The Secret to Raising Capital for Your Company or VC Fund with Jason Kirby of Thunder.vc

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March 31, 2022

I’m super excited about this week’s episode because it hits close to home. If you’ve listened to the pod before, you’ve probably heard me mention the passion project I’m involved with, a platform that’s helping to democratize access to capital called Thunder. On this week’s episode I sit down with Thunder’s Co-Founder and CEO, Jason Kirby.

To give a bit more context, Thunder is a company that’s come out of the Interplay Foundry, the part of Interplay that builds companies from scratch. Jason is the incredible CEO we brought in to build and grow Thunder.

Thunder is a platform that connects founders and VCs by utilizing a double opt-in, AI-based matching protocol that not only creates relevant deal flow for all parties, but also helps everyone save time and avoid spam. We started this with the mission of helping founders that lacked a strong network raise capital.

Jason is a serial entrepreneur and has done an incredible job so far. Not only has he advanced the business, but he has also advanced the vision. I think this company is going to materially improve the way capital flows in the alternative asset classes such as venture capital. I’m so excited to watch what he does and help support him. Be sure to check it out at thunder.vc.

During our chat we talk all about how Thunder works, how it helps both founders and investors, why it’s important for platforms like it to exist and much more. Enjoy.

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‍Transcript (this is an automated transcript):

MPD: Jason. Thanks for being here today, buddy.

Jason Kirby: I'm excited to be here.

MPD: Okay. Let's start at the top. Do you mind giving us an overview of Thunder?

Jason Kirby: Yeah. Happy to do so Thunder is a tech enabled investment bank where we are focused on early stage ventures. To make it easier for founders to raise capital from the right people and VCs to vet and catalog and analyze and rate deal flow faster than any other solution with our AI.

MPD: What's the problem we're trying to solve here. Why does this need to exist? The machines working right, the whole industry is transacting right [00:04:00] now.

Jason Kirby: Why. Yeah, it was a value that's raised, $40 million or less over years for a couple different companies. Fundraising is, a full-time job and it distracts from founders, focusing on building and creating value in their companies.

And I'll be, it's a necessary evil to to have in the, you as a founder, ultimately it comes down to family, spending time with the wrong investors. Countless investors will just take deal flow and they'll be like, oh, this is interesting to listen to it. And they'll keep their thinking on the, keep the door open, but not really actually be serious about the opportunity leaving the founders on the hook to be like, oh, I'll make sure to follow up and continue that conversation.

Maybe it's there, but reality it's like a 99%. And so what we're trying to focus on is, rather than opening up the door to a hundred VCs, we're trying to laser focus using our AI to identify, the three to 10 VCs that are actually going to be willing to check for [00:05:00] specifically what you're building and having you focus your rifle shot on those VCs, as opposed to a shotgun approach, which is unfortunately what a lot of founders do.

Maybe they get lucky, but in a lot of cases, they're just losing a lot of time and not being able to focus on their product. So that's one of the main reasons that, I got excited about this opportunity was to solve the problem for founders, but then we learned, like what's a problem that VCs have because it's a two-sided marketplace.

And so what we'd like to add is that VCs out there don't necessarily have deal flow problems, especially well-established, VCs that have brands or have, following up on in some capacity, but there's 2,500 VCs out there in the U S and more growing, more coming up into the the ecosystem every day, and new emerging fund managers that don't necessarily have.

The those connections and that deal flow. And a lot of VCs that are outside of the major markets, where a lot of the deals are happening, but one access to great deals. And our technology [00:06:00] enables them to be a part of those opportunities at the earliest point, to have their chance to get allocation at the great deals and also our technology in itself, your VCs that have too much deal flow.

We have the ability to process capital. Analyzing rate, their deals to only bring attention to the best deals, for them, streamlining their processes and effectively acting as a, as an analyst, saving every one, substantial amount of time.

MPD: Okay. But let me pick that apart a little bit.

There's a lot of ECS. I think that don't want founders to know. Exactly what they're looking for. And the reason why is because they want to be opportunistic, right? So they are, I used to say, every VC based gives the same website, right? They don't articulate nuances with thesis and when you meet them and you chat with them, it's very clear.

Many folks are investing in debt, very different things. And it may not even be different sectors. It may be different dimensions of the business or strategies or types of founders and those little nuances. Once they come to life, [00:07:00] they really do guide a bit of the matching in this game. But I think there's an argument for VCs where they just want to see all of it and be overwhelmed in order to just make sure they don't miss the one out of, the needle in the haystack.

How does this, how does that fit within the kind of thunder framework?

Jason Kirby: So I think that's what specifically separates us from your, what might be out there in the market already, where, it's a lot of bullying, checklist, type things that you know, founders or VCs use to identify, deal flow effectively.

What makes us different and how we take advantage of that opportunity is a lot of generalist species is the label I put on them where they just want to see it all. Yeah, we sit down with the BCS in our platform. We do, anywhere between a 15 to 30 minute call to understand those nuances.

To understand, do they just want to see, the best deal that's hyper relevant to their investment thesis? Are they more of a generalist where they want to see anything that could potentially be of interest? And so [00:08:00] we take that into consideration and send them what they're looking for. And again, in some cases it's, it's automated, in some cases, it's a human relationship where, we're looking through our deal flow due to our relationship with those weak seats.

It was going to peak their interest. What's going to get them excited, whether they're more of a early stage, team kind of focus, whereas less, so much about the idea. It's more about the team or, broad sector focus where there's just general SAS. We have the ability to identify what correlates with what VCs want and have that flexibility to tailor it specifically to them.

For a lot of VCs that don't want a lot of deal flow, cause they are, they feel that they have it all and they're doing whatever they got. We know that when we send that one email is going to get answered. Whereas some VCs, I want to see a lot coming through. We have a dashboard for them to navigate sort and filter and do whatever they see fit.

They can follow our scoring and rating mechanisms that they wish, or they can dive into the mix. And we have hundreds of companies coming by. Providing information, giving a lot more detail and insight than they would get, beyond just the [00:09:00] deck, other things, to be able to sort and standardize the information that they, it's important to them.

Now, I know

MPD: You have a rating system. Can you describe what the rating system does? I think there's probably an appropriate level of fear that your ratings will be wrong, right. For that venture fund, everyone feels to a certain extent that they've got a kind of a special lens for how they're picking their company.

And also, they may not be looking at the same image, mentioned the same deals as other people. A rating, isn't a universal thing, right? Beauty is a little bit in the eye of the beholder. So how do you, how does the rating work for VCs?

Jason Kirby: So we had three scores. We have a company success score that takes into account a variety of different.

Variables from what stage they are and what sector they're in and depending on what sector they're in, what level of traction they have in relation to their sector and stage that give us high signal, a lot of noise [00:10:00] is this company venture back-haul, does it have what it takes to, to get that.

And so that gives us our success score, which we use, see scores, kinda think of a standard deviation for negative three to plus three, it's the extreme outliers are the ones that we really focus on. These were the ones that we doubled down on and make the intros for. Those kind of three plus type companies.

So those are the ones that we, reach out and go through our due diligence process. We prefect them and you'll highlight them on the platform and make the interest manually. But the rest of the companies, the score respectively take into consideration the company score the investor score, which is the investor's willingness or unlikeliness to invest in that particular.

So this takes us to get a situation of, what fund they're on how much capital they have left in their fund. What check sizes they write? Are they a lead or they, don't lead. Do they like the occasionally they get a cold lead. So I take all those considerations in to factor in comparison to the company that's [00:11:00] it's being presented against.

And then we have a compatibility score that day takes into consideration. We'll call it the secret sauce of the faculty, of the VC in terms of what they're specifically looking for their criteria. Like I said, there's things to fill out data to collect on the platform, but in those intake calls that we do other VCs, there's an extra, something special that we try to cake incineration either we populate into the model, or we just have it as notes on this.

So before we make the intros we referenced that to make sure it's going to be aligned with what they're looking for. So all three of those scores effectively go into what we call a simplified match score. And that's, what's published on the website or for VCs only two companies don't see this information.

Companies are not allowed to, start reaching out to any and all investors. We give the investors a control of who they want to interact with that they want to take action on the platform, or they can just sit and wait for us to send them email notifications and the director validation recommendation if they want to move forward with the company or [00:12:00] not.

So that's how the scores work. It takes in right now. It's about 85 different points of data, both first party and third party data from other sources. To basically pocket the spores.

MPD: So when this started, it was simply just a game of, is the company in the right sector, stage geography, et cetera, the basics true or false for this investor match.

Yep. And you've taken it to the next level and built this whole algorithm. So now these scores are. The rating of a company for you as an investor for each individual person, it's this personalized recommendation engine, what kind of math and technology is going into making those scores work?

Cause the way you're describing, the reality is I don't understand it. It's too much data for me to crunch in my head. How do you get all those inputs to jive in a way that actually yields something that's. [00:13:00]

Jason Kirby: So for that, I was bringing my partner, our chief data scientist, Matt, who's a PhD from Columbia and behavior, data science, and doing his post-doc at Princeton right now in terms of the data that we collect and how it's processed.

I would probably butcher it if I try to go into the finance data, the not financial, but the models that he uses to, weight the different characteristics. So it takes into consideration. Human until, intelligence, both from, VCs in the market in terms of how things are weighted over others.

And then it takes into consideration. No third party data inputs that are trained from taking Crunchbase data in terms of what makes companies successful from historical data. That's able to be captured from there in terms of past funding rounds public information that's available and other sources to identify, trends that happen at different sectors.

So it's a pretty convoluted and complicated model. To be honest with the constantly evolved and trained [00:14:00] to deliver on expectations. Right now we're fortunate in the way that it's built to be almost as if the model was built for each and every single investor specific to their criteria, but there's gonna be certain nuances in different sectors.

Some things we don't necessarily have a good grasp on or things of more like detail. That, there's traction is very different in terms of what, when they're raising, for different rounds, biotech, those types of things. So there's certain sectors that, require a significant, the different model with different data butts, but for your traditional VC backable startup especially, any kind of level of tech or CPG those ones, we have pretty strong confidence that we'll feel solid results.

Okay.

MPD: So th the bit you were saying before, the key value add for VCs that are big brands, they've already got plenty of deal flow is it's like high signal to noise ratio, right? What's the narrative for the venture firms that are not big brands [00:15:00] firms that maybe not everyone knows about.

Jason Kirby: So there's a lot of great firms out there.

A lot of what I call like part of the poorly marketed capital pools, billions of dollars, being managed by great VCs that, chose not to be big on Twitter or LinkedIn in terms of influencers, a lot of deals happening within their network. And so the value proposition there is getting access to deals that are far outside their network.

There's a lot of amazing merging founders that are diverse, that don't necessarily have the broad network to access to capital that, some other, maybe previous founders or other founders that easily identified. And that are building great companies, but are truly struggling to, to get access to the right people.

And there's something I dealt with when I was my very first company, I was in San Diego back in 2012, trying to raise capital for our marketplace. And it just couldn't get in the room with the right people. And I was pitching all the wrong [00:16:00] investors because that's all I had access to in my network.

Ultimately, we're growing 40% another month, we had $40,000 a month in GMV and. Could not get in front of the right VC. That was going to be excited to work with us, but just couldn't open those doors called email, all that kind of stuff. Just went to the bottom of this. And so we act as effectively that warm intro, that partner to that VC, that prevents deals that are specifically related to that VC and align it with, founders that we think this is going to be a smart money play, for them to make sure that they're going to get the capital they need to build out their future and their future product and, credit great return for VCs.

I think the

MPD: natural reaction to this as an investor is that it's going to lead to a bunch of spam. That's the fear. There are services out there that have basically crawled the internet and added a lot of VCs and their personal information, including their email addresses to the web. I get it. [00:17:00] But why would people with wanting to sign up for something you go and sign up for something like this?

Yeah, I think there's, it's natural to be afraid that there's just going to be an onslaught of interest that maybe isn't relevant for you, which is just more. And also it sucks. No one, no VCs wanting to reject companies. It's the worst feeling ever. Is your people passionately working on something to improve the world?

How do you handle the spam dynamic?

Jason Kirby: Exciting to us that, when we talk about how the platform was originally designed, that's ultimately what it led to. And it was to open allowed founders that, didn't do their homework to basically have direct access to these investors. And based on the data and what we collected through that experience, what we've seen on other platforms that, ultimately never succeeded was the spam factor.

It's just more noise. It's just another cold email as far as how, the platforms originally signed. And so what we've doing now acting as the effectively. The middleman in terms of vetting these deals prior [00:18:00] to them getting fronted to BC. So of the hundreds of companies, we're not sending you a newsletter with, Hey, check out these 20 companies that we think are cool and just more noise that you're not going to click on.

No, we're looking at again, having a relationship with the BCS, knowing what they're looking for. And then when we send that email, we're talking about sending one, maybe four emails on. Know, we're not looking at sending, 20, 30 deals a month and just adding to the noise. So if the deals that pass our vetting process, we're looking at a few a month, maybe the dozens of bond once we start hitting scale and what be more there.

But again, those are all gonna be different categories, different sector. That most VCs that are on our platform have gone through our entire intake process. And like I said, I get one for deals of month that are hyper specific with an explanation as to why we feel fit to. And you know what you're looking for.

So there's that human intelligence and that human layer there that allows us to go above and beyond in terms of that expectation, as [00:19:00] opposed to just, again, trying to automate everything and make it a SAS and just, allow free for all which many companies have tried before. And it, it doesn't lead to success and, it's basically the same thing as cold email.

MPD: I also love the double opt-in nature on the platform. Do you want to recover that?

Jason Kirby: Yeah. So we're removing the ability for founders just to have direct access and vice versa. So effectively making sure that both parties opted for this, because, if you're a founder and you want to help fundraising, there might be a really great VC, but they've invested in a competitor.

So you don't necessarily want your company information, your proprietary information, your debt getting in the hands of that particular VC. So that's, vetted before those intros or potentially. And for the VCs, getting deals we reach out to that VC. We show them, the material and, information about the deck.

Then, Hey, we recommend that you take a meeting with this company, but you might not have interests. That might be something that, you know Hey, we did a similar investment or, Hey, we [00:20:00] don't like the space, whatever it might be. And then that founder never gets any notification every time. Yeah, they, we basically, log that into our system.

We might alter the algorithm or something information to profile the better, make better bits, but that both sides are protected in this case. So that founders are not wasting their time spinning their wheels, sending 10 follow-up emails that they're not going to get an answer to. And, VCs are not having to deal with, trying to explain their reason why they turn them down or, feeling like they have to go.

MPD: Got it. What kind of information are you giving the investors when they're, you're saying, Hey, we like this one, have a

Jason Kirby: look. So it's twofold. It's one, there's a very simple introduction, couple it's of what we think makes this deal sexy. And then a link to the deck and a link to their profile where it's like all company.

And if they request to move forward that VC is going to not [00:21:00] only have the option to meet with that founder, but also once that meeting happens, I found her can unlock their data room, which you've already pre-established and already have ready and due to our pre-vetting process. So all the data room details and information that at least probably 70 to 80% of what a VC would look for is already going to be ready to go.

And for them to be able to do a deep dive. So the founder has control of when that information is released. Considering, the progress of the meeting.

MPD: Okay. So unfortunately I'm becoming an old VC and I only know that because some of the younger folks keep reaching out as they're starting their funds and asking for advice.

And I share what I can. I'm still learning as well. A lot of them are asking for LP intros and I've been using thunder as a solution for that. I'll say, look, there's a bunch of people on thunder who are looking to invest in funds, go there. I think their heads explode sometimes because, they're the way you find most LP introductions is [00:22:00] through a series of emails.

It's a chain. Yeah. Do you want to cover the value in this for LPs?

Jason Kirby: Yeah. So as far as our new product, that's launching, we're allowing, high net worth individuals, family offices, and other forms of LP expensive. To have access to GPS. So in, we've been focused primarily on the founder to VC, conversation, but I'm glad you brought up the LP to VC.

So effectively LPs put in what they're looking for, pretty simple information to provide, whether they're acting as an individual. And that information, is able to go into, again, our batching specifically for LPs to BCS, which we haven't touched on, but effectively GPS decide whether they're operating out of a closed fund that's, not love or raising funds or they're actively raising a fund or.

Operating of deploying capital out of an active, the raising fund. And we asked different questions based on, what fund there aren't actively [00:23:00] raising. And if they're actively raising, there's the opportunity for us to match LP to GP, based on, what type of fund they have, what's a check size, what they're looking for, what exposure, what markets are getting exposure to that, LPs.

And then we're able to make, exact same process as founder to VC in terms of making those intros and those recommendations and the exact same process. So that's something that we're gonna be scaling up in Q2 to be able to bring that together.

MPD: So this is a big behavioral change for a lot of folks, right?

You're talking about nothing new in the sense that founders are getting touch with GPS and GPS are getting in touch with LPs, but this is historically been done just over email. Whether it's a cold email or a warm email or a message through LinkedIn or whatever else, it's basically some form of digital messaging platform.

And it's bespoke. Have you gotten a lot of pushback on the behavior change here? What are you seeing with people reacting to this, but what skepticism debunk? [00:24:00]

Jason Kirby: I would say on the skepticism side, a lot of people will just have a system, I do deals. Why do I need this? And a lot of the reason I would come back with that is, popular term NBC, but I'm not, you don't know what you're missing out on in terms of, the deal flow and opportunities that we're going after and we're bringing to the table.

But then something that I think is really interesting, just the market dynamics as a whole, as you're starting to see. Significant wealth being generated for the first time, as millennials and some gen Zs, coming into money whether they worked for a big tech firm for awhile and their options invested.

And now they're, they have seven figures of capital and I don't know what to do with it, or maybe they gambled in crypto and, stock market recently made a ton of money, but now they're coming to terms like this market going south real quick. I don't really know how to manage this.

Maybe I need to put my money into someone who knows what. And, specifically for me, it was like I got into angel investing. [00:25:00] And once I figured out how to get deal flow, it was just massively overwhelmed as a full-time job to make the right bets. And rather than deploying individual $25,000 checks, I was like, maybe I should just throw my money into a fund that kind of aligns with, what I believe in and falls my investment strategy than trying to do this myself.

And that's ultimately what I did. And I see there, I think we're seeing a lot more of those types of people come to the market. But they don't necessarily have the connection, especially like top tier funds. You can't write a quarter million dollar, half a million dollar check and get exposure to, big funds that have been out for a long time.

You can exposure to great funds, but you might not know who those people are. You might not have access to those networks. And to be cold emailing as an LP you probably give an answer, who knows if it's good fit and maybe that GP has certain requirements. So we basically take care of that unknown aspect and make the relevant connections when the time is know Ryan, both parties aligned.

So that's how we basically are taking advantage of when I think to be a big market shift [00:26:00] that a lot of people are, talking about.

MPD: Okay. But on the surface, there's a handful of other sites that look just like the. And the market. And there, I think they have the same mission it's to facilitate the matching of investors and people seeking capital, but there's a big difference.

So how does, how are those folks, those other platforms, how have they affected your ability to get the message out here? Because I would imagine anyone who's been on one of the other platforms is having a, they figured out that it's a Spanish. And I would imagine you're being met with hesitation.

Jason Kirby: Yeah. Cause people put us in that bucket, especially now with the, the MVP is still in the market. By the time this comes out, a new product will be out and that problem be resolved, but that is the initial concept. And that's why we have changed how the product experience will work is to eliminate that negative connotation of spam.

[00:27:00] Yeah, the perception that is just more noise and we'd listen to the audience, we listen to both sides and you have from founder's species to LPs. And, we feel that we're taking a very difficult approach, but with the right technology, to make sure that it scales without having to sacrifice quality of, the genuine connection.

So using AI is great. Technology is great. But left to its own without any kind of humorous intervention or intelligence or relationships involved, ultimately becomes just like every other product out there. And so that's why we went to the broker dealer route and, our focused on success based outcomes, as opposed to, a SAS referral where anything and everything goes and, mostly just turns into noise and spam that gets.

Okay.

MPD: Are there geographies where this has been more relevant as you're looking at the data and the patterns I know people from around the world can tag into this, but not all investors invest in, [00:28:00] other geographies, what

Jason Kirby: So at this point, we are predominantly focused on the broader us Canada.

We do see some deals coming in from Latin America and Africa and Europe. But from a primary is prioritization and systems, process perspective. We're focusing on us, but we are seeing a lot of founders outside of major. That are being attracted to NBC's that are either in other markets and, or the top markets.

And so being able to make those connections, again, solving that, you don't know who you don't know a problem and making those types of introductions to founders that are building great companies, they're just outside of the traditional tech ecosystems, which with the massive work from home movement that we've seen is opening up doors.

And, it used to be a talent issue. If you weren't at the top market, you didn't get the top talent. There's a lot of tap talent, moving all across the country and, having that freedom to work [00:29:00] wherever that's no longer restraining factors. So we're capitalizing on that trend in spa.

MPD: Okay. Right on. So look, I know there's a huge roadmap for this, right? You've got a extensive plan here that you're putting together. Where does this go in the next three to six months? How does this product evolve? What should early adopters be? Except.

Jason Kirby: Yeah, as of right now we're really optimizing our flow through and get your diligence and finding the best company.

So both sourcing and bedding, deals. So that's going to be our primary focus. We'll be rolling out the GP to LP functionality, allowing that to grow organically and identify, room for improvement. Probably three to six months. We'll be tripling down on that. That area we'll be allowing it to happen.

We'll be focusing on making some of those deals happen so we can continue to evolve and adapt the platform to meet those specific needs. And then beyond that, we're looking at. Being able to close and, the dozens, if not more, [00:30:00] deals in terms of companies to VCs, just given what we've learned in the last, six months.

And we feel we have the right pieces in place and, our BD license, coming together we'll be able to execute on that front and beyond there. When something that we haven't touched on is some of the data that we're collecting, one of the integrations that we want to make in terms of the road, Is third party connection, similar to a Zapier type API type connection where founders are able to connect certain data sources to thunder, to auto-populate their monthly, traction updates so that we can have trending data over a period of time because a lot of founders have come, they sign up, but they're not necessarily right for funding, just yet they need a couple more months to prove out their traction, solve some of the problems maybe to find product market fit, or at least get closer to.

And so our platform will enable them to have that information. Auto-populate if not, be able to manually populate. So we collect all different types of [00:31:00] KPIs that are all standardized, that, some will be more relevant to other, to depends industries and to BCS. And that information will be trending over time once they make that connection.

So try to streamline and simplify. That process. And then once they hit certain thresholds that recalculates the algorithm. So once they hit that a hundred, I get, a hundred KRR or a millionaire or, whatever type of business, it might be, whatever those K you know, KPIs might be. The algorithm gets updated, and that might bring certain matches to the top that weren't there before two, it sends signals to our team to reevaluate and reassess, that company that we might not have brought through our process.

And being able to do wh