Lifeselfmastery's podcast I Startups I Venture Capital
00:12:26 · Rohit Malhotra
[00:12:26] S1: Got it, interesting. And, you know, before the call you talked about Ruta Excel where, you know, you've moved on to this new initiative where you're focusing on traditional SMBs rather than venture backed startups you know so what led you into you know this sort of change where you've moved from Mexico to Ruta Excel?
00:12:54 · Marcus Dantus
[00:12:54] S2: Okay, as an investor, what I can tell you is that there's... I like a balanced, you know, portfolio because at the end of the day, a startup, especially a technological startup, is mostly binary. You either make it or you don't make it. Okay. And most of them don't, but the ones that do probably will return the money that... Or or or or make you money. And and that's interesting. But it's a big risk. Yeah. On the other side, you have traditional SMBs. Traditional SMBs are not binary. They may not grow, of course, as fast and provide the returns that a startup could provide. But most of them won't die. They'll continue operating and perhaps a financial exit could be dividends. So I've always tried to balance, you know, my investment portfolio in those two categories, you know, alongside real estate and other stuff. Now, what I have noticed is a couple of things. First of all, and everybody knows this, SMBs are the heart of an economy, especially in developing countries. For example, in Mexico, 98 of SMEs are micro businesses or super small businesses. And what I noticed is that this is a forgotten side of the economy. Nobody's investing in these businesses. Nobody's professionalizing them. Nobody's helping them, you know, take advantage of all the tools that are currently available for them, which I consider, you know, the great equalizer, you know, allowing us very small company to use tools that a corporation uses in order to really compete. So at some point, I wanted to create a fund that actually invested in these boring companies, if you will. And and and, you know, I started giving a lot of keynotes. And in every keynote, I started being approached by people that would give me their products. And I would start noticing that their products are amazing, but they don't have a online store or online presence. They... Nobody knows them. And and they're missing a lot of elements in order to really grow the companies. And this is how Ruta Excel was born, trying to focus on this specific problem that I think repeats all over Latin America and even in the Hispanic U. S. And in Spain. That's our focus.
00:16:02 · Rohit Malhotra
[00:16:02] S1: Very interesting. And, you know, you've been part of Shark Tank and you've been investing. So, you know after fourteen seasons and you know you would have listened to close to 5,000 plus pitches, what can you tell about a founder in the first sixty seconds whether you want investment with them or not?
00:16:20 · Marcus Dantus
[00:16:20] S2: Well, look, of course, the founding team is the most important part and the entrepreneur. So if... I look for three things usually. I look for, you know, something that solves a problem or, you know, a necessity that is real, that the solution is differentiated, that it has, you know, competitive advantages, innovation, And of course, the founding team. Now on the founding team, I look for several things. I... Of course, the ethical side and, you know, understanding that we are for the same things. I look for, you know, if I like them or not because at the end of the day, you know, venture capital is like a marriage. You wanna stay married for a little while at least. Even though you know it's gonna end up in divorce eventually, but but so so to like them, I I like to see the team. I I want to see a multidisciplinary team that complements each other, that that has a clear leadership, that, you know, is is is, you know, rowing towards the same goal at the end of the day. So I want them to be open to suggestions and to hear what people tell them, to really listen because look, when you invest in a company, especially in the early stages, I think that the most important thing that you can provide them is contacts or experience or knowledge of the industry more than the money. So if they're not going to take advantage of that, I think it's not a good prospect. And the last thing I think is very important is that they are focused on the business. Many times we got pitched something that was amazing. The numbers look great. The business look great, but the entrepreneur had all the businesses. And if he's not going to focus on one, then I don't think it's a good idea.
00:18:33 · Rohit Malhotra, Marcus Dantus
[00:18:33] S1: Got it and you have a goal of the first meeting is to get to the second meeting you know and that is something which we in sales and business driven also focus on but you know walk us through how founders should design a first meeting around that idea. [00:18:50] S2: Well it's interesting that you brought that up. This is usually what I talk about when I teach entrepreneurs how to pitch And many entrepreneurs are really anxious about saying everything in the first meeting. They want you to understand their business model and their technology and their growth possibilities and everything. And when I say that phrase, what I mean is, you know, you don't need to say any... Everything. As a matter of fact, it's actually beneficial if you don't. Because if you don't say everything, they'll give you a second meeting so that you can, you know, complete the information that you gave them on the first one. My opinion is that no venture capital deal sells in the first meeting, or at least it's my experience. So my suggestion is that you tease them with information, you get them excited, you focus your pitch on that, on the story of being memorable, on being understood. And then you have a second meeting, if you achieve it, where you actually go through the technology or through the product, or, you know, probably they're gonna have some specialists there to test your knowledge, etc, etc. And that's where you have the real opportunity to close.
00:18:50 · Marcus Dantus, Rohit Malhotra
[00:18:50] S2: Well it's interesting that you brought that up. This is usually what I talk about when I teach entrepreneurs how to pitch And many entrepreneurs are really anxious about saying everything in the first meeting. They want you to understand their business model and their technology and their growth possibilities and everything. And when I say that phrase, what I mean is, you know, you don't need to say any... Everything. As a matter of fact, it's actually beneficial if you don't. Because if you don't say everything, they'll give you a second meeting so that you can, you know, complete the information that you gave them on the first one. My opinion is that no venture capital deal sells in the first meeting, or at least it's my experience. So my suggestion is that you tease them with information, you get them excited, you focus your pitch on that, on the story of being memorable, on being understood. And then you have a second meeting, if you achieve it, where you actually go through the technology or through the product, or, you know, probably they're gonna have some specialists there to test your knowledge, etc, etc. And that's where you have the real opportunity to close. [00:20:19] S1: Got it. And you also draw a sharp line between creating FOMO and telling lies. So where exactly is that line and what are the most common exaggeration that you catch? [00:20:32] S2: Well, look, there's... Entrepreneurs have to be very careful about the information they provide. [00:20:40] S1: Yeah.