Found In The Rockies

Serene Papenfuss (Kickstart Fund) \\ Investing in Great Companies in the Wild West

April 12, 2023 Les Craig Season 3 Episode 16
Found In The Rockies
Serene Papenfuss (Kickstart Fund) \\ Investing in Great Companies in the Wild West
Show Notes Transcript

In today’s episode, I am very excited to welcome a fellow investor and friend here in the Intermountain West, Serene Papenfus, who is a Principal at Kickstart Fund in Salt Lake City, Utah. Kickstart is a venture capital firm on a mission to help build great companies in the Wild West.

Here’s a closer look at the episode:

  • Growing up in Tokyo, Japan. And comparing the skiing in each. 
  • Transitioning from management consulting to Venture Capital.
  • What brought Serene back to Utah.
  • Kickstart Fund NOT Kickstarter
  • The Kickstart mission and 6th Fund
  • What does Serene think about the macro environment in the Rocky Mountains?
  • Why VC is the wrong product for most founders? - Bryce Roberts article
  • The difference between growth equity and VC.
  • What impact the current banking environment may have on startups.
  • What’s in store for the future of Kickstart and Fund 6.
  • What has Serene learned from being a VC.



Serene LinkedIn:

Kickstart LinkedIn: 

Serene Twitter: 

Kickstart Twitter: 

Serene  00:00

VC is the wrong product for most businesses, including those who raise it or attempt to raise it. Most often the reason that a VC will say no to a founder, aside from team reasons comes down to TAM. When a VC makes a decision, they're not only thinking about, you know, the market size matters because you're backing into this decision of: Will my initial check, be potentially have the potential to return the entire fund when I invest in a single company.

Les  00:36

This is Found in the Rockies, a podcast about the startup ecosystem in the Rocky Mountain region, featuring the founders, funders and contributors, and most importantly, the stories of what they're building. I'm Les Craig from Next Frontier Capital. And on today's show, I am very excited to welcome a fellow investor and friend here in the Intermountain West, Serene Papenfus, who is a Principal at Kickstart Fund in Salt Lake City, Utah. Hi Serene. Hey, welcome. So awesome to have you, excited to feature somebody from Kickstart. We've never had anybody from Kickstart on the podcast. We've had a lot of, not a lot, we’ve had some of your portfolio companies on, but you’re the first Kickstarter. So I'm excited to have you on.

Serene  01:22

I'm flattered. I did not I didn't know I was the first so seriously, thank you so much.

Les  01:26

Yeah, of course. You know, and I actually just to start off, why don't we let's focus on you a little bit. Tell us, tell me a little bit about your story where you grew up and how you found your way into the wild world of venture capital.

Serene  01:39

Yeah. And feel free to stop me anytime. So I grew up in Tokyo, Japan, I’m half Japanese ended up going to Brigham Young University in Utah for for my undergrad. And that's that was kind of like my first like, formal foray into Utah, I suppose, did Management Consulting out of school, and then went into Growth Equity for about four years, and then came into early stage VC directly after that, and came back to Utah for that from the East Coast. So jumped around across the country, but this is where I'm at now.

Les  02:11

Awesome. And what at what age? When did you move from Tokyo to the United States?

Serene  02:16

The first time was seven years old. So moved to the US. Yeah, that's when I first learned English. And yeah, it was an adventure.

Les  02:24

Amazing what a cool kind of early childhood you must have had. Do you still have memories from when you were growing up in Tokyo? Do you have

Serene  02:31

Yeah, so I went back for middle and part of high school. So the second time I lived there, I went to an international school the first time there I was in a Japanese school. So definitely have memories both times. Yeah, it was an amazing place to grow up. And sometimes wish I could live there even now.

Les  02:48

Super cool. And what about what was the so, BYU was the draw to Utah? I guess initially, right? That’s what brought you. Was there any anything any kind of similarities between, you know, Japan and Utah that like just uniquely you could draw off of I'd love to hear

Serene  03:05

Oh, my gosh, I cannot think of anything. 

Les  03:07

Nothing? Nothing! That's, well, that's what I would assume. But I thought maybe there'll be some cool revelations. Yeah.

Serene  03:14

I guess two things. So one is the people and the cultures are so different. But I love the people in both, they just bring different different draws. The thing that I did not know was similar until I was an adult is that both locations bring in quite a bit of ski culture. I didn't grow up skiing in Japan, but skiing is huge, in northern Japan. So people often talk to me and they're like, oh my gosh, did you grew up skiing in Japan? I'm like, No, I didn't. I didn't actually learn to do that until I was in Utah. So yeah, those are the honestly the only two things I could come up with. I should probably prepare for this question in the future.

Les  03:48

No, that's cool like that. There. You know, by the way, there's a I'm a mountain collective supporter. That's what my family we like to ski. And I think it's Niseko is that this is that's in northern Japan, right there. It's on the paths. I want to ski it. Yes. Hard to get there. Yeah. Have you have you skied in Japan at all ever?

Serene  04:06

I have. I went for a school ski trip. But it was like, you know, three days it's not enough to like actually learn how to ski properly. But I have skied in Japan once.

Les  04:15

Very cool. Yeah. I wonder how the snow quality compares to that Utah. That fame infamous Utah snow.

Serene  04:21

I do too people tell me it's amazing. Yeah, she had a couple of resorts in particular, but I just wouldn't know. I mean, Utah really is the best snow on Earth. I think I've seen places and it's been the best so far. So

Les  04:33

yeah, even Post Malone talks about how great the Utah snow is. So I mean, it's incredible, I guess. So that's funny. What do you study at BYU?

Serene  04:42

I studied Poly Sci and Japanese.

Les  04:45

Oh, so you Oh, interesting. So Are you're still quite a language like Do you still? Yeah, obviously you speak the language but I mean, do you keep sharp on it? 

Serene  04:55

Yeah, people think people chuckle that I studied Japanese. The thing to know is that I I grew up speaking Japanese, it was my first language. And, you know, I was able to pick up on speaking pretty quickly because of my mom, my grandma. But I didn't really get good at reading and writing. And so I'm kind of illiterate was kind of illiterate in Japanese. I think the thing that got me better first was I served an LDS mission in Japan. So I was there for religious reasons in my 20s. And then, when I came back from my mission, when I was at BYU, I realized that was something that I really wanted to stick with. And I really did want to learn how to read properly in Japanese and wanted to level up so that I could communicate with my grandmother and friends in a much more meaningful way. So that was kind of like the motivating factor outside of that I'm not particularly a linguist.

Les  05:46

Got it. I mean, really impressive, though, because I would imagine that once you speak Japanese, it's probably like, even more difficult to learn how to read and write it. Is that fair? I mean, just because of how difficult I would assume it is to learn that from scratch, but now if you have to like almost backpedal to learn the characters and everything, 

Serene  06:07

It is tough, it's tough for a couple of reasons, it definitely want to acknowledge like, I had a leg up on other people when I was studying. And there comes to be a more naturally to me, I suppose the tough thing with Japanese for everyone is that there's kind of three alphabets, there's hiragana, katakana. And kanji. Kanji is like the originally Chinese characters that you know, where one character symbolizes a word or a phrase. And learning that, I mean, they're just 1000s of them. So it's a very difficult language to master from a reading and writing perspective. The other tricky thing for me personally, is that I learned the language without learning, like the rules of grammar, right? So people would be like, Oh, but what why is the sentence structured that way? And I'd be like, I don't know. It just sounds right that way, for the same way that I don't know what uh, what was it like a past participle or whatever the word right? Like, we might be able to define that Right? Exactly. Take some of these classes. And it would be like having to return in some aspects to a 101 to understand why certain structures were there. Does that make sense?

Les  07:11

Oh, totally, totally. Well, and we may have lost some of our listeners I'm following along because actually, I had a dear friend who, who was a Japanese linguist. Actually, during World War Two. He passed away a few years ago at at the amazing age of like, 100. He was 103 when he passed, but I used to grab lunch with elver every month. And he would tell me these incredible stories about being a Japanese linguist during World War Two. He's one of the first Americans on the ground and Tokyo, you know, after the bomb got dropped. So I mean, just unbelievable stories, but one of the things I used to love that out would always tell me these I think they're called it's like, Coda Waza. Is that is it's like a proverb kind of thing. Did I say that right? Is it? Yep. Yep. So Al had all these he would bring these up all the time. And they were like, so incredible. And I'm sure do you have any have any favorites that you'd like to share with us? 

Serene  08:02

Oh, I can’t think of any Les, you think I'm much more philosophical than I am.

Les  08:07

All right. I'm cheesy. I'll tell you. I'll tell you one. I actually looked one up because I wanted to find one at least that was relevant to venture and it's Yeah, test my pronunciation on this. So no, he No, non No. Got a

Serene  08:21

Okay, what does that mean Les?

Les  08:24

Do you can you translate it was that pronounciation just terrible. 

Serene  08:28

It's hard for me to understand. A lot of Proverbs use incorporate old Japanese almost like English proverbs that are very old where you incorporate the or you know, old words were like me having learned on the modern Japanese and never studied old Japanese have a hard time understanding. 

Les  08:49

So here I want to translate to as one Japanese plumb a day is an escape from that one day struggle. Was it close at all as it anyway? It really the translation is the discomforts that are caused by struggle can be healed by just one little piece, one little taste of happiness. It's kind of irrelevant to founders, right?

Serene  09:11

Yeah. Well, you need like one more thing to keep you going. 

Les  09:15

Yeah, exactly. A little taste of happiness. You know, you got got that term sheet and you're ready to write go out and raise your A or something like that. Yeah. 

Serene  09:22

Yeah. I love that. That's cool. 

Les  09:24

Anyway, all right. We got totally side-railed but I think that's such a cool part of you and your story. So I really wanted to kind of highlight it a little bit, I hope. I hope everybody thought it was as cool as I did.

Serene  09:33

And well, Thank you.

Les  09:34

Alright, so BYU Poly Sci and Japanese. You studied what? You mentioned that after that, you know, you got into management consulting and you went into growth equity. But tell us give us a little more detail because I really want to peel this back because you ended up at like the premier seed stage VC in the Rockies like how, how did it actually happen? Tell give us some more detail on that at post BYU.

Serene  10:00

Yeah, so I'll go from like the middle of management consulting, which was a job that I loved. It was, I think, what I needed at the time to learn certain frameworks and workstyles, etc. 

Les  10:10

You were you in Philly at this time? Is that right? 

Serene  10:13

No, I was at Cicero in Utah. Yeah, so it was interesting. One of my mentors I was talking with at Cicero at the time, I told him some of my thoughts on my career. And he pointed out to me that it's funny, it just illuminates the fact that sometimes it just takes one person raising a flag, where it leads you down a totally different path. But my mentor pointed out to me that I would probably be more passionate working with software companies and earlier stage companies versus the kind of profile that I want to average working with. And he was like, Hey, you should just read some of these venture capital, I had no idea what VC was at the time, like, but he said, you should subscribe to these or not subscribe to these newsletters, such as Fortune Term Sheet, and see if this is something that, you know, gets you excited. And sure enough, it did. And, and one other thing that's so integral to my story is that my then boyfriend, now husband was working in venture capital as well. And it was from him that I learned so much where I was like, Oh, that I, you know, for one don't need my MBA to go get this job. And this actually is something I'm really interested in. And fast forward, we moved to Philadelphia, because he was doing his MBA. And I realized at the time, I actually want to get a job at an early stage startup or in venture capital. And I was okay with either one. And I kind of had a bunch of criteria for what I was looking for in a venture capital fund. And just cold reached out to a bunch of different people. And one of those two of those people ended up responding from the same Fund, which is Susquehanna Growth Equity. And I was so impressed by the conversations I had there, and the structure of the fund, and the boss that I would potentially be able to work for who I ended up working for, that I ended up accepting an offer there and ended up being I think, the the most needle moving career move I could have made it was It's such an amazing job. 

Les  12:11

What a great firm to kind of launch into as well. 

Serene  12:13

Yeah, for those that are not familiar with SG it's a growth equity fund. And the cool thing about that fund is that it's a true single LP structure. And so it makes it much more flexible in terms of how they work with entrepreneurs investing and hold time horizons. And that's it's very unique value prop that you can offer in venture. So for variety reasons, my boss was the best opportunity I could have gotten at the time, I think. 

Les  12:40

Very cool. And so now you're in Philly, with your still boyfriend or now husband, now husband. Oh, okay. Awesome. I met I'm sorry. I met Where are you guys still dating in Philly? It's

Serene  12:53

Oh good question. 

Les  12:54

Yeah, meant timing wise. I know you guys are married now.

Serene  12:58

I don’t know if you have met him. Yeah. So we actually got married a week before he started school. Honeymooned, and flew to Philadelphia. He started school the next day. 

Les  13:06

Honeymooned in Philly? That's a new one. 

Serene  13:09

No, I should be more careful with my words. No.

Les  13:11

We got a cheesesteak on the corner. Oh,

Serene  13:13

No, we honeymooned and then flew straight to Philadelphia. 

Les  13:17

Very cool. Oh, by the way, Philly, I'm from Pennsylvania. Originally, Philly is a great. We got Eagles fans out there. Please don't be haters. I love Philly. So anyway. Yeah. All right. Cool. All right. So but you're both so you're both in you both. It seems like are you know, having great career early careers. He's going back to school. What I'm still trying to figure out how did you get back to the Rockies? How did it happen?

Serene  13:41

Yeah. So I think there were a few things that came into play. We loved Philadelphia, and we loved my job. And it was kind of a surprise for everyone, including me when I came back to Utah. I think few things happen. One was my husband started a business founded a business and watching him scale, an early stage startup that was venture backed was really exciting. And I realized that on average, there was a difference between visionaries slash builders at that early stage versus optimizers at the later stage, I’ll people interpret that as they will. The second was, I found that there was probably I had a hypothesis that there was merit in focusing on true ecosystem investing. Where when I was working at SGE, it was such a wonderful opportunity and got to work with companies in Ireland, Israel, Chicago, Texas, etc. But I felt like you would see you would have deal advantage and be able to see other benefits from focusing on a particular location. And so I kind of thought about, okay, what are places that have true upside potential where exciting things are happening, but it can grow into so much more? And I identified three spots personally and one of those was Utah. And so, in the back of my mind, I thought, you know, my last year at SGE if the right thing came up where I felt like it was a fund that focused on an ecosystem had an amazing profile, a bunch of other things I was considering as well, team, etc. I would probably join that fund. And so when Gavin from Kickstart, talk to me in March 2021. I was intrigued, and that brought us back to Utah.

Les  15:25

I see how'd you meet Gavin originally? What was it through?

Serene  15:30

It was through Jason, my husband.

Les  15:32

Oh, that's right. You've been avoiding that one…because it's your husband is a Portco of Kickstart’s. Yeah.

Serene  15:40

Yeah. He's a Portco. And he's an investor before business school.

Les  15:43

Oh, wow. So lots of ties. Yeah. Wonderful. 

Serene  15:46

Yeah, it's kind of weird. But like many of the partners had been at our wedding. And I just never even thought it never occurred to me, these would be eventually the people I would work with.

Les  15:55

That's amazing. But that's the business. Right? I think it's a really important takeaway. Like this is a very relationship oriented, you know, just startups in general venture in general. It's all about the relationship. So it makes total sense. At least it happened in that order. And not the other order, because then we'd be making all kinds of nepotism jokes. And yeah, oh, you backed to your husband. Oh, that's great. 

Serene  16:17

Well, luckily, it happened in totally different funds. He was a fund four company and I came in at fund 5.  I mean, honestly, when Gavin asked if I was interested, one of the first things I said was, I don't know, like, I don't want I don't want people to assume that I got this just because my husband did it. And Gavin and others were really kind and thoughtful about that. And, you know, I wanted them to make a fair decision. So yeah, it was a tough one at the time, partly for that very reason.

Les  16:45

Yeah, it makes sense. Well, and I appreciate that really appreciate the transparency there. But you know, knowing your team, their reputations. I mean, and for those folks that don't know about Kickstart, I mean, just one of the most incredible I mean, look at the performance, look at the companies they're in. That's one thing. I'm talking purely on a people level, these are some of the greatest people, you'll meet in the industry as an early stage founder and kind of people I want to work with on every deal. So like, I get it, and I can imagine that they were very careful, very considerate in that and step through that. So that's awesome. Thanks for sharing.

Serene  17:16

Yeah. Yeah, great team.

Les  17:18

So March 21. When you start when you start at Kickstart?

Serene  17:22

yeah, it was July 2021. Right. So that obviously some time passed, like they They really let me take my time on my decision. I helped build the team that I was on at SGE. And so the partners let me stay on as long as I felt comfortable to make sure that there was a good transition. So yeah, it's July 2021.

Les  17:39

Awesome. And just also I want to be I'm gonna be a little cheeky and funny about this, but I want to make sure we get the message out. This is not Kickstarter. This is not Kickstarter. This is not Kickstarter. This is different. The Kickstart Fund, right. This happened, this happened This is confusion happened a little bit

Serene  17:59

Les it happens all the time. Can I tell you a quick story about this? So I was at the dentist and you know how a dentist and their hygienist will always have like they'll carry at one point by way conversation where they're like working in your teeth the

Les  18:14


Serene  18:18

Yeah, so well I have like this like scalpel in your mouth. Yeah. So the dentist or no, sorry, the hygienist was asking me about where I work. And I said Kickstart. I invest in tech companies and she she was like Kickstarter. I no longer want to pose naked keeps working in my teeth. And normally I correct people immediately and I'm like all people get it confused and starts going on about, So Brandon Sanderson is one of the most successful Kickstarter campaigns and she went on and on about his books and his latest book, and after 15 minutes, I was like, we're in too deep.

Les  18:49

Take the vacuum out of my mouth right now. I don't care if I'm gonna swallow all this toothpaste. I gotta tell you,

Serene  18:54

I can't correct her at this point. Okay, so my husband, I tried to book our dentist appointments back to back so that we, you know, can just drive one time, and he was in the waiting room. But the hygienist brought me back to the waiting room where my husband was and she said, You like congrats on all the amazing Kickstarter campaigns. You guys have crushed it and my husband is starting to open his mouth and I'm behind her and I mean, listeners can't see this. But I'm like making the motion of like, don't say anything.

Les  19:22

Oh, man. Too funny. That's like a Seinfeld episode is gotta be if not it's great material. So Kickstarts the Fund, Kickstart Fund’s mission is to help build great companies in the wild west. Am I was that right? Did I

Serene  19:43

Yeah. To find and build the best companies in the Mountain West. Yep.

Les  19:47

Yep. Cool. What, tell us a little more about kind of the team the strategy just like what that means in practice on a day to day basis.

Serene  19:56

Yeah, so the team has about a dozen of us. It's changed so much over time, but the mandate has really been the same since day one when Gavin founded it. And the fund was founded back in 2008. And it's always been a seed slash / preseed fund. And we're typically like the first institutional check in tech companies that are raising venture rounds. So we invest primarily in software and marketplace companies. And, and those companies were have always been located in the Mountain West, primarily, that's been the mandate since day one. I think Gavin was visionary when he recognized this that, you know, there wasn't really a fund that focused on the region back then companies founders typically had to go to the coasts to raise or get poor terms from angels. And so there was kind of the this dearth of opportunity for them here. And that's that, in that sense, the mandate, the regional focus has been the same since day one, and that primarily focuses on Utah, Colorado, Arizona, New Mexico, but anyone building in the Mountain West, that's what we're looking for. 

Les  21:01

Yeah, so throw Montana in there. You guys have a Montana portfolio company. 

Serene  21:04

Totally. Which, you know, I should point out Les that you sent her to me. And the thing that made me really excited about investing in her initially was listening to her episode on this show.

Les  21:18

Oh, listen to the plug for Fin the Rockies. You heard it here founders. You want to get funded, be a guest on the show. No, I'm kidding. That's awesome, though. But Michelle, I mean, Michelle Huie, founder of a ShopDot incredible founder. And like, I mean, incredible to have her in Montana, by the way. I mean, she could be anywhere doing anything. But she chose Montana very deliberately. So yeah.

Serene  21:44

Yeah, she her story is just killer, just the amazing immigrant story hustle story, where she's, you know, worked on something else that scaled and was successful, and then decided to respond later on with her own software startup that solved the problem that she identified earlier. Everything about her story is just awesome. She's great. 

Les  22:05

Yep. Yeah, very cool. Well, and I love the strategy. I gotta say, it's so good that you know, NFC decided to copy it, you know I mean that in a very friendly way. Because we go late, we go a little bit later than you guys. We don't really do the pre-seed. We'll do seed to seed two. So I think that's where our firms have been very complimentary. So that's been fun. But yeah, Mountain West, what a great place to live work and do venture deals. Yeah. So Kickstart is on you announced earlier this year, or no? Sorry, not early this year? I think it was last fall, the sixth fund, right, you're on your sixth fund. And there's some exciting news as of kind of recent, I mean, it's not gonna like we're not going to like break the press on this. But what's the latest news with regards to sixth fund?

Serene  22:48

Yeah, we announced $230 million of capital. So $175, out of fun six and $53 million out of our CO invest funds, so tons to deploy. And as part of that, you know, I mentioned the different states as part of the region that we focus on. And some of our best companies have come out of Colorado. So, you know, Utah has always been a home base for us. But this is also a signal of not only do we want to continue investing in Colorado, we're opening an office and have a GP who will be in that office. And hopefully we expand that over time. So it was meant for a variety of reasons.

Les  23:26

That's right. And that's Dalton's moving to Colorado. Right. That's the announcement. Very cool. What, tell me a little bit more about just how you think about how Kickstart thinks about kind of the macro environment and kind of what that's implying for VC right now and how it's affecting maybe your strategy in the Rockies?

Serene  23:44

Yeah, I think there are a couple of challenging things as part of the macro environment. And maybe we can double this conversation with, you know, trends that I see in venture capital more broadly, and how this kind of ties with that. So I think one of the challenges that came from 2021 to be fixed in this period is explaining to funder sorry, explaining to founders that fundraising is not the end goal. I think a misunderstanding that became largely common from that period of investing is that a lot of founders started getting in this mentality of my goal is to just raise the Series A or my goal is to raise a series B. And I think that you know, the caveat to my argument that I'm making is that, sure, you have to think about the marathon and increments right and getting you to the next step is, is essential. But the goal isn't to raise a Series A The goal is not to raise a Series B. The goal is to build an incredible business. And building an amazing business versus aiming for a benchmark that can change opens more doors and gives you more optionality. And the founders that have really internalized that I think the ones that will be able to have more optionality as they think about exits, rounds, or how they want to grow their company, given the change that's happened in terms of expectations of growth versus profitability. So that's been one of the tough things I think to deal with.

Les  25:13

Yeah, I'm glad you shared that. Because it's like, well, for founders in particular, there's always complexity. You know, I remember a mentor told me once, like, create, create and control for the things that you can, because for the things that you can't control for you have, like, it's going to create complexity as it is, right? And what you said really kind of grounds to that as well. Because it's like, I feel like what the past few years have taught us is we have no idea what the future is gonna hold. So optionality is king. And like, I love what you said about building an incredible business, you know, that if you focus on that as the goal, like you're gonna, you're gonna end up in a place where you have options and where you can survive and live another day and continue to thrive and grow beyond that survival. So it's a really important takeaway. So what else?

Serene  26:07

Yeah, one other thing that weighs on me quite a bit. And Bryce Roberts actually wrote a really great piece on this a while ago and articulate some of my thoughts here really well is that, so VC, became really sexy, particularly over the last couple of years and became becoming a founder and saying that you're a founder became the sexy thing as part of that. And this is a difficult thing to articulate. But I wish entrepreneurs had the opportunity to go through a masterclass of not only how VC worked, but how the unit economics worked as part of that to really better understand what are VCs looking for. And should I raise from that type of funding profile?

Les  26:50

It's so true. Because I feel like when I was a founder, it's like, Man, if I only knew what I know, now, when I was a founder, but why can't that be done? There's like this mysticism around VC. It's not rocket science, it's actually pretty dang simple.

Serene  27:06

I think a lot of classes or though there will be community events that exist around how to better pitch a VC, etcetera. Like a lot of those things exist. But that's entirely different from how a VC makes a decision based on the unit economics. That's the thing that that Bryce, for instance, points out that I'm like, Yes, this hit the nail on the head is that VC is the wrong product for most businesses, including those who raise it or attempt to raise it. So what I mean by that is that most often in this is painting with a broad brush. But most often, the reason that a VC will say no to a founder, aside from Team reasons, comes down to TAM (total addressable market), at least for me, personally. So why does this matter? You know, when you when a VC makes a decision, they're not only thinking about, you know, the market size matters, because you're backing into this decision of: Will my initial check, be potentially have the potential to return the entire fund when I invest in a single company? And that's what we endearingly refer to internally at Kickstart as dragons. The joke a Kickstart, is we we look for your dragons, not unicorns, were a unicorn for those listening as companies that have achieved a billion dollar valuation. But that billion dollar valuation may not matter at all, if you don't have meaningful ownership percentage, or if you didn't invest at a an interesting valuation, etc, it can come down to a variety of reasons. And so Dragon potential is can this company actually return the entire fund through that first check? And, you know, the other reason that this matters, and this ties in with, you know, VC trends that we're seeing more broadly, is that when, and I want to be careful with what I say, because VC still is an industry that has so much merit, and I still believe in it, hence, I'm a since you and I are VCs, but I think there are a lot of things to consider, as you know, in terms of you know, how all of us are moving this industry, as we continue to think about it as founders think about which funds to raise from but you see this trend of funds getting bigger over time, including Kickstart. And there are certainly a lot of pros that come from raising from funds that are bigger or more mature. And some of those can be the signal that you get from that lead investor that can be reserves or follow on potential for that founder. But I think that there are some downsides to consider for the industry, which has largely been to a certain extent, necessitated by what VC as an industry has become over the last five to 10 years in particular, is that each initial check necessitates a larger exit or outcome as funds get bigger over time. And the point here is,

Les  29:56

It's quite a teeter totter of like incentives that's really strange, right? 

Serene  30:01

It is and I think, you know that this is where we potentially do entrepreneurship a disservice by increasing expectations on outcome potential. Where, on one hand, let's say, you know, the company that you're looking at, is a good company. And it has an interesting, it's working on an interesting product or problem. It's servicing an interesting market. But if it doesn't have that x billion dollar outcome potential, as a VC, in most cases, you have to say no, like, it just does not make sense for your fund size and the LP that you're servicing.

Les  30:33

And everything else could be perfect, right. Amazing team. Amazing timing, amazing to go down the list. It's all great. I love this company. I love this deal. And I have to say no,

Serene  30:43

Yeah, yeah, it's so it's an almost feels almost impossible to tell a founder. That it's a no, 

Les  30:50

It's not you. It's me. 

Serene  30:51

Yeah, no one wants to hear that, right. And, in cases, many people are building businesses that are incredible, but just don't have 10 billion plus of outcome potential. And explaining that can be extremely difficult. And in some cases, like we are wrong, in most cases, we are wrong as VCs, and we can be wrong on the market sizing among other factors. But that I think, is I don't know if I want to call it an existential threat. But it's something to consider really seriously as an industry because it's where VC is trending. And it's become increasingly difficult as a VC to produce those, you know, truly outlier outcomes. But it's also, you know, how do we better, begs this question of how do we better? I, I want to find the right verb here, but how do we better service founders to ensure that they're getting funded, in the best ways possible when venture capital or certain segments of venture capital may not be the best answer for them?

Les  31:51

Yeah, for sure. I love it. It's such a great thread you peeled back there, and I'm glad you shared all that. Everything from the unicorns to dragons, we'll put the Bryce Roberts link maybe to an article or two in the show notes. So really good tidbits there. That's great. That's awesome. What about? What about kind of a little bit of a pivot from there, but still related is, how are you think about the industry? Kind of the difference between growth and VC? Because like you used to be on the growth side? Can you talk a little bit about that, because I think that's also an important kind of phase line for founders to think about. And I don't think we've ever really had somebody on the show that maybe has experienced with both. So I'd love to hear your perspective.

Serene  32:36

Yeah, they're very different, I thought they would be more similar than they are when I first joined Kickstart. And I've just learned over time, how different they are. So with growth, there are multiple flavors of growth equity is something I should acknowledge. But growth equity for those listening is tends to be the this middle ground between venture capital and private equity, where, in some cases, you're taking a minority or a majority stake in a business. It's called growth equity, because it's not quite private equity, where you're not focused on average on cost cutting, you're focused on injecting capital for true growth, but it's past the product market fit stage. So on average, for those companies of that profile, it tends to be, you know, 10 million plus in ARR or net revenue, and growing a meaningful percentage over time. So by nature of the company size, and how, you know, quote, repeatable the sales motion is, you could do a lot more sophisticated analysis on the health of a company. So that can range from, you know, retention, cohort analysis, burn ratios, etc. So, you look at sales efficiency and growth in different ways than you do as a venture capitalist. And as a venture capitalist, you're focused so much more on founders, the team profile, and how do we just get to product market fit? And, you know, it's a totally different motion in terms of founder-led sales versus, you know, the sophisticated, you know, cuts that you can do at the growth stage. So, variety ways of looking at it. And, yeah, that just the analytical stuff, I think, is what differentiates the two.

Les  34:16

Makes sense, as any of that changed on the venture side over the past, oh, you know, a couple of weeks or so, just in terms of how you are seeing folks think about making more kind of metric based decisions are more like, like, are the investment decisions, getting increasingly more challenging for folks that get committed at the earlier stage more? Is it? In other words, is it turning more into like, growth, the growth equity, like decision making?

Serene  34:46

It's tough to say maybe at the Series A, it's more so at the Seed, it's still so hard to because it's just inherently too early. 

Les  34:56

Yeah. The metrics don't exist. 

Serene  34:58

Yeah. I think like websites So what you're asking is that you can think about it from a terms perspective, I see terms changing, where are some folks with what they're getting in market. It hasn't changed too meaningfully at Kickstart. But I do observe that for our companies raising at later rounds.

Les  35:16

I see. What about, you know, kind of also related to the topic, you know, you're the first investor we've had on the podcast. Since I'll be very positive. I'm not going to mention the letters V. S, or B in any particular order. We are going to talk I'm gonna say you're the first investor we've had on the podcast since First Citizens Bank made an acquisition How, what's been your reaction or the portfolio's reaction to the wake of the last few weeks? How are you thinking about things?

Serene  35:43

Yeah, it's a crazy time SVB has just been an incredible 

Les  35:49

Hey! I said we weren’t going to talk about them. I'm teasing. That's about Yeah, that's what we're avoiding. But no, I'm teasing. Yeah, we all know what happened. Yeah, it was pretty, pretty wild.

Serene  35:57

Yeah, I mean, they and others, too. But they've, in particular, just been such an amazing partner to us, and many of our portfolio companies. So for sure. It's been, yeah, a crazy whirlwind. And the sad thing is, I think we're anticipating a really big credit crunch over the next. I don't know how many months or years as a result of this, just because SVB has been won uniquely to service early stage startups where other banks just didn't touch or want to put in the time. So yeah, I think there will be a lot of second order effects that we just aren't even thinking about, but we'll see over the next, I don't know, how many months or years. 

Les  36:35

Yeah, I totally agree. And on a very serious note, I mean, SVB, an incredible institution for so many years, such a trailblazer for our industry for venture banking, and just so many incredible people that I've also worked with, you know, over the years at that institution, so, you know, hopeful that everybody lands in a good place, and and that we can move forward. But you're right, it does have implications to credit. I think it has implications to, I think just how we think about things, right. I mean, I never assessed who we bank with as a risk, we underwrite a lot of risk and venture. I never thought about banking as like, Oh, yeah. Like, who does that? Who does the company bank with? Like, we maybe want to, you know, think about that? 

Serene  37:17

Absolutely. I mean, there are just so many effects that people don't think about. I mean, the obvious one is that some companies didn't, feared making payroll the following week, when the worst hit, but think some of the other things to point out was one, if your regardless of whether you bank with SVB, or, you know, if it were to be any other bank in that scenario, if your payroll provider banks with SVB, you are in a pinch that day. And then, you know, SVB, to this goes back to the, you know, the amazing part of the ecosystem that they service, but they provide, you know, credit lines or, you know, which can be serviced for accounts payable in some instances. And so some of our marketplace businesses feared what would happen, if, you know, SVB were to go under. So, yeah, tons of implications that people don't think about, in terms of how a business is run on the back end.

Les  38:13

Yeah, for sure. I mean, even one observation for me that was pretty wild, is you think about like, could the existing investors potentially have bailed out some of these companies that were, you know, in a real in dire straits. And it's like, in one particular company, there was like five VCs on the cap table and all of them bank with SVB. So there was these singular dependencies that were just so interwoven that it Yeah, it's, it's pretty wild. All right. Well, I want to make sure we talked a little bit about that on today's episode, just because it's so recent, and you know, so thank you for indulging me, the let's get back to some more positive stuff. Because I think there's a bright future ahead for a lot of your portfolio and for this new fun. So I'd love to know, looking forward. Where's the what's in store for Kickstart’s future? What are some of the goals for 2023 and beyond and excited to hear about more about this new fund, maybe highlight some of the flavors of entrepreneurs who you're looking for, and kind of a call out for, you know, for what's next? 

Serene  39:09

Yeah, I mean, we're gonna keep looking for outlier startups in the region. So, you know, the folks that, you know, really feel like they can have dragon potential going back to what we talked about earlier, and are building a, you know, SaaS startup or marketplace startup that they feel like fits the bill, and we're a good partner, they should absolutely reach out to me. You know, as part of the announcement, I mentioned that, or we talked about how we're opening up an office and Dalton is going to be the first person to move there. I'm in Colorado, I think every two to three weeks for board obligations and meetings as well. So, you know, those two states as well as the others are going to be where we continue to place a lot of focus, and I don't think that'll end anytime soon. So if you fit the bill. Absolutely. Come talk to us.

Les  39:55

Awesome, calling all dragons. We’ll put Serene’s contact info in the show notes. All right. Awesome. So I got two more questions. I always like to end on something fun, but kind of my last more kind of serious. I mean, when am I ever serious? But my last kind of serious question, I'd love to know from you. I know you're somebody that I've really admired, you know, working with you on a board and admire your thoughtfulness, admire your just attention to detail the words you choose when you choose to deliver them. And I've observed, I think, and I'm sure this goes for a lot of founders, you serve you you really are a great mentor and a great teacher. But I don't want to know about that. I want to know what you've learned. What have you learned, from founders that you've worked, maybe have takeaway, or two something that a founder has taught you about yourself, or maybe about being a VC, something fun?

Serene  40:50

Oh, that's really nice of you. Um, that's tough. I don't know if it's a lesson in particular versus just empathy. And I think being married to a founder really helps. But being a founder really is one of the hardest jobs in the world. I love the quote that Michelle actually gave, she's told me this in person, but she actually gave it on your episode too, with her, is the highs are high, and the lows are lonely. And I felt like that was the most apt way to put it, where I think it's important. It's such a tough balance as an investor, when you have a fiduciary responsibility to point out certain things and point out the hard feedback that no one in the room may want to hear while also balancing that, the fact that the founder that you're talking with is going through something really difficult. And that balance of being the cheerleader, as well as the the person that carries the responsibility. It's a tough thing. And that constant reminder of take a step back and emphasize and know that this is the hardest thing. It's way harder than my job. It's a good reminder.

Les  42:02

So so great that you shared that. And actually you just reminded me, that's it's very authentic, and real of you to share that because you just reminded me of something, experience that we had with a founder around the holidays when we had dinner at the founders house after a board meeting. And I remember, that took me back so far. To my past when I was a founder. And I just it really helped me realize and empathize with like, this is the person this is the family. This is their children. And these are people. This is their life. Ah, exactly. It's so important. Yeah, to keep that humanness to everything we do as people but I think especially in this business. So that's a great takeaway. Thank you for thank you for sharing that. And it goes back to Michelle again, man, this episode is like a love fest for Michelle. But yeah,

Serene  42:50

Yeah, all founders we work with are great people!

Les  42:53

They're all good, but we're just gonna get Michelle two call outs on this episode. Yeah. Yeah, that's, that's great. All right. Last question. And now we get to get fun. It's been fun the whole time. It's awesome. It's less. All right. So fun. The fun one, I know you like to travel. All right. I know you've been around the you know, you'd like to get around the world a bit with your husband. What is a place that you are either super excited about visiting, maybe a place that you have plans already to go or somewhere that you like, can't wait to make plans?

Serene  43:26

Oh, okay. We've talked about going to Tanzania. I frankly, don't know if it'll be possible, given it's really hard to pull away a founder from their business for anything.

Les  43:39

There's that empathy again. Yeah. Coming out being married to one. Yeah,

Serene  43:42

save for reality. So yeah, honestly, the two trips that we're thinking about are one Tanzania to climb Kilimanjaro. And Safari.

Les  43:52

That's a trip you can't just like go on. You gotta prep for that one. Yeah, like, wow, for that one.

Serene  43:57

Yeah, we're big hikers. And we love the outdoors. And we want to do Sub-Saharan Africa. So

Les  44:02

Is Kilimanjaro, the highest peak on the African continent. I believe so I think it is. Yeah. Wow. That's a good one to bag.

Serene  44:09

That's yeah, that'd be fun. Or this is like the opposite in many ways. What we're thinking of doing South Korea and Japan

Les  44:16

It's familiar, but I'm sure it's still exciting for both.

Serene  44:22

What about you Les? Are you excited about anywhere?

Les  44:25

Man, I rarely get the reciprocation here. So I actually I'm super excited. One of my dear friends is getting married in Mexico and I've been to Mexico a bunch, but I've never been to Mexico City. Yeah, so I'm excited about that. And you know, honestly, I maybe this is a little too much but I don't like to travel that much. I get stressed by it a lot based international travel. It just has this response and a lot of it has to do with some you know a former me former life, but it stresses me out. I'm always good once I get there and I get familar and I get on the ground. But Mexico has been a place I've actually gone back to a bunch and now I'm like, comfortable. I feel like it's like, you know, I'm not even leaving the country. So I'm so excited about that trip and also to see Mexico City. And I love mezcal, too. So you know,

Serene  45:14

Jealous. Take pictures.

Les  45:19

Well, Serene this has been such a pleasure having you on the show. It's always always a pleasure to just to interact. But I think especially hearing your story and sharing that story with our other founders and funders and contributors in our ecosystem. Just want to thank you for your time today. And in closing, if you would, please just share a little bit about where founders can find more about you and more about kickstart the fund online.

Serene  45:45

Yeah, absolutely. I think I'm the only Serene Papenfus online. So my Twitter handle is Serene Papenfus. My email Serena at kickstart So, anyone has questions? Absolutely. Don't hesitate to reach out.

Les  46:01

All right, especially if you're a dragon, you know where to go. Thank you for listening to this week's episode of Found in the Rockies. You can find links in the show notes or go to to get transcripts, links, and contact information for today's guests. If you liked what you heard and want more, please don't forget to rate review and subscribe to get notified as our new episodes drop every two weeks. We'll see you next time.