Matan Magril - Innovator, Investor and Guide (027)

<cite>Tobin Arthur:</cite> <time>0:04</time> <p>Welcome to the Innovation4Alpha podcast. I&#39;m your host Tobin, Arthur and I&#39;m joined today by Metan Magril who is just incredible guy. We&#39;re gonna have some fun in this discussion today and I&#39;m really excited to introduce him. To all of you. Matan, welcome.</p> <cite>Matan Magril:</cite> <time>0:34</time> <p>Thanks for having me, Tobin excited to be speaking with you.</p> <cite>Tobin Arthur:</cite> <time>0:37</time> <p>Well, it&#39;s hard to even know where to jump in because you and I have had a number of discussions and you have done so many fun things in your career. But maybe just give everybody a snapshot of how you started your career and some of the things that you&#39;ve done over the years, then we&#39;ll kind of move things more to the present.</p> <cite>Matan Magril:</cite> <time>0:52</time> <p>Sure,I&#39;ll give you the abridged version because if I was to give you the entire story we will have a two hour podcast. I actually started off at HSBC, in their rotational investment banking program. I think it was on my second day there that I realized that I was a lot of things, but an investment banker wasn&#39;t going to be one of them. It took another seven months to leave HSBC and I was presented with an opportunity by a very dear friend of mine who was based out of Shanghai at the time. Mind you, this was the height of the recession. We&#39;re talking 2008. So I guess it was a smart decision to be leaving HSBC that time. But my dear friend, Travis Scheff was based out of Shanghai. He had the clever idea of starting a business in in China when everything on our side of the world was looking very grim. And his idea was to start the first large Western music event in China. And he kept badgering me to come over and join him in Shanghai. And I took two suitcases and he met me Pudong airport. , We initially started trying to create Shanghai&#39;s first electronic music festival, but very quickly realized that wasn&#39;t gonna happen and we were gonna have to take baby steps. And that&#39;s what we did. We started with an artist booking agency by the name of Imperial Entertainment. We started bringing Western artists over to tier one cities in China. That business evolved into a full event production business. We were doing a lot of really large events all over Asia with a concentration on tier one and tier two cities in China. After two years, Travis left for law school in Boston, I didn&#39;t have enough of Shanghai quite yet. And I was a part of the founding team of Advocacy Asia, which was China&#39;s essentially first word of mouth marketing platform. We were bringing over FMCG Western conglomerates to the Chinese market via a platform that we created, which was inducing organic word of mouth on behalf of Chinese consumers. We did that for about three years, and hat company was acquired, at w ich point, I too had enough o my China adventure and I moved ack stateside. I relocated to New York. And it was then that I founded Foodie Trip and Foodie Trip was love at first sight For me. It was a business that I started because of my love for travel, and more specifically, my love of trying different culinary experiences abroad, and essentially did exactly that. It was a marketplace, which connected local food guides with travelers all over the world in order for those travelers to connect with locals instead of getting stuck in McDonald&#39;s somewhere. We raised a couple of institutional rounds for Foodie Trip and the company is still very much alive and well. It was during my time at Foodie Trip that I was surrounded by a whole bunch of very clever entrepreneurs, people who were introducing really innovative IP to their specific verticals, people who really knew what they were doing. You could call them subject matter experts within their individual fields or on top of their operations. The one common challenge that they&#39;re all facing is a lack of understanding of the capital raising process. They either didn&#39;t have access to capital, or if they did, they didn&#39;t really know how to interact with investors and get their hands on that capital. And that was something that really bothered me. I was seeing too many solid businesses shutting down their doors; not because the entrepreneurs at the helm were subpar in any way but because they didn&#39;t have access to put their businesses on the hyper-growth kind of trajectory. And that&#39;s when I started the passion project alongside Foodie Trip, which did exactly that. Help entrepreneurs initially within my own social circle to create a narrative that was an investor facing narrative to articulate that narrative into a wide variety of investor facing collateral, whether it was pitch decks, or financial performance or one pagers, etc. Once we got the attention of investors via those pieces of collateral, we started helping them with deal structure, what investment vehicle were they going to raise etc. That was wow, that was five years ago. That passion project has evolved into what is Jetpack. Today, it&#39;s a one stop shop capital advisory for startups. We&#39;re a team of 10. We do everything in house. We have our own consultants, financial advisors, copywriters, designers, all of whom still very much take part in those three different buckets that I mentioned before, whether it&#39;s collateral, investor facing collateral, deal, structure, deal flow. And that&#39;s where I am today.</p> <cite>Tobin Arthur:</cite> <time>6:30</time> <p>There&#39;s so much in there. Foodie Trip is just such a neat business because I share the same interest in travel and food. It&#39;s almost like Anthony Bourdain meets local travel. Just before we get off that topic, how much have you been able to, go out and travel the world and work on building that?</p> <cite>Matan Magril:</cite> <time>7:00</time> <p>I&#39;ve been fortunate enough to live in four different countries and 15 different cities so far. I&#39;m originally from Israel, I grew up in South Florida, I studied in Italy for a time, I spent some time in London moved to Shanghai; like I mentioned before, Hong Kong. And I always found myself learning or getting some sort of insight into the local cultures by filling my belly and having a beer with with the locals in that particular place. I found that was the easiest way to connect and get a true representation of that specific culture. And over the years, I&#39;ve done culinary-centric trips, in other words, trips that were meant only for me to eat my way through these cities, and I have gone on some adventures. The very idea for Foodie Trip actually started when I was doing a motorcycle trip in Vietnam from from Hochi Minh CIty all the way to Hanoi. And it was two weeks doing research beforehand and finding myself surrounded by other tourists in places that were supposed to be very, very local. And I very quickly got tired of it. I saw a small street sign that said, nighttime motorcycle food tours, those are all things that I liked, I called the number on that street sign. And at 10 o&#39;clock, a Vietnamese woman on a motorcycle showed up told me to hop in the back of the bike, we were joined by 10 other travelers also on the back of bikes and from 10pm until four or five in the morning, they took us to some of the most authentic underground spots. I got to drink snake wine, I was a happy camper. And that was kind of the lightbulb moment for Foodie Trip. I said this is how people need to start traveling. This is, and again, it wasn&#39;t just even the connection between us and the locals, it&#39;s also a connection between traveler and traveler. You know, we&#39;re all sitting around that table and we all had the same kind of philosophy, eat, drink, be merry. Let&#39;s go explore.</p> <cite>Tobin Arthur:</cite> <time>9:28</time> <p>That&#39;s so cool. You have an uncanny ability to distill stories, to tell stories. The capital raise side... where&#39;d that come from? Obviously you have natural talen. But was some of that from your HSBC education?</p> <cite>Matan Magril:</cite> <time>9:49</time> <p>Let me correct you. I don&#39;t think anybody&#39;s a natural storyteller. I think a lot of people like to tell themselves that they&#39;re natural storytellers. I think that I&#39;ve had loads of practice and a lot of trial and error, to get to the point where I felt comfortable telling stories, especially investor facing stories. I needed to raise rounds for my own companies, essentially in Asia, and then f r Foodie Trip here in the S ates. And I very quickly u derstood the amount of sweat, b ood and tears that is required i order to engage an investor. A d I also very much understood t at the ethos of a company is s mething that&#39;s very, very i portant in trying to convert i vestors. You know, you can h ve technical facts, and you c n have traction from here to S nday. If you can&#39;t convey a v ry, very engaging story to an i vestor they&#39;re not going to c nvert as human beings just l ke you and I. So trial and e ror. And I think, again, on a p rsonal note, it is that the f ct that I am an immigrant and h ve moved around a lot... have a ways needed to be a bit more a imated, have always needed to k nd of be articulate in order t maybe fit in socially, maybe k nd of get the spotlight on me t at wasn&#39;t necessarily there to b gin with. So I think it&#39;s a c mbination of the two.</p> <cite>Tobin Arthur:</cite> <time>11:17</time> <p>That makes sense. As you&#39;ve learned over the years, and as you&#39;ve built Jetpack, maybe share a couple things that have emerged as patterns in terms of when you&#39;re working with startups, things that you see that typically they may do wrong, or where they&#39;re making mistakes, or where they can improve. Are there things that have jumped out where you</p> <cite>almost always say:</cite> <time>11:39</time> <p>&quot;Here&#39;s two areas where everybody&#39;s gonna need to improve&quot; or what comes to mind when you think about some of the patterns.</p> <cite>Matan Magril:</cite> <time>11:47</time> <p>Let&#39;s start with the macro side. So I think what we&#39;re seeing in the macro side is that a lot of entrepreneurs, especially first time entrepreneurs, are seeing what&#39;s going on in the private market today, and go in to the capital raise process with the train of thought that this is going to be a two week thing, you know, between the time of them sending out whether it&#39;s called emails or connections, meeting the investors in a pitch meeting and getting that wire transfer into their account. This the capital risk process, especially the the early rounds, it&#39;s a difficult and long process, it takes a lot of effort, I would say that it becomes a full time job. For the executive team, it becomes a full time job specifically for the CEO. And it takes anywhere between four to six months, if everything is done correctly. So the very first thing is that we&#39;re seeing at Jetpack is a lot of entrepreneurs thinking, let&#39;s get this done, let&#39;s do this over a three week period. There needs to be a complete mental shift. Going into that process, it&#39;s a long process, and the boxes need to be ticked off, before any investor is going to write a check. In terms of the micro things, we&#39;ll start with the the collateral side of things. I think that that entrepreneurs, a lot of times, are too deeply entrenched inside the trenches of the story. They tend to concentrate on very, very minor details of the IP, they tend to not necessarily provide a sense of how the IP is going to be a value to the end user. It becomes a very technical kind of discussion. By no means am I saying that IP needs to go. There needs to be technical know how, and a deep dive into it. But if the investor doesn&#39;t understand the big picture of how it is that your customer is going to benefit from your IP, the technicals won&#39;t matter. So that&#39;s that&#39;s one. The other thing that we&#39;re seeing is no call to action, we&#39;re seeing a lot of no call to actions or a very weak call to action. What is your ask? What are you going to be utilizing that ask for? How is it going to change the trajectory of the company from a revenue, user acquisition, IP development, stand-point? Show us what you&#39;re going to be utilizing your funds for. Show us how much money you need. Tell us how you&#39;re going to be raising it, etc. So there are so many times that we&#39;ve experienced pitch decks that would have been solid, or other pieces of collateral that would have been solid, but there&#39;s no hook. There is absolutely none. This is what I need to get out of this meeting by the end of this meeting. So I would say from a tactical perspective, those two are big.</p> <cite>Tobin Arthur:</cite> <time>14:53</time> <p>That makes a lot of sense. And as you mentioned on the timelines, I think it does a disservice for a lot of entrepreneurs when they read various blogs and journals, and they see all these successes. And what they take away from that a lot of times is that raising money is easy. It&#39;s happening everywhere. Even you hear things like, there&#39;s so much capital in the market. And while that may be true in a macro sense, it still doesn&#39;t diminish the hard work that it takes. And as you said, the timelines; and I think that&#39;s discouraging, right? A lot of entrepreneurs get going on the process and they wonder, why am I not raising this and that. You&#39;ve interacted with teams, and let&#39;s focus on the early stage teams, let&#39;s say seed round. Do you find there&#39;s a particular structure for the team in the sense of the CEO is on point and the rest of the team are playing certain roles? Or do you find it&#39;s more successful when there&#39;s somebody working for the company? A point person on capital development? I&#39;m sure there are different, variations on the theme, but how should the entrepreneur, the CEO, the founder, be thinking about best structuring a process for their seed round?</p> <cite>Matan Magril:</cite> <time>16:06</time> <p>Sure. So for the seed round, specifically, the CEO is the point person for for anything. There is nobody else that the investor is going to be expecting to communicate the value proposition, the story, the investment, property investment, the ROI, rather, etc. There&#39;s no alternative to it. And that&#39;s exactly why, by the way, that&#39;s one of the reasons why we also coach a lot of the CEOs that we work with post-collateral creation, in terms of the delivery and the communication, the messaging of the collateral we just created. How is it that we that we actually articulate all of that efficiently in front of investors? There is no substitute for the CEO in the process.</p> <cite>Tobin Arthur:</cite> <time>17:01</time> <p>Let&#39;s touch a little bit on your your point about the ROI or the ask. So what I&#39;ve seen a lot is that an entrepreneur has a great let&#39;s call it just a widget. They&#39;ve got some widget that&#39;s faster, better, cheaper. And so their pitch essentially is I&#39;ve got a faster, better widget, but that doesn&#39;t necessarily address the question of how does this become a business or successful business? And as an investor? How do I get my money out of this business? What&#39;s the end game? How do you balance that? Like, how do you think about the fact that they need to focus on what they&#39;re building but also telling the investor story?</p> <cite>Matan Magril:</cite> <time>17:41</time> <p>That&#39;s an excellent question. Vision is very much a part of the early rounds of the investor facing story. If we get into the tactics of it, every pitch deck does start with the widget. How does it work? Why is it useful, etc. Every pitch deck that we create also ends with, how does this widget evolve into something that is completely scalable, and is used by a much larger, larger target demographic than the original widget actually focuses on, right? What strategic partners help make that happen? What additional IP development do you need in order for that widget to become a platform, right? I&#39;m using the same analogy here. We don&#39;t usually talk about exit strategy this early on, but it should be something that the entrepreneur is comfortable speaking about off the record with investors. It needs to be a part of the vision. But like I said, it&#39;s a very, very fine balance of explaining to me how the widget works today, and how it becomes a very, very large, scalable platform two, three years from now.</p> <cite>Tobin Arthur:</cite> <time>19:01</time> <p>We are building a partnership, which I&#39;m very excited about between Jetpack and AngelMD. And we&#39;ll be revealing more about that in the coming weeks. But give us a sense of how you guys work. And one of the things that I love that you guys do is you really understand this space of distilling the stories and getting these into collateral and materials that are going to help the entrepreneur. It&#39;s really just filling up their toolbox. And for most entrepreneurs, and I would venture to say a very high percentage, this is not their skill set. Even if it was, it would take them five times longer than it&#39;s gonna take you guys but there&#39;s a lot of work involved. Walk through just a little bit of that process from when you first hear the story from the entrepreneur to how you guys end up with the collateral package that they need to start pitching. Sure.</p> <cite>Matan Magril:</cite> <time>19:52</time> <p>So I think the very first step is understanding if the company actually needs to raise capital. That&#39;s the very first kind of valuation that we that we provide. We sit down, we hear the story, we understand what the status quo is for that particular company. And then we ask the very basic question, do you need money? And if so, how much money do you actually need? Okay, so those are the first initial questions we ask. And if the if it&#39;s a affirmative answer, and the dollar amount is significant enough to go for a round, that&#39;s when we start getting the ball rolling. We start off with an onboarding questionnaire that we provide to the companies we work with, which serves as a data dump, for us to understand everything that they&#39;re sitting on everything that&#39;s in their heads transferred to our heads, at which we review that questionnaire. And my team and I start creating a narrative that we believe, based on our market research and understanding weaknesses in that particular vertical, would resonate with investors. We backed that narrative up with market research that we do internally, whether it&#39;s competitive landscape analysis, whether it&#39;s a market size analysis, etc, which will be go back and present a very ugly piece of collateral right on design, but has all of the has a complete anchor would say, from a narrative content perspective, to the entrepreneurs explain what our thinking what a logic behind that narrative is. We take notes on it, go back and integrate those notes into the narrative that we created then go back to them once again, for another revision round, in order to fine tune everything, at which point we go into design. That&#39;s the pitch deck process. At the same time, our financial analysts, once we&#39;ve agreed on the narrative, begin to model out the five year projections. And we create these really, really efficient dynamic financial models, which are very much meant for stress testing on behalf of investors. But the most important thing is that those two pieces of collateral - the pitch deck and the financial projections are completely uniform in the messaging that they provide to the investor. And basically, from a collateral standpoint, that&#39;s the process. It&#39;s back and forth and a lot of strategic thinking on our behalf on what it is that&#39;s going to convert with the very specific targeted investors within their verticals.</p> <cite>Tobin Arthur:</cite> <time>22:28</time> <p>Talk just a little bit about your perspective, because you see a lot of things and you&#39;re in a really unique position. And so you&#39;re seeing some trends in the market. What are you seeing right now, that&#39;s personally interesting, in terms of investable companies?</p> <cite>Matan Magril:</cite> <time>22:51</time> <p>So, for what I&#39;m excited about is going to bore your listeners. I&#39;ve been excited about last mile logistics for a very, very long time. We&#39;ve cracked a lot of logistics but we have yet to crack last mile logistics; whether it&#39;s food delivery, packages, etc. We&#39;re not there yet. We&#39;ve been working with a lot of interesting companies in that space that are doing a lot of work in city mesh network delivery. That&#39;s their IP. Like I said, in different verticals, whether it&#39;s trying to break the monopoly that third party food deliveries like GrubHub and Uber have, in order to lower delivery times and lower delivery costs for the consumers, and not necessarily hold the the supply chain hostage with those third party food delivery stew. That&#39;s, my kind of nerdy area of interest. We&#39;re seeing a lot of interest in cyber and ever since the pandemic Life Science and Health Tech has been on the up and up. Interestingly enough, in that particular sector, is where we find the most IP and the most difficulty telling the story of that IP on behalf of the entrepreneur. You can be a great doctor, clinician, etc. and not necessarily be a great storyteller. So we&#39;ve seen a lot of companies in the health tech space recently. And again, I suspect that there&#39;s a direct correlation between the pandemic and the amount of money that&#39;s been going into that space and investors can&#39;t get enough of them right now.</p> <cite>Tobin Arthur:</cite> <time>24:38</time> <p>It&#39;s interesting. You actually could combine all three of those because the pandemic also showcased the last mile supply chain problems in healthcare. And that can be everything from blood testing and various other testing and so it&#39;s getting slightly more efficient where people don&#39;t have to go to the big hospital to have their blood drawn. It&#39;s now somewhat available in strip malls and and elsewhere. Although it&#39;s still extremely inefficient, and probably five years from now, people are going to be saying they used to do what? And you could say the same thing about cyber. There&#39;s a lot of cybersecurity issues in Healthcare. Healthcare is a space where there&#39;s a lot of vulnerabilities. Obviously, if you crack into certain systems, you&#39;ve got access to people&#39;s health information. Hospitals are especially vulnerable. You&#39;ve got IoT everywhere in healthcare. And sensor vulnerability is going to be a big story in healthcare over the next several years, and we have some companies in our network focused on that area. So it&#39;s interesting that you mentioned those areas because one of the fun things of healthcare is it tends to be behind some of these other industries and its adoption. The good news is, as some of these things get built out and proven in other markets, whether it&#39;s 3D printing, supercomputing, last mile infrastructure, cybersecurity, Blockchain, healthcare has it all. And it all ultimately has an impact. Matan, we&#39;re gonna have some fun in the coming months talking more about Jetpack and exposing the capabilities of your team, to the benefit of the 1000s of companies in our network. We have some great companies in the AngelMD network. But a company that can&#39;t tell it&#39;s story and document its story is going to be a company that is stalled. And so I&#39;m really anxious to expose them to your team and resources. I think it&#39;s going to be a great help. And I really appreciate you jumping on today to just give a little snapshot of what&#39;s to come and the the talent behind the scenes. So thank you.</p> <cite>Matan Magril:</cite> <time>26:43</time> <p>Thank you, Tobin. And we look forward to working with the AngelMD Family</p> <cite>Tobin Arthur:</cite> <time>26:48</time> <p>In the meantime, have a great Thanksgiving, Metan and a great holiday season and more to come over the next few weeks and months.</p>