The Twenty Minute VC (20VC): Venture Capital | Startup Funding | The Pitch
00:22:29 · Harry Stebbings
[00:22:29] S0: I totally agree. And I'm with you on the non model. I think it removes so much of the politics. You mentioned that the kind of Swiss Army Knife team and the expansion of the team. And this one was actually from Frank Rotman at QED. But he said, you know, you've had the most incredible journey professionalizing from small early stage specialists to now stage agnostic powerhouse bluntly. And he asked, what were the biggest challenges in making the transition and the professionalization of the firm as you have done?
00:22:54 · Nick Shalek
[00:22:54] S1: You know, I'll take anything from Frank. You know him and Nigel and QED and they're just actually awesome. To be honest, I don't think we've changed the core parts of Ribbit. We always define ourselves by our thesis and by wanting to work with the best people who are changing finance, not really by a particular stage or a kind of deal. Know, just for example, in the first fund, we had early companies and mature companies across several geos. We had fun surprises like Bitcoin. And that same thing is true in the current fund. Like, we'd love to invest as early as we can. Ownership matters. Be thesis driven, you know, rather than reactive, and do it with a scrappy team with a lot of data and not much process. And all that has stayed very consistent. That said, what's definitely changed is the market. Like fintech's gone from being this sort of ignored backwater to one of the hottest sectors in tech. Last year, you probably know this, but you've heard some of these stats that PayPal became more valuable than Bank of America, Square became more valuable than Goldman. And the speed of that happening is shocked even us. If you take the top seven, eight fintechs and the top seven, eight banks last year, something like $800,000,000,000 in market cap swap hands between them. You know, at the same time, the number of companies identifying as fintech is actually going down, while the number of software commerce businesses that consider fintech core to what they're doing skyrocketing. And crypto has gone from approximately nothing to nearly a couple trillion dollars depending on the day. So value is moving. And if we wanna work with the best and be relevant, we have to keep evolving tactics while staying true to that core.
00:24:14 · Harry Stebbings
[00:24:14] S0: When you think about engaging with founders at the earliest and earliest of stages, when you think about the decentralization of entrepreneurship, you have to be the first thought for fintech founders in LatAm or in New Zealand, you name it. How do you think about Ribbit's brand? Because you've done so well despite not being out there. How do you think about that? And do you think it will change as you move forward?
00:24:35 · Nick Shalek
[00:24:35] S1: This is something that Micky and I discussed probably in our very first meeting together. It aligns with my personality and with what I believe, but I I really kinda like learned the value of it from Micky, which is, you know, just being comfortable letting the work speak for itself. We've always believed that the brands that that matter the most are the ones that we back and have thought that, like, if we do our job well, the word should get out about Ribbit. And that there are a lot of people that were out there shouting with megaphones, know, much, much bigger megaphones than our own, some who are doing it incredibly well with great star power and teams of people that we shouldn't try to play that game, we should try to do something that felt more authentic to us. You know, I think that's like a subset of a broader thing, which is, you know, I've seen from Micky's, like, really good at framing what success looks like and not getting caught up in the noise. And we've tried to carry that, you know, on at Ribbit. Like, for example, early on at Ribbit, we said, you know, what if one of our core KPIs was how many of our founders would actually invest their own money in Ribbit, know, after working with us? That's been a great guiding light today, a significant majority of the founders, we've backed our investors in Ribbit, which means a lot to us, and it's it's always a good way of framing whether we're doing the things that we need to do to build the brand.
00:25:38 · Harry Stebbings
[00:25:38] S0: Because I was chatting to someone the other day, and they were like, yeah, man. We're gonna pay up for this company. And I was like, oh, it's pretty quick after Ribbit did it. And they're like, yeah, but Ribbit did it. So, like, we just pile on. And I'm like, is that a concern for you? Because now you do have the brand of success, bluntly, in fintech where, bluntly, people just wanna give your company's money because you're it. Is that a concern for you? And how do you advise founders on taking those preemptive rounds and taking that cash that is coming very aggressively and sooner than planned?
00:26:05 · Nick Shalek
[00:26:05] S1: I think it's really hard, Harry. You know, mostly what we encourage founders to do is keep their head down and focused on the business. You know, it's rarely the case that more money will make the business successful. It's never the case that more money will, you know, patch over a lack of interest from customers or a lack of execution by your team. So there are thousands of ways you can die as a startup. Having more money is one of them, but there are lots of others too. It always sounds like self serving advice when you're coming in as an investor and around, I'm sure you've had this conversation many times around encouraging founders not to get too far ahead of the company on valuation, but it's a little easier once you're already a partner. And like with anything else, try to give founders our perspective and share some examples and then let them make their own decision. You know, the one thing I would point out since I think it's bad to look a gift horse in the mouth is that we could, you know, view all this capital as a bad thing through a competitive lens. But I actually think it it can bend the curve on returns for some types of businesses. Like when your competition like it does in fintech comes from incumbents with huge balance sheet and regulatory advantages, having more capital can increase your chances of success in a material way. Like, I don't think this is true in all areas of venture or even in all fintech companies. So the idea can and is most often applied incorrectly. But I do see, like, the fluidity of capital today is more of a challenge that we can adapt to rather than an existential threat. And the thing we struggle with more is what you, you know, brought up earlier is around the speed of deals.