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How personal biases lead to bad investments.

We make every day decisions with personal biases — whether we realize it or not. But when you’re a venture capitalist, a bad decision is very, very costly.

So, let’s talk about stacking the deck in our favor by removing our personal biases — shall we?

Brad Zapp with Connetic Ventures breaks down how relying on data, not personal bias, optimizes investments and returns.

Hello, Quant Funds.

Rachael Qualls: Welcome everyone to Venture360’s podcast about all things venture capital. My name is Rachael Qualls. I’m Venture360’s co-founder and CEO, and your host. I’m really excited to introduce you to our next guest today. But before I do, I want to tell you the story of how I met Brad.

Rachael Qualls: So, Brad is one of our investors here at Venture360, and one of my very favorite people. We had never actually met until a couple months ago, when Brad was visiting Kansas City, which is where we have one of our locations. He was visiting for the first time for a basketball tournament and we met for lunch. So of course, being in Kansas City, I had to take him to the best barbecue of his life at Kansas City Joe’s. The gas station one of course, not the fancy one.

Rachael Qualls: Anyway, he asked me how business was going, as any investor would, and I explained that everything was going great, but that we were having a really hard time raising our second round of capital. So I didn’t really understand why we were having such a hard time. We checked all the performance boxes, we just weren’t getting the kind of traction we expected. And obviously I’ve done this quite a few times before. Anyway, Brad looks right at me, and very matter of factly he says, “Well, it’s because you’re a woman, Rachael.” So, ladies and gentlemen, I think that’s a great intro to introduce you to Brad Zapp, the managing partner of Connetic Ventures. Hi, Brad.

Brad Zapp: Hi, hi. Good to talk to you Rachael.

Rachael Qualls: Always good to talk to you. So, why does being a woman matter when it comes to raising venture capital? And what has your fund, and your structure, and your general thesis done to take personal bias and things out of the equation?

Brad Zapp: So I’m going to tell you all that, but if anyone not familiar with Kansas City is listening, at this gas station I was introduced to something called burnt ends, which sounds terrible now that I say it out loud. But I promise you, if you’ve not been to Kansas City, other than a lovely downtown, and an opportunity to meet Rachael. If you go to this gas station, I think it’s literally called Joe’s, find out what burnt ends are. Rachael, that was awesome. Thank you very much.

Rachael Qualls: I don’t even know now it’s possible for someone not to know what burnt ends are. But maybe someone listening doesn’t, and now we’ve changed their lives.

Brad Zapp: Nobody does, unless you’re from Kansas City. So you wanted to talk Connetic, and a little bit how we’re different, and my little bit perspective on my comment that I made to you. That was what I heard, right?

Rachael Qualls: Let’s do it.

Brad Zapp: Okay. So my background is in finance, and I’ve just been fascinated my whole life with two things. Data, which is very quantitative. And then behavioral economics, which is very qualitative on the way the human brain works and the way that people process decisions. Coming from a financial advisor, the very simplistic wisdom of how to be successful at investing is you buy low and you sell high. But that’s the exact opposite the way people feel. So that’s behavioral economics.

Brad Zapp: So when I was introduced to angel investing and then ultimately started my first venture fund, Connetic Ventures, I wanted to build a product that was quantitative in nature so it could remove these biases that are just completely natural and completely normal in all human behavior.

Brad Zapp: What’s fascinating to me about venture investing and angel investing is I think these biases are much more pronounced than say investing in the capital markets and stock markets. So one of the biases, which I think will relate to one of the reasons that difficult for women and minorities to get invested, is called confirmation or anchoring bias. It’s basically first impressions are hard to overcome.

Brad Zapp: So when I first started angel investing, I joined six different angel groups. I sort of sat in the back. I just kind of watched everyone how they behave to different investment opportunities. And what I noticed was literally within about the first 90 seconds, the first impression time zone. People would form their opinion on if they were going to invest in the company or not. If they ultimately move that company into diligence, diligence was really just confirming what they already felt in their gut. So unless some crazy red flag came up, if they were already going to invest, they were still going to invest. And if they were not going to invest, but they were still putting in diligence for whatever reason, unless some crazy opportunistic piece of diligence came up, they would still not invest. And I thought that was crazy.

Brad Zapp: And how this relates from the model of business capital, venture capital is basically a referral network. And you kind of refer people you know, people you have past experiences with, people in your network. And in America today, we kind of live in our own little tree houses, our own little echo chambers. Men travel with me, women travel with women, and white guys travel with white guys, and old white guys travel with old white guys. And there’s more of us. And this is kind of that network effect. Because there’s no shortage of female or minority and businesses being started. But I just think some of it is it’s difficult for them to get in front of the same number of venture capitalists as say the normal all male teams. And even when you do get in front of, again, you’re just got to go with what you’re comfortable with. And that has created this cycle. And it’s not just my opinion, the data supports this. So it doesn’t really matter what data you pull, somewhere between two and 12% of female and minority companies get funded. And that’s just far too few.

Rachael Qualls: Yeah, that’s right. That’s interesting. Because when you told me this, my initial reaction was of course not to get offended. This is just feedback from a business strategy perspective that I hadn’t really considered. I hadn’t to be totally honest with you, considered the fact that my being a woman was as significant a factor of me getting funding as it really is. Because when you look at the math and less than 2% of venture capital is going to basically anyone who’s not white and male, then my probability of being funded is extremely low. And that’s what I think is so interesting. Because let’s talk about the data. So when you look at performance data, how significant is someone’s gender really to overall performance? Do you know?

Brad Zapp: I know some of the data, yes. And there’s two different pieces of data. One, I can quote directly and one I can empirically quote. I can’t source it while I’m sitting here talking to you. But there has not been necessarily a male versus female differentiator and performance. And that’s just to say that doesn’t it make sense that we’re kind of created equal? What I will say is there is a McKinsey consulting study that was done years ago that showed a team that is more diverse, whether that’s with a minority founder or female founder, with or solo with male counterparts, does about 35% better from a stock performance standpoint than their all white male peers.

Brad Zapp: So this is super interesting. This is common knowledge, this study, this research. So if people know that funding teams that are more diverse, which kind of makes sense, do a little bit better than their counterparts, than actually what you would think would be that those teams are over funded. So the fact that they’re not just underfunded, they’re substantially underfunded. The only way you can attribute that to is one of two things. Some terribly crazy biases, or something just completely broken in the venture capital business model. So for us, I think it’s both. I think the venture capital business model for Middle America in particular is a bit outdated. And I do think we all have biases.

Brad Zapp: Thank you. Yeah, okay. So basically, so there’s data around hey, diverse founders do better. Hey, there’s plenty of companies being started by diverse founders and they’re simply not getting funded. So that we know. And there’s also data both written about plus my own personal experiences that I find it fascinating that women in particular get asked different questions than men.

Brad Zapp: So I think there is another sort of psychological factor going on. You get two guys talking, guy number one comes in the room. He pitches a group of men and the testosterone’s flowing and they’re like, “Tell me about the upside. Tell me how he can win. How big can this get? Sell me, sell me, sell me.” And that releases all the happy hormones in your brain. You get very excited, and when you get excited, FOMO sets in and boom, you’re going to invest.

Brad Zapp: But I noticed two things happening in these rooms, these investment committees or angel groups or VC collaboratives, whatever. When the female counterparts came in either A, we just didn’t drill them enough. We didn’t take them serious in the such, we were on our phones. Or number two, more interestingly, it seemed like we were asking questions about risk, downside. Have you thought this through? And when you think about downside versus upside, you never release the happy hormones. FOMO doesn’t set in and you don’t get funded.

Brad Zapp: So one of the things that we did to counteract this at Connetic using a software platform that we co-invented called Wendal is everyone needs to be asked the same set of questions period. And none of these questions should be able to tease out the gender, or background, or race, or age of the founder. It really needed to be around just things that we thought would be important and eventually structured as a data point on is this a company that we might write a check to. So that was sort of the genesis of it. And that was version one, and we stuck it in the cloud probably a year ago and took off from there.

Rachael Qualls: So you leveled the playing field where true competitors can show up and compete on the same preset circumstances, right?

Brad Zapp: We invested in a female in Kansas City who we didn’t know as a woman, to a city I’d never been to and a person I’d ever met. And I think the check cleared, right?

Rachael Qualls: It did clear. So I think-

Brad Zapp: And we’re excited to be in that deal. So yeah, we absolutely, that feels fair, doesn’t it?

Rachael Qualls: I think that anyone who talks about what’s going on in the world today as it relates to discrimination, I think that’s all anyone wants is an opportunity to compete and compete well, and have the same starting point. So that’s what I think what you guys are doing is so incredible. Because it does that. And when you look at performance, if we’re all showing up to compete and you’re funding the best athletes as it relates to business, well then you’re backing into your return profile, which it’s what we’re all here for. Right?

Brad Zapp: Go ahead.

Rachael Qualls: No, you go right ahead.

Brad Zapp: I was going to say to be clear to everyone out there listening, Connetic Ventures does not have a diversity inclusion mandate. We don’t, that’s what makes us awesome. Anyone that has gotten funding has gotten so on a completely organic level. And whether we’re at 40% one month, 47, 39, whatever, we’re tracking about 40% of our companies have at least one non white male founder. Some, the whole team. And that’s about what it should be. I just think it’s fascinating.

Rachael Qualls: But at the end of the day, you don’t care. Right? Which is the best part. And the reason you don’t care is because it doesn’t matter. Right?

Brad Zapp: Correct.

Rachael Qualls: You talked about Wendal and you talked about kind of co-inventing this behavioral way of looking at performance and investing. But can you go into a little bit more detail about how you look at companies? How many companies are you guys funding? Are you applying when it comes to math and portfolio theory? Are you doing a volume of deal as well? Talk a little bit about that.

Brad Zapp: We are. So this will make a little more sense, the short version of who the partners are at Connetic. So we have four current principles, one of which is female. We have, who is on partner track. She’s just the newest, it’s the only reason she’s not. The three partners, one is a data analytics national expert. One is a Wall Street analyst, and then I am a certified financial planner, portfolio construction professional by trade.

Brad Zapp: So when you mesh three super nerds together, it sort of makes sense that this is the outcome. So number one, we definitely have a portfolio construction mindset. So what we don’t do is we didn’t just put together millions of dollars and say I want to fund these three categories cause we kind of know about it and let’s just see what happens.

Brad Zapp: We have a begin with the end in mind. We’re going to do 80 investments. And that’s okay. If it’s 70 something, and it’s okay if it’s 80 something. But 80 is our target, we’ll be very close to that. And we know if we’re going to end up with 80 investments, then that means we also know how many we need to put in diligence. How many we need to take a second look at. How many we need to get past through the window process, how many we need to be at the top of funnel.

Brad Zapp: So for us, top of funnel has been a big issue. And if you’re listening to this and you’re an individual investor, and you are not located in California, New York or Massachusetts, I promise you, you have a deal flow problem if your goal is to build a portfolio.

Brad Zapp: So Wendal, our technology platform, the one beautiful thing that that helps us do is Wendal lives in the cloud. And that means Wendal can simultaneously be in England, Canada, Israel, Kentucky, or Kansas City to help us get deal flow, ask everyone the same set of questions, and use some scoring algorithms to rank companies against each other. The comparison is the magic because we’re not crazy people where everything is just an artificial intelligent bot. But that does a great job of sorting hundreds per month to where we can then put, we do have some really good human venture capitalists here. And then we can work with the bot program, with the human, and then forge a relationship later after it’s too late to have formed confirmation bias or anything like that as we move forward to build our portfolio.

Rachael Qualls: So you guys are doing a volume of deal flow at the front end, at the top of your funnel, and then you’re doubling and tripling down as you have the performance data to weigh them, right?

Brad Zapp: Correct. So if we didn’t, again, it’s 80. It’s 80 in four years. It’s 20 a year. It’s 1.6 per month on average deal that we want to do. You want to do no more than 2% of companies that apply. Bottom line is not just companies we see, this is a difference between when angels or VSs say, “We see hundreds or thousands of deals.” Well yeah, we see thousands. We’re aware of even more. But that literally come talk to us, whether it’s you want to say apply for funding, or give us their data, or talk to Wendal. We’re getting over 100 per month that talk to Wendal. And that gives us the opportunity to sort that down. My goal is to get about nine companies per month better that have gone through and talked to Wendal, our artificial intelligent bot. And Wendal will say, “Here’s the nine companies you principals need to talk to.” And then we start that process and we try to make one or two investments, maybe three in any given month.

Rachael Qualls: So talk to me about what happens after you make your investments. Because now you’re applying two theories of thought because you’re applying more of your personal touch to the investment process at the second round. Right? So talk to me about that.

Brad Zapp: Yeah. So both. So you could say that there’s an art and a science. And if you look at all the best companies over the last couple of years, they’ve really employed this tech enabled solution. So there’s no reason why this isn’t just great for venture capital. So Wendal doesn’t stop talking to the companies. So once we make the investment and then we have a relationship, we have tons of proprietary data that you continue to send us. You tell us about your team. You tell us about your new hires by position. You tell us about your financials. You tell us about your product development, you tell us about your troubles. So we continue to feed that to Wendal and it continues to tell us things about your company.

Brad Zapp: But at the same time, on the human side, we pick up the phone every quarter and we call you. And not everybody wants us to be involved in their company. I hope you don’t need us. I always thought it was funny when investors say, “Well, I’m looking for companies where I can add a lot of value.” I’m thinking the opposite. I’m looking for companies that don’t need me to add a lot of value. Their success is predetermined. If I can add value, that’s great. But our principals will forge relationships. As well I, as a managing partner, but our principals primarily, we’ll do quarterly calls and just make sure that we hear from you. Ask you if we can help you in any way. Get you to give us a little tidbit on what’s up. And we do that to stay abreast of the situation. So that when you in the Midwest or Middle America inevitably raise that next round. I don’t want to run you through the ringer for six months. You ought to know for a yes or no, honestly before you even open the round.

Rachael Qualls: It’s an absolutely fantastic way at looking at the efficiency with which we could be moving through, in the different stages of capital. When we look at the venture capital model, because we started this conversation with it’s broken. I think most people would agree with that, even those implementing the current venture capital model. So let’s talk about what that model is. I’m on the phone all day, every day with venture capitalists all over the world, and almost everybody has the same model they’re executing. When it comes to deal flow, almost everybody is looking at a referral network for the deals that they’re looking at. So immediately and right out of the gate, you’re only getting referrals from this small cultivated network that you’ve established. And then the second thing is they’re doing a small number of deals so that they can be more actively engaged in those companies, which is backing into your probability of hitting gets lower and lower with the less amount of deals that you do. Which you guys are doing the opposite of. Right?

Brad Zapp: we’re like the island of misfits over here. So if the traditional model is doing it, we’re probably not. And look, the data supports it. So if you look, venture capital as an asset class is the top performing asset class in the world, that is passively managed. The top. So if you don’t have venture capital in your portfolio, you’re missing out. So other than the liquidity and transparency problems, why doesn’t everyone have venture capital? Well, because the distribution of performance is not logged normal. It’s not like mutual funds where most of it is close to an average performance. Venture capital is the world of the haves and the have nots. So people, venture capitalists in the traditional model that are the haves, and maybe they’re that networked, maybe they’re that good of an art critic, maybe they’re that experienced, they’re killing it. Good for them. And if you are investing with them, I applaud you and you should keep doing that. But the rest of the people that try to employ that model, their performance has been pretty bad. I think if I’m correct on the data, it’s about a 1% average return.

Brad Zapp: So that’s not to scare you away from venture. But I hope that gets you pause of the traditional model. If you’re not with one of the top firms that have a long history, then maybe you ought to be looking at a different model.

Brad Zapp: So at Connetic, yeah, we’re definitely the opposite. I would say that if I told you I was going to do 80 investments and 80 investments would probably be spread out between 20 to 40 states or countries, and we would have diverse founders, and diverse rounds. It’s all still early. What’s the odds that we’re going to have a few because of the number that are just absolute breakout stars? It’s great.

Brad Zapp: And then we also take the mindset, again, this is no small thing. But right or wrong, I believe success in these venture opportunities like yours are kind of predetermined. And it’s more of a function of can we pick winners or forget picking, can we just get winners in our portfolio? And so again, when you take a data-driven approach, it’s about moving the needle to say what are the odds that I have winners in my portfolio? What I would tell you is I think our odds are very high that we have a lot of winners in our portfolio, because we’ve taken a data driven approach.

Rachael Qualls: I would agree obviously. Talk about the personality aspects, which I found fascinating because when we were going through your funding process, the personality profile was just the strangest thing I’d ever taken of all the different personality profiles we’ve all taken at some point in our lives, but this was quite different. So can you talk without, don’t give away the secret sauce or anything of course. But talk a little bit about why you profile personalities because we’re all betting on the jockey, but we buy the horse. And how you weigh those in what you’re kind of looking for.

Brad Zapp: You want to talk about this because your profile is better than mine? Is that what it is?

Rachael Qualls: That’s it. I feel like you should leave at that and then you could follow that with, “And because Rachel’s so awesome.”

Brad Zapp: Well, I mean this is true. You scored in our estimates in the exact profile that we’re looking for, for a founder. So look, so again, let’s go back to my experience. I was sitting in again six different angel groups prior to being a VC. And everyone without pause when we’re talking about we’re doing postmortems or we were just talking about companies, we always, every investor I’ve ever talked to. Man, it’s all about the jockey. Man, it’s all about the team. Every successful company, “I want to thank my team, I’ve got the best team.” Every investor, hey that CEO’s the best. It’s like unequivocal.

Brad Zapp: But then when you look at diligence, it’s like nothing is ever done. Nothing. You have two types of people. You have the diligence guy and knows all about product. They come from some Procter & Gamble type company and they know all about distribution models, manufacturing, branding. And they’re like, “Well that model will work or it won’t.” And then you have people like me that are finance and they ask a million financial questions. That model makes sense or it doesn’t. But how many psychologists have we ever had in the room saying, “Hey, we may need to ask some questions about who this person is. About are they coachable? What’s their emotional IQ? What’s their aptitude? What jazzes them up? How do they do energy?”

Brad Zapp: So we were convicted from day one that if nothing else, we believe if we built a portfolio of great founders period, because we tested them. Because there’s no way if you don’t have a history with a person that I have any clue Rachel, and one little pitch if you’re good or not because you’re well trained at pitching. That’s just ridiculous. If I can’t test you in some way to pull out your inside, your DNA on who you are, there is no way for me to know that. But at Connetic, we believe that we built 80 companies with 80 top end startup founders/CEOs. I think we’re going to do all right.

Brad Zapp: So we’ve been on a mission for years. And just like you, we’ve taken them all. We’ve tried them all. But basically we’ve come up with, we did find a 60 year old study that made sense to us. Then we wrote software to execute on a study, tweaked it to be specific to what we wanted in a startup CEO, created our own math around that. And then we labeled who you were as a person and we selected two or three profiles that were acceptable. We’ve just been bent on making that the capstone of our entire process.

Rachael Qualls: And this is why we’re friends because I did the exact same thing when I was running my investment firm. We partnered with a company called Matchpoint Careers to do psychometric testing on every single founder. And actually, not even the founders who were people we were going to fund, but everybody entering the top of our funnel to make sure that we weren’t applying personal bias. And our short list of people we wanted to invest in were actually top performing founders. So again, obviously I think it’s credible what you’re doing. Can you give any specifics about some of the personality traits you’re looking for in top performers?

Brad Zapp: Yeah. So let’s start with a trait that I would call the obvious, is your desire to win versus your desire to be a part of a team. So we are all hard wired a certain way. We can argue whether you were born that way or whether it’s cultural, or whether it’s taught, whatever. It doesn’t really matter to me because I’m not a psychologist. But, we all know the type of people that when whether it’s in life, whether it’s at business, or whether it’s a game of monopoly.

Brad Zapp: So being a startup founder is lonely. It’s hard, takes longer than we think. You have sacrifices. And if you don’t have that desire to win that is so far beyond the desire to be on a team. Because if you want to be on a team, Rachel, I’m sure you can hang it up tonight and have many, many job offers. And you’d be a part of many, many great teams. But you as an example started on this path. And I don’t think, I know you, I’ve seen your profile. I don’t think you’re capable of stopping until you win.

Brad Zapp: So that is a driving trait that if you were just slightly for us on the, “Hey I’m kind of balanced between team and win.” That’s not okay to be the startup founder. You’ll never move fast enough, which is a perfect segue to our second most important trait. We have many that we track, but the other is pace.

Brad Zapp: We made some mistakes early on prior to developing our own software where we have this one founder who he’s so polished. And in fact he probably in his industry has the greatest product in the United States of America. Seriously. But he’s not been able to get venture financing. He’s not been able to raise a successful series, series A, he’s not been able to penetrate the market. And it’s because he has his foot, he’s just always rolling out new product features. He’s always polishing this thing, and he just moves at a pace that is not fast enough for startup land.

Brad Zapp: So while you want to get things right, and that’s very important. But early on, speed kills. So we are looking for founders that can move through this world like a comet with a desire to win and a pace to match it. And that’s just two that I will talk about. And there’s many, many more to test for or many, many more that work together. But being able to see that in a profile allows us to use data to say, “You know what, I’m not going to talk to this founder anymore.” And that’s not to say that founders with other traits won’t win. They will. It’s not perfect. But we have a specific basket, specific looking profile that we’re trying to build. And our belief is very simple. Great founders at a fair price. We’re going to have a nice offering.

Rachael Qualls: It really hits the nail on the head in that one in what it’s like to be a startup founder, which is very different than running a growth stage organization or being the CEO of a massive public company. It’s a different animal starting something that nothing exists now and building that into a viable market product. It is lonely and it is hard, and it’s all of those things.

Rachael Qualls: So it’s really interesting to kind of dissect that into a personal profile of someone who’s going to be able to run this kind of company. So when you think about if we know that the model in venture capital is broken, what if we fixed it? How do you think the industry, if everyone is listening to this podcast today and they’re like, “Brad Zapp is a genius, he’s figured it out.” Not everyone’s going to go out and build a Wendal, but what could we fix today? Excuse me. What can we fix today? And how do you see the industry changing and evolving over time then?

Brad Zapp: Well I would say first off, the model is working for some people. And if the model is working, whether you’re a VC, whether you’re an entrepreneur, or whether an investor. So I want to make sure that those people that listen to me, hey, good. There’s a lot of paths to success, but the model is not working for most people. And I think the number one if you want change is you got to have a seat at the table. You can’t change it from the cheap seats. So whether you’re a emerging manager. So let’s start there because that’s what I am. I’m a new emerging manager. This is really hard. So what I would say loud and clear to governments, state governments, and accredited investors. If you have an emerging manager who is doing something unique and different in the venture space, just because they don’t have a 20 year track record or three funds under their belt, you should consider not only supporting entrepreneurs. Please support your emerging managers. Get in the game.

Brad Zapp: If you’re an entrepreneur and you want things to be done differently, then maybe you should consider taking money from a different type of investor. Maybe you should create competition. And it’s not just venture. There are tons of ways to get money into your company, and competition is healthy. That’s good. That’s when things change. But when a certain model has a monopoly and it’s working for them, it’s not going to change.

Brad Zapp: So that’s just my message. Just wherever you’re at, get involved. If you’re an entrepreneur, get all the perspectives. Again, whether it’s a syndicate fund like me, whether it’s a lead investor, whether it’s a quant fund, whether it’s a grant, whether it’s venture debt, whether it’s a bank, just get lots of options. If you’re an investor or an institution with money, don’t forget to support your emerging managers, not just the entrepreneurs.

Rachael Qualls: Exactly. Well said Brad, like everything you’ve said. So one other thing, and then we’ll kind of end things here. Someone like me, the industry is not going to change for me and it’s not going to change in the time that we’ll have to close the next round or for anyone else who’s listening to this podcast. So specifically for someone who’s going up against the traditional model, how do you break through that given the biases and everything else? Because you had great advice for me, but I kind of want you to give it to everybody else.

Brad Zapp: Well, I think any advice I gave you, you were probably sitting in the basketball game and that was probably two years deep, which means it was great wisdom. But I totally forgot about whatever that advice is.

Brad Zapp: But look. Number one, I know you. I have no doubt that you’re going to find a way. So persistence is the key. And you have to widen your net. So I just believe everything is, of course I do, right? I’m a quant fund. Everything’s sort of like a math equation. So there is plenty of people out there Rachel that certainly will fund you, and it is very hard to find and get in front of them. But given enough time and enough effort, you will find them, and they will fund you. And that’s the same for any company.

Brad Zapp: I can definitely speak about my headquarter market in Greater Cincinnati is one of the mistakes that the entrepreneurs have here is I don’t think they have driver’s licenses because they seriously never drive more than five miles. They go to Cincinnati, they talk to the one VC and the one angel group there, and they come to Northern Kentucky they talk to the one VC, one angel group here. Then they just kind tread water. And I always say hey, did you know Indianapolis is an hour and a half away? Columbus is two hours away. Chicago is five hours away, Pittsburgh is five hours away. Nashville, Knoxville is three hours away. Atlanta is a direct flight away. And you’re giving up on $1 billion of potentials.

Brad Zapp: So if you are not getting funded, it’s literally either your business and idea is not good, or you have the wrong price, or you’ve not got in front of enough people. So control is things that you can control. And if you’ve got a good business, you will get funded.

Rachael Qualls: Yeah, I believe that too. I really do. Having seen it and been on both sides of this table for as long as I have, it’s a sales process and you have to cast as wide a net as possible and then work that sales process down until you find the right fits. So Brad, I think that we’ve talked about today is a fantastic way of looking at our industry from the perspective of what works and what doesn’t. And how you’re changing perceptions, hopefully all over. So I’m going to end with one last question that I ask everybody. So is there any potential investment that’s come across your desk that you passed on that was a huge win? And if not, is there any public company or large prominent company today that you in its earlier stages would have passed on? So the first question, is there anything that’s come across your desk that you wish you would have funded?

Brad Zapp: Well yes, there is. And one of the companies that came, venture capital is different. So as you know, we’re different and we’re new. We’re four years old. And one particular company had all the green lights going off. They just straight up, they had other investors and they were full. And we just didn’t have the opportunity. So a little bit different, but that’s a company and it has been a huge success. I’ve had two of those, in fact. One turned into a $1.6 billion unicorn, and we tried really hard, really hard for the series A and the series B. And we’re just different. So that old culture kept us out. And then we had a life sciences company that’s not quite a unicorn. But it did.

Brad Zapp: Is there a company that I could have got in that we didn’t? I’ll tell you the truth. I’ve not looked at the data Rachel, close enough. That’s in our plans. No doubt, when I do look at the data, there will be. As far as a publicly traded company that we would’ve passed on. Well yeah, I’m guessing here. Okay. I think we would’ve passed on Uber. Given our tilt, I’m just guessing. I don’t know this, probably shouldn’t say this. But look, they’ve had their cultural and team problems, and CEO problems. I’d like to think that our proprietary team DNA analysis would have vetted that out. So let’s just assume for this question that it would have. We would seriously, regardless of the opportunity, we absolutely would have passed on Uber. And I think that’s fair to say.

Rachael Qualls: Nope, that’s exactly what I was looking for is sometimes the best deals are the ones you don’t do. And then sometimes I look at these companies that are wild successes and I think I never would have funded them. So I’m just always interested to see what my peers pick and thing. So Brad, you’ve been fantastic today. I can’t thank you enough for spending your time and talking about how you’re doing things differently. I think it’s important and I think you’re fabulous. So thank you again.

Brad Zapp: Rachel, thank you. And to anyone listening, I’ll close with don’t forget Kansas City burnt ends.

Rachael Qualls: Burnt ends will change your life. All right Brad, thanks so much.

Brad Zapp: Goodbye.

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