00:00:00 · Donald Muir, S1
[00:00:00] S0: We publicly launched the business just a few months ago. We're tracking it, you know, 10 x quarter over quarter growth consistently going into q one of next year. Welcome [00:00:11] S1: back to another episode of BUILDERS. As always, this show is brought to you by frontlines.io, Silicon Valley's leading b to b podcast production studio. If you're bringing technology to market and wanna learn from your peers, we have a library of more than 1,200 interviews with venture backed founders and marketers where they talk all things go to market. Of course, if you wanna launch your own podcast, we offer podcast as a service to more than 80 tech startups. The idea there is very simple. You show up and host, and we do everything else. Now with all that said, let's jump in today's episode. Our guest today is Donald Muir, CEO of F2. Donald, welcome back to the show. [00:00:48] S0: Great to be here. Thanks for having me. [00:00:51] S1: Of course. And I should say welcome back to the show. You were one of our early guests of category visionaries about three years ago. And you know what's funny about that is we did our interview, and then, like, a week later, the SVB crisis happened. And one thing that always stood out to me is, you know, I watched all of these people kind of approach comms from, like, an ambulance chasing perspective, and your approach to comms there was very helpful, very useful, and just always had a lot of respect for you for how you handled that situation.
00:00:51 · S1, Donald Muir
[00:00:51] S1: Of course. And I should say welcome back to the show. You were one of our early guests of category visionaries about three years ago. And you know what's funny about that is we did our interview, and then, like, a week later, the SVB crisis happened. And one thing that always stood out to me is, you know, I watched all of these people kind of approach comms from, like, an ambulance chasing perspective, and your approach to comms there was very helpful, very useful, and just always had a lot of respect for you for how you handled that situation. [00:01:14] S0: I appreciate you saying that. It's been quite the journey over the last five years, and it's great to see you again. And, yeah, you caught me at what was an exciting inflection point for my first company, ARK, and you're catching me again at the next big inflection point in my entrepreneurial journey. So it's really great to reconnect around that context. [00:01:31] S1: Let's jump into the new company. So what does the new company do? And then we'll get into a bit more about the why you decided to start it. [00:01:36] S0: Yeah. F2 is the AI platform for private markets investors. We work with institutional asset managers to augment and automate due diligence and portfolio monitoring workflows with AgenTic AI. [00:01:51] S1: And what was the... This opportunity that made you say, like, I can't stand on the sidelines. I need to go in. I need to go build.
00:01:57 · Donald Muir
[00:01:57] S0: So dating before ARK in my prior life when I was working for corporations, I grew up in traditional private markets investing. I worked in middle market and late stage private equity buyout. And so the pain point that I am now solving with AI, I experienced firsthand in my prior life late at night and long weekends in the bullpen working for large private equity funds, doing commercial due diligence, modeling investment committee memo generation for large financial sponsors. All the workflows are completely offline. It's Microsoft Suite. It's Excel. It's Outlook. It's very inefficient. Fast forward, go to Stanford Business School, found my first company, ARK. As you know, maybe for everyone else, you can think of ARK as a digital Silicon Valley bank, but its roots were actually as lending business. Before building the banking business and the debt marketplace, I actually started out as a direct lender. So I raised hundreds of millions of dollars of debt alongside my venture rounds, And I lent money to other startups, and then I collected it. And so I also got to experience the pain points of direct lending. Went on to build out ARK. So turned the lending business into a debt marketplace with hundreds of private credit funds on the supply side of the marketplace. And then with my banking business, eventually, thousands of tech companies on the demand side. And I was helping the two sides meet each other and effectuate debt transactions. So the lenders would lend to my banking clients at ARK, and they continue to. Well, to make a long story short, with the advent of generative AI circa late twenty two, early twenty three, I saw an opportunity to automate the debt placement experience on my debt marketplace. And so we get loan applications from banking clients, and I built AI to take that data, standardize the very messy kind of Excel based dataset from lower middle market companies, and then create custom screening memos to surface those debt investment opportunities to the lenders. So building out that technology, we were really early just organically developing TAC to make our own debt marketplace scalable. And it did. And so we built TAC and allowed us to go from tens of millions of loan volume in ARK to tens of billions of loan volume, thanks to this AI native underwriting system.
00:04:10 · Donald Muir, S1
The moment for me was when the lender is particularly up market on the marketplace said to me, we wanna use your AI for not just the deals you're sending us in the marketplace, but for all of our deal flow. And in order to do that, I needed to start a new business. It was non core. Building out that product would have been very, you know, non core for ARK. And so I went back to the investors and and my team and my customers and saw overwhelming support to start what is now F2. And so the new company, F2, AI for private markets, has a bunch of former employees from ARK. Effectively, all of the investors from ARK, 50 of them participated in my first funding round at F2. And a number of the customers, the lenders I worked with that are now customers at F2. So lots of overlap on the other side of this, and the two business now have pure operational focus on serving their customers to the best of their ability. [00:05:03] S1: On the topic of customers, I know a lot of founders who work with ARK, and I've never heard anything but really, really good things. And I feel like that's very hard to do as a brand. You know, normally, it's like, it's mixed. The, you know, 10% will be hostile or say they had a bad experience. I've never had a bad experience. So think that says a lot. But also it makes me wonder, was that a hard decision? Like, that can't have been easy to make that call.
00:05:03 · S1, Donald Muir
[00:05:03] S1: On the topic of customers, I know a lot of founders who work with ARK, and I've never heard anything but really, really good things. And I feel like that's very hard to do as a brand. You know, normally, it's like, it's mixed. The, you know, 10% will be hostile or say they had a bad experience. I've never had a bad experience. So think that says a lot. But also it makes me wonder, was that a hard decision? Like, that can't have been easy to make that call. [00:05:23] S0: I haven't left ARK, at least not in heart or in spirit. Actually, we share office space. Our teams are a 100% in person in San Francisco and New York. We have offices in the Financial District on both coasts. One side is F2. The other side is ARK. I'm on the board. I'm a large shareholder. I see the ARK team every day. So it still feels like one family. Now the teams are focused entirely on their own bookends of the market, but I haven't gone anywhere, and that made the transition easier. Not to mention my cofounder at ARK, who's now CEO. He'd been playing that role for the, you know, call it the last year before I left as I spent more and more of my time building the AI for the lenders. And that was a fairly natural transition. But ARK is always my baby, and 100% of my cash is stored with ARK. I'm still spending tons of time with all the founders, you know, who we bank at ARK and who are, you know, loyal customers of my first company.
00:05:23 · Donald Muir, S1
[00:05:23] S0: I haven't left ARK, at least not in heart or in spirit. Actually, we share office space. Our teams are a 100% in person in San Francisco and New York. We have offices in the Financial District on both coasts. One side is F2. The other side is ARK. I'm on the board. I'm a large shareholder. I see the ARK team every day. So it still feels like one family. Now the teams are focused entirely on their own bookends of the market, but I haven't gone anywhere, and that made the transition easier. Not to mention my cofounder at ARK, who's now CEO. He'd been playing that role for the, you know, call it the last year before I left as I spent more and more of my time building the AI for the lenders. And that was a fairly natural transition. But ARK is always my baby, and 100% of my cash is stored with ARK. I'm still spending tons of time with all the founders, you know, who we bank at ARK and who are, you know, loyal customers of my first company. [00:06:13] S1: So F2 dot AI, saw that you have that domain. What's the story there? I have to imagine that that was not just sitting there on the beam chief ready to buy.