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FedTech Innovator Podcast: Josh Grehan from Helios Climate Ventures





Intro: Welcome to the “FedTech Innovator” podcast, bringing you the stories and journeys behind Deep Tech innovation and entrepreneurship. In each interview, we go behind the scenes with the entrepreneurs, scientists, and visionaries who are engineering the technologies of tomorrow — today. These journeys are unpredictable and full of learning and whether you’re an entrepreneur, researcher, or funder of innovation, our goal is to create a community where we can learn from each other, as we all seek to change the world with technology.


I’m Ben Solomon, Founder and Managing Partner of FedTech. Since 2015, we’ve been building a bridge between the R&D world and the venture world. Every year, we get to work with hundreds of companies and researchers who are changing the world through technology. In this podcast, we’re going to share those stories with you from our friends and colleagues in Deep Tech. I’m coming to you from our headquarters in Arlington, Virginia, just across from the river from our nation’s capitol.


Ben: All right, I'm very excited to be joined by Josh Grehan from Helios Climate Ventures today. Josh and I actually got introduced through our undergrad alumni network, which is always fun. Josh, tell us a little bit about what you do and where you're calling in from today.


Josh: Absolutely, Ben. Real pleasure to be here. So thanks for having me; definitely looking forward to the conversation. I have the distinct pleasure of getting to work on combating the climate crisis; I do that by working with Helios Climate Ventures, which is a venture capital group that has been around since 2016 and is focused solely on technologies that seek to reduce, eliminate, drown down — use the adjective of a verb you want here for greenhouse gases — so we can be in a better position to hopefully have a functioning ecosystem and planet for future generations.


Before that, I was very lucky. I got to work with some friends from college on a biotech startup, which grew from a few people outside of a lab, to 200 people that went public.


Before that, I spent a little bit of time in the federal government back in Canada — where I'm from originally — and some time in the nonprofit sector. So, I've bounced around a lot. Lots of different industries, lots of different things. Just feel very lucky to have gotten to do all the different jobs I have.


Ben: Yeah, and I'm glad you're working on obviously an important topic now. My children — who are young — thank you. Their kids — my grandchildren — in the future will thank you for doing the work you do.


Tell us a little bit about the types of bets that Helios makes. What are some portfolio companies that you've been excited about recently, just as examples?


Josh: I think I tend to use the word bets as well — but as somebody who works with other people's money — calculated rational, data-driven informed decisions.


Ben: Let's reframe. I like the way you said it better.


Josh: I hear you. So — Helios — we don't believe that there is any silver bullet for the climate crisis; what we need is silver buckshot. As a result, we really look broadly. Many different solutions are going to play a role in trying to eliminate or reduce greenhouse gases. That being said, we do have a specialty or focus area; we invest primarily in energy storage.


So, what do we mean by that? We look at that as batteries and the surrounding infrastructure systems around that — cradle to grave. How can you get important critical resources or minerals out of the ground such as lithium? How can you better manufacture batteries? New, novel battery chemistry techniques, but also what happens to the batteries after you use them? Recycling and second life. So, that really comprehensive energy ecosystem is where we spent a lot of time over the last five years.


Josh: While we have invested in solar, ag, and other areas, about 90% of the investments we have made are in that energy storage space, partly because we have some technical skills on our team. One of our partners has his PhD in Material Sciences and has a battery background. And also just because we spent a lot of time in this space, we feel we've come to understand some of the holes, some of the players, how they interact, and I think we're better able to support our portfolio companies when we work in that area.


Ben: Just even for the lay folks like myself, give a little walkthrough of just all the ways that energy storage technology can be used theoretically. We all know about your Teslas driving around, but what else is this technology going to be useful for in the future clean economy?


Josh: Totally, Ben. I think a really good way to step back and look at it is: part of the reason why we chose to focus on batteries is we see it as a foundational technology for two of the biggest drivers of emissions. In the United States, 52% of emissions come from power generation and transportation, right? It’s a massive amount of American emissions. Globally, it’s also a big chunk; slightly less, but it’s still also a very high threshold for emissions.


Now — as you noted — transportation, things like electric vehicles, it's become very apparent that EVs use batteries. Obviously, if we have more electric vehicles versus internal combustion engine vehicles, we'll probably lower emissions.


The other thing, though, is power generation, right? I think we've all either seen solar fields, wind turbines — or at least heard about them. Also, I think we're all aware that the wind doesn't always blow and the sun doesn't always shine. So, these sources of green energy have an intermittency problem, which is used in the industry. What that really means is: what happens when they're not there?


Obviously, we need to be able to power our lives 24/7, so what people are trying to do is develop batteries that can basically suck up excess energy when the sun is shining and maybe your solar panels are producing more energy than the grid needs. Can we find batteries to store those or build batteries to store that energy that can then deliver it at night when the sun isn't shining, but we're still wanting to heat our houses or turn the lights on?


If you look at it from that way, you need batteries for clean power, clean energy generation to solve the intermittency problem, you need it for transportation, and then just generally in life, right? I think we look around ourselves and the Internet of Things is a phenomenon. Our phones, our laptops, our watches — everything's starting to have batteries in it. All over the world, we need better battery storage, more energy storage, so that’s why we focus in on it.


Ben: They're definitely not easy companies to build. When I was kind of coming up as a young buck through my MBA at the University of Maryland — they have a wonderful incubator program — one of the companies there was developing. When we were getting started at FedTech, they were developing a couple of doors down from us a thin, flexible battery that was primarily trying to sell it to soldiers, sort of wearable batteries. I just was struck by how infrastructure-heavy it is to really manufacture — at least in their case — at scale and be able to have a production-level facility. It's not the type of business that looks to be easy to get cashflow-positive quickly like some things might be.


I'm curious, what's your perspective on that and how do you build a great energy storage company without raising maybe gazillions of dollars?


Josh: Ben, you’re spot on. Look, I am long on batteries as an industry; I'm short on any particular battery company. The reason why I say that is there's so much promise, potential, growth, and needed demand in the field that it's obvious that there's gonna be a lot of very successful companies, but it is very hard for all the reasons that you noted.


First off, you’re developing hardware and hardware is always difficult — no matter what the field is — because you got to build something and building is expensive. Normally, you're building something first of a kind and that's particularly expensive. Also, you got to prove that it works in difficult conditions, right? If you want to build a conformable, wearable battery, a CWB for American soldiers, you got to build something that is robust, is lightweight, can withstand bullets or doesn’t explode when it gets hit, and you got to be able to make that cheap, reliable, and repeatable. That's hard, right?


This isn't software where you go, “Oops, there's a problem in the code. Well, let's crush a couple of Red Bulls, have an all-nighter, we'll fix it, and we'll be good to go tomorrow.” Hard tech doesn't work like that. So, you have to be very careful and methodical. It does take a lot of money and it does take a lot of time.


I think this is one of the things that, Helios, when we really look into this, each time we partner with a company — or enter into a relationship, you’re married — this will be a journey of many, many years. We are committed to being there, helping, and working with people to think about where should they focus. Who can they talk to, to gain expertise? How are they going to manufacture at scale? These are all hard problems. Also, how are we going to make sure you have the funds down going forward? Whether that would be loans or equity to get cash so you could operate.


I don’t know if I answered your question or if I just rambled.


Ben: I think what seems to be special about your group is the commitment to the founders and to be helpful. What does the relationship look like? How do you spend your week? What percentage of your week is helping portfolio companies? Any thoughts on that?


Josh: Well, definitely a large part of any week is spent having conversations, talking with our teams, talking with the founders. The past week has been particularly heavy, given what happened with SVB. I spent a lot of time over the weekend talking and working with different founders to make sure that they are going to be supported, that we could make sure they had payroll come March, or could cover March payroll.


A lot more time this week than maybe a normal week, but I'd say a good 25% of my time is spent talking with our founders, just making sure that they’re supported, they have the information that they need. How can we be helpful? Running a company is hard; there's always some problem popping up somewhere. Having been on the other side of an operating company once before, I like to think I hopefully, have some empathy. And if I don't have a solution, I can at least just be a friendly ear that you can rant or yell at. At the very least, I hope that makes them feel better.


Ben: Yeah, no, I'm sure it does. I was joking earlier, right? It's like it's hard enough to be running a company and making sure there's enough money in the bank, let alone to be worried about if the money will stay in the bank or evaporate. Yeah, so it's really something else. It feels like it is, in a general sense, a difficult time to be building a company that's relying on private capital. Obviously at FedTech, we get really excited about non-dilutive government funding. Our general model is let's have a company go and win government prizes, prize challenges, win SBIRs — those types of things. What are you seeing? Is it still possible? Obviously, capital is more expensive, things like less liquidity in a general sense. What are you noticing?


Josh: Yeah, absolutely. It’s not an earth-shattering revelation, but I think things are starting to slow down. Climate tech, as a sector, does seem to be more resilient than we've seen in other parts of the venture community. If you look at what's happened to the tech community or crypto where you've had these massive re-evaluations, huge haircut, huge down rounds like that, past fundraising events, I don't think we're not necessarily seeing that in climate change. I think what we're seeing in climate tech is valuations aren't accelerating like they used to. Fundraising is taking longer, but there's been a massive flood of interest. A ton of capital has been dedicated to investing in this space.


I think there's also a moral imperative that keeps a lot of people in this, right? I think people look and go, “Time is running out,” and I think you've got a bunch of funders and a bunch of LPs who have brought together cash like, “Hey, we need to act; we can't delay.”


Also, governments are stepping in and supporting, whether that's the IRA and what that means, whether it's the EU and their attempts to respond to that. With all that government funding, there is still capital out there that can be accessed. The Department of Energy in October announced over $2.8 billion dollars to fund 20 different battery companies for their build-out in the United States, right? You're having battery companies that can mix and match public dollars and private dollars. I think that is useful and it works both ways. For public dollars, the government can be, “Hey, for every $1 I'm putting in, I'm leveraging $4 of private capital. That's a great ratio.” The $4 to $1 was made up; it could be any different number. I think whenever public dollars want to see ROI and the private money, we go, “Oh, this is great.”


We know there’s support there that can help so that companies don't have to access so much capital from the private markets, which maybe is having a little bit more difficulty now than back in ‘21 when the markets are being — fair to say — irrational or overly exuberant.


Ben: IRA — for the non-energy — is the Inflation Reduction Act, for the listeners that haven't really heard about that legislation specifically. I'm interested — I mean, it feels like there was a lot put into that bill that has been kind of building up over time, that people wanted for a while. I'm just curious, were you happy? Were you excited with the outcomes of the Inflation Reduction Act?


Josh: Ben, I was thrilled when the Inflation Reduction Act was passed. The reason why is: why did I get involved in climate tech? It's because I truly am passionate about protecting the environment.


I was deeply worried that despite all the comments that had been made by the federal government that no major climate bill was going to get passed during this current administration. That really made me nervous because the United States is the second largest greenhouse gas emitter — largest per capita — is still the global leader. Climate change is a global phenomenon; if the United States was not willing to lead, it's going to be hard to see other countries following. When the Inflation Reduction Act got passed, it did many things, right? It's an incredible piece of legislation. You know, it’s going to lower prescription drug prices; it allowed the government to negotiate for Medicare and Medicaid. That's massive. That's huge. That deserves a lot of attention.


For the environment, it earmarked roughly $370 billion for various initiatives to combat climate change. It covers so many different areas. It's tax credits for electric vehicles. It’s credits for producing low-carbon hydrogen — green hydrogen if you want to use a color. Wind, solar, domestic production — it does so many different things to build a U.S. manufacturing base for the 21st century focused around green economy. It's going to just help really kickstart so many different initiatives and efforts that are going to help the United States hit its 2050 climate goals. It’s an incredible piece of legislation; it's generational impact.


We're still working out a lot of the finer points about how exactly everything's gonna happen. It's often happened with Congress that if a bill gets passed, then you gotta work out all the details. As those are being hammered out, it's gonna be an incredible piece of legislation to build green jobs in America, to position America to have leading technologies for the 21st century. It’s not only a climate bill, it’s a jobs bill. It's a really impressive piece of legislation.


Ben: That's a huge achievement. Yeah, I was also extremely excited. It's interesting, it's kind of a boom time in a general sense.


Obviously, the world that FedTech lives in is commercializing R&D. For us, we've been thinking there's a lot more R&D that's gonna be happening between IRA, the CHIPS Act, and whatnot. We're actually even working on some accelerator concepts now. If you think years to the future, when that research investment becomes real in the form of a technology that could become a product and a product that could become a company.


How do we prepare now for that infrastructure to be ready to work with what's going to hopefully be a big volume of really disruptive new technologies that are starting development now? It's a good time to be in the business and in a general sense. I'm sure you see it, too.


I'm curious, Josh, you mentioned you're from Saskatchewan. Tell a little bit of your story. How do you go from Canada, obviously to Princeton, and to where we are now?


Josh: Yes, proud Canadian from 20 miles outside of Prince Albert, Saskatchewan. Saskatchewan is the province above Montana and North Dakota, so middle of the country. So, I grew up over the countryside. A single mom, single child, nearest neighbor mile away in a log cabin that was heated with a wood stove; it was rustic.


Ben: Sounds rustic, yeah.


Josh: It was. I was really fortunate. I went to a little country school that had 50 kids, rode the school bus there, took an hour to get there.


I was very fortunate. My province every year had one scholarship to go to a boarding school. Every year, one student would get this scholarship for two years for a high school out on the West Coast of Canada. I was very fortunate I received that.


From there, I found out that there was Shelby Davis, a Princeton alumnus, who had really come to take a shine to this school and the network of schools that it belonged in, which are called the United World Colleges. They're these really interesting school system — UWCs. I encourage anybody and everybody to look them up; they're amazing. Basically, if a student from a UWC could get into Princeton, he would cover whatever their family couldn't afford to pay. In my case — single mom growing up on welfare — that meant everything. So, I was like, “Wow, I always wanted to go to college.” I never knew how I was gonna afford it, but if I could get into Princeton, I’m good to go.


So, I worked really, really hard; I put in a lot of late nights studying and a lot of time and effort into putting my best foot forward. It was very fortunate and I got selected. It was a remarkable, life-changing opportunity, and I had an incredible experience. The university took really good care of me, taught me a lot, equipped me, gave me a lot of great friends. Then, from there, I was very fortunate I got a scholarship to go over to the UK for grad school for two years.


Ben: Backing up a little, Josh, like I don't think I realized that you were coming from quite that much of a remote setting. What did you learn or do you have any reflections? That sounds like you overcame more than some people do just to go to college. What did you learn about yourself going through that and what do you look back on when you think about those early days?


Josh: Yeah, absolutely. Look, was it the easiest background? No, it definitely wasn’t. Not financially, but I was incredibly fortunate. My mom loved me deeply and dearly, and was an incredible role model. She put a lot of time and effort into just making sure that I knew I was loved, that I cared for, promoting the value of education, read a lot of books together. Let's say I got a 95% on a test, she’d tease me and asked where the other 5% was. So, it was just a really good, positive influence.


We were very isolated, very remote, and we had moved to the area.


I actually spent the first five years of my life the only white child in a native village in Northern Canada — Pinehouse, it's a Cree community. My mom worked as a land use community organizer and activist, helping the First Nations community access government grants and other funding so they could build and provide for themselves.


When I turned five, my mom was like, “Well, the schools aren't necessarily the best here. Let's move south to Prince Albert.” So, we moved down there and moved into an area where everybody else was — I joked — a Wilkinson or related to one. They are all had lived in that area for generations; we were the new blood. And the community just really rallied, accepted us, and looked after us.


My mom passed away when I was in college. Two of my friends' moms came to graduation so I wouldn't be alone. What I learned is — there's this saying, if you wanna go fast, go alone; if you wanna go far, go together. A lot of community support, a lot of different organizations, a lot of different people helped me along the way. So, any success I have had or any opportunity I've had has been because other people supported me. I think learning to be grateful for that and to acknowledge it. I think if you pay that forward, people also will want to help you later.


I think I again rambled off and wandered down a path. I'm not sure if I addressed your question.


Ben: My level of impressed with what you've achieved grows; thanks for sharing. Really, really neat personal story.


I cut you off before, so pick up — so what happened after college? What did you? Where did you go? How'd you end up now as an investor?


Josh: Like I said, I grew up with the single mom on welfare and had a lot of people do a lot of stuff for us. So, I was committed to giving back. The way I thought initially I was gonna do that was working in nonprofits. Mission has been always very important to me.


After grad school, I took my first job working with a nonprofit working in sub-Saharan Africa and helping smallholder farmers access tools so they could basically grow more food. If they could grow more food, make more money, and lift themselves out of poverty. Kickstart International — great organization. Incredible founder — Martin Fisher — the man deserves a Noble Prize at some point. So, I worked there for a period of time, then leaving.


I started going to work at Bridge Span, which is a consulting firm that only works with nonprofit clients. In the span of that, a friend of mine had started a nonprofit that was trying to…


Josh: This is going to be a little different, so bear with me. Have you ever heard of poop transplants or FMTs?


Ben: I have! I wouldn’t say we’re in the business of such things, but we have been well-briefed on Los Alamos National Lab — which is obviously famous for the Manhattan Project — now does that type of work.


Josh: For people who aren't aware, one of the most commonly acquired infections in US hospitals is the thing called C. difficile; it's a bacterial infection that you normally get after receiving surgery and taking antibiotics to avoid post-operation infection. Half a million Americans get it every year, and it kills about 30,000. Basically, what it is: take these antibiotics, they knock out all the bacteria in your gut, and then C. difficile is this bacteria that's living in the hospital. It sees this clearcut forest that is your gut and moves in. It overgrows, proliferates, and makes you very sick.


The way we normally try and treat it is: we give you more back, we give you more antibiotics. Well, those antibiotics don't always work. It turns out, if you can get good bacteria into the gut, it can outcompete that bad bacteria. Now, the way you get that good bacteria is what's sometimes referred to as an FMT — fecal matter transplant, or a poop transplant if you want to be colloquial or casual with it. Basically, when you have a bowel movement, you’re not only getting rid of food, you actually you shed a lot of bacteria in your gut. So, we would basically have people have a poop, grab it, process it, and store it. Then, when a person would get sick, the doctor would call us. We'd ship them this FMT — this poop transplant — and either the doctor would provide a colonoscopy or put it through a nasogastric tube to get it back into the patient's stomach and it’ll outcompete the bad bacteria.


We started a nonprofit doing that because there is — as I said — half a million Americans getting sick with C. difficile, killing 30,000 a year. We had this known solution, but there's only nine doctors all over the United States doing this because they couldn't get paid for it; there's no easy way to get access to this treatment. Basically, we're like, “Wait, there's this huge problem and there's this known solution, but there's this implementation gap because nobody can get access to FMT because doctors don’t wanna collect the poop, process it themselves, put it in a blender, pour it through a strainer.”


They're not going to do any of that, right? They're just going to get more antibiotics. We're like, “If we can almost do what the Red Cross does for blood, but do that for stool, we can help a lot of people.” So, we started a non-profit. My buddy, Mark Smith — incredible man — and another great friend of mine, James Bridges, started this nonprofit called OpenBiome that is basically the world's first poop transplant bank. They went in, were talking to me, and they're like, “Josh, you work at a consulting firm that tries to help nonprofits grow. We're a nonprofit trying to grow, do you want to come work with us?” I was like, “You guys are great. What you're doing is cool. Yeah, let's go for it.” So, I got involved in that.


Ben: I'm just curious, is it regulated? Do they have to get over a lot of hurdles to be able to be in that market?


Josh: Ben, spot on question. The question, right?


It was such a new field of medicine that when we started doing this back in like 2013, there wasn't any regulation. The FDA very quickly got freaked out, right? They're like, “Whoa, whoa, whoa, what is happening here?” This sounds pretty scary, so it’s understandable. So, they wanted to regulate it.


We argued, you should regulate this like you regulate tissue, right? Or how you regulate blood. Make sure the donor is healthy. Then, if the donor is healthy, test the samples, make sure they're health and as long as they're clear, allow us to do it. The FDA said, “No, we're not going to regulate this as a blood or a tissue. We want you to go the full pharmaceutical drug route like Phase I, Phase II, Phase III, and clinical trials. The hundreds of millions of dollars, it-takes-a-decade route.”


Ben: Right.


Josh: So, that was going to shut down OpenBiome. There's this huge outcry from the community. All the providers were like, “Look, FDA, there's some logic there; we can understand it, but if you do that, thousands of people are going to die.”


The FDA decided to walk a middle ground where they were going to allow OpenBiome to exist in something called enforcement discretion, where they're like, “Hey, we're going to allow you to operate, but we want somebody to go and get this approved. Once they go and get it approved through the clinical trial route, we’re gonna remove the enforcement discretion.”


What that meant is we then spinout a for-profit called Finch Therapeutics because a non-profit wasn't going to be able to access the hundreds of millions of dollars necessary to take this from clinic to commercialization. We spun out a for-profit called Finch and then raised capital. I ended up working there, grew that from 10 to 200 people, raised several hundred million dollars along the way. We got an IPO in March 2021 on the NASDAQ to pursue getting a FDA certification for FMT.


Ben: I don't think I realized the full breadth of that story. That's amazing. What was that like in terms of going from, “Yes, I was kind of interested in why that product would fit in a nonprofit,” then became a for-profit. What was that growth like because I imagine going you know that that amount of growth: probably new facilities, new infrastructure required. What did you learn as an operator and a manager going through that?


Josh: Yeah, absolutely. Well, I learned it's really hard to build a business. and it's very difficult to do one in a space that is heavily regulated. I'm a person who believes government is important, but the number of times I'd be like, “Gosh darn government regulation getting in the way of getting things done.” Not that I'm blaming. The FDA were good thought partners and were actually really excellent to work with. It's a very impressive organization.


But you learn that it's hard to raise capital. It's hard to take care of the 101 things that you need to run a business. Like, what's your insurance policy? What about real estate? What about paying the pack, like keeping the lights on, IT, hiring people, building a culture that will keep people motivated and wanting to stay and excited to grow the company? And snacks — people care about snacks.


Ben: Yeah, I was gonna make a joke. You gotta keep the fridge stocked with the good stuff.


Josh: Absolutely. Also, I was not the scientist. We had a lot of great scientists doing a lot of good scientific work. I did everything in the background; my job is to get stuff done to build systems and then hire in people who know what they're doing.


It's like, “Oh, hey, we need to figure out our legal systems. Okay, I will help set up our contracting process and work through that.” Eventually, we're gonna hire a lawyer who really knows what they're doing. They're going to come in and look at what I did and hopefully go, “Oh, that's cute. I can work with that.” If they said that, great! Mission accomplished. But to do that and if they looked and went, “Oh man, I'm going to spend six months having to undo everything you did,” it was like, “Oh, I messed that one up.”


I just learned that there's so many different elements and components that you need to build a successful business. Not only is it the science, but it's the people. It's all the infrastructure that they need. Then, it's the funding to keep all that going, right? There's so many different things that you have to keep an eye on, keep pushing forward and together if you want to succeed. You need science to succeed. If you don't have science, you're not going to have a company in this space. You also need operations because if you don't have that — great science, but no operations — you won't get ahead as well.


As an investor, it's been really helpful having that experience because I think it hopefully allows us to identify companies that we think have the right blend of great science and great operations that will allow them to succeed. Then, we also hopefully provide that support or help when we are working with our portfolio companies to make sure that they do have something that they can turn to who may be having not been in that exact circumstance that you're in, but has been in something similar so it can be an aid or a source of information.


Ben: It's such an interesting point. I always joke, if I had to pick one word to take to a deserted island and have that be relevant to startups, it would be hiring, right? Over time, we see with our portfolio companies that it's just 101% about the people. When the people are right and the team is in place. life is easy, business grows almost naturally. When it's not, it’s the exact opposite of that spectrum.


So, when you look at a founding team, what are the traits of people that make it? Is it grit? Is it comfort operating in ambiguity? Is it resilience? What do you think?


Josh: It's all of the above, right? It's also passion, it's humility, it's curiosity, it's empathy, right? When I look at a founding team — especially when we're talking with early CEOs — a lot of times there's two things that I'm really looking for. One is a clear vision of what they are hoping to achieve, where they want the company to go. The second is the ability to clearly and convincingly articulate that in a way that is inspirational to those around them. A great leader is somebody can say, “We're going to go there, we're going to climb that mountain.” Then, they turn to everybody else and they go, “We're going to do it and it's going to be great,” and everybody looks like, “Yeah, let's go for it! This is going to be fun.”


Having somebody who has vision, but also has that charisma or empathy to get people motivated and to understand them so that they can help inspire them to go and accomplish that. I think it's incredibly important. I think great leaders — especially at early stage startups — need to have very strong empathy skills because your teams are so small and situations are so difficult. You're gonna encounter hard times. If you can't understand your employees, your teammates, what they’re going through, and what they need, you're not gonna be able to motivate them and you're gonna lose them. Especially when you're a small company, churn is a killer, right? If you're 10 people and one person leaves, you just lost 10% of your company. That's a big problem.


Ben: If it's an early employee, you might be losing 98% of your intellectual capital. It's unevenly distributed, right?


Josh: Totally. It's one of the things, whenever I'm evaluating a company, I go, “How big is your company? Over the last 12 months, how many people have you lost? And how many people have you hired?” The science and technology could be great, but if there's this crazy high churn going on in the background, something's wrong. People don't leave good companies unless there's a really good reason and that reason is normally, you come for the job, you leave because of the boss. So, that's one of those things I really want to understand — how does the founding team work with the rest of the individuals?


Ben: It's a great point. The game — obviously, I'm sure you guys saw with your portfolio companies — is harder than it used to be in terms of growing a team. We always bounce around on the in-person versus virtual workforce, right? When you're growing that culture element, we typically lean towards in-person's a easier way to do that, but there's obviously good arguments the other way, too.


Transitioning a little bit, a lot of the folks listening are building companies, are thinking about it, or work with entrepreneurs in different ways. There's kind of this mythology around pitching a VC. If you go look online, you'll get 75 different things you should do when you go and actually meet somebody like yourself. I don't think many of them are even right, but what would you say? What's important when you get pitched? How do you like to have interactions with companies that are not in your portfolio? What's that look like?


Josh: Yeah, absolutely. Look, I remember having to raise our first Series A where we were gonna go to outside investors. The company CEO going like, “Hey, Josh. Okay, we're gonna do this. I think we need a data room.” I go, “Well, what do we put in the data room? I don't know.” You gotta go figure it out, right? I just say that this year, I’ve been on that side where it’s so intimidating to talk to venture capital. There's these weird power dynamics and imbalances. The industry does a bad job of necessarily making itself accessible.


What can I recommend to somebody who's going to go and pitch to a VC? One is really believe in what you're doing because if you don't believe it and then you're not excited about it, that's just so immediately obvious. If you can't care about it, how am I gonna care about it, right? That's kind of self-evident, but I just wanted to stress it.


Maybe a more tactical thing is just remember the acronym KISS — keep it simple, stupid. Especially for your first time when you're talking to somebody, have a really clear narrative arc and message. There will be time later to get into the nitty-gritty details — to really drill down — but when you're having that first conversation, I talk to many, many companies every day. I'm maybe not an expert — I'm probably most definitely not an expert — in your field, so I need you to be able to explain this like you're talking to a two-year-old or a second grader.


The founder normally, they've been working on something for years, they’re super passionate, they want to share all the information, they want to share all the details. I need to stay at the 30,000 foot level for the first presentation, so I can get an idea of what's going on. Then, later, bring me down to the weeds; I will ask to get into the nitty gritty, three inch level. At that first conversation, I need a clear, high-level story of what’s the problem you’re trying to solve, why you have a great solution, why you think that solution can make money, why you can do it at scale, and why you have the team to get there.


Ben: It's kind of a signal of coachability and how the founder is going to be to work with too — if they're able to quickly explain that and have a relation. We're getting out of the science, at least for the purpose of talking to the money people. To me, that's a signal that's positive.


Josh: Yeah, absolutely. Like I said — when you asked what does a CEO need? I was like, “I need vision, they need the ability to clearly communicate,” right? One of those groups that they need to be able to clearly communicate to is VCs. Unfortunately, when you're building a hard tech company, you're going to be raising money a lot of times. It's not going to be one round and done; you're going to raise a slug of money and 12 months later, you're probably going to have to go and do it again. You're going to have to do that over and over and it's exhausting. If you’re not good at raising capital — even if you got a great technology — the company's probably gonna have some real difficulties.


Ben: Good advice. We'll leave it there.


Thank you, Josh; it's been a pleasure. I’m inspired by your story. Thanks for spending a little bit of time with us. Don't be a stranger. I know you're a DC guy, so please, let's get together soon.


Josh: Thank you, Ben. I'm also really impressed by you and FedTech and what you're doing, helping grow America's innovative ecosystem and economy. So, thanks for helping push it forward. Without innovation, we're not going to compete in the future.


Ben: Yeah, I know we're all in it together, man. All right, we'll talk soon.


Josh: Okay, take care.



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