William Leonard
Welcome back to the Atlanta Startup Podcast. My name is William Leonard, your host for today and we’re in for a good, great conversation I’ll say with with Blaine Davis, who’s a Partner at Outlander VC. Blaine, finally, were able to do this man.
Blaine Davis
Glad we’re finally doing it. Thanks for having me, William. It’s been been a minute.
William Leonard
Yeah, yeah, for sure. I think, over our coffee chats over this year, we’ve been talking about getting this on the calendar. And now I’m glad we’re able to finally make it happen. But let’s kick the conversation off with just a high-level overview of Outlander and the thesis you all have at the firm like, tell us what gets you excited when it comes to backing innovative startups.
Blaine Davis
Absolutely. So, here at Outlander, we’re fundamentally first-check investors. So really, early stage in the truest meaning of it. We’re a generalist fund and we lead pre-seed rounds. And our process, being as early as we invest is, our process and thesis is based on investing in people. So, we’ve backed a handful of unicorn companies across our first few funds, and we’re investing out of our third fund right now. And our biggest differentiators, like I said, it’s all about the people for us. We have a founder framework, a proprietary founder framework that drives our decision-making process. Take something that’s traditionally opaque, evaluating people makes it quantifiable. This allows us to invest very early, and get to conviction before a lot of other funds would get to conviction. We invest sometimes even at the idea stage, or the MVP, as long as it’s the right team. We’re all about team dynamics, founder market fit, and just the human element. We like to bring the human element to this industry.
William Leonard
Yeah, we’re gonna dive into that aspect of how you all build conviction a little bit later on in the conversation, but it’s good to know. And I love that you all are not this Pre-Seed focus here. What is your background? How did you land up Outlander? I know you’ve been in the investment space for some time, and ran some great programs up at Vandy. But how did you get connected with the Outlander team?
Blaine Davis
Yeah, it’s a great question. It’s a long, long, winding story. I feel like a lot of us in this industry have, a ton of different backgrounds and journeys to the space. I’ll take your way back, former college athlete first part of my career was primarily in product in FinTech in New York. And I went back to business school, to get over to the investing side of things and make that pivot wasn’t sure what stage I wanted to invest that. But, had a couple of road bumps in the road and around business school and wanted to focus my career around around impact. How can I touch as many people as possible, and make a change in the industry in the investing space? And that drove me to focus on that early stage. So I was laser-focused when I was at Vandy, getting my MBA and networking, and joining a top-tier fund as early as possible. So I spoke with a lot of funds, a lot of Top funds, and just had a great values alignment without Ender. I’ve always looked at myself as a true extrovert, a big people person, as how many coffee chats that we had, and just sat there for hours, chatting. I’m all about that. So I think the people the people thesis brought me here. And I’ve been here through through kind of that deployment of, of our, of our second fund. And then, now we’re investing out of our third fund. So really value alignment on the team came here to Atlanta, we’re a remote first fund. So we’re kind of scattered throughout the US, there’s seven of us on the team. But there’s a big contingent of us here in Atlanta. So that’s, that’s how I ended up here. And, and part of, part of the reason for joining, and part of the reason that what we’re doing here line so much with my values is, our thesis we like to invest outside of those typical cities. So, San Francisco, New York, I think there’s value there but we found a lot of alpha in markets like Atlanta, I’ve invested in companies in Atlanta and Portland, Maine, and Boulder, Colorado all around I think there’s a lot of interesting tailwinds that we’re all about post-COVID Just shifting to this kind of remote first world.
William Leonard
Yeah, now I can totally agree with that. There is, I believe, going to be a new wave of, value creation from startups that are built between the coasts. And it’s good to see that there are a lot more VCs kind of building a thesis around that where there’s just been so much capital sort of congested on the coast that, there’s plenty of untapped value that sits in the middle of the country in the southeast Midwest. But that’s awesome. Man. That’s a great background, I want to dive into how you all think about building conviction at this Pre-Seed stage, right? You mentioned maybe you’re even investing when there’s just an idea. And there’s maybe not even a product building, you all are indexing on the people in the team here. Why, how do you all do that? I know you have a proprietary founder framework, but maybe you can just share some high-level of how you all think about conviction building at Pre-Seed.
Blaine Davis
Yeah. So that founder framework I mentioned before, I’ll touch on that again. But our Managing Partner page was in the intelligence community for a while, and we’ve sort of based our investing thesis on people off of how this character attributes training that they do in the intelligence community. So there are elements of that in what we do. And just over the years, it’s, it’s kind of shifted to us seeking out these different founder archetypes and in various geographies. And that’s kind of how we get to conviction. So it’s a lot of it’s around the people. Of course, we do a ton of diligence on the business model, and, market sizing, and all that. But, I think I think there are a lot of funds out there that say they invest founder first and, what does that mean? I think everybody cares about the people, but, this founder framework 38, character attributes, that’s, that’s how we break it down. We analyze every team, and each founder, that we speak with on this, and that’s how we get to conviction. So I think, high level, it’s, it rolls up to a few different categories, vision, intelligence, character, and execution, which might seem, might seem simple on the surface. But I think a lot of what we do, and what we look at are less obvious. So, vision is not just product vision, in the simplest form, it’s being customer-obsessed, owning your brand. Intelligence is not just IQ and EQ, it’s being a quick learner, we’d like to support that character we invest in leaders. As I mentioned before, I’m a former athlete, we’re a full team of former athletes and veterans, too. So we’ve been, we’ve got some bias towards investing in that type of leader and then execution, we look for people that want to move quick. I think in this industry, you need to grow your company quickly, for speed, we look for focus. And yeah, and that’s, and that’s a lot of, it’s a lot of how we get to conviction.
William Leonard
You mentioned, this 38-attribute framework here, what are some of the favorite attributes of founders that you’ve backed? That you’re just like, I want to see this, and in almost every founder, that I’m backing, or it’s similar traits that you’ve seen in successful founders that you’ve bagged, whether it be grit, tenacity, able to sell the product, just an outlandish, like crazy vision that they can execute on what what are some of those attributes that personally resonate with you?
Blaine Davis
Yeah, that’s a great question. That’s a fun one. There are a few of them. Right? So 38, I think, for me, I love to see a founder that’s truly customer-obsessed. So not just, “Oh, I’ve done a bunch of research on the space and chatted with a few people,” I tend to gravitate towards the founders that have spoken to a couple of 100 different customers before writing a single line of code. I think that obsession with space and uncovering that is a true pain point is exciting to me. And I know, we’ve talked about that before, too. I know that you’re a big fan of that one, also, under that kind of character bucket. I like, risk-takers, and courageous people. Those are two main factors that I consider. I think it takes a lot to take the jump to be a founder. I mean, everybody knows that right? It’s it is a big risk to take but I think People who are in a great place in their careers have done extremely well there are a lot of factors that can go into just how much of a risk you’re taking, and just how much you’re, you’re betting on yourself. And I love to see that self-confidence in the folks that I back. Those are just a few of them, I think. I think there’s, there’s a lot more we could go into. But, I think the 38 points allow us to every person on our team has a different kind of archetype that they liked back. And, we all we all analyze, in our processes, we all analyze each founder that we invest in, everybody runs them runs the founder framework against it. So it’s, it becomes a great process to see.
William Leonard
That’s awesome. I want to shift the conversation here a bit more, right? Because building conviction at Pre-Seed is such a unique exercise that accelerates specific market, or regional growth, right? I think one of the reasons that San Fran and New York are so have been so successful for so long is because they’ve had that foundational PreSeed capital there for so long. And in markets like Atlanta, you and a couple of others, I think overline and some of those funds are kind of filling that glaring gap at PreSeed here in Atlanta, and really in cities and regions between the coasts. So we’d love for you to speak to the importance of what PreSeed capital means to a burgeoning ecosystem like Atlanta, Boulder Colorado, or Nashville cities like that.
Blaine Davis
It means so much. I think I’ll take it a step back before I answer that, too. So I think one of our other differentiators here at Outlander is our deal flow, right? I think any early-stage VC, any VC will tell you how important proprietary deal flow is. But what does that mean? What we realized is to have as large of a top of the funnel as you can have and as differentiated is so important to success, I think, talked about it and a ton of concentration, San Francisco, Silicon Valley ton of concentration in New York, might even throw Boston and La into that mix. But I think being able to become a destination for founders in those underrepresented cities, just under-networked founders have, is one of our biggest focuses, I think, after COVID, so many people are staying in their cities that they start building in and not moving towards those hubs, which they traditionally used to I think there’s some statistic like 50% fewer companies at the Series A and B and beyond where it was the generally raise a larger round like that. And then there’s pressure to move to wherever your investor is, in those larger hubs. That’s not happening sticks, right? So it’s even more important to get in early in those ecosystems and continue are the companies in Atlanta Chicago and Austin. What have you so so that’s, that’s, that’s a long-winded way to get to, why PreSeed in Atlanta and the importance of it, but it’s not easy building a venture scale business, I think it takes capital to grow. And at the early stage, it takes a lot of capital to find that product market fit. Right. So we, we kind of fill that gap of really growing what used to be known as a friends and family round and institutionalizing it. I think that can take that process of finding a founder market fit if you were just bootstrapping are raised a little bit of money, it could take a few years to find sorry to find product market fit. By institutionalizing the PreSeed and investing at that stage, it can take that couple-year process and shrink it down to a few months, right, which just makes growth so much quicker. So I think doing that in these smaller, smaller cities, has just built the ecosystems like crazy, it’s it lowers the barrier to entry, it allows folks to realize that they can achieve that growth earlier. And we’re trying to take that nationwide, I think I think that’s, that’s been around for a while in Silicon Valley and it’s the access in all these other cities is, It’s really important.
William Leonard
Yeah. I think the broader thesis of trying to institutionalize the family and friends or PreSeed round is only going to pay dividends for the city or region where this is now occurring. And because you have so much more innovation that’s happening, you have people, you’re encouraging people to build in that region. Now, as you said, people were, building here, but realizing that they couldn’t fundraise. Get an investor from the bay, take their company out to San Francisco, New York, LA, or whatever it may be. So it’s good that we’re seeing in more places.
Blaine Davis
We want them to stay, right?
William Leonard,
Exactly, I think, where we’re seeing companies now that get that are built in Atlanta, they get funded with PreSeed capital in Atlanta, they find a seed investor in Atlanta, they find their series eight here, and then maybe they go out to New York, or the bay for growth capital, as well. But I think the more that we can have companies be foundationally built here, from PreSeed to series, A and B. It’s like this evolving flywheel for the ecosystem here. And I know you all have an interesting PreSeed company here in Atlanta that you all backed. I think it may be seed now ie squad, but tell us about the squad and what they’re doing and how you all sort of build conviction around them and in their round.
Blaine Davis
Yeah. The squad’s super exciting investment advisory was made just a little under a year ago. And I’ve joined the board worked very closely with the founder max. And what’s interesting about them is that they were kind of spread across two cities, both not your Tier 1 typical Venture cities in Atlanta, and also Portland, Maine. So this is another example of a great place where, these cities, I think there’s a ton of hidden gems, we were able to find the squad very early, just coming out of TechStars. We were the first institutional investors there and have supported them since I think, Max is a great example of that, some of those traits in the founder framework that I spoke to earlier, are some of my favorites, right customer obsessed. He knows it’s a vertical SaaS platform for field operations. So mining, forestry, fisheries, etc. And he knows the space more than any other. He’s a third-generation field worker. He’s also an immigrant from Chile. And it’s just been great working with that team. I think that’s a perfect example of a company that can grow and thrive in an ecosystem like Atlanta, Atlanta has a high concentration of end customers and forestry customers. He’s been able to land a ton of contracts here and has no intention of leaving the Atlanta ecosystem, which we’re excited about. Yeah,
William Leonard
I know you mentioned something interesting there, right? companies that build in a particular city that have a high concentration of their end customer. There, right? Like, for instance, how do you patch it founders think about that, right? Because let’s say you’re building software for forestry, or whatever it may be, but you’re in, you’re in Texas, or like you’re in New York City, like, how does a founder think about getting close to the customer, but kind of maintaining a base in the team? Maybe in a differentiated geography? Or should they be, in the same city as their customer, or customer base, as they’re thinking about evolving the company from PreSeed idea, phase two, to MVP to now, early signs of product market fit? How do you all think about geography for those companies?
Blaine Davis
Who gives you a terrible answer, which is It depends, right? I think it depends, we truly do believe that so much business can be done virtually in these post-COVID days, where 90% of the companies we invested in out of our second fund we never met face to face before writing the check. So I think from that standpoint, you can be anywhere within reason and do very well in terms of selling as an early-stage company, but for some of those more old-school industries, like forestry or fishing, fisheries or mining, it’s helpful to be there and be in person and still a lot of handshake deals. So some sometimes like that we we encourage it and That’s a focus area for us, too. We love vertical B2B SaaS in some of these more old-school industries, I think there’s a lot of opportunity there, for tech advancement. But, I think we’ll, we’ll never tell a founder to move to move anywhere. But I think some people gravitate toward those hubs. And certainly, I don’t think there’s that much commercial fishing in Texas. So that would be a that would be a tough one. Right?
William Leonard
Right. I think that’s interesting. I’ve seen a few funds pop up with a thesis of bringing or investing in companies that are bringing offline industries kind of online with technology. So I think that’s an interesting thesis to think about and watch over the next, 5, 10, 15 years or so.
Blaine Davis
We love that space, especially with AI, it’s like a very practical application of AI technology these days, and brings automation to some of these older industries and just drives efficiencies that way. I think, anytime you can replace pen and paper with a very easy-to-use system, low cost, easy to use, easy to bring a lot of users onto the platform, It’s an exciting space.
William Leonard
Yeah, I agree. You mentioned that you’re on the board of Eskuad, I would love for you to share just perspective on building a board at this early, early stage of the company, right? Because, one, from your perspective, you’re on the board of this PreSeed company that is probably experiencing early revenue momentum. So maybe you can unpack some of the board dynamics, for some of the early-stage founders that are listening to our conversation today, to kind of know, maybe some first principal thoughts around just general board hygiene at the seed or early early stage?
Blaine Davis
it’s a great question, It’s a great topic. I think taking a step back, right, we’re here and a lot of my founder friends that are very early stage might be intimidating, the thought of having a board right, and really kind of institutionalizing and making you more corporate than early stage startup. Right. But we don’t think about it in that way. And I think it’s important to kind of take away that take away that notion. We take board seats in a lot of our companies when it’s appropriate, not every investment we’ve taken, and we take some observers, some board seats, and we think it’s a huge advantage for the companies and for us to get in the habit of doing these proper board meetings. I think there’s the notion that there’s no need for a board before Series A and then Series B, that’s always where a board is established and becomes more formal, but we think why not be prepared earlier, it’s going to happen, it can only help as you get further down the line. So I think we think about establishing the board as, setting a cadence holding companies accountable, which which we do at all times with our portfolio companies, but if you can structure it, quarterly goals retrospective on those goals, how can we be more productive going forward and just get a lot of different perspectives in the room? That’s a great use of the board. Again, yeah, making it a habit. It’s gonna happen a series that I and then I think, it helps to kind of stabilize or bring structure to something that’s, tend to be frantic, right? I think that is our founders moving quickly. It always feels like juggling a million things at once. They tend to, they tend and we as investors tend to not take a step back and look from a higher level unless we put structure to it right, put a board meeting on the calendar, it doesn’t need to be stuffy. And get into that good habit. And that’s that’s how we looked at it and it’s been a pleasure being on the east quad board. And, I would recommend most founders set it up at the seed stage.
William Leonard
Yep, as Valor, we have the thesis of leading seed rounds and we take boards at, we take a board seat when we do leave that seed round and it just, it creates structure formality and helps the company accelerate into that Series A and win now as a founder you get to the series A and you have a more formalized a larger board. You understand the dynamics of how board meetings go you understand, the cadence of board meetings and sending out board materials, etc. And you kind of walk into that with some skin in the game already. So I love your insights there Blaine.
Blaine Davis
It’s only gonna make you look better. I think it does what they say, “in the corporate world it’s a dress for and do the job that she wants to be doing”. So you run the Series A processes as a Seed company, it’s only going to make you look better, and throw fewer new elements in when he gets to that next stage.
William Leonard
Right! As we wrap up the conversation here, Blaine, I know you and the team are pretty general generalists when it comes to making investments. Do you like vertical SaaS industries that are offline technology that’s bringing them back online? What are you in a team excited about when it comes to 2024? And do you have any specific focus areas that you’re digging into now or plan to dig into over the next, 12-24 months or so?
Blaine Davis
Yeah, so you mentioned that we love we love vertical SaaS for old-school industries. We’ve been investing in AI for about a decade. So we’d love practical applications that are vertical-specific for AI. We love the future of workspace. I think we’ve mentioned it a few times tangentially. But the workspace has been shifting ever since COVID. And we imagine that there’s gonna be more exciting technologies in the next few years as well. And lastly, low-cost robotics while paired with AI. So we invest in low-cost robotics, as long as there’s a strong software element as well.
William Leonard
Cool, low-cost robotics have to dig into that some more. That’s awesome, man. But, Blaine, this has been a great conversation. We have a lot of early-stage founders off the idea stage who listen to our podcast, what is the best way for them to potentially pitch or get in front of you or someone on the Atlanta team?
Blaine Davis
Yeah, I would love to speak with anybody who those conversations resonated our website is outlander.vc. And there should be right at the top right, I believe on the website, there’s a form for submission of decks so we can speak with every one of our cold inbound leads. So, go to the website, reach out, and we will get back to you. We value that so much. So yeah, we’d love to chat and look forward to it.
William Leonard
Awesome, Blaine. Thanks for the time, man.
Blaine Davis
Thanks for having me. This is great, appreciate it.
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