S5E24 VC Red Flags, Top 5 Questions to ask VCs, and Raising Money from Celebrities including Leonardo DiCaprio With Nathaniel Harding

S5E24 – VC Red Flags, Top 5 Questions to ask VCs, and Raising Money from Celebrities including Leonardo DiCaprio With Nathaniel Harding

What are some of the VC Red Flags to look out for?

Looking to raise capital for your startup? In our next episode of the Payback Time Podcast, we delve into essential insights with Nathaniel Harding, a seasoned venture capitalist and co-founder of Cortado Ventures. He breaks down crucial aspects including 5 green flags, 5 red flags, top questions you should ask, and his experiences investing alongside celebrities like Leonardo DiCaprio.

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Key Attributes for Startup Success

One of the key takeaways from Harding’s discussion is the importance of understanding what venture capitalists look for in a startup. He highlights five crucial green flags: the founder’s background and abilities, leadership qualities, the ability to articulate a vision, creativity, and grit. These attributes are essential because they demonstrate a founder’s capability to lead a company through the inevitable challenges of building a business from the ground up.

Red Flags to Avoid

Conversely, Harding warns against several red flags that can deter investors. These include a lack of honesty, poor communication, evading bad news, and having a bloated organizational structure, especially in pre-revenue stages. He emphasizes that transparency and clear communication are vital for building trust with investors. Additionally, a streamlined team focused on core objectives is more likely to succeed than one that is unnecessarily complex and top-heavy.

Strategic Fundraising Preparation

Harding also stresses the importance of preparation before reaching out to venture capitalists. Founders should understand the stages of investment and align their fundraising efforts accordingly. Early-stage startups may find more success with angel investors or family and friends before seeking venture capital. This approach allows entrepreneurs to build a track record of small wins, making them more attractive to larger investors later on.

Mastering the Pitch Meeting

When it comes to the actual pitch meeting, Harding advises founders to ask strategic questions that demonstrate their knowledge and seriousness. Questions about the venture capitalist’s thesis on specific sectors or their value-add can balance the dynamic, positioning the meeting as a two-way evaluation. This not only shows professionalism but also helps ensure that both parties are a good fit for each other.

Lessons from Success and Failure

Harding’s experience in working with both successful and unsuccessful ventures offers valuable lessons. He recounts how complex business models and over-reliance on celebrity investors can lead to failure. On the flip side, he shares success stories like NuVu, a company leveraging LiDAR technology on satellites, which has secured substantial contracts and illustrates the potential of high-tech innovations.

The Path to Long-Term Success

Ultimately, Harding’s insights underscore that the journey to securing venture capital is multifaceted and requires a combination of preparation, transparency, and strategic thinking. For entrepreneurs, these lessons are invaluable in navigating the challenging yet rewarding path to building and scaling a startup. By integrating these strategies and being mindful of both the opportunities and pitfalls, founders can significantly improve their chances of attracting the right investors and achieving long-term success.

Key Timecodes

  • (00:37) – Show intro and background history
  • (01:14) – Deeper into his career journey
  • (05:03) – Understanding his business strategies
  • (07:05) – Deeper into his customer focus philosophy
  • (07:52) – What are the green flags he look for from founders
  • (09:05) – What are the red flags he look for from founders
  • (11:16) – Examples of his big losses in the last 4 years
  • (13:37) – Working with celebrities in this market
  • (14:58) – Examples of his big wins in the last 4 years
  • (19:29) – Commercial break (TYKR)
  • (20:18) – Deeper into his tactical strategies starting a business
  • (23:07) – What are the key actions before reaching out to a VC
  • (25:50) – What type of questions he want to listen from a founder
  • (28:02) – Guest hot tips
  • (29:42) – A key takeaway from the guest
  • (34:15) – Guest contacts


[00:00:00.000] – Show intro

Introducing Payback Time, the podcast for entrepreneurs looking to build and scale their startups, gain access to actionable tips, proven strategies, and valuable data that can help you avoid mistakes, skyrocket sales, and optimize profits. Your business breakthrough may just be an episode away.

[00:00:17.880] – Guest Intro

If you’re looking to raise venture capital, this episode is for you. My next guest breaks down five green flags they look for from founders, five red flags they avoid, the top questions you should ask a BC, and what it’s like investing side by side with celebrities, including Leonardo DiCaprio. Please welcome Nathaniel Harding.

[00:00:37.290] – Sean

Nathaniel, welcome to the show.

[00:00:38.950] – Nathaniel

Thanks, Sean, for having me.

[00:00:40.690] – Sean

Thanks for jumping on. So before we dive in, why don’t you tell us something about yourself that most people don’t know?

[00:00:46.670] – Nathaniel

Most people don’t know that I was an official judge at the Miss Oklahoma Beauty Pageant. It was a week long job. It was ruling, but somebody had to do it.

[00:00:58.240] – Sean

Yeah, not a bad gig, my friend.

[00:01:00.590] – Nathaniel

Yeah. It’s actually my wife is a connection to my wife, so it’s also sanctioned by the wife’s committee. It’s important.

[00:01:07.840] – Sean

It’s approved. Yeah. Well, good for you. That’s a first on this podcast. All right. Well, let’s dive into your backstory here. If you could take a few minutes and tell us about your career background.

[00:01:20.140] – Nathaniel

Yeah. I’m actually from Oklahoma originally. It’s where I am now. I’ve been all over, been to 50 states and 40 countries. But my career, after college, I worked for a large oil and gas company before working for our family’s oil and gas business. I’m an engineer by degree and by career. Then we brought in outside capital and grew the family business and sold it now almost 10 years ago, which started my journey as an entrepreneur. So since 2014, I’ve started my own technology-driven oil and gas exploration company. So we would work with geo scientists and technical equipment find new areas to develop. And that was really defined my career, 2014 to 2020. But also around that time or in the earlier part of that, I was in the Air Force. I was a reservist in the Air Force working with geospatial intelligence and logistics. Specifically in 2012, I was in Afghanistan working at the US NATO headquarters. That was a tremendous experience. Got to work with other military officers from our allies as well as our as our Afghan allies that were there with us. Anyways, came back home, returning to civilian life and was an entrepreneur starting and selling a technology-driven oil and gas companies.

[00:02:43.110] – Nathaniel

Then I also have been appointed by the mayor of Oklahoma City and the governor of Oklahoma to serve in different roles relating to workforce and economic development. So specifically, Oklahoma City had a nearly billion dollar 10 year project that built out different quality and infrastructure assets. And so I was appointed to help oversee those projects. And then starting in 2018, was personally an angel investor investing in high tech companies. And those experiences all came together when my partners and I started Cortado Ventures, which is our venture capital firm investing in high tech startups focused in the middle of the US.

[00:03:22.390] – Sean

Got it. And this was started around 2018, ’19, somewhere in there?

[00:03:27.180] – Nathaniel

We officially launched in 2020. It was an idea in And then we launched in 2020, like a month into COVID. So that was my COVID project, I guess.

[00:03:38.980] – Sean

Right on. Yeah, the same on my end, too. Launched Tykr, and that was July 2020. Oh, wow. The smack dab of COVID. Yeah. So let’s dive into your firm a little bit here. Talk about the types of businesses you invest in a little bit.

[00:03:56.050] – Nathaniel

Yes. So high tech startups broadly, but specifically, companies that were an entrepreneur has built their product, whether it be software or something physical, but some novel new invention that has application in different industries that we call critical infrastructure. So that could be energy, logistics, mobility, supply chain, advanced manufacturing, as well as health care, biotech, and medical devices. And these are companies where it’s maybe pre-revenue or very early revenue, early commercialization. And we invest at that seed stage and help the companies go from that first commercialization to a thriving, growing company. And we invest in several companies throughout our fund. So we’ll raise a fund every few years and then invest in these high tech startups that fall within our categories of sectors. And then lastly, we focus on a region that we call the midcontinent. So really stretching from Houston to St. Louis to Denver, we see a lot of commonalities in those sectors. It’s also where we leverage our network to really help these companies grow.

[00:05:03.990] – Sean

Got it. Okay. You gave us a lot there. A lot of the questions I was going to ask, you just answered, what size fund you’re going for. So it’s seed round. What checks are you writing, typically?

[00:05:13.970] – Nathaniel

As far as size, anywhere from 250,000 to two and a half million. And depending on the round dynamics, we’re often the lead investor or co-lead or what we call a catalyst. And so the terms may be founder set, but we’ll work alongside and help raise the round. And so we’ll invest alongside other investors, minority investors, but very much still a founder-led company. But in terms of check size, our average first check is about a million dollars.

[00:05:43.120] – Sean

Okay. Let’s get into what I would call green flags and red flags. What are you looking for? And then what are some red flags, some signs you probably want to avoid? So let’s get into the good first. What are you looking for with the companies you invest in, especially knowing that you’re investing in pre-revenue you, you’re taking a little bit of a risk there, which means I’d like to know, what are you looking for? What stands out?

[00:06:06.390] – Nathaniel

Yeah, it’s definitely based around the founder, right? And that founder’s insight. So importantly, so green flags for us would be, what is it about their background and experience that gives them this unique insight? It didn’t have to be technical talent. Certainly, that could help if they’re building something that is very technical, but an ability for them to really be a leader. And so Because think about it, when you’re a startup founder, you need to recruit talent around an idea. You need to recruit first customers, be able to raise capital. And so there is a certain level of those leadership qualities that we look for. So green flags would certainly be an ability to communicate and articulate your vision, having a unique insight that’s informed by your background. And so that may be industry experience. So coming from the same industry where you’re now building innovative product. That’s a green flag. And I would also say people that have illustrated a certain amount of creativity and grit and tenacity because startups and building companies is not for the faint of heart. And there will be bumps in the road. There will be pivots that founders have to make.

[00:07:21.040] – Nathaniel

And so another green flag is an ability to be a creative problem solver and to really be a driver. Sometimes I even refer to as a people mover. Or at the end of the day, you need to convince people to move in a certain direction. And that can be done through various personality traits, but it’s really a demonstrated ability to move people towards a vision. Again, these are all things that may be not immediately apparent, but that you’re able to learn about each other through the course of getting to know a founder.

[00:07:52.810] – Sean

So to quantify it a little bit, do you start asking questions? Tell us about previous projects that you executed at this stage where it’s pre-revenue. How did you get there to a revenue situation? Do you have them walk through that journey to see some of these green flags bubble up to the surface?

[00:08:12.780] – Nathaniel

Yeah. So the one that could be apparent would be their industry background. So they come from the same industry that they’re now building for. But then, really, the three key questions are why this? Why you? Why now? Why is this new technology inevitable and needed? Why are you the one uniquely positioned to bring it into the world? And why now, is the market in a place where there is a viable go-to-market strategy? And so when those things come together and the ability to walk through that, articulate that, we may not ask the question in quite that way, but those are really the things. Every good pitch is going to be able to answer those questions.

[00:08:54.130] – Sean

Right. I’ve seen those. Who you’re pitching to will have some framework like you describe there, the three questions, why this? Why you? Why now? And versions of it. So yeah, that makes sense. All right, flip the table here. Red flags. What jumps out of you? Like, oh, you probably don’t want to invest in this company.

[00:09:12.930] – Nathaniel

I would say a lack of honesty. So obfuscation, somebody who is really not communicative. Because there’s a huge trust factor when you’re building a company early on and really in business in general. But there’s so much that isn’t clear, really owning up to good news and bad news. Those are important attributes for character and to know that it’s going to be a long road together, so we need to be able to trust each other. So red flag would be not communicating or evading what could be bad news. Another red flag, which is less about character and more about just alignment with what it’s going to take to be a successful startup founder, is whenever we see a pre-revenue, pre-seed seed company that is just really frankly, bloated in terms of their org chart and their… If I get an email from an idea stage company with emails from their chief of staff, I’m like, Well, how… You have maybe not a clear idea of what it’s really going to take to bring this idea into the world, thinking that, Well, I’ll just hire business development from day zero. It’s like, No, as the founding CEO, you’re going to be the one that’s on a mission to land those first customers.

[00:10:29.180] – Nathaniel

We do enterprise tech, and so I usually say, The first 10 customers are all founder-led, and you got to make those first customers wildly happy. If you’re trying to outsource that, bad expectations.

[00:10:40.240] – Sean

Yeah, that’s a good one, too. I’ve seen that quite a bit where you’ll see a pre-rev tech company with a whole bunch of motivated 27-year-olds that they’ve got seven people in the business, two of them are founders, and the rest are like, Are you working for free? Or what are you… Are we playing business here? Or are we doing business?

[00:10:59.780] – Nathaniel

Yeah. Yeah. Everybody is really part-time. And I get it when you’re first building something, it may be a side hustle. But 10 people giving 10 % of their time is not equivalent to one person giving 100 %.

[00:11:12.590] – Sean

Correct. Yes. Well phrased. Yeah. No good red flags there. You don’t have to give any business names, but we always like to hear what’s a big win in your last four years and maybe a big loser, and you could share some lessons learned there. Let’s start with the negative side first. Were there any duds or strikeouts you had in the last four years?

[00:11:36.540] – Nathaniel

Yeah, certainly as a VC, you definitely have lots of zeros. I saw a study recently that even the top decile funds will still ultimately have half their portfolio, not return, at least their investment. But for us, we had a company that really had a complex business model. That’s one of the things that we learned. If there’s many different players for a product market fit to happen, then that can be… You really have to understand the risk behind that because you’re not just trying to convince one customer and one sector. You’re trying to move maybe both sides of a marketplace at the same time. Or if the customer who’s getting the benefit is not the same entity that’s paying for it, that’s another situation where you have misalignment. So we’ve seen, to not give the name, but to give a little bit more to color around it, had a company that was really interesting and had a novel solution in the job tech space. So connected people with work. And there was a celebrity investor that came that joined the round. Super exciting. We got to jump on this. I mean, big name and it’s going places.

[00:12:51.430] – Nathaniel

But that’s also when we learned there’s the same company where it was a complex model. And complex models, I now believe require more runway because there’s more to pieces that you have to fit together, so you need more time. But I also learned that working with billionaires is not always awesome because when they’re really motivated and interested, then it’s amazing and everything’s moving so quickly and it’s exciting. But then if they just get bored with that project, then all of a sudden it’s dead to them. They don’t have any need. They’re not a fiduciary for other people’s money. They’re not trying to still make it. It’s my own thought process on it, but it can be very binary in terms of the attention you get. So it’s not always great to have a celebrity investor involved.

[00:13:38.780] – Sean

That’s funny you say that because I’ve run into other people with that same situation that they’ll have a celebrity that’s their motivation motivated for five minutes. And they don’t need the business to be successful because they’ve made money in other ways. So if things start getting a little difficult or there’s a little bit of friction, their attention goes somewhere else in two seconds flat, and the entrepreneurs are left hanging. Oh, yeah, I’ve heard this story on repeat. So, yeah, listeners out there, it might be exciting for a minute if a celebrity is getting involved, but based on the success ratio, I’d say it’s like a 95-5 rule. I’m not going to say 80-20. 95 % of the time, it’s not going to work out like you expected.

[00:14:25.830] – Nathaniel

Yeah. And you should always have most of your cap table be professional professional financial investors, right? So the quartet of the world, it’s literally our job, and we’re driven by many layers of motivation to make it work, and it is our full attention. So maybe you could even say it’s good to have a mix. It’s great to have a strategic investor. It’s great to have a big name or celebrity investor, but having financial investors and having that mix. So that way, when things aren’t going well, you have people that can roll their sleeves and help get through it.

[00:14:58.640] – Sean

Yeah. Good call. You want the real entrepreneurs. They’re in it. They’ve got skin in the game, and they want this to survive. Grit was a keyword at the end or a few minutes back. That really jumped out to me. Let’s flip the equation here. You talked about a loser Give us an example of a winner. One of your big wins over the last four years.

[00:15:20.210] – Nathaniel

Yeah. One of our companies actually uses LiDAR on satellites. It’s a company called NuVu. And so LiDAR is one of the technologies that self-driving cars use, for example, to navigate the road. It’s how they see, quote, unquote. Well, imagine using that on a satellite. This company is developing that technology that can then create high-fidelity 3D imagery of any surface on Earth. So it has application with energy and utilities, monitoring and maintenance, but also agriculture, so monitoring your crops, as well as defense or climate studies, climate technology. It’s a tremendous technology. This company recently reported so we can repeat it, well over a billion dollars in signed contracts and data sharing agreements. They actually have a celebrity investor. Leonardo DiCaprio is an investor there. Tying it all together. But they also have an undisclosed strategic investor here. And then, of course, several financial investors were involved. But it’s a great story because we love it for the obvious reason of it’s the first of its kind. It’s really defining a category, has so many applications, but they’re also building… It has applications in sectors that we know. One of their bigger customers is actually a pipeline company that we’re familiar with in the region.

[00:16:39.020] – Nathaniel

And that’s a space that we know, so energy infrastructure. But interestingly, They do… One of the jobs that I have when I was in the Air Force in Kabul, this company can do much faster. And so my deployment would have been maybe two weeks instead of six months if that technology had been around. So it truly is a category-defining technology. We were an early investor, so thrilled to be a part of that company.

[00:17:04.940] – Sean

You said high tech startups? That’s high tech. This is cool. I want to make sure I get the URL right because the audience may be interested in checking out the first one you You mentioned NuVu. It’s spelled N-U-V-I-E-W. Space. Yes, that’s right. Nuvu. Space. Okay, very cool stuff. That’s awesome. The second company, what’s the name of that you mentioned?

[00:17:29.570] – Nathaniel

I’ll All one company. The one that wasn’t great, I didn’t say the name of, but the company that… So NuVu has application in two different sectors. So it has application in energy as well as those, ag and defense and climate. So maybe that’s the takeaway is one company that has so many markets that it can sell to. That’s another thing. We love seeing a horizontal platform technologies like that. It can be difficult to then have a go-to-market plan because Because you’re trying to decide where you go to first. But that’s been a couple of other conversation, how investors think about that versus just a company that have one application. But yeah, NuVu is a good example of one that’s a horizontal platform.

[00:18:14.690] – Sean

Yeah. Thanks for the clarification there. So nuvvu. Space, N-U-V-I-E-W. Good example there. With our audience, a lot of people do invest in the stock market, and we do teach that, hey, when a business is more mature, you like to I have a business that’s serving multiple industries as multiple streams of revenue. In case one gets pulled out from under it, it can still grow. But where you’re at, I can totally see from your perspectives, you want to be highly focused and get really good at one, make a bunch of money in one, and then you can diversify. But you got a cool example here of a company that its application is so advanced, it can solve problems in multiple verticals. It’s a great place to be.

[00:18:59.510] – Nathaniel

Yeah, I I think the difference is when asking yourself, when do you go to a different customer profile, a different sector, it’s really a function of how much work it’s going to take. If you’re generating data, it’s like a newbies case, they’re capturing the data regardless. And So then it’s just a matter of selling different customers. And so that’s maybe a key attribute. Whereas if you’re having to retool your product and retrain customer support, well, now that’s a very different question about when do you sell to a different sector.

[00:19:28.670] – Sean

Right on. Let’s take a quick commercial break. Investing in the Stock Market. I’m sure the top questions that come to mind include, how risky is it? And can I actually make money? Every day people like you and I, or otherwise known as retail investors, are flooding the stock market because a friend invites them or because of information they hear or see on YouTube, TikTok, Reddit, or some other social media app. There’s one big problem that new investors face. In most cases, they don’t know the difference between a good stock that can make them money and a bad stock that can lose them money. Unfortunately, there is a solution. I’d like to introduce you to Tykr, a platform that makes investing easy for anyone, especially beginners. Go ahead and get started with a free trial. Visit Tykr. Com. That’s T-Y-K-R. Com. Again, Tykr. Com. All right, back to the show. I got a few more fun business questions here. So one is, we’re going to put your entrepreneurial hat on, not your investor hat. If you were to start a business in one of the key sectors you focus on, what would be one of your first steps?

[00:20:33.930] – Nathaniel

Find a really smart person. No, seriously, if I were to get back in the entrepreneurial world as a founder, I would look for deep energy tech. I mean, I love… That’s a personal area that I’m really interested in. Coming from oil and gas background, that’s been the last 150 years that’s powered our country. But I’m really excited around the science of what’s next, and there’s really interesting developments in nuclear energy. But because of that, one of my first steps would be I need to work with somebody who has deep domain expertise. Because it’s a very technical field. And so it would really look for a technical co founder. Now, and I guess to do that, it’s really a matter of working your network. And I’ll give a specific example. When I started, when I cofounded Cortado Ventures with my partners, I looked back at the numbers. The year leading up to the launch and in the beginning of the launch, I had 500 meetings in that time. So that’s ten a week. Yeah, that’s right. So 500 meetings in the year leading up to in the beginning of the launch of Quartada. And those meetings were me just working the network, asking questions, start with the dumbest questions, and then you’re a little bit smarter, and then you also uncover more things on that topic.

[00:21:56.500] – Nathaniel

I may be taking a call with somebody to learn about allocation strategy. And then in that conversation, something comes up at secondary markets and how you get to liquidity. Well, then now I should have two more conversations with people that they refer me to on that topic. And then that reveals new things. So to answer your question, what would be my first step? If I were to say, starting tomorrow, I’m going to start a new company, it would be I’m going to plan to have 500 meetings, 500 calls, Zoom meetings to meet with it, to really uncover what is the opportunity and how How do I start?

[00:22:31.550] – Sean

Yeah, I love that. I do know entrepreneurs, they’ve got an idea at the surface level, and they start moving forward, they start investing money, and then they get down the road a few months and realize, Oh, gosh, I should have went this direction, not that direction. That could have all been avoided if they interviewed and talked to a whole bunch of businesses and really uncover the true problem so you can get laser-focused on the right thing.

[00:22:58.480] – Nathaniel

I think it’s like an Einstein quote that says, If I had 20 days to solve a problem, I’d have to spend the first 19 days defining it.

[00:23:05.060] – Sean

That’s an important aspect of discovery. Yeah, good call. All right, still in this position as a founder, and you’re on that side of the table, you’re VC. So what are the key actions you should take before reaching out to a VC? Because I know some of the listeners are like, Oh, maybe I want to reach out to you. But there’s a few things you need to do before. So what are those steps you would recommend?

[00:23:30.200] – Nathaniel

And knowing what stage a company is at and then what stage that VC invest in. And so most VCs start off at seed stage, which is where product is developed, you have a minimum viable product, and you have maybe some pilot customers or some early revenue. If somebody is earlier than that, if somebody is to pre-product, then that’s a better fit for angels, typically. And a lot of people start with family and friends, investors, and angels, and starting off with smaller checks, because I think maybe a misstep that some make is, I’m going to wait until I find that one VC that’s going to give me the big check and I’ll be done. It’s really more like be getting the small wins now, get the smaller checks from family and friends and then angels in the near term. So that way you can start building the thing and can illustrate the use case and even get some pilot customers. That way it’ll tee up a more productive… First of all, it’ll increase the odds that they’ll land a meeting with a VC, but then it’ll make that much more productive because VCs are more like metrics-driven.

[00:24:37.360] – Nathaniel

You want to see some traction, want to see… Have a customer they can talk to to get feedback on how interesting is this technology. So I think really understanding where you are and what stage you fit in in the investment landscape is an important first step. Some cities have incubators and programs that will even work with the founder that are nonprofits that will work with the founder to actually help define that, too.

[00:25:04.520] – Sean

I’ve seen mistakes out there with entrepreneurs that they’ll send a pitch deck with their idea to a VC that only focuses on Series B and C and beyond. It’s like, you did not do your homework on your audience. So you’re going to get a hard no on that.

[00:25:19.910] – Nathaniel

Yeah. Emails are free. It’s tempting to send out a lot of them. But you’d rather spend the same amount of time finding the one or two or three best fit than that amount of time scraping a thousand emails and blasting everybody. Yeah.

[00:25:35.220] – Sean

Yes. Be smart about it. The shotgun approach can… It shows you didn’t do your homework. If those emails arrive and if a conversation were to arise at a later date, they may not show interest in you. You don’t want to kill the relationship before you even really started. Here’s a fun one. Let’s say a founder gets a meeting with you. Let’s get them prepped for the conversation. What type of questions would impress ask you in that meeting?

[00:26:02.300] – Nathaniel

Of the founder asking me?

[00:26:04.140] – Sean

Yeah, exactly. The founder asking me. Yeah.

[00:26:06.470] – Nathaniel

Well, it being clear that they looked at the website, and so I have an understanding of how we view the world. And we publish things on Medium, and we share our thought process. But if they were to start off asking… I had one recently that was like, what is your thesis behind this subsector? Okay. So what is interesting about this about this sector for you, Cortado, as an investor? And I found that interesting. It caught my attention because it also gets that alignment. Are we viewing this opportunity in the same way? Are we actually the right fit as an investor? Because are we going to be able to add value or are we just like, Oh, I don’t know. I just thought this was cool. So any questions that help see if we are going to be a good value add investor for them, it shows an experience level and a maturity level and professionalism. But actually even is a little bit of a psychology of it balances…

[00:27:09.470] – Sean

Yes. I know where you’re going with this.

[00:27:11.620] – Nathaniel

Balances the framework of who’s driving this meeting. I’m like, we both need each other, not just I need you, you need me. And so it actually makes that founder, it makes that company seem more appealing from all this, just like a reverse psychology advantage.

[00:27:28.650] – Sean

Yes. I’ve heard those case studies of founders that they know what they’re looking for, and just asking for money isn’t enough. You want the right strategic alliance with people that has them… Like you, you’ve got knowledge in this space in your specific sector. It’s like, so you want to be checking all the boxes so it’s really a good fit. And they’ll go in with the thought, well, yeah, they’re interviewing me, but I’m also interviewing them. So the high ground isn’t lopsided.

[00:27:59.610] – Nathaniel

That’s right.

[00:28:01.080] – Sean

Yeah. No, that’s good stuff. All right, I want to do a roll up here. Then I’m going to ask you what is one more key takeaway? I always like to do a roll up to really summarize some hot points here. I’m going to hit the green flags and red flags, but this episode is just packed full of a ton of value. This is amazing. So audience, here we go. I’m going to list. I’ve got five green flags and four red flags. So right at the top here, green flag number one, founder’s background and abilities. That’s what you’re looking for. Leadership qualities, number two. Articulate your vision. Can you articulate your vision? Where’s the company going to be in the next 5, 10 years, so on, so forth? That’s three. Creativity is number four. So are you a creative problem solver? And then number five is grit and tenacity. And of course, asking questions about your background, giving real-life experiences that can bode well in your favor. Switching gears here, red flags. Lack of honesty, number one. Two, I always have to highlight this, poor communication. Don’t they say that it’s the number one reason why marriages fail, and it’s the number one reason why businesses fail?

[00:29:07.170] – Sean

Poor communication. Evading bad news is number three. I see this way too much. Even with younger CEOs at the public level, I’ll tell my audience about this. It’s like, sure, you want to provide all good news in your quarterly reports, but that doesn’t do everybody favors. Okay, this is what’s going on. This is the truth. We have some challenges to walk through, but then what are we doing to mitigate the problem. So sharing the bad news is important. Number four would be a bloated org chart, especially in pre-revenue. I love that one. Good call out. All right, before we get to the rapid fire Ron, what is one more key takeaway you can give our audience?

[00:29:49.950] – Nathaniel

I’d say for people that are wanting to start something, wanting to start a company, have an idea, there really is no substitute for just starting and iterating, right? As opposed to waiting for, Well, I need to make sure I have all the people in place, and I need to make sure I fundraise first. Really, even if you’re not a technical person, building something that illustrates what’s possible. Sometimes we call it a wireframe, Yes. But there is no substitute for just starting. You’re going to find out that you started, that maybe you should get some early feedback that you should develop this side of the product more or a different product or a different a whole strategy around the market that you’re going to address. But there really is, when it comes to the entrepreneurial mindset, there really is no substitute for just starting as opposed to waiting for the stars to align.

[00:30:42.930] – Sean

I love it. To One of the key things I want to point out there I have to really hammer on, which is you mentioned the prototype. And I’m in the software world. You can have pretty complex stuff. You’re dealing with hardware and software. I’m strictly software. Go to Figma. You don’t need to write code. You can have clickable prototypes and save yourself so much time, but it’s enough to get in front of customers, get feedback. What do they like? What don’t they like? What would they do better? You can have those conversations in no time. So that’s number one. Two is, I agree A hundred %. Talking about doing something isn’t doing something. You got to move. I use the phrase all the time, it’s now or never. This is happening. And too many people sit on the sidelines talking about their idea but never executing. I don’t want to I’ll sit there.

[00:31:29.760] – Nathaniel

If you’re starting with a business plan, then you’re wrong. You’re still going to start.

[00:31:35.220] – Sean

Thank you. Let’s get to work. Roll up the sleeves and get after it. All right, now let’s transition to the rapid fire round. This is the part of the episode where we get to find out who Nathaniel really is. If you can, try to answer each question in about 15 seconds or less. You ready?

[00:31:52.840] – Nathaniel

Okay, I’m ready.

[00:31:53.880] – Sean

All right. What is your favorite podcast?

[00:31:56.040] – Nathaniel

All In.

[00:31:57.050] – Sean

I’ve heard of it. All right. What is a recent book read and would recommend?

[00:32:01.900] – Nathaniel

Range by David Epstein.

[00:32:05.140] – Sean

Really? Okay, I have not heard of this one. It’s a good one.

[00:32:07.640] – Nathaniel

Okay, I’m writing it down. I got it back here. It’s back here somewhere. Here we go.

[00:32:14.390] – Sean

Third question, what is your favorite movie?

[00:32:17.680] – Nathaniel


[00:32:18.750] – Sean

Really? Okay.

[00:32:20.170] – Nathaniel

Matthew McCona has an astronaut. Come on now. Yeah, right. All right, all right, all right.

[00:32:27.910] – Sean

I love Christopher Nolan films. I have to say, Interstellar wasn’t my favorite, but still very creative movie for sure.

[00:32:34.790] – Nathaniel

It scratches my sci-fi itch, too.

[00:32:38.410] – Sean

Yes. Yes. Nice. All right. What is the worst advice you ever received?

[00:32:45.570] – Nathaniel

Probably the whole don’t go to bed angry thing. I mean, because you’re not going to solve the thing in that moment. Sometimes it just needs to sit. Sometimes you’re going to feel different about it the next day.

[00:32:57.740] – Sean

Okay. Okay.

[00:32:58.620] – Nathaniel

Go to bed angry, folks. If you’re like me, then you’re not going to sleep.

[00:33:06.060] – Sean

You got to at least write it down or get it off your brain.

[00:33:09.670] – Nathaniel

That’s true.

[00:33:10.320] – Sean

Yeah. All right. Flip the equation. What is the best advice you ever received?

[00:33:15.990] – Nathaniel

My grandfather’s advice, which was always collect prepayment. And what that is in the oil and gas business, before you drill a well, you got to collect prepayment from all the partners. If you don’t do that, then basically they get a free loan. If it doesn’t go well, they don’t pay. But I extrapolate it to a broader life’s lesson. Don’t carry your chicken before they hatch thing.

[00:33:39.630] – Sean

Yes, 100% agree. That’s good advice. All right, and last question here, the time machine question. If you could go back in time to give your younger self advice, what age would he visit and what would you say?

[00:33:51.010] – Nathaniel

I would go probably to my mid-20s, just 25, and try to convince my younger self that success does not have to be linear. It doesn’t have to be, I guess, straight up into the right path. In fact, detour sometimes where more of the breakthroughs happen.

[00:34:10.940] – Sean

Yeah. No, that’s wise. I like that. That’s what we’re talking about. All right. And then where can the audience reach you?

[00:34:18.910] – Nathaniel

Super easy to find on LinkedIn and also Cortado Ventures is our handle on all the social media platforms. Luckily, it was available. So Cortado Ventures, easy to find. And then on our website, cortado. Ventures. So definitely reach out, whether you’re an investor or an entrepreneur, or just want to get feedback on what you’re thinking of building, then let the chat.

[00:34:41.580] – Sean

Awesome. Nathaniel, this was awesome. Thank you so much for your time.

[00:34:45.780] – Nathaniel

Thank you.

[00:34:46.580] – Sean

It’s been great. All right. We’ll see you. See you. Hey, I’d like to say thanks for checking out this podcast. I know there’s a lot of other podcasts you could be listening to, so thanks for spending some time with me. And if you have a moment, could you please head over to Apple Podcasts and leave a five-star review? The more reviews we get, the higher this podcast will rank. All right. Stay tuned for the next episode. We’ll see you.