From Venezuela to Venture Capital: Alicia Castillo Holley's

0:01 Hello, everybody. Thanks for joining us for another episode of Arthur's Roundtable. Super grateful to the Family Office Insights community for participating in these and sharing with others who are just getting started, as you know, with this podcast. And we're just super grateful again for everybody participating. And we're happy to welcome Alicia Castillo. Did I pronounce it Castillo? Holly, I just see that now, right, for joining us today. She's just fresh off or in the middle of the JP Morgan Healthcare Conference out in San Francisco. And so maybe we'll enjoy some of the insights from that as well. So Alicia, please, thank you for doing this and welcome to the podcast. Thank you for inviting me.

0:44 It's such a pleasure to be here and so grateful to be able to be here, especially after the JP Morgan and before Dallas. I'm recovering the tree. Yeah. So let's start a little bit with the how your journey began. That's OK. Sure, I have a very unusual journey, which is now become very popular because I grew up in Venezuela in a little town and actually I'm from at Iowa State where the trend that I was born, but I love Venezuela. Mona, 14 years ago, my parents are not Venezuelans. They let their home countries because of wars, their parents left their home countries because of words. And then I migrated and my kids continue to migrate.

1:25 So we are grand family with a lot of wings and not a lot of groups or groups come everywhere. I began my professional career as a scientist, my cancer, both socialist, the romantic type that we forgot they're wanting the 60s that you have to share knowledge. They're both educators. So it's Ukraine knowledge. You share knowledge, Education is the future, money doesn't matter. So that gives me a very unique lens to be an investor, which is why not went from science, went to work or corporation through the hands of one of my students. Then I discover entrepreneurship late.

2:06 I went to boxing and that opened a world for me. I realized we don't have to pick who wins and who loses. We just have to make the pie larger. And I did 10 minutes and then so many people investing in that and me and I discovered venture capital. I'm involved with venture capital. I know how it works. I made my money in venture capital and he doesn't work right now and and then later on many countries. I moved myself to sewer company in 2012. Joints and healing jobs now have an investment flow and now I have a fund and family office and I'm very interested in using venture capital for progress and making it work for family offices, founders, sewers and society at large. Super interesting.

2:54 So what was the first entrepreneurial endeavor look like for you? So it's kind of interesting my, my first entrepreneur I endeavour was when I was in college. So I was in college, my parents didn't think you have to give your kids allowances. You're going to figure it out. So I, I was a research assistant since I was 12. I presented my first research paper at 15 and I didn't get paid. It was all the prestige and I figured out, well, I need money. You know, I work 40 minutes to get to the lab. It would be good to be I'm not even thinking about a car or a bike. It would be able to be able to pay for the bus. So that's how I started thinking, hey, you know, we do need money.

3:41 It's it's, it's not the world doesn't work without money. It's good to go and pick up your potato, but you don't need that. So my first entrepreneurial venture was making a cake out of seven, which never went bad. And I would sell the pieces to the professors and because I didn't have the money, I would pre sell it for the next week. And without yes, I had no clue what I was doing. I didn't know anything about finance. We never talked about assets and liability to something about, you know, I learned that word when I was in my third. And, and people forget there are worlds, there are societies that live and exist and are healthy and are happy and they don't need to follow the, the liabilities and all of that. And, and they exist.

4:31 So that was my first one. And, and you know, even even I was a professor at the university and our salaries were not big, but I have to figure I had, I ended up buying a car that was 16 years old. I know how to fix cars, but but at some point is it there has to be a better way. It was, I was not suffering because everybody was the same. It's a little time, but I, I, you know, it was frustrating. You know, it's like, how come, how come I can't have this stuff? So I, I always think, you know, money is an illusion. That's one of my things. We don't need money. We need things and we just wanted to pay for it. That open self a wide range of opportunities in entrepreneurship, but also in venture capital, because I always ask my key question for founders is if you need something, if I can give you something and it's not money, what do you need from me?

5:28 And if the answer is money, that's not even investor for me, that's not even founder for me. They answered this is what I need. And then we work together to see how you reduce the needs of funding so you can increase your logical and that's how I make my money, not value to investment, but how do we really make money on our investment? And part of it is capital, but part of it is a whole bunch of other things. So give us a couple of examples of how somebody's answered that question that caused you to say, OK, I'll give you the money and that. OK. So I have two examples that are really, really interesting. And in the first time, in the first example, we made 50 times our investment breaking lots.

6:15 So that example was very close to me because there were two scientists and I was a scientist and they print organs and because I'm a scientist, I work in science, Internet attrition, I dismissed the companies. They can't do that. And they kept bugging me. And then one day I said I'm going to go to the lab and I saw what they were doing and I was blown away. And so I look at the number. I have a Peach in finance that I got later. So I looked at the numbers and said the reason why you can't raise funds is that your valuation is too high. So you've been raising funds for a year. If you've gotten to half of it, I dismissed you because I didn't really know the technology. So I'm going to bring you. I was a leading investor in that second round.

6:58 I'm going to bring you, but let's do something. Drop your your cap. It was a convertible mode. Drove your car from 12 million to 8 million and call everybody and say we're going to close this running two weeks and close it because you can't be racing around for a year. You'll be a Nancy. It doesn't work. So they did that. They close them out. Everybody else read because they got the balance of the money to stay in business, right? But but no, they were, they were investors that have passed but had an interest. Why? See. So they hadn't hadn't invested, but if they drop the valuation and they're going to write a check, I got it, OK. But you know it, it goes back to values and principles.

7:43 On their own, the founder, these two founders went back to all the investors that had invested at a 12 million account and they said, hey, we have better deals, better terms and we think it's just fair that everybody comes on the same terms because you help us at the beginning. So that that make me feel very good about that. Yeah, that's a good signal. Yeah, within three months they raise another million at 12 million. But this is what happened. I used to work for a pharma in part of A and when I look at that, I said you're trying to solve a problem that is way up there. You know it's going to take you 20 years to solve that problem. They started with lung and the use of the smoke used has declined.

8:30 So lung cancer is in decline. Throat cancer is going up because we do vaping and pancreatic cancer is up. And so, so I said you're missing the point because you're building towards a market that is decreasing. So you need to change that. But the most important thing that I told them was your market is on the patients. Your market is pharma because the people that are developing the molecules for the future need to test it in cells and in organs. Nobody can test it in organs. So the way we test it is if we put an organ in a mice and we try in a mice, but we're not miles. We're miles but we're not. So it doesn't work. So if we can test so passionate about this because it might, you know, science and investment and I said if you can provide the research department of a pharma company with their way of testing this in tissue before you continue doing the formulation, you just unleash the ton of volume because it's not what you reduce the time. But researchers are expensive.

9:36 We spend millions of dollars and billions of dollars researching something. And then if you can reduce that one year, you just save a ton of working capital. So they didn't know how to do it. This is a company that the, the creature, the gafer was human tissue and the ink was your, your, your DNA, my DNA. So it was personal before people were talking about personalized. Now you see that, you know, and I'm going to explain this because it's the way I think. And I think this is what we need to add in venture capital. This is the missing piece. So they say, how do we sell that? And they say, well, nobody knows because you're doing something that is very unique. But I do know that the price has nothing to do with the cost. The price has a lot to do with the van. So we're gonna price it very, very high. You have the same printers.

10:26 We're gonna price it very, very high. And if it's too expensive, they will tell me. But if if not too expensive, they won't, they'll just buy it. So we price the the with their printers for labs, they were pricing at 30,000. We price it at half a million. They just to test we got an order for 10. Yeah. So now the company doesn't need $5,000,000 to raise. Now the value of the company increases if risks are. Giving less of the equity away for right. And that's the way we. Work more equity, yeah. You have more equity for the founders. We have more equity for us.

11:07 Our multiple is higher. So I don't do ban investment the billions of dollars because we have 4 Unicons in our in our portfolio. We have one Unicorn. Now in public. Once you reach that, you're not going to make a big multiple. You make some money, but it's more bragging, right? So I'm so big and you know when you're talking, you can't really probe that much. So our focus is very different. How do we reduce the risk? How do we reduce the need of capital and how we can add 1 so that company was sold 13 months later for 400 and years? Wow. Creates a ton of value because researchers need that. So they were able to demonstrate to pharma that they could test something on human tissue and.

11:54 So no, they sold the printers and the papers and the ink to pharma. They just sold it. They just sold it the the printer. They sold it $42 million each printer. And they would create what pharma needed so pharma could test it. Because that's the other thing. When you're testing a product that's confidential, you don't want people to know that you're testing it. Yeah. And you need to just need to improve it. So there's a lot of love and hate relationship with pharma. I work for Bayer and I work for Sivakali and I have AI, have a lot of vibration for them. I get better because pharma exists. It has a lot of side effects. But the reality is that if pharma didn't exist, if we have not been investing in pharma, most of ours would be dead. That's a reality.

12:42 So we need to, we need to continue progressing science. Science only progresses where we're skeptical, but but so that's, that's the other thing have continual value. So that's what they did. They provided, they provided A mechanism for pharma so they can test it. And the beauty of this particular technology is that nobody loses. We need more pharma using it. So it was just a virtuous circle and everybody benefits. So we we do, we evaluate something that we call the multiplier effect. So instead of using an impact, we look at who else benefits and we we tend to invest in companies that create a massive amount of wealth not only for us, but for society. So in the case you don't have to say who it was unless you want to, but who was the natural exit for them? So who what was the profile of the company that was willing to pay?

13:38 Was it a pharmaceutical company that paid $400 million exit? That's what I'm interested. It was a company that was doing printing for materials and they wanted to go into biotics. Yeah, perfect. Completely different synergy over synergy over synergy over synergy. You know, it would have been an idea acquirer, but we did we It was not HP. Yeah, right. So we, so an idea in life sciences in many of our companies. I, I prefer acquisitions, strategic acquisitions than IPOs myself. But when, when you think about the marketing, when you only have the economics macro view you, you try to feel who has the capacity to increase manufacturing for this particular product and who has the congressional venue and we're talking to family offices. That is the biggest tragedy in venture capital. In venture capital, I'm investing 13 BCS and I have a ton of non financial contribution that I can make, but I like I don't obviously I don't know make that like that's not my area.

14:45 That's science. I know a lot about engineering, I know a lot about space, I know a lot about energy. So in those areas it is just simply stupid for me to just give them a check. And that is the big tragedy of venture problem. Now that's what that's what I want to change because finally Alquist is have the infrastructure to manufacture or to deliver or to package or to sell. And they try to get into venture capital without understanding venture capital, which is very, very unique. And the way they go through venture capital is blindly like we invest in the stock market, in the stock market we pick winners. The way venture capital works is making winners, Co creating that and what is good for you might not be good for Anne or Peter or I don't know. It's very unique to find that age. You need to find how you Co create that wealth and that is that is what is missing and that's what I want to be working on.

15:48 So would you agree that the typical venture capital operating model is flush 90% of the companies give them a lot of money until they fail and demonstrate that they're not unicorns and then Superfund the 5% that are likely and that the trouble has been that many of the companies that they kept on pouring capital into didn't have a path to success. They only thought that cash would solve the problem. So I'm sorry to be so humble. Yeah, no, there are many questions about it. And again, it is useful to me to get back to my roots to understand that money is an emotion. OK.

16:32 So it's not money. What do we need? Do we need, do we need an expertise in fees? Do we need? So for example, we don't need a consultant to be working with us 10 hours a day, but we have a way to measure that. We need a consultant to tell us stop doing that so we don't waste a year in working capital. And and so, so that, that that is the concept. I think people have the best intentions. Ensure Capital was actually formed in Boston to overcome the problem of lack of jobs. That's what it was. So there was a banker, professor from MIT, professor from Harvard, and they went through the richest families and they said we want $1,000,000 and we want to create new jobs.

17:14 And we don't know how we're going to do that. And we're going to take 30%, but we're not going to put any money. And they convened seven families and that's how they started. And the first investment was debt and they became a super Unicorn. We didn't call it Unicorn that time, but now everybody started doing that because they think people they think it's easier. So what happens with venture capital is that there's a lot of misunderstanding. 65% of VCs are not going to return the money that they receive. 65%. I know because I'm an investor in some of them. And I know that is that stupid thing. Me too and I have an investment club. We're in the top 8%.

17:59 We still lose money, but we make more money then we lose money and then now what happens is a lot of people are thinking, oh, this the problem is that you don't have liquidity. Well, you don't have liquidity selling internally, but it's all a graph. So I wrote an article on LinkedIn about what I call the circularity of capital, which is a new financial concept. So if I have especially in AI, if I have an AI company that needs to get money. So some of the big companies that would benefit from that would invest in that the corporate receipts that they would put a billion dollars, but I put a billion dollars. But you, you sign a contract that you will buy $5 billion or $10 billion marketing from me or I put a billion dollars, but I am your supplier. And if you buy $10 billion chips for me or I got. So what has happened in AI is that for individual investors, there's no money to be made because the money was made on the transactions and, and people need to step up, especially the people that cooperated businesses that I understand the business people need to step up and say, OK, how does this work? And then the second layer is you make money in venture capital with the equity part.

19:19 So you need to figure out who benefits from what you have because it's completely different. There's a synergy that has not been discovered and that and that is also missing. But as long as we keep the limited partners limited, we won't be able to make that connection. So like by now we have, I have a club and I have a fun and I merge them because the club is more efficient and I like that model better. It's not for everyone, but it's much more efficient. You don't need, think about it, if you make 50 times your investment and you put $1,000,000, you just make $50 million, but also you help everybody. So the patients have better systems, health care system doesn't waste time, but nobody lost in that transaction.

20:05 And we need more family emphasis to get together and say how can we add our piece of the fossil so whatever it is that we have. With whatever it is that they need can come together and they don't have to spend the money for example, to build a cling lab or they're going to have to spend one or two years to find a consultant that can open doors for them. We have that we just added protein Dahari system Co open innovations in 2012. I don't know if you still have it. And what they said is that if you have a new idea or product, we'll have to define it. We'll help you sell it, we'll help you produce it, We'll have you distribute it and we'll take a portion.

20:49 And I remember I talked to what I found and, you know, directed consumers is not my area, but I remember talking to some founders that we don't want to give up equity. And I'm like, it's so stupid. You're giving up equity and then you have to work overtime and you don't know what you do. Just pair with them. That's a good thing. And so I think that's good. And then corporate receives have their own challenges because it's very political and, and, and. You can't, yeah. Yeah. I mean I went, I went to, I went to to I'm not going to name the company, but because my area is life sciences and energy, one of them wanted to get into that area and say could you please advise us and fold. The incentives were one to investing and I said, you know, you have been the incentives wrong because if I save you from wasting $10 million, that is good for you, but there's no way that I can benefit from that and you can benefit from that.

21:42 So the people that you're attracting are the people that without knowing are more inclined to continue investing and to say, oh, we invested this video, this video. So we need to be aware of that investment, in my opinion. So can you help us understand the difference? The fund structure is pretty clear. How does the club differ? Is it like Angel list syndication club? No, no. And, and you know, I have, I have a little bit of trouble explaining that because people are so used to, to the model. So I spent probably 7 years creating a model because that's what I do. And it's like, oh, I don't like it. Let me see if I can fix it. And by the way, I'm working on model philanthropy for profit.

22:23 So anybody wants to come and join, get critics ideas? I have a figure right now. But so I tell you what we did with that book. So I've been investing for a long time. I had a good track record. A lot of my friends wanted to invest with me. I don't like his feelings. I'm a people's person. I want to see who you are. Do you have kids? You like horses? Because at the end of the day, where people and that's what's important for me. You know, mine comes and goes, people stay. So after a certain period of time, I was at Tan Hill, which is a great group. I was on the board, I was a courtier of life sciences. It was overwhelming. So I said I am going to pick one company. Of all the companies that I see, I'm going to pick one company per month and I will do a due diligence and I'll show you how you do that and you can come and invest with me and if you don't want, you don't have to. So I created a club and that's what the club does. So the club is a membership base organization and every investment is a class.

23:20 That's very typical in California, but it doesn't exist in other states. So other states have what it's called Series Island. California doesn't recognize Series LLC, maybe well in the future, but it doesn't, but it recognizes classes. So every investment that we make is a class. And then the members, you can choose how much they want to put, if they want to base, if they don't want to invest, I don't care. I'm going to invest in all of that. So essentially I did it for myself. It's going well. And now I have a little family office with my my two kids. We do that for ourselves and then the members can come and if they want to invest, they can invest. And if they don't want them and the way we know if we separate that into what needs to be paid.

24:01 So the membership of the club provides information for people that want to explore investing. We have one new member, I'm sorry, one new company per month. We review between 50 and 100 and up to two follow on. So for example, we have two follow ONS this this month and one of them is open to everyone, but the other one is in insider round. So the companies that they continue to grow, they can usually have insiders rounds only because this is only for the people that invested before. But so we have a club that provides information if people want to and then that's a cost because that team has to be paid. And if people want to come and join, then we have an investment vehicle on investment vehicle for the whole club. And every, every member has a participation in that particular class.

24:50 And then that gets really to 20, but we return the 2%. But that team is the team that follows up and calls them and we help the founders collect. We help them if we don't invest because probably 20% of the companies that we invest in are companies we declined two or three years before. And we help them sit. Take a look at this, go and talk to this person. I have a network of receipts that are super cool and Angel investors and family offices. But if they want to invest with us, they have you're going to have to what happens is not not without knowing that. I didn't know that what happens is any member can buy or sell from any other member. So we have our own secondaries that completely transparent. And you know what, I really want more people to use this model, even if they work with me or or not, because this is the future of venture capital.

25:40 This is don't work. You have to live in 10 days, in 10 years. It's a lot of stress. The GP is like a sandwich. Yeah. So you have to provide this information for them. You don't have the time to to really support. You're on the board, but the board is we don't take more position. Board is controlling. We're more in, hey, that's hell. If you're on the board, you have to fire the whole team, but you have to fire the CFO. You can't talk to the to the CEO. We have to replace the CEO. So is it fair to compare the class structure for the club as if it's an SPV that is often used where I'm an LP in the SPV and that I can sell my LP actress to another LP in the SPV?

26:29 Is that a fair comparison? Like if I wanted liquidity as a secondary for example. That that is a fair compression as long as somebody else wants to buy it. Right. And in your case it's the same. You have to be. Right, there still has to be a willing environment, right And the and the club is go ahead. It's a little delayed. My fault. Go ahead. No, no, the the so. So you have to be in the other, otherwise you can't do it. You have to be a member of the club to able to transact. But like last year, we have we have a credit investors, we have family office. Last year we had a family office. It's a friend of mine that I've known for years kept saying, you know, I need to organize my state. I'll go and invest.

27:12 I don't really mind. These are great companies. They're going to get funded. We don't do precinct and and you know, we're just grateful to be able to do this. And eventually he said, I'm ready, ready to join. And I'm like, you always say that. No, no, no, I am. But he said it was really funny because I said you need to we need to know your customers. So there's steps that we need to take because it's we don't want toxic people in the cloud. So not, not everybody comes to John, but yeah, yeah, it's becoming shorter. And and so, yeah. And so he's doing on the tears and somebody said I want to call these companies and I'm like, what is it? Yes, yes, yes.

27:55 So our information is on the web. Actually, we just published our last year's results and it's all on the web. So you know who we invested. We have an active LinkedIn page and the top four or five, we put it on LinkedIn even though we only pick one because these are great companies, more people should know about them. But we don't. We don't provide investment clubs. We provide information on the club. People make their own decision. But what happened was that this guy drew it and said I want to buy this and this is how much I want to pay. And I said you don't even know how much there was. I said no, I don't have to. This is what? So we put it on, we send it to our membership by Wednesday.

28:37 He didn't, he didn't buy the 4th 1, which is going to be calling Unicorn, but by Wednesday he joined Tuesday. By Wednesday he had to make investments and I and I'm like, wow. And then our members are happy because they could sell 5% of just had a conversation already and one of our members said I tried this product. I want to buy it. I know if she's a member, she said, and she said it's Madison Reed, which is a super cool. We have two consumer products only. And she said, I saw who who wants to sell. So I was talking to another member today and I said, oh, this person wants to say, oh, I want to, I want to sell half of it. So it's just more con video. It's it's the way I think investment clubs should work instead of saying I'm going to take some from you and and it's also natural. It's more fun.

29:23 So to be a member of the club you obviously have to know the person has to be a good fit. No toxic people. Do you make a commitment of how much money you're likely to put into something? You pay a fee? What is it? How's that work? So that this is going to be a podcast about my, my life. So I I'm like, Oh my God. So we could talk about whatever you want. No, I just say it's I, I blush because I'm so passionate about the, the function of the club and I want more people to do that instead of doing the VC. But the way we the way we have it is to be a member of the club, you pay an annual fee that allows us to do all the work that we need to do without having to put pressure on the team or the company or they or the club to to make investments.

30:17 So there's two different decisions. Non conflicted, yeah. Non conflicted. SO we at the moment this year is $5000 for accredited investors, $25,000 family offices. Family offices have two extra services than our credit investors. It has to be an accredited investor and you have to talk to us and, and we interview you and then we see if it's a good fit for you as well. Because venture capital is risky. So people need to know that if you don't have money to lose, you shouldn't do venture capital. But but I and I have some educational women. So you know, it's around 5%, two to 5% of your of your asset base should be invested in and on risky things that founders, VCs or direct investment.

31:08 But The thing is that if you invest blindly, you're not going to get results because that works in the stock market. But these people need help and you need to help them. So only investing things that you can. So that takes care of that part. If people want to invest, we charge 2% annually from January to November. We don't park December because, but we charge it annually and that takes care of the post investment team, but also the team just at the financial and the CFO and all of that. So that's how we separate them. So the people that invest should pay for the follow up and in most of the Angel groups in in the crowdfunding, which are good platforms, you don't have the follow up and you don't have the capacity to interact with the founder. So that that is the problem.

31:54 So that's the way we have structured that we try to manage membership months is generating and the rest of the year we focus on supporting our companies. We make money supporting companies. We don't make money on seats, CVS, you never know how much money is going in. And I've done a couple of winners about that and you know, I keep thinking how can we continue to improve, but the way we did it is we have one deal only one per month and that we percent, we do a deep due diligence, 59 variables making chunks that are manageable. We have a newsletter that was I travel all the time. So I have a very global perspective of the financial markets and by analyzing the companies that they call, we can see we we have something that we call the bones of the sea.

32:40 So we have a newsletter that allows our investors, our members to have an overview of where the market is going. Are the forces of science, for example, life science is very important for all of us. Not a lot of money is going there. Where's the money going? The money is going to the support infrastructure for AI, which is energy, transportation, some computing space, mobility. So, so we need to understand that because now we need to be more patient with that. And then we have one deal a month and we do a due diligence. We put it on the portal. We spent three of months we're doing that. We only transfer the funds when the company when the round is 80% full. So that's the way things you don't get work. And we have one meeting at a month only that is one hour. So it's 40 minutes with the founders or the CEO. Sometimes the CEO's are not founders and in 20 minutes homes ourselves, we'll talk about everything that I mean, there's still, I have a joke somebody when somebody joins this, I have a stupid question.

33:38 Is it there's no stupid question, stupid people. So if not, no one just says that anymore. And that's the way we work. And then we have follow ONS. We have health is one of our top companies is I think every single man should invest in that is a diagnostic tool for excellence. Now they work very, very hard and Avenda, Avenda Health and they do prostate gas. We have 7 companies in our portfolio that we want to connect with family artists that have hospitals and and all over the world because those are very interesting diagnostic tools that can be providing very easily.

34:23 I think the health is one of them. Which of any adventures that's telemeters, they start selling to dogs and they work with them. Heart tissue. We have WAVY diagnostic is a paper that most parents of toddlers to see if there's liquid in the ear canal. I had my son when he was a kid. He had an earache. I had to take him to the hospital. I didn't have anybody to take my daughter. So we spent six hours. We did all the I have the, I have the whole multiplier impact 80,000,009 visits in the US, there's 80,000,009 visits for toddlers that have an earache. Yeah. And and I, with my kids too, they had earaches. They would recommend putting tubes in the drain, all that business, right.

35:08 But what you're saying is you waste so much time doing some because the only methodology was to go to the doctor and then go to the hospital. And then you spent, you know, two days all in. And, you know, arguably that could have be done more efficiently. Well, this is a piece of paper and the piece of paper called Sense. You can buy them, it's called WAVY diagnostic. You can buy them at Amazon and you can use it and it's 98% efficacy versus 93%. The hospital also has trainers. You don't want to have a toilet running around agreement with bank because they do know how to say that they are in pain in an emergency. 1,000,000 people are. So we evaluated the whole, the whole map, the hospital space like $3000, the patients between 600 and 27106 hours of pain.

35:59 Everybody's upset at the emergency room. The nurses have to be trained costing dollars per quarter to train that nurse. The parents go home. I didn't, I was, I was a single mom. I was alone. I was doing my MBA and we were Boston. And the whole thing was and it was nothing but most, most of the you're painting toddlers 2 to five years, of course, at night because you put depression, but it's growth. But my father-in-law was an anti doctor. And if you have meningitis, that's them here, it can cause permanent brain damage. So it's a parent after. And then I think what happens to the poor people that have to take two jobs and they have to take the kids and then and then they have to go back home and then have to go and work. So it's one of these things that. Potentially the benefit is exponential, yeah. It's, it's a multiplier impact.

36:54 So we have that we're we're looking at Link. Link has an insider's round which is at a meeting this morning. I cannot talk about the details, but we are able to go into LINK, Yeah. And you can do Link role and they're going they have announced some very interesting advances and there's they have an insider respond. The only way to get in is to do that in before. So the way we work as a group, which I think it's is a powerful trial is that few people would make the protect the risk of putting a little bit of money in the company. We getting the company, we help the company as the company continues to grow, the value of the company continues to grow, but we can put in more money.

37:34 So some people benefit later because somebody invested before and what has happened, I didn't structure it that way, but what has happened, We have the power of a community supporting this for the benefit of everybody, not only us because we invest, but other people also invest. Eventually. What I would like to do is I'd like to do a whole investment club where we could truly support the companies and maybe also have the option of getting their return out because we sell that. But because we maintain that only family offices can do that. A corporation cannot do that. Only found guests can do. And it applies to, it applies to climate water. Water is a big thing.

38:19 We should be investing more in water. So it applies to everything. But anyway, very fast about that very very active learner as well. So what is? Is there a carry for the club on the upside? Yeah. Yes, yes, they from a tax perspective, the membership is an expense for people, so people can write it down as an expensive as as. Immediate deduction, yeah. Isn't it? Yeah. And then they carry, we charge a carry every year and then we return, sorry, we charge 2% every year. We return that and then we have we take 20% of carry.

39:00 Yeah. And yeah, pretty normal. Yeah. When we compare that, so when we compare, I'm an engineer by train. So when we compare that, we compare the flow, the flow of capital, the cash flow, what happens is if you're an investor in the VC like I am too, and I like emerging fund managers. I don't like the big ones. I, I, you know, they don't care about me. But the, the, there's emerging funds, there's some super, super cool 1. And I'm, I'm in two of them actually the club investing in one. But when you invest in a fund, the fund charges 2% of the capital committed whether you invest or not. And they do that for 10 years. So after that, you already spend 20% of your capital supporting the infrastructure. And then on top of that, if you know SPVS, which a lot of people are doing SPVS, the the key question on any SPV that people need to ask is how much of wine money is going to the company because this is what happens with it. We have 6 SPVS.

39:58 We don't do SPVS anymore, but this is what happened. You structure the SPV. You have to pay the management of the SPD which is 5 to 18,000. It depends. Yeah, depending on. What you so that is the cost that is that's the card on Angel VS Sidecar whatever. You also have to change the management pay the management of that. So here are the two things that we that we sold for. Although our intention, I feel about our intention before we didn't, we didn't start because we wanted to do that. I just wanted people to have access to better deals so they could be better Angel. That's how that's what I want to do. So in their communities, they could be better Angel.

40:39 But if that's shifted, of course, if you're fun, if you invest in a fun, what happens if we did, we did the and I'm having excel sheet. What happens is if you if you put $5,000,000 in fund the average, it would put 400,000 in a in a company because the most goes to and and you would put 20% and you put 4 million into a company. That's it. If the only million goes to to pay down, if you put the same amount of money through a club, our club, if somebody else has the idea of do a club that would be fantastic. You only only put the money, the 2% on the company you're investing.

41:24 If you add that to the $25,000, the amount of money that you can put in in the same 10 companies is 443,000. When more money goes to the company. Now it is true that more more money is going to get lost. It's a company goes bad. But in the bad change scenario. In the bad change scenario, limited corner makes 43% more money in the signal Signal scenarios with a cloud versus a fund. No, that's super easy math. More money gets you might lose more money, but you'll also make more on a winner. Yes.

42:05 And if you put any other top percent on the top, so as we did the calculation, the top percent you make 20% more. So you lose less in, in the worst case scenario. That is AVC, that is AVC. There's two other advantages which is you can influence the outcome and you cannot do that at AVC. I know you cannot. And there's some limitation at AVC and it's the GPS. I don't think the GPS are doing it because they're bad. That's just the structure that we have that's. Just the model, yeah. Yeah, that's true. Now, if you go to an SPD, this is what happens. If you go to an SPD, the money what gets invested in between 60 and 70%. So let's say that I put 100,000, I'm going to put in it. But let's say I put 100,000, and let's say the company does well, and then 100,000 gets multiplied by five. So if I put 100,000, it gets multiplied by five, then I make 500,000.

43:06 But if it's 70,000 by 5 it's less, right? Exactly. And and VC has become AC structure industry and then people can't, there's no real incentive because you don't need to have an exit to make money receipt. And that is a problem that I have with VCs now and that's what I want to change. So I'm a New Yorker and so I grew up surrounded by hedge fund guys and girls, mostly guys. And privately they would all say hedge funds aren't a business model, it's a compensation scheme. Same thing, right?

43:51 Yeah. Because the only, the only hedge fund that I know of, and there's probably more that went public was man in the UK. And so it monetized its future value by going to the public markets. But for the most part, a hedge fund manager in New York is just printing money every year. And then when he closes up shop, he doesn't sell the hedge fund. He gives the money back and he goes and forms a family office with all the money that he made. And you don't need to put a multiple on something that you just give the money back, right? Because you were printing money all the way along. And again, I'm not passing judgement, but it really is. Now, if you're Stevie Cohen and you're doing 43% and you're getting, you know, 3 and 60, you know, the economics, you make a lot of money, right?

44:43 And make a lot of money for your investors. So was it worth it? I don't know, right? It was definitely worth it for students. You know, I have a patient in finance. I was studying. Yeah, yeah. And, and I, I think people have the best intentions, but we need to align the incentives because otherwise it's too easy to get sidetracked and it's too easy to to go and have, you know, you have to show that you have to spend money on. So you have to do the hair, which I don't. And but, but, but there's so much pressure to I call it the Hollywood wolves. There's so much pressure to impress by looking and by having to I've been in.

45:26 If we look, no fine returns the capital. It's in paper. I wrote an article about. It's on paper. The stats are there. Yeah, the stats are there. Yeah. And so. This is fascinating. I know we got off the track, but doesn't matter. It's our track. We can do whatever we want. Tell us what's in it for what's in the future for you short term. What what? What are you excited about? Aside from the companies that mentioned, I'm super appreciate you mentioning them on the record here. Oh, look at our website, you're working that cloud. Look at all this, all the companies that are there, if you, there's some that have exited and they have been merged with another ones, if there's a company that you can help, they just know.

46:10 We'll put it in touch. We're in these together. We need to create more for everybody together. What excites me is, well, the what assess me is I feel that I was able to combine socialism and capitalism. There's a lot of ignorance about that. Socialism is about being kind and being compassionate to those who don't have the same opportunities that we do. Interleave society as a whole. It's not communism. Communism is something else. People mix it here because I think the good and bad socialist I I've not lived in a common, I lived in our country. I'm not lived in a communist country. I have visited, but I have lived in good socialist countries, embed socialist countries.

46:58 So in on the name of socialism, you're very, very unproductive. And that's where capital comes in. So capital is about numbers and processes and progress that we can measure. Virtualism is about kindness and emotion that we cannot measure. And I think, I think both are the same, are the same coin. We need both. But because they're looking towards the outset, they cannot see each other. I am very passionate about finding ways that we can work together. We're so polarized. AI only helps you support your theories. AI is not meant for us to look at a different angle. It's not even if we tell them.

47:46 Timmy and I would like to do that. We have to prompt it. And I think AI is puzzling about the vision and I'm very sad about that. I think we need to, as society, we need to lift progress for everybody, not just us. I my heart breaks. I'm from Venezuela. I have a nonprofit that seems food and medicine. My heart breaks when I see the people that were born there were absolutely amazing people, adorable people, and they have no way of progressing. But the same thing happens in Iran now, the same thing happens has happened in Syria, The same thing happens in North Korea, Afghanistan. So I feel what I'm doing is helping a lot of founders have a better, nicer way and investors.

48:29 And I think the next step for me is figure out how we can expand that so as the world progresses, we can be better as a world. So I'm a hard yeah say say that again. And I have not proved that. So I'm a hardcore capitalist and we're all a product of our environment and our experiences. I'd like to know if you don't mind sharing where you live? That was a good socialist experience. Oh, Denmark in Sweden and I'm going to I'm Australian too.

49:09 I did many years in Australia. It's, it's the Sweden is a good example and it's a consideration that we have and it has some challenges. I mean, it's not foolproof, but it's a consideration that if somebody, if somebody needs to support society would keep the support. So what happens in a lot of developing countries is the government doesn't support the people because the people support themselves. But you have a tribe, and because you have a tribe, you have less mental health issues because you are really, really important. Yeah, and look what happened. I don't know if you watched any on the Blue Zone where the people lived the longest.

49:50 It was not just that they had good food. They had community, right. And it happened to be in Greece. I'm Greek. I was born here, but my parents were born here. I was born here. So I still have an appreciation of MyHeritage. I just, I was just in Greece and Italy. It's just a magnificent, wonderful culture. The arguably one of the reasons why people live so long in these Blue zones was not just that they had indigenous food that was pure and didn't have any of the junk in it, but they also had this sense of community that everybody was helping everybody. Somebody needed something. It just happened, right? So I think there's there's a lot to be said for the energy of that, right? But The thing is that if we do too much of that, then we don't progress because people get lazy. They get lazy.

50:38 I don't know. I don't know what the answer is. So I just don't know what the answer is. I'm just very fortunate to have been able to leave it both at the right time. I, I worked very hard, very, very hard in Venezuela and I lost all my money before jobs. The recent jobs got elected is that 60% of the money in the bank, 60% disappear. And that was because people stole. So that's why people move to somebody that I'm going to protect you, they need to be protected because there's no way they protect themselves. So they got into another problem, but that we need to understand that impact. You know, you can cut it if you want to, but I'm certainly not with the values of America.

51:28 You know you work hard. Totally. You are. You are. You're the most the most generous society that I've ever lived is the Americans. And I lived in America many times because I come in and I go, I did not want to raise my kids here. That's really interesting. Too much pressure on external locus of control, too little pressure about what's important for you. I remember I used to walk with my kids to the football games. I used to have them and somebody says, oh, not my bouquet. What is a, you know, physical abuse or something like that? I said it's honey. And what are you talking about? So I did and I was very scared of drugs. I didn't grow up with drugs. We didn't have drugs where I grew up. We just didn't, it was not there. So I never took drugs.

52:13 But it's not because I'm super special. It's just they're not there probably with, I don't know. But the, the, the essence of the Americans would do whatever it took to help somebody else. Now what happened? They started feeling that they were taken advantage and the other people felt that they had the obligation. Now we have the crash of bounds. I go to Berlin a lot and people in Berlin keep asking it what happened. Everyone knows, everyone knows. I don't care. I don't know. It's too hard, too complicated. But the fact that we, this is a place.

52:54 I live here because my intellectual property is respected and it's not my investment. You have a person, that Rochester thing, and someone comes to coffee, they give the credits. That doesn't happen anywhere else. That only happens in America. That respect for intellectual property is another report. It's true. I think that's absolutely true. In fact, one of the reasons why on some level we've been able to prosper as we have in a short 250 years. Can you imagine? It's just a blip, right is because we have rule of law that ain't perfect, but works pretty good, right?

53:35 And I, I was just watching an episode of Lex Friedman where Paul Rosalie had visited an uncontacted tribe in the Amazon. And it was really an interesting discussion because they're completely in the wilderness and been living their life for maybe thousands and thousands of years. And they have no idea what's going on in the rest of the world. And all they care about is to be left alone and make sure they have enough to eat. So it's back to fight or flight food. You get up in the morning, all you have to think about is what I'm going to eat and that some is not going to eat me, right?

54:20 Plague, right? That's right. You play. That's right. Yeah. It's a fascinating episode. I don't know if you followed Paul Rosalie, but he's but he's secured 20,000 acres of the Amazon now and is on a mission to do almost 300,000. So fascinating experience that he talks about. I'll take a look at that. But I have, I have an anecdote for you. When I was when I was in college, I had saved about money because because I knew, I knew early on that money gave me choices. So I worked very hard. Yeah, yeah, yeah. And, and so, so I, I left my parents home, but I always saved money.

55:03 And then I got to a point where I could buy a car. Somebody told me there's this land in the Allison. And I went and I sold it and I bought it. And in the Amazon, they, they don't have a concept of property. So I remember talking to them, I had a watch, you know, it's just a watch. I remember talking to them and somebody asked me for a watch. So I gave them the watch and, and then I need to go because I was going on a bus and, and the bus was leaving and I was trying to get the, the, the watch back and I think it's mine. And, and then there was a priest. I was walking around there, he was getting food or something. And he said they don't have a concept of property and their, their Spanish was inducted. And I said, how do I, how do I do this? Just tell them that you need, you need to see the hour. And they gave it to me.

55:53 So ownership was defined by need to use think what have the social implications of that? Now I gave many years in Australia and the Aboriginals don't have the notion of life your spirit. And there's a great book called Sand Talks about talking about Aboriginals. But because we move like you move, I move because we lost that connection with our roots. But Sand Talk, it's a very interesting book that talks about how natives see themselves embedded into the earth and it's it's so fascinating.

56:37 That's really interesting. So back, back to this just for one second, the, the way that Paul Rosalie has been able to buy these, this land up is 1 the people who would come in and figured out how to buy it from the indigenous people because there still is issue with title, right? And so, and but they bought it with the intention of logging it. So they did the heavy lifting, the loggers of finding a way to buy it and he would rush in and buy it from them and say, OK, now you're going to make more money with me. You're going to become part of our organization and we're going to keep this land open.

57:19 And so he would go in and come cause the indigenous people were the people who were gonna do the logging 'cause that's how they were gonna make money. Cause in their view, they might own this 10,000 acres, but it was of no value to them, right? They didn't understand. But all of a sudden, yeah, the loggers came in and said, OK, you can make money, but you have to log it. And he came in right behind him and said, don't log it. I want to make you more money. And you're going to become a Ranger to find me more property and you can talk to other indigenous tribes. And so he's, he's really done an amazing job of leveraging a very difficult situation. So anyway, I'm it's. You're still getting younger. I'm sorry. What yourself then you're just goes through?

58:01 I'm I'm in at the I'm about to buy a big piece of property out here in Utah and keep it as open space. So nothing, nobody can do anything with it. So I'm on the run that band way. I'm interested. I don't because I think that's what we need. I think that's what we need. And I think no matter, no matter which tendency to go, you end up realizing you need both. It's stupid fighting winning both. So, you know, some people, I'm a New Yorker, right? And some people outside of New York, when they come in to visit, they misinterpret the energy of New Yorkers because they would stop a German family would stop a New Yorker on the street and the German families walking for stride.

58:48 And they don't understand you can't do that, New York, because people are going to pass you, right? They'd stop and ask somebody for directions and they would, hi, how are you? What's going on? And New York would say, where do you need to go? I'll get you there. And they would immediately say, go here, here and here, boom, boom. And then they would keep on moving. Well, that was in New Yorkers. They're the most generous people around, right? They just don't want screw around wasting time. I don't need all the nice. He's just tell me what you need and I'll give it to you, right? It's kind of the same contrast about when you do business in Silicon Valley, everybody wants to help everybody, OK?

59:30 I mean, generally speaking, right, They they're open to helping. When you sit down into a meeting in New York City, there's none of this. Oh, how was your weekend? How is it? No, it's like, what do you want? OK, I'll give it to you. What do you want? No way. No how. Let's move on, right? It's the completely different environment, right? Yeah, yeah, yeah. But, you know, I, I wasn't in love with that because I said, you know, it's so efficient. It's very efficient. Very efficient. So quantalism, it's about efficiency and production. We need that, otherwise we can't, we can't function. Yeah, Yeah, yeah. No, I, I think I need to involve bridges. Yeah. You just. And. And your accent came out a little bit.

1:00:12 I have been a lot in Utah, but every year I go and spend a week in, you know, I love the energy. Yeah. I got everywhere. I got to try. I go to Stewart Valley. Yeah. So wonderful. How can I help? How can I make your life better? It's a very, very generous question. And you just did so you don't have to do anything more. And I, I didn't know what to expect, to tell you the truth. And the audience can hear that out loud. But I'm super happy we've done this. It was been enriching for me and I'm sure for the audience as well. So Alicia, thank you for doing. Yeah. Thank you for entertaining for the time. You know, life is too short to have my time. And let's do more peace and love and and and let's say.

1:00:55 It took me a while, but it's all about loving kindness. I figured it out. It does. It does. It took me too. Yeah, it took me until the 60s to realize the secret sauce is fine as a hub. Yeah, for sure. Thank you. Normally I would stop and talk to you after, but I've got to run. But I will talk again line if that's OK. OK, Alright. Thank you everybody for joining us today. Hey Kalisha. Bye.