William Leonard
Hey everyone. Welcome back to the Atlanta Startup Podcast. My name is William Leonard, your host for today. Excited to be sitting down with someone who I’ve known for some time now. And Kevin Moore, welcome to the podcast.
Kevin Moore
Thank you for having me. Good morning,
William Leonard
Kevin, it’s great to have you on. You are now the managing partner and founder at Serac Ventures. And we are going to dive into all things ceramic in this podcast. But I want to jump right in your background is very interesting. You’ve been in the world of financial services, Northwestern Mutual, Morgan Stanley, the Federal Reserve, then you were an LP limited partner for some time, and then now you’ve switched over to the GP, the general partner side of things with running Serac, I would just love to hear you take us down the path from LP to GB.
Kevin Moore
Absolutely. Thanks for allowing me to come on the show and share a little bit of my story. I think that one of the things I love about people in the venture capital industry, in general, is just the versatility and non-linearity of their backgrounds. And I feel like in venture capital, having multiple experiences allows you to relate and understand the path of so many different entrepreneurs. And I guess one missing piece before becoming an LP, I worked at a firm called ITP, where I was investing in startups. It was there while I was raising capital for one of our funds, and called on a fund of funds and didn’t realize that this organization was within our state, Oklahoma. And I went to work there as a partner. That transition of going from the GP side to the LP side was an interesting one in that it was a different framework by way of looking at investments. But I always considered myself an investor. And that was one of the things where I said, “Well if you’re an investor, you should be able to think about investing as a framework and apply that to whatever medium”. So working on the LP side was enlightening, I will tell you that it is something that I think a lot of GPs have not had the experience or chance to do. And it’s certainly been one that has been additive to the role that I’m in now, sort of back on the GP side, and especially in the managing partner seat. So happy to go in any direction there. But we could dig deep into this. But I want to make sure that that’s just sort of the overall benefit I’ve got from seeing both sides of the table.
William Leonard
Right, there is a lot of overall benefit there. And we will certainly dive into that. I would love to get more context on the thesis of ceramic, right, you have started at fun. That’s such a unique moment when we think about where the venture is today. So when you were thinking about starting ceramic, how did you go about crafting this thesis to fit within the ecosystem? What did you see missing in the capital stack? And how did you think about seracs differentiation, you know, all the things you go through mentally when starting a fund?
Kevin Moore
I will say to be honest, in hindsight, 2023 was the worst time to start a venture capital fund. I didn’t know that at the time. The idea of starting a firm started around three or four years ago, it always been something I’d always wanted to do since graduating college. But filling in the knowledge gaps was something that necessarily definitely needed to happen. And it was probably about halfway through my time as an LP, having been able to appear inside the portfolio of so many different fund managers, where I started to see there was an opportunity to say one, there’s not enough representation in the venture capital industry for people who look like me as a person of color. And then there were some amazing emerging large categories in the market, where amazing founders were building great technologies, such as in the future of work category, the creator economy category, and obviously with companies that are sort of expanding access to financial services. So when I started to think about that regarding a fund 2023 was a year of refining that and then bringing on another individual to the team dough freighter, and we were sort of talking about the categories where we were investing in what is fueling in the economy and this whole thesis of entrepreneurship as the future of work. And effectively, what that means is we’re trying to back companies that are expanding access to capital, products, and services that increase, make the lives of individuals and businesses easier, more efficient, and just overall better. And the companies that we’ve backed so far enable that. But that’s the thesis of the firm going forward. And obviously, that might change over time. But really, the whole thesis is an expansion of access to services for the masses, and not looking at a venture, this narrow gap only helps a certain type of person, and can only go into certain types of markets. So we have that versatility that Surrett ventures.
William Leonard
Future of Work, expansion and or democratization of services for the masses is a really interesting place to be at right now, as we think about, you know, one place I think about that being hyper-relevant is sort of the alternative investment space, you’ve got so many platforms now that are popping up allowing consumers to invest in alternative asset classes, like wine or real estate, or whatever it may be. When you think about the traditional kind of stock market and how people are, we’re in that during the pandemic, and now they’re transitioning into unique things, gold stocks, or whatever it may be. So as you kind of think about that what part of the capital stack relative to venture Are you focused on is it seed is it precede Series A, in the geography bounds? Tell us more about that.
Kevin Moore
Peter Wagner at Wynn Adventures years ago, did a study called the I forgot what they call it the cannonball effect or something like that, effectively, what it was was a research study on how companies have been able to do more, with less at earlier stages in their lifecycle. When he compared series A stage companies 10 years ago, they were at the same valuation and have made the same type of progress as a seed stage company today. And that reinforces Serac’s thesis to say, hey, you know, what, we can come in at the seed stage, add a lot of value, get respectable valuations, and not have like these crazy, enormous round sizes, and still be able to make an impact. Because these companies have progressed so much further along by way of what they can do with technology, their ability to work virtually, and have super talented people on their team all around the world, the proliferation and ease of advertising and getting a product out to market, there’s just been like a huge paradigm shift in how companies can come to market and can do so so much faster. So that sort of galvanized Okay, seed and then even now, looking at free seeds, companies that have made significant progress to where now you can look at it like I’ve late pre-seed stage company is one where they’re at the brink of being a seed stage company, but it’s might, they might be classified as precede just because of their round size or because of their valuation. But it says nothing about the fundamentals of the company, one of the things that I like to look at in a company is its pipeline, and where they’re going and getting into a company early, you can get a sense for how they’re doing that how they’re taking other going to market, who their potential customers are, which is something that we try to do is talk to a few potential customers to get a sense of, is this a company that’s poised for hyper-growth? So the semantics around is it precede? Is it seed? There’s a framework of valuation round size pipeline that we look at to determine Okay, is this the company that we want to back? If it’s beyond that, and it’s a Series A or Series B, or later, generally the round sizes are too big for us, but the C, late precede stages are where I think we can be the most effective and add the most value.
William Leonard
I agree with that. And you mentioned, right, think, precede see, pretty much have a different definition depending on what region of the country and world that you’re in as well. Certainly preceding the bay may be different from a precede in Oklahoma, Atlanta, or Miami. And you’re right, it’s about developing a framework as a fund and as it Team. And you also mentioned how there’s a different sort of speed and efficiency to market today that is enabling companies to be a little bit more mature than they would be, let’s say 10,15, 20 years ago. And I think that’s attributed to this paradigm shift that you mentioned, also this platform shift of now having AI at the table to build applications and do the role of, you know, several team members with a team of three. And so I’m curious to hear you know, at Serac, you and Darrell and the broader team, how are you all thinking about AI in terms of specific verticals that you’re interested in, whether it be along the future of work or unique ways that you want to, or thinking about deploying AI, internally at Sarek?
Kevin Moore
I love I love technology. When what I mean by that is, that I love how certain technologies can make existing processes and workflows, and even data collection and automation easier, better, and faster. Now, AI to me, having been around investing for the last 810 years, but not again, that’s not all, in the private markets, eight years of that was in the public markets. But what I think about is not so much the technology. But I think about the utility. And to me, utility is so much more important than anything regarding technology. And I’ve seen several companies over the years and even other sectors over the years that have fallen, because people were so enamored with the technology that they weren’t thinking about, Okay, what’s the practical application? And is this going to help us make money? I think the last big technology, I wouldn’t call it failed. But the hype cycle was Web3, and Web3, a phenomenal concept around everything being super decentralized. And there would be no need for any corporations or even a central government to some extremes. I think that the ideology of that is great. But the practical application never never materialized. I think AI is a little bit different than that. It’s a phenomenal technology that applied to so many different sectors can make these more efficient. There’s a fear of AI coming in and destroying the current sort of employment infrastructure that we have today. But you know, in other texts, technology cycles have occurred like this over time, AI is just another one. So I don’t dislike AI. I love it. We think about it, it helps a lot of things that we do at Sarek Ventures by way of collecting information, writing in putting out content, and great utility. I’ve seen several companies in this space that I think will even back but again, at the end of the day, is it helping companies to get access to capital, better products, and better services? That’s the question that it has to answer, regardless of what the underlying technologies are.
William Leonard
You know, we hear, I hear dozens of pitches. I know you hear a lot of pitches as well. Companies will say there’s there’s AI in their product. You kind of get under the hood, you do a demo, you use the product. And you see there’s no how are you from a high level, diligence, seeing AI opportunities that come across your table. Oftentimes, these deals are pretty hot, you know, they’re moving quickly. At least there’s a lot of FOMO created around the opportunity from the founder’s perspective. But how do you all think about diligence being an AI opportunity that comes across your desk that you’re interested in, but you’re not sure it’s proprietary or not? One
Kevin Moore
of the I’m not a technologist. To fill that gap, there are a couple of people on the team that I trust, who know that space, Rylan, Donaldson, and one of Serac’s guild members or advisors garland more, whenever I’m looking at technology and the application layer, if I can’t understand it, and it’s going sort of the toward the deep tech sector. I always bring in these experts to help me understand, hey, is this doing what it says? On the back end? And to the point where I have to do that, that’s when I start to feel like oh, this is a company that’s building the tools like the internal wiring behind what is making this technology work. The Serac level things where it might be a b2c application. And they’re utilizing AI for some superficial purpose. That’s not necessarily the underlying tech. And to me, the difficulty in scaling that is, you’re now marketing a product, which takes a lot of spend. And you’re not essentially building a tool that can be used for multiple types of other companies doing the same thing that they’re trying to do with marketing dollars. So that’s the thing we’re looking for, if we’re looking at AI, the most attractive opportunities are ones that are building the picks and shovels the tools that are fueling the companies that are utilizing AI. And those are, I think, harder to understand, hence the reason why bring in outside experts to help validate those opportunities.
William Leonard
No, it’s interesting. And Kevin, I want to shift back to your time as an LP a little bit, right? You, you spend time there, I think for five or six years or so. And curious to hear how you developed frameworks around decision-making, from investing in funds to saying, Hey, this is a red flag, I should double-check with the general partner or the specific venture capital firm or whatever asset It was at this time about this, or I should ask them these questions, what decision frameworks carried over from the LP side to know how you think about decision making as a GP? Yeah,
Kevin Moore
I liked this question. Because I think about again, as I mentioned, investing in general through the lens of frameworks, and if you’re an LP looking at a GP, or even if you’re a GP looking at a company, I have to ask the following universal questions. One, at the high level, what type of investments are you looking for, as an investor, if it’s a fund, then you’re looking for series A funds that do X, Y, or Z into X categories. If it’s a company, you’re looking for these types of companies in the sector. So it’s just that high-level question. The second one is, how does it add to the portfolio, it needs to be added to can’t be something that’s going to be less impressive or add less potential upside as companies or funds in your existing portfolio. The second one is what is our process. Or the third one is what is our process of due diligence? And are we sticking to that? When I was an LP, we had system things boxes that we checked, and we went through that, religiously, we do the same thing as VCs, we have internal frameworks, and we have checkboxes of things that we must gather things that we must know, to move forward. The last two questions are how do we approve the investment? Who’s involved in that process? And what do we need to see? Do we are we writing a memo? How many references are we collecting, etc? And then the last one is probably the most important is how do we monitor the investment? Monitor the investment going forward. Are we having regular quarterly check-ins? Are we meeting with individuals at their annual meeting? Or how often are we collecting information to keep up excuse me keep up to date with what’s happening with those companies. So that’s essentially the process. So I look at it like, there, the process is no different as a GP as an LP, or even if you’re investing in the public markets, it’s like if you can answer those five questions and develop a process for how you’re doing things, to me, your process is what leads to long term performance, versus just getting lucky on something because you got lucky, but you are making a bunch of mistakes along the way. And I forgot what book I read where they talked about this. It’s like a few follow-up processes. And that process is well thought out and it makes sense. If something goes wrong. You can’t be upset that it went wrong. You should be upset if you look back and you don’t follow your process. And that to me is has made a huge difference in how I think about investing is that that structure process.
William Leonard
Kevin, I appreciate this perspective because there are a couple of podcasts that are out there doing a really good job of kind of demystifying how LP thinks about investments. I know, swimming with Allocators by Ernest is a good one. Samir Kaji has a really good one called Adventure Unlocked. But another question on this tangent for you is how LPS sort of think about alignment. With the prospective funds that they want to invest in from, you know, a thesis perspective and and also how do they build conviction around emerging managers at fund one in fun to any frameworks that you can provide for us around around that insight.
Kevin Moore
People who have developed strong convictions around emerging managers are those who’ve had success investing in them. And I’ll say this with a grain of salt. Many of the most successful funds that are in the market have been around and I’m sort of brand names, many of them have sold, or they might continue to sell on the success of their funds, one, two, and three. And there are characteristics of those funds that make them more successful. And again, this is my opinion, but to a certain degree, it’s an educated one, because I’ve seen, those funds, earlier, funds are usually smaller, they generally have a very concentrated focus on maybe one or two or three different categories, the decision-making process was immaculate. And it was one fun strategy was like, we’re going to focus on the early stage. Now, as those funds get more successful, they have a precede early stage of growth. And in some cases, they might even have a fund where they’re purchasing public. So then they’re doing all these different things, and they become these massive institutions. So when I think about just the evolution of how funds evolve, and why people like these earlier, smaller funds, it’s usually they like that sort of narrow focus and concentrated strategy. And LPS today, especially with the pool of emerging managers that are coming out, I’m looking for that next Founders Fund or that next Sequoia Capital, or that next coastal venture, or whoever it might be, because I think that there is something about being able to get in on the ground floor with a firm and a manager that shows the potential to grow into an institutional level organization. And that’s the hope that you’re looking for, you know, I’ve been thinking about this question a lot, especially in the last two or three years, but I’ve just seen so many emerging managers come to market. And the difficulty that LPS faces with deciding if is this the right one that I’m going to back. I think that it’s a great opportunity because there’s just such a wide set of opportunities to choose from, but unless you can have that framework of what you’re looking for, I think that LPS who have done it before are going to be the ones that benefit because they’ve seen kind of how that system works and how they can be profitable there.
William Leonard
Yeah, that’s interesting. Hopefully, that will resonate with a lot of the founders that listen, are founders of funds that listen to this podcast, we have a pretty diverse audience of early-stage precede seed series, startup founders, a couple of fund managers that we have gotten specific, specific and direct feedback from on how they enjoyed the podcast. So appreciate that insight, Kevin, and as we wrap up this conversation, right, so RAC is a young firm that has made some exciting investments early on, maybe you can walk us through, you know, a couple of those deals that you all have done already. And why you had conviction in the team or opportunity in Tam as well.
Kevin Moore
Yeah, absolutely. You know, just going back to the just the frame that question, you know, the general thesis that Serac is that entrepreneurship intrapreneurship is the future of work. And for the last several decades, there’s been a paradigm shift in the relationship of employer to employee, you know, employers are no longer rewarding employees for just longevity, but their creativity and their ability to innovate. And I think there are some examples like Google where they reward people for spending their free time or they give them time to just create and come up with new ideas. And I think also one of the other things, that reinforces is that our society is moving toward this entrepreneurial mindset, where companies expect their employees to create and they’re rewarded for that. So one of the things that has yielded is this whole thing about the Creator economy and people creating content that is consumed in a completely different way than it used to be 10 years ago most people are consuming on their mobile and at home. One of the companies that we backed called Bump created a tool to help creators, better monetize and monetize a better monitor all of the income that they’re receiving from the content that they’re creating online. And they’ve teamed up with MasterCard to help those creators obtain the capital that they need to grow their business. And this company has had explosive growth. They just sent me their last numbers, and they more than quadrupled their year-over-year revenue from 23 to 22. Because of this surge of craters that are out there, that entire market by 2026, is suspected to be half a trillion dollars in market size, and it continues to grow. But it’s just another example of a great company that’s not only expanding access to capital, but it’s providing this platform to help creators in this new economy to be more entrepreneurial. And then another company solo funds super excited about what they’re doing. It’s a peer-to-peer lending platform that allows people to borrow and lend one to another in small-dollar increments. Most of the time, if people need small-dollar loans, it’s very difficult to get that from a traditional bank. So they’ve set up and designed a payback mechanism to cater to these types of borrowers, such that they can get the money they need for small things, so they don’t end up in credit traps and ruin their financial history in the long term. So it’s companies like these that we’re excited about that fit those themes thematically. And we’ll continue to look for those going forward.
William Leonard
Yep. I love it. I love it. Yeah, those are two interesting companies. I know you have a few more that we’ve talked about as well. But you know, we’ll keep it at that for the podcast. And last question or point, Kevin, I know you’re based in Oklahoma City, which is a burgeoning startup ecosystem that has a lot of momentum behind it. Why is Iraq and in Oklahoma, and What advantage do you have of being kind of centrally located in the country when it comes, to deal flow?
Kevin Moore
Well, I started the firm here, and I’m originally from Ohio, from Tulsa, and moved out of state to live in Chicago, then we moved back to Oklahoma City, which is where our wife is from, and all the things I didn’t adventure as a GP as an LP, we’re all here. I think that one of the benefits of working in a small but fast-growing economy, like OKC is the support you have from your peers, and business leaders to succeed, especially when you’re building a company like a VC firm, that has the potential to back transformative technologies that are going to grow the ecosystem. You know, in the last year, when I was thinking about where I’ve been, I’ve spent a lot of time in LA, Chicago, where I used to live in New York City, and living in Oklahoma City in the middle of the country makes it so much easier to get to all those places, which expands our access to entrepreneurs all over the country. You know, we don’t have an Oklahoma-centric focus. But the ease of transportation to all these amazing markets, including the one that we’re in, just enhances the overall portfolio. But I will say that founders in, I wouldn’t call them overlooked parts of the country, but growing parts of the country that are very scrappy, and they have thrived for a very long time doing more with less. I can name a bunch of examples of companies that have had great outcomes because of that. But we’re right here in the center of it. And it’s a great time to be building a VC firm in an area where it’s the next big wave coming to the shore. I think the waves that are near the shore are great. But the ones that you want to ride, kind of surfer analogy, or the one or the big ones coming that you can’t see but are developing, and that’s how I think about smaller markets around the country.
William Leonard
That’s great insight, Kevin, this has been a fascinating, deep dive into how you think about life as an LP, how peas make decisions, and funds and fund managers. And then also how you think about surrounding your thesis unfolding in developing through the real dollars being put to work. So how can a founder who’s listening to this conversation, get in touch with user form on your website or anything like that?
Kevin Moore
There is a form on the website on the founders page that people could fill out But if anyone wants to get in touch with me directly, the best way is just to contact me on LinkedIn. It is the preeminent platform in my opinion for reaching anyone. So reach me on LinkedIn. Kevin Joseph more. I’m out there.
William Leonard
Awesome, Kevin, really appreciate your time today. Thank you for joining.
Thanks for being a part of the community of courage by listening to the visionary founders and investors on the Atlanta Startup Podcast. Subscribe now so you don’t miss a single episode of the over 200 investors and founders sharing their insider tips and secrets to growth. Our regular listeners tell us we’re the briefing room for the innovation economy in the fastest-growing region of the country, the South –and when you subscribe, you become part of the inside circle.
The Atlanta Startup Podcast is proudly hosted by Valor VC. Valor is a venture capital firm that leads seed rounds in AI and B2B SaaS startups. If you like the podcast, check out more of Valor’s programs for courageous founders and investors, like Startup Runway.
Over $100M in early-stage venture capital and counting is catalyzed through Startup Runway’s grant-making program for pre-seed startups. Go to StartupRunway Dot ORG to learn more and apply directly for non-dilutive capital.
Valor celebrates VC DAY, the largest early-stage private capital conference in the region, at the end of the year. The top founders in the region, leading VCs, endowments, and family offices focusing on venture capital outperformance attend. Learn more at VC.Day.
At Valor, courage is the currency of innovation and the heartbeat of our culture. Thanks for listening and come back next week.
