Oct. 10, 2024

260. Venture Capital Is A Game, feat. Sunny Han, Founder & CEO of Fulcrum

260. Venture Capital Is A Game, feat. Sunny Han, Founder & CEO of Fulcrum
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Season 4

Text your thoughts directly to Rich.

Sunny looks at VC as a game, one that has rules. You can still choose to play with people good people, but know that they have objectives that may not be the same as yours.  

About Fulcrum
Fulcrum applies modern technology to manufacturing processes, helping makers focus on their craft and grow their businesses. The innovation of American manufacturers is critical to a better world, and Fulcrum aims to revitalize the industry with automation software.

About AVL Growth Partners
AVL Growth Partners, founded in 2009, is the leading fractional Finance and Accounting firm supporting organizations in pivoting from growth to scale. AVL brings an experienced team of CFOs, Controllers, and Accountants to your organization, delivering transparent, strategic actions for short and long-term success. Transform your financial approach affordably with AVL, supporting companies coast to coast - get to know AVL Growth Partners at avlgrowth.com. (Sponsored)

About SpringTime Ventures
SpringTime Ventures seeds high-growth startups in healthcare, fintech & insurtech, and logistics & supply chain. We look for founders with domain expertise, forging a path with a truly transformative technology. We only invest in software-based businesses in the USA. We bring a people-focused approach, work quickly, and reach conviction independently. Our initial check size is $600k. You can learn more about us and our approach.    

Transcript
WEBVTT

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There is a game.

00:00:02.626 --> 00:00:03.947
Venture capital is a game.

00:00:04.237 --> 00:00:09.266
You are a cooperative player with me and also an opponent at some times.

00:00:09.563 --> 00:00:14.342
It's not a zero sum game, but it's only not a zero sum game if we make it a non zero sum game.

00:00:14.372 --> 00:00:16.862
If we grow enough to make it a non zero sum game.

00:00:17.612 --> 00:00:34.442
You, SpringTime, based on the terms of your fundraising documents, you have a fiduciary responsibility to your LPs and the people that give you money to maximize the utility of those contracts, those agreements that we have, those agreements are essentially contracts to maximize the value.

00:00:34.468 --> 00:00:41.557
When you raise a Series A and everybody's buddy buddy, you tend to think that, oh, maybe the handshake agreement is what we have and we're going to support each other.

00:00:42.005 --> 00:00:52.148
But if you build something valuable and you do it in a way where you put yourself in a precarious situation financially, well, there's all sorts of incentives to maximize the value of this contract.

00:00:52.554 --> 00:00:55.277
And at the time I felt resentment.

00:00:55.628 --> 00:00:56.898
I felt betrayal.

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But really what I feel now is that it's both.

00:01:00.392 --> 00:01:05.355
It's that Forrest Gump line, Are we just floating in the wind or do we actually have control?

00:01:05.605 --> 00:01:13.993
You have this man that's debating free will versus determinism and he says,"I think it's both." And I think it is both, too, in venture capital.

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It's both a financial interaction and transaction.

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And it's a human to human interaction.

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locking arms in the trenches and fighting the war.

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It's just, it's both.

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For me at least, and other founders that I know, we tend to think about it as one or the other.

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You're either, just this horrible financial person, that just cares only about what's in a spreadsheet.

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Or you really believe in me and what I'm doing and you're gonna ride it out with me even though things get bumpy.

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But the reality is, it's very much both.

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It has to be both.

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Sometimes it's one or the other, but I think even in the best of times, it's both.

00:01:48.570 --> 00:01:54.760
I think we expect none of the financial maneuvers when you have somebody that cares about the business that you're building.

00:01:55.066 --> 00:01:59.715
But even if they're nice to you about it, our best investors, were just really transparent.

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"Hey man, this is what I'm going to do.

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I'm going to do everything I can to push you towards the best deal that I think is for my investors and for me and for my firm.

00:02:11.199 --> 00:02:14.128
Here's what I think you would want and that differs from me.

00:02:14.128 --> 00:02:18.662
I'm going to tell you how it's different." The worst experiences were more clandestine.

00:02:19.045 --> 00:02:25.036
You make a series of decisions and at the very end, you realize that your interests aren't aligned with your investors.

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And they're going to make decisions for their own self interest.

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I think it's extremely immature to believe that that's bad.

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But that's how I felt.

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I felt that it was bad.

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It took months.

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It took a year, almost.

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It took till now, that happened about a year ago, it took till recently, till about two or three months ago for me to realize, I'm the problem.

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I'm the one playing the game, not by the rules.

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And that's, that's silly.

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It's silly with friends.

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It's silly with business partners, it's silly with employees, it's silly with family.

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It's just silly.

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The game is the game is the game.

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I think that really, again, matured me in how I think about business and I think about venture capital.