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This is the Executive Connect Podcast - a show for the new generation of leaders. Join us as we discover unconventional leadership strategies not traditionally associated with executive roles. Our guests include upper-level C-Suite executives charting new ways to grow their organizations, successful entrepreneurs changing the way the world does business, and experts and thought leaders from fields outside of Corporate America that can bring new insights into leadership, prosperity, and personal growth - all while connecting on a human level. No one has all the answers - but by building a community of open-minded and engaged leaders we hope to give you the tools you need to help you find your own path to success.
Melissa Aarskaug (00:00.649)
Welcome back to the Executive Connect podcast. Today's guest is a legend in the startup funding world. Hall is the founder and CEO of Ten Capital Network, a powerhouse connecting startups with over 17 ,000 investors. Their network has fueled the rise of countless ventures, helping them raise a whopping 900 million in capital. If you're a startup founder seeking funding, you won't want to miss this episode.
Welcome Hall.
Hall Martin (00:32.385)
Thanks for having me, Melissa. Looking forward to this call today.
Melissa Aarskaug (00:36.457)
Thanks for being here. Now I'm going to jump right in. So 25 years of angel investing. From your perspective, how has the landscape evolved and changed over the last few years?
Hall Martin (00:50.401)
Well, it's certainly filled out with more investment types. When we got here, there were standard VCs and then there were angels. And when I started doing angel investing in the late nineties, people would literally stand up and ask for $5 million to build a web company. And back then you had to build your own server farm and you had to pay American wages for everything. It was just very expensive. And then five years, six years later, the business had evolved where,
you didn't you only need $500 ,000 to invest in a startup. And so most of those deals move from the venture capital world down into the angel world. And that's all there was there was angels and VCs over the last 10 years, 15 years, we've actually seen the rise of crowdfunding, regulation CF where people anybody can invest. And this is for those who have a very large network of people that want to put in on average $500 into their deal. And then we've seen
the rise of the Micro VC fund, the sub $100 million venture capital fund, which comes down and looks very much like an angel group as far as the sector and stage that they come in. They come in a little bit earlier and for smaller rounds. So we see more people coming into it. And finally, there's the syndication group where people come in and angels don't, instead of joining a group, they just join together for each deal that they want to be in and they just do a syndication for each one. And you can be in this deal, but not that deal. And so,
and they're not necessarily in a formal group. So we're seeing more groups come together to fill out the ecosystem with more choices for investors to invest.
Melissa Aarskaug (02:26.601)
I'm curious too with the major changes in technology over the last few years, how has that changed the way venture capital is sourced and how you make decisions?
Hall Martin (02:37.537)
Well, one of the biggest changes most recently is that the whole world has moved online through the pandemic. We moved to Zoom and then discovered how much more efficient that was. When I started the Central Taxes Angel Network, I started three of them and the first one was CTAN in 2006. I remember I was sitting there one day in the downtown Headliners Club where we went downtown to do everything, screen, diligence, present, et cetera, that half of what we could be...
half of what we were doing could have been done online. You know, in fact, if you were online, you could use your tools to do more diligence, more research as somebody's pitching, you can look at their competition, check their evaluation and so forth, because you had the tools there. It was bad form back then to be pulling out your phone and typing on it while somebody's pitching, even though I was trying to research. So if you move online, you actually get a lot more resources available to you to analyze the pitch and what's going on there. And that's one of the biggest changes is that.
Up front, there's so much more that's going to be done as far as introductions online is going to be through Zoom. And then the second and third meeting may go in person if that goes. The one thing we found is that it's very hard to close online. So it's easy to open the dialogue, but it's hard to close. The other thing is that there's many more tools out there now for analyzing startups. There's AI tools coming on the marketplace and other things for doing that. So we see a lot of.
a lot more in the way of technology coming in to enhance the experience. And in most cases, they're assistive. They're helping you make a decision, not making it for you.
Melissa Aarskaug (04:13.545)
Now, you're a fellow podcaster and you have your own podcast. And I'm curious from your perspective, what role does podcasts play in educating investors and entrepreneurs today?
Hall Martin (04:26.017)
Well, I remember talking to many angel group leaders and one of the most common complaints I had from them was they said, I wish I had put in more institutional knowledge. And in the angel world, especially in an angel group, you have people coming in that are new at this and in the early days are making mistakes and they're learning and then they get better. And just about the time they get really good at it, they retire and move on to something else. And here comes the next group and they're learning all the same mistakes and making all the same.
mistakes over again and you kind of wish you could have learned from the previous group. And so when I started Investor Connect, I wanted to be able to capture the knowledge of investors to share it with follow on investors. And primarily we've done 650 interviews with mostly angel VC and family offices and they talked about how they invest, why they invest, where they invest and how they do it. And you can learn a lot if you listen to what other people do.
how much they put into research, how much they weigh the team, and those type of things. And it does vary from one group to the next, but there are some common themes one can learn about it. So hopefully you can build some institutional knowledge where you can maintain the learnings of the group as you go forward. And so that's why we did ours.
Melissa Aarskaug (05:36.745)
That's fantastic. That's a lot, right? Can you share a little bit and maybe a couple of success stories that you've had over this last 25 years?
Hall Martin (05:48.897)
Well, from an investing point of view, when we started C -10, we had two home runs that came out of the first group. When I started C -10, I was basically on the board in charge of membership because I was the first guy to sign up. And then after two months, we lost our director. So I became the director and I helped recruit basically 50 investors to come into the network. And then we invested about five million collectively into 20 startups.
of which two turned into home runs. One was a 40 X return. The other was a 35 X return. And that really propelled the group onward. So it was great to have wins upfront. Typically you get one or two wins every five years of that nature. And we had two right up front, which really helped move the group forward. So it was a lot of fun to do that. And then we helped do other things like the Baylor Angel Network was a university based group. And so we had a...
I think the win there was the experience that students got because they were doing the deal flow and the diligence for us and they were actually helping us with figuring out which deals to invest in. And it was a great experience for them to work with real deals, real money, real investors. And of course they had great tools to put into their portfolio because they were putting 20, 25 hours of diligence into each deal, cap table analysis, the whole thing.
and go to your first employer and say, I've done this kind of analysis on these real deals here. It makes a big difference for the students in getting a great job and a great experience.
Melissa Aarskaug (07:16.585)
That's amazing. Now, how did you get into this space hall? How did you start in this industry? I'm curious. Was there any unique way that you found angel investing and being part of a CTAN? And maybe you could share a little bit about that.
Hall Martin (07:34.145)
Sure. Well, when I was in undergrad, my father got me investing into stocks and then in graduate school, we got into sector stocks. And if you just keep working your way up into different funds and different instruments, eventually you get to angel investing as one of the ways to invest. And I worked for a company called National Instruments. They went public in 95. I was an early employee there. So I wanted to start investing as an angel investor.
we had a group in the 90s called the Capital Network here in Austin that ran from 95 to 2002 and they got tied to the dot -com world but I went to it and made one investment lost all my money and learned that this is harder than it looks and I really wanted to join a group to learn how to do angel investing so the best thing best advice I give people is you know go find a like -minded group of investors in your area and join them and learn from the others don't make don't write a check in the first three months just watch what
the others do and what questions they ask and how they diligence it in. From that you pick it up pretty quickly there. Over time you have to do more formal study around diligence, term sheets and the like. But upfront you're just trying to figure out what's in the game and what's not in the game. And working with other angel investors is one of the best ways to start.
Melissa Aarskaug (08:53.833)
That's great. Any other tips for people who have never done this type of investing or who have never invested before outside of maybe a standard 401k and their primary residence? Any other tips that they should look for besides joining a group?
Hall Martin (09:09.985)
You can invest in a fund. Sometimes if you have a thesis around a certain sector, like I think the world is going to AI or blockchain or fintech, you can find a fund out there that manages it. And with many funds comes a community or a network of people, and you can be a part of their program and learn from their investment, how they do it, why they do it, and so forth. So a well -selected fund can also be very helpful in getting into the space, because you can.
use that as a mentorship exercise as well as an investment one.
Melissa Aarskaug (09:41.417)
That's great. Now, with technology and AI, like you mentioned, what do you believe are going to be some of the biggest challenges with venture capital and angel investments?
Hall Martin (09:55.457)
It's always a challenge to find the right deals out there. And there is a move with AI and data analytics to use a data -driven approach, look at what's successful in other areas, and try to map that into the market coming up. The challenge with that, though, is that in, I think, the next 10 years, we're going to see an explosion of new technologies, especially in life science, where there's not a whole lot of data available. You're going into a new area. And I found that some of the biggest ones I have came from the new areas that weren't yet
proven out. Once it's proven out, well, everybody figured out where the goal is. So everybody's over there mining that gold before you get there. And so at heart, you have to be a little bit on the cutting edge to do make an outsized return in the angel investing world. Sometimes you get lucky, but for the most part, you just have to be in the right space at the right time. And that's usually a little bit beyond what is currently proven or known to be true.
Melissa Aarskaug (10:51.273)
Yeah, it feels like everybody's in, I don't know if it's just me, everyone's in AI and software now. I feel like that's the big thing and there's so many companies now to look at and they all have kind of their unique spin on them. So just kind of looking ahead, like you kind of mentioned on just what are some trends out, like you mentioned life sciences, is there any other kind of...
trends that you see outside of that coming up and maybe things that entrepreneurs can prepare for or challenges.
Hall Martin (11:27.681)
Well, one of the biggest is life science. It used to be about 10 % of our deal flow. Now it's about 50 % of our deal flow. And what may not be obvious is the fact that there were advancements or tools that came out that lower the cost of life science or starting a life science company. You could do things with a lower cost wet lab space and with lower cost testing and array and diagnostic tools. So there's an explosion of startups out there that are each picking a novel target in.
taking it through to the process of getting FDA approval. So there's a huge amount. And then there's the model of convergence where is technology married with therapeutics or life science, for example, if I take a therapeutic and I add AI and data analytics to it, I now have a drug discovery engine that can help me find the right targets. And maybe I'm just selling the data from that to other people, or maybe I'm taking each promising target and carrying it all the way through FDA approval.
So convergence, the combination of tech and medical device and therapeutics is an area to really watch, because I think that's going to really be a supercharged era. We talk about Moore's law, where everything doubles in 18 months. Well, here, everything's going to be tripling in 18 months, given the technologies behind DNA sequencing and that of AI coming together is going to be a very supercharged model to look at.
Melissa Aarskaug (12:50.409)
That's great. Any nuggets of wisdom for those, I know I've seen a lot of buzz on my LinkedIn profile where people are leaving their jobs of many years and starting companies. Any kind of nuggets of wisdom for those new founders that are, you know, they've been a W2 employee for the majority of their life and now they're launching a new business in a space they're experts in. Any kind of nuggets of wisdom that you can share with our listeners?
Hall Martin (13:18.273)
Well, in the world of startup, it really takes a network to build a great startup. And so you want to start building your network. You want to know people in the industry that you're in. You want to start with an industry you know something about and can become an expert. Because I think the winners often come from those who have a insight into the industry that others don't have. So you're looking for that insight that says, this is how this really works. And
you build a startup around that. And then if you have the right network to help you raise funding, to help you build the product, help you go to market, to help you sell it, you know, it comes down to being able to fulfill all of those requirements to make it all, take it all the way through.
Melissa Aarskaug (13:57.129)
Yeah, absolutely. I've seen some people pivot completely. Maybe they've been in retail forever and now they're going into cybersecurity. A lot of these new business, I don't see the correlation. Like you mentioned, having a good network, that saying your network is your net worth comes to mind. If you have experience in one field, staying in that field and finding solutions to problems that are in that field make a lot of sense to me. I know
I recently sat in on a pitch for a baby bottle company that redid and retooled how baby bottles are on the market and they've done amazing, staggering numbers and it's just a bottle with a different top on it. And so I think I love the people are coming and inventing new ways to do things and it's awesome to see some of these startup companies.
create amazing businesses really quick. What are you seeing? Is there a specific sector that's growing faster right now? Is it tech? Is it AI? Is it healthcare? Is there any one industry that's really innovating and raising new dollars right now?
Hall Martin (15:19.361)
Well, healthcare is one that's always raising dollars and is such a big market. You don't have to go very far to convince people there's money there. And there's also a lot of problems to be solved. So it's one of the best markets to go after from a startup point of view. But it's a big market. There's a lot of money that goes into it from all angles. So I think that's probably the one that always is available and driving. Everything else like AI is enabling technology that helps you get there.
There are other sectors like aerospace, transportation and so forth, but I always looked at healthcare as being one of the biggest ones to be a part of. So, and that's always gonna be true. Even a recession, people still need the solutions that come out of that.
Melissa Aarskaug (16:01.417)
That's great. So just kind of in closing, any final, like maybe the top three things for people that we haven't talked about that you can share, any other tips from your perspective that you can share with our listeners.
Hall Martin (16:18.273)
Sure. So in raising funding, it's all about the team. You want to find the team that really can take you all the way there. In any startup failure I invested in, it ultimately came down to the team just was not up to the task. So you always want to make sure you get the team that is up to the task and is a great one in that case. And then, two, always make sure that you're working in the, I like to say the cutting edge. You need to go out a little ways from your comfort zone.
in order to find new opportunities. If you stay back in the comfort zone, you're probably going to be crowded out from too many other competitors and you need to have a little running room space to do the project on your own. And then on the third is, I think, working with the, in the angel world, it comes down to sharing the deal flow and the diligence. So you always want to go out and give first and.
pay it forward first to in order to build a network of people that will help you help enough other people get what they want, you'll get what you want. And that's that's a key part of the angel mantra is to make sure that you're out giving to the other people in the network.
Melissa Aarskaug (17:29.481)
That's great feedback. You know, I've listened to a couple of pitches recently and some were really, really great and others seem like it was the first time they've ever talked about their businesses, but they've been around for 10 or so years. So when it comes to actually the pitch, anything you can share about the actual pitch to the listeners or any like recommend, like practice, of course, practice your pitch, any kind of key takeaways for people that are pitching.
Hall Martin (17:59.009)
Well, I always liked the idea of instead of a pitch being a monologue, turn it into a collaboration, involve the investor in the process as you pitch and gain some level of feedback along the way. You know, mention the problem, the solution, how it works and then check interest. What do you think about that? And see if you're tracking along or if they're tracking along with you as you go through it and try to figure out where they consider the risks in the deal are. And so you want dialogue with it. I have some entrepreneurs that,
It's just a wall of words and we're grinding through every slide no matter what. And in the end, they don't really know if the message landed or not. And so the key is to take the investor on the journey with you and not run them over with your deck and make sure that you get, make it a two -way conversation, even if it's not meant to be. Try to get some feedback along the way so you understand it by the end, what's working and what's not, or where you go from here.
Melissa Aarskaug (18:56.489)
That's great. I think you've shared amazing tips and good feedback for our listeners and I want to thank you so much for being on the Executive Connect podcast today. Any final thoughts, Hall, or anything you want to share?
Hall Martin (19:10.209)
No, thanks for having me on here, Melissa. Appreciate all the great work you guys do and looking forward to all the wonderful things you have coming up. Podcasting you'll find is a great way to meet people and learn a ton about the industry and I'm sure you're going to enjoy the ride.
Melissa Aarskaug (19:24.329)
Thank you so much and that's the Executive Connect Podcast.