are huge, uh, all of that. Anything that will help us live longer. I think we're going to see a whole longevity medicine, uh, sector that's going to evolve and longevity clinics and longevity opportunities for people. People want to live longer, they want to be healthier. We're seeing the introduction of all kind of treatments from peptides to, you know, exosomes and stem cells and, and uh, and you know, hormones and different things that, and we've got this whole weight loss industry going on right now. And there, there's certain things that are Good and there's certain things that are bad and some people are actually overdoing it and having some problems. But, but I believe that we're going to see more and more of that. And I, and that's really a function of people that have extra money to spend. If you don't have the money, you're not going to be able to play in that. But I do believe that those areas are going to expand. We're going to see more and more technology and in diagnostics, in health care, surgical procedures, you're going to see that less and less intrusive, less invasive. Uh, there is a, there are new things that I am aware of as a matter of fact because I'm health care background and people call me all the time. New procedures to treat back injuries, to treat, um, all kinds of different things that people have, including cancer and whatnot. So uh, let me tell you, memory care is huge memory care. I mean this whole cognitive thing, improving cognitive function, uh, how do we go about doing that? What can we do to make sure we don't have Alzheimer's? You know, I mean this is a huge area. So we're going to see more and more of that. And so uh, I'm pretty excited about what's going on in the healthcare industry and uh, and then again the new drugs, new biologics, uh, things like this and uh, uh, you know, all kind of new products that will on the horizon right now.

Speaker D: What do you think about the other direction of things that may not get as much attention here over the next few years while everybody is putting all their money into technology?

Speaker E: I think, I think that this, the basics that we have to have, I mean things that used to be important, you know, uh, um. I mean we're seeing of course, you know, in the auto industry we're seeing some really neat stuff coming out in terms of design and whatnot. But I think uh, I think that um, you know, just your routine stuff that we buy, you know, and our retail, uh, stores across the country are less ah, interest in investing in those. I mean you got the Walmart that have just like blown everybody else out and. But uh, uh, you know, I think the mundane things that are central, that are important are receiving less. I mean nobody. I mean you don't see a lot of venture capital going into the clothing business. You know, they want to invest in a new line of clothing for men or women or whatnot. You know, I think uh, a lot of that is being funded by angel investors and individual families and whatnot. And Existing companies. But, um, uh, you know, I'd have. Let me give that some thought. Maybe we talk about that next time. But because, you know, right now the young mba, you know, fund managers out there that are in their late 20s, early 30s, that are managing billions of dollars, which I've met with them many times, they're looking for the things that can explode, that have huge, huge opportunities where they can build multibillion dollar companies in a short period of time. Let me, let me hit you with this. There are a few things you don't want to do if you're pitching a deal or you're putting a deal. What you don't want to do is overdo your, your metrics and uh, downloads and impress impressions and you put all this stuff out there, but you don't show how it's going to convert into dollars. Ah. So if your vision is too big and you know, you explode, you know, with your deck presentation and just got a whole bunch of stuff in there that, that they can't follow, that's a no. No. Um, and you don't want to over engineer the uh, your, your, you know, what your product can do and you know, in reality it can't do all those things. But you, you know, you, you made up all this. Be careful with buzzwords, be careful, careful with how you're going to use AI, uh, and blockchain and all of that makes. Because some of these investors are really smart and all of that. And if you get out there and make a lot of claims, uh, you can get in trouble. But the things you do want to do is you want to have clean metrics, you want to be very clean. Your metrics have got to be clean and understandable quickly to understand is what I want to say. Your story needs to be fairly simple so that you need to show the problem, the solution and the traction and why you're going to win in building this business so efficient, uh, progress relative to the capital spent. Because that's what that whole signal to burn is. They're looking at, you know, what is the product per dollar burned? What do we get for each dollar? So you know, uh, those are things that you need to focus on and make sure you're able to present really well. And so I'm saying that because, um, and this is serious stuff, Dave. If you're going to go out and take the time to pitch and try and raise money, make sure that you engineer your presentation so that comes across. Does that make sense? I, uh, just want to help people out there. And tell them, you know, you know, don't, don't come in with a bunch of bull.

Speaker D: Yeah, you won't get, you won't get far.

Speaker E: No.

Speaker D: You got another one from Tony in Chicago that we can finish on this week that asked Richard, for founders outside Silicon Valley, how important is geography when raising venture capital in 2026?

Speaker E: That's, uh, I think it's, I think it's very, uh, important. It always is. Um, and, and I'm not 100% sure what he's asking, but I think, you know, are, are you talking about where your businesses are going to be located? What the demographics are? Um, the geography I would think is taken into, you know, what, what are the locations, what are the cities, what are the states? You know, how big can you build this? I've always said that, uh, if you're going to raise venture capital, you need to show that this thing, this business is a national, you know, at least a national, if not international opportunity. Uh, it's, uh, bigger than your local market. And if it's just a local market or even a regional, it's not going to work. One of the first things that I Learned in Building HealthSouth Corporation was we had to get outside of our local market to prove that our success in our local market wasn't. That's the only place we're gonna be successful, because we knew the doctors and we knew the people, and therefore it was gonna work because we had relationships. But when I went to Baltimore out of Birmingham, and I went to Miami and I went to Denver, Colorado, you see what I'm saying? Then they, in St. Louis, things began to change. And they said, oh, my gosh, you know, Little Rock. Uh, and they said, why you go to Little Rock? And I said, because if we made a mistake, nobody probably ever go see it. But anyways, that was a joke. And because it was not a destination and that, of course, the venture capital said that to me. And I said. He said, I'm going to Little Rock and I'm going to see it. And I said, little Rock is a beautiful town. You need to go there. It's great. Right? But we had a hard time until we expanded it outside of our local market and said, and we went to Baltimore. We had a very successful location in Baltimore and Miami was killing it. And so when they saw that the money came in, they said, hey, this thing can go anywhere. So geography. Yeah, it is important. It really is.

Speaker D: Well, that's going to do it. For our weekly episode of Screw Sheet on Business, a Lot of good information. And we, uh, also want to remind you that there's, uh, plenty of other episodes that we have recorded and talked about Bill Manovich and the episode. We had some guests that we talked to earlier on and have answered a lot of questions about venture capital and how to get your business started. And we always appreciate everybody, uh, joining in on the fun by emailing inforscrushionbusiness.com because you can ask these questions directly, uh, to Richard and Richard, uh, uh, I'll let you have the final word for this week.

Speaker E: Yep, we just appreciate the viewers and we have added some new viewers over the last few weeks and uh, you know, we missed a couple of weeks. We had the Christmas time off and then we had the storm and I couldn't, we couldn't get together to do this. And uh, so we apologize to those of you that are looking for, you know, us every week. But, uh, we're going to, you know, if it's possible, we'll have one out every week. And again, we appreciate your viewing and ask your friends to take a look. And my might be some things that we do that interest them. We hope you're enjoying it and, uh, do let us know if you have any questions or any thoughts or any recommendations. We're wide open and we do appreciate you.

Speaker D: The show is for you. So if you have those questions, get them in info@scrushionbusiness.com well, that's going to do it for this week. We will see you next week on Screw. She on business.

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