YouSaid · the spoken record

Ron Bouganim

lines on the record: 39
first: 2018-10-29
most recent: 2018-10-29
sittings or episodes: 1
sources: podcast

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“What we're talking about here. So to us, code if you think about it, is sort of the very foundation now of how our society operates and every single engineering department in the world, frankly, is going to need SEMA, not just GovTech. And so we looked at this whole sort of code maintenance challenge as just a massive business opportunity and tremendously impactful within the GovTech space. So that's why we said yes.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Who are most recent would be from Fund 2. We announced two investments out of Fund 2, SEMA is the name of the company, S-E-M-A, SEMA. They're in broadly the space that I would define as legacy code maintenance, which is a mouthful. But basically, it uses the often used AI and machine learning ML to automate the maintenance of code. And I said yes to this crew because maybe you wouldn't be surprised, but government agencies are still running on COBOL in some cases. And this from the 70s, I mean, this is a real problem in government. You know, these systems are so old and there's such a major retirement wave that there's literally nobody around to maintain them. And so refactoring is an understatement in the GovTech space. And I'm not talking about just refactoring for a payroll system at some state level agency. I'm talking about you need to refactor code that NASA uses in launch vehicles.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, because I did so many, I can tell you how rare that is, but when it does happen, I know for me, I certainly left going, what just happened there? I mean, okay, maybe I'm good, but I'm not that good. You know, like, come on, what's going on here? And so you just have to think through, like, this is incredible. This person has achieved their success for a reason.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Sense that, like, you know, I was so prepared because I thought, look, this is going to be this person is very, very successful. And I thought this is going to be really challenging. And I was ready on seven different dimensions. And what you find is the folks who are sometimes the most successful have really done the work. They didn't get there by accident. And they've done the work. They know what they are looking for. And literally I was out of there, I think within 20 minutes, I was out and had a commitment. I didn't know what to do with myself for the rest of the hour.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a tough one because I think a lot of high net worth individuals and family offices and so on prefer to sort of keep these things confidential. But what I would say, so we're fortunate, we've got some really great LPs. One of them is one of the wealthiest individuals in the world. I mean, believe that that and maybe people can fill in the blanks. But I think the takeaway from that was, you know, I had done a lot of pitching. Again, people didn't understand what I was talking about in the early days. And what's interesting to me is that sometimes the most successful business people, you sit with them and investors. And literally that meeting was all of seven minutes. I sat down, I flew over to see them in the family office and so on. And literally I sat down. They said, okay, we're in for, I think it was $2 million or $3 million in Fund One, which was, you know, 10% of the fund. We're in. And here are like seven questions or whatever they had. And it's like, okay. And I just answered. And all I could do was stop myself from pitch. No forget I was in pitching mode and I had to just tell me like they just said yes, you know, shut up, stop selling. And so I think that's for me a memorable.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I would say the question here, I think for any new fund is, can you have a vision for a new product offering? Because I think the fund is effectively a new product. In the context of a ton of competitors, money is coming from all sorts of directions, and you have to have a unique value proposition that I think will create a long-term competitive moat. So actually, if you think about what I just said, it's actually the exact same question I asked startups. Do you have a vision? Is it unique? Will it create long-term moat? All of those same questions, I think when you're founding a new fund, you have to ask yourself the same thing. And if you can't answer those questions, then I don't think you'll be successful.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say GovTech is government contracting. I think a lot of people So I would say if my dad was a first generation immigrant, so his English wasn't perfect. But he used to say this thing that I often keep in mind, he would say, think, don't sink. I think probably because it just rhymed. But anyway, what I took from that is it basically means that there's always a way out of a problem. And so whenever I find myself or the portfolio companies in a jam, I think the key message there is stay on message, stay on the problem and don't let it overcome and overtake you. If you think your way through it, there is a way to find a doorway out. So I've often kept that in mind. Plus it's easy to remember. Think, don't think.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“I'm going to go with one I recently read, which was Walter Isaacson's book on Leonardo da Vinci. I've been driving my kids crazy because I refer to him as Leonardo with my best Italian accent. I think every entrepreneur should read that book, honestly. Da Vinci is the ultimate dreamer, doodler, cross-disciplined thinker, fact-based scientist. He had this relentless curiosity of the way the world worked. And I would say he sort of had this product visionaries view that a product is never really finished. And I think entrepreneurs have to adopt that as well. So I would go with that one”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, I'm fortunate to be co-invested actually with lowercase in both Mark 43 and Binti as well. So that'd be a great starting point. On the larger institutional investor side, I think the folks at first round capital have done a great job. Their model is different, so they can't have the same level of intensity that I was describing for the GovTech fund earlier. But they have put in place, I think, very good platforms that can help entrepreneurs in very specific ways. And they're able to tap a very good support network. So I really like investing with those folks, but if you look at our portfolio, it's everyone from general catalyst to cowboy ventures and all the rest. I mean, there's a number of investors in our companies. Our portfolio, I've invested now $17 million all in. Our companies have raised nearly $300 million in follow-on capital. So we've got a lot of good people in the mix. I think we've been fortunate to work with some really good folks.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“And help them, I don't want to say as a therapist, but in that context, in a professional way such that the next day at a board meeting, if they're not hitting their numbers, you can slam on them, right? And make sure that they get the message. I don't think that there has to be this dynamic where it's like, we're not friends that way in the way that it's moved past the line of being unprofessional. But that doesn't mean I can't be empathetic. And that doesn't mean that I can't feel extremely close to people, especially with the level of intensity of work that I just outlined. I think they view us as another sort of co-founder. So yes, it's intense and you have to keep that balance always, but I think the founders are doing the same. They're not forgetting the fact that I'm an investor and that I have LPs and I'm institutional investor and all the rest of it. And yes, I am Ron as well, but there is a way of managing that professional line. I haven't encountered it to be a problem so far. Maybe I'm wrong, but thus far it doesn't seem to have been a problem.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, so I'm not dodging the question. I think you can do both. I literally have situations where, as I mentioned earlier, I mentioned some personal dynamics, right? These are, in the GovTech funds case, these are 20-year-olds. And especially if they're hitting those growth rates I mentioned earlier as well, I have a few companies now that when I invested, they were two or three people. They're now well over 200 employees in just a few years. And that is a tremendous amount of pressure, I think, for anyone, much less a recent graduate. And there are personal dynamics that come into that. I think you have to find a way as a scene investor. I feel like I am doing it that way, where you can have personal conversations when they need to happen. You can be a coach. There's a difference between being my spouse, who I'm having obviously very direct and close conversations with, of course, because we are married to each other. And being a coach to someone, you can still have personal conversations and offer advice and be an empathetic ear and present context for that individual.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Maybe down the road. But I would say if you want to do that well, I think it's difficult to do that with 50 or 100 companies. And I think the perspective, just come back to your question, I think the perspective that LPs have is, well, it's...”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure, and it's a valid point, I understand. I think, however, and all I can look to is the data again. If I look at my experience with the lowercase capital portfolio as an LP there, I think they had a very concentrated portfolio and tremendous results. As an angel investor, my focus was very much enterprise SaaS, and I was only doing one or two or three investments a year. Obviously, as we talked about earlier, the dynamics as an angel investor are different. My board of direct consisted of my wife, but still the pressure was there, right? What are you doing with our money? And she would underline our money. So I think that there is something to be said for their seed stage investors, that they should be highly engaged in their companies and really help those companies achieve product market fit and put in place the infrastructure for early scaling. That's kind of our view on what we should be doing or those two things. And we can get into all the things the GovTech Fund does and how we think about co-investors and so on.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Very good chance I probably know those agencies or people there or whatever. So I can have really meaningful conversations and then beyond that as well. My diligence actually is many of the agencies. In fact, probably about a third of our deal flow today comes from the US government. I think I'm the only VC that can say that. And that is because agencies will call us and say, have you heard of XYZ company? And if you were to help put together around a financing, we would feel more comfortable buying from this particular company because we feel like they're going to have a long-term standing, right? They're not going to disappear overnight. And so that's what a typical company looks like for us. They're already underway. And then by joining the GovTech fund, they sort of get onto our, I guess, rocket ship of access and all the other portfolio peers that can help them grow their business.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“So we, by design, I run a fund that has fund one, which we stopped investing out of in December of last year of 2017, had 15 portfolio companies in it. So we're roughly doing one investment a quarter. I think about a sort of three to five year investment horizon. So 15, 16 portfolio companies per portfolio. As a result of that, it's a high intensity, high engagement model. We might talk more about that later. And so as a result of that, as much as I wish I could engage with companies in sort of the idea phase, right, really sort of the ideation and incubation phase, we just don't have the bandwidth. So a typical company coming to us has a product. I wouldn't call it product market fit, but what they've got is half dozen agencies that have signed on to be beta partners, perhaps to give feedback. They've got something going in terms of motion. And again, because it's all we do all day long.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“So, their software is enabling municipal bond issuers who are trying to raise money for a school or a bridge or whatever. Now that's creating a marketplace connecting individual institutional investors to government bond issuances. So again, GovTech and government doesn't operate in some kind of an island. It's not a remote thing. Government sits at the center of industry, citizens, right, all these constituents. And so our companies are increasingly filling that role of connector. And that creates very interesting marketplaces, which I think will add downstream invaluation upside. But anyway, hopefully that answers your question.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Enterprise SaaS companies do. What's interesting is they start to capture marketplace valuations as well on top of the SaaS valuations because of the value they're creating by acting as the glue between government and their constituents. So quick examples, if you think about our portfolio company, Smart Procure, sales procurement software to procurement officers, government employees, but now it's connecting governments and vendors, so buyer and sellers, in what is the biggest marketplace there is. The US government spends a trillion dollars a year on stuff. Forget about like missiles and submarines. I'm talking about like paper and pencils. It's 10 times Amazon's current GMV, just what the U.S. government spends every year co-inspect another one of my companies, food safety software. So yeah, you know, they sell their food safety inspection software into government agencies, but now they're connecting restaurants on the other side. And so that marketplace presents insights into the entire food supply chain, neighborly. Last one I'll just throw in, municipal bond software.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Earlier on. And I think a typical great exit in the SaaS space is sort of $5 to $10 billion market cap. If you look at public companies, the largest SaaS player is probably Salesforce today at $100 billion valuation. I think it is fair to say that consumer products, you know, Apple, Facebook, Netflix, drive the higher valuations because in the consumer space, the distribution reach and adoption is more pervasive than anything in the enterprise SaaS space, you know, GovTech or not. But I guess what I would say here is on a risk adjusted basis, I'm very comfortable investing at the seed stage of a GovTech sort of B2G enterprise SaaS company that has a $5 to $10 billion exit. I would do that all day long. And I think a lot of investors all the way up the capital stack from seed to growth would say the exact same thing. And I guess last point I would make here, last comment, I think where things really get interesting in our companies is as they evolve, so they will typically start as a SaaS business. So they're solving a workflow problem as most”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“First, I would say one must choose a vertical that is large enough to support massive outcomes. I think GovTech more than meets this test. The US government alone this past year spent $150 billion on technology, IT and software. That's bigger than the entire online advertising market, sorry, Google. Globally, we were talking about governments, gardeners talked about government spending over $400 billion a year on IT. That is larger than all of retail transportation utilities combined. That level puts you in the same category as all banking IT worldwide. So it's a massive space. Now, no doubt we are going to miss moonshots as you alluded to earlier in other verticals since we're not investing in those other verticals. But I would say a few things. First of all, I'm pretty confident we're going to hit the govtech moonshots. And I think to be sure, though, you know, what I've described as GovTech is really enterprise SaaS. If you discuss the definition,”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“I would suggest, and thank you for bringing that up, it is by far the most valuable thing that my startups have. I think, and in particular in the Bay Area, only about half our portfolio today is in the Bay Area, where I'm based in San Francisco. Government, of course, is everywhere. There are governments everywhere. So we have companies based everywhere in the US. But I think it's a really good point. We shouldn't just leave it. It's very, very difficult. I'm sure you've heard this from others to recruit, in particular in some of the major city centers, the Bay Area and so on. And in particular, when you're up”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Are looking to work on companies that matter. If I can say that without sounding condescending, it's not to say that Snapchat doesn't matter, but they want to work on something where there's a real definable impact. And so if you look at our portfolio company, Mark 43 and the law enforcement space, literally the co-founders were at Harvard and they started the company while they were at school just doing ride-alongs with police departments. Binti, which is in the foster care space, the founder there of Felicia, her family foster family themselves. Got foster children. So every one of these stories, every one of the companies, when you peel back the doors there and sort of get into the stories, you will find entrepreneurs who are personally connected to the mission of the problem they're trying to solve. And that leads to a certain amount of passion and connection that you need to have if you're going to run the marathon of running a startup.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Again, I'll start with the data, and then we can talk about maybe why. So the data is I've got 19 companies in the portfolio. One is already exited. So of the 19 investments we've made, only two are founders who are over the age of 28. The rest are in their early 20s, recent graduates from some of the top computer science programs. And I don't consider I'm 46 now. I don't consider myself an agist in any way. It is just the reality of what's happening on the ground. And I think this is a testament to sometimes the often maligned millennial generation. I quite think the opposite. I think what's happened is there's a generation graduating school now in computer science programs and elsewhere that are saying, look, and many of our founders have multiple job offers from the usual suspects during the Google's Facebooks and so on. And of course, those are wonderful companies. But I think millennials are perhaps even more aware and socially connected issue driven, mission driven.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Set up mini conferences and invite their peers to come and talk about some of the innovative things they've been doing. And they will invite their vendor partners to come and present. And so literally you have agencies marketing our companies to each other because they want to spread that innovation. I just say that in contrast to imagine if Coca-Cola had some innovation, would they call Pepsi and say, come on over? Let's talk about what we've just innovated. We want to, no, of course not, right? And so that's a unique dynamic within government, the level of sharing and collaboration makes for a very interesting customer.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, again, so as we are primarily sort of SaaS investors, think of us as enterprise SaaS investors, perhaps our customers a little different, we think a lot about SaaS metrics. And so what we're looking for are companies that can hit $25 million of annual recurring ARR, annual recurring revenue within three to four years of our investment. So that means you roughly need to be growing 15 to 17 percent per month. We have a number of companies on that path which would make them honestly best of breed in the SaaS space. One of the reasons that I didn't mention in the earlier question of, another reason why it grows so quickly, governments are unique in that when they adopt innovation, one of the things they'll often do, and literally this happens in the US, hundreds of times a day, is once they adopt innovation in a given department, since they're not earning stock options and bonuses and so on as government employees, one of the ways they attain recognition and they want, they go and they share their innovation.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Four and five years ago, and asking the question How is this possibly happening? Now, let's be clear, it's not uniform across local, state, and federal government in the US at least. And there are many, many agencies that are still adopting the cloud and still coming into this sort of new way of thinking about things. But there are plenty of early adopters, as I was just mentioning, as evidenced by the number of agencies we're already in as a portfolio.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“And of course, it's commonly known. The cost of technology has dropped so dramatically that the price points that my companies can offer in many, many cases is far less than the threshold, the procurement thresholds that are required by agencies to issue these very long processes. That is to say, every government agency has some kind of a number below which it just doesn't make sense to have a very detailed, long process because it's too time consuming for that small amount of money. Well, if you're a startup and you're selling into a major city and you can sell a deal for $250,000, which is below their threshold and get that done in 30, 60, 90 days, well, it turns out there's thousands of cities. So go do that a few thousand times. You've got yourself a very nice business. So that just leads to a sales cycle that is dramatically less than historical selling into government. And again, that's what I was observing when I was running the accelerator.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, sure. So there's a number of factors at play here. One of them is clearly in the emergence of the cloud. And what that has enabled government agencies to do, first of all, is move away from this traditional model of, well, we are police department of a major city and we need a new record management system. So what we're going to do is hire a major consulting firm, spend three years designing a brand new system that's custom for us and then take five years to build it. And by the time we get it, it's technologically obsolete and $100 million over budget and all this nonsense, right? What's happened now with the cloud and software as a service is, of course, as you've seen in the enterprise, off the shelf products that can be easily adopted without going through the CTO, in fact. And so department by department can now make these kinds of technology decisions. I think another dynamic is a procurement itself and it's related to the first point, as I'm sure you've heard from many VC interviews.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, let me start with the data. So the average sales cycle in our portfolio is actually less than 90 days. So let's start with that fact. We now in four years across 19 companies are connected to roughly 20.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Call it a company, but if you think of it as an enterprise, local, state, and federal government combined, it's massive. And so that massive enterprise needs tech to operate day to day. Let's call it B2G, if you will. Well, that's GovTech. Civic tech, by contrast, we think of as the technology that empowers citizens to do their civic duties. So if you think about politics, elections, voting, community organizing, policymaking, lobbying, this tech you might think of as more B2C, maybe where the C stands for citizen. So that's a fairly broad difference between the two. And for sure, I often get pitched companies that, hey, help us with voting or lobbying. It's very important to democracy, but GovTech is not the area we focus on. The other one I should just point out, you didn't mention it, but there is also this notion of urban tech, which sometimes also gets confused with what we do as well. And urban tech, of course, has to do with sort of the urban movement to cities, the built environment, mobility solutions, that kind of thing.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“That's a great question. I think it's a good place to start. I think folks often do confuse the two. So to keep it simple, just think of GovTech as the technology that government employees use to do their jobs. So the GovTech funds portfolio today is exclusively comprised of SaaS startups, software as a service startups that, for example, run a police department or manage foster care or enable the trillions of dollars spent in government procurement every day or administer a public school, et cetera. So think about the US government if you just take a step back as sort of the largest enterprise in America. And frankly, I think in most countries, one could say it's probably the largest enterprise in that given country. In the US, literally the U.S. government is the largest enterprise. It employs three and a half times as many people as all of the Dow Jones public companies. If you look at the Dow Jones 30, that's Microsoft. And take all their employees. The U.S. government is three and a half times bigger than all of them combined. So if you think of it as list,”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Them. My sign of success is that a founder has come to us around is coming together. And basically, and this has happened often, I said, how much do you want? And we're raising $10. We know you're a small fund. Can you do five? Can you pull some of your LPs in? Can you put together an SPV? Whatever you run and GovTech fund can do to take a major chunk of this next round, we would like you to have super product. Something to that effect. When I hear that kind of feedback, that says to me that we are doing our job. And if I don't get that kind of feedback, that says, I'm not doing my job and I don't deserve the extra pro rata. So I'm definitely in the second camp.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I'm in the second camp, not of course against larger ownership stake in the first check, but I would say if you looked at the 19 investments I've made to date through GovTech Fund 1 and 2, the overwhelming trend has been certainly taking a meaningful position with leading around, or certainly being one of the co-leads or significant investors in the earliest rounds, for sure, adding to my position, we would invest typically through a series B kind of round, but I would in some cases perhaps even doubled my ownership position over those first early stages. Now, you know, you could say, well, gee, you're paying a lot more for that extra ownership, but actually when the companies do well, it will all sort of work itself out. And I still will make obviously a better return on that first dollar. So I think for us, the strategy has worked because we are so engaged in these companies. Yes, we do sign ProRata rights and we have all those agreements as typical VCs, but honestly, we don't even need...”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Becoming institutional. It doesn't have to change your underlying foundational view of the world, but it does mean you have to think about some other institutional dynamics. It's sort of a debate for me that I was having the other day here on. I always believe that ownership is largely built on first shack and with the breakaway companies, the big boys coming at the next round and you don't get...”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so my investing mindset has changed, I would agree, but perhaps without sounding trite, I would say I've become more institutional now that I'm institutional investor. So that is to say, now I have to think a lot more about institutional topics like ownership percentage, portfolio construction, follow on rounds, board responsibilities, of course LP reporting and all the administrative sides. So I think a lot of this comes out of the fact I'm writing bigger checks and leading rounds. So that just comes with a lot more responsibilities, I think, than I was doing as an individual angel, you know, perhaps writing $25,000 checks. But in terms of my core investment lens, investing in early and great entrepreneurs with massive market potential, and also my work style, even as an angel, being the most engaged investor in these companies that I'm part of, I don't think those have changed. So in that regard, I think I understand Andy's point, but I think it's a function of just, frankly,”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Honestly, in part, sort of came out of spite. It was like, well, if you all aren't going to do this, I'm going to launch it myself. And also a realization that like, wait a second, I know this will sound a little, again, sort of cliche, but I almost felt like if anyone's going to do this, I'm the guy kind of with the entrepreneurial background, with the investing background, and part of this movement, and I was one of the only folks in the room with that kind of background. So I sort of felt incumbent like, well, if anyone's going to do this, it should be me. And so that's how GovTech Fund one got kicked off. I mean, I love that founding story, but before we dive headlong into all things GovTech, I do want to just touch on two evolutions. And the first is maybe a more macro. You mentioned obviously there being an LP, being an angel before GovTech. How have you seen the ecosystem really evolve over the last dozen years here, Ron? Well, I mean, I think the infusion of capital has really shifted the entire space. And so went from being sort of a collegial, I guess you could say almost.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“To see startups growing at venture backable growth rates. Remember, at that point, it had already been an angel for a number of years, an LP in some funds. So I'd run my own company. So I had context already. And I started speaking to my VC friends saying, hey, look, this is a $400 billion global market, this GovTech thing. And these startups selling into government for the first time, this has really never happened. You should invest. And now we're forwarding to sort of 2013. And at that time, my friends of ECs, they just weren't biting. They've come a long way since then. We can talk about that later. But what I think was going on, Harry, was just the classic case of information asymmetry. I just knew a lot more about a very particular, and as it turns out, a massive vertical. And it seemed the data, the shift with my own eyes. And by contrast, my peers, for 40 years, VCs had data telling them the government was a terrible place to invest. And they were right. But they also weren't seeing the same shift that I was. So basically the GovTech fund.”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Perfect for me because that movement was a mix of tech and a focus also on sort of giving back to my new home, the country that had been my host, and that I was a citizen of now. And the modernizing of the operations of government struck me as I've always sort of thought of government as a vehicle of connective tissue, of society. And I thought if I could help modernize the operations of that connective tissue, that that would have a tremendous amount of impact. So that got me hooked. And then one of the initiatives that emerged from that Gov2.0 movement was a nonprofit that you may have heard of called Code for America. And their mission was broadly to connect the Silicon Valley and government. So I joined as a volunteer, was actually one of the first or earliest volunteers there, the woman who founded Jennifer Polaka I had known from before. And eventually I helped to launch a GovTech accelerator within Code for America, which in turn introduced me to startups that were tackling the challenges of modernizing the operations of government. I also had the opportunity as a volunteer again to speak to hundreds of government employees. And through the accelerator, I began...”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Want to give back to the country that in the prior dozen years had really become my home and the home of my children at that point as well. So I looked into getting involved in politics. I had done some politics work in Canada. But I found the two political systems between the two countries radically different. And becoming part of a political campaign just, it didn't really resonate with me. But as it turned out in 2010, there was a movement growing in the valley referenced gov 2.0. So what was happening, thinkers in Silicon Valley like Timo Riley and others were asking questions like not if, but when major trends of the day like the cloud and mobile agile software development, et cetera, when those hit government, what will government look like? How could we modernize the operations of government to meet the 21st century citizens whose life was increasingly digital? And so that led to a series of conversations and a movement arose out of that. And that was”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source
“Sure. So my story starts when I became a US citizen in 2009. I was actually born and raised in Toronto, Canada, but I moved to the US in 1997 after college to really to jump into the startup world. So in 2009, my life at that point, I had been part of two tech startups that had exited already at that point. I was parenting my then two young children, getting involved in building a local school, and I was angel investing mostly in SaaS startups at the time, LP and a couple of VC funds. I owned a home, I made a lot of friends. And so the net of all that is, you know, my point is that my life at that point was very much grounded in the US. And so citizenship just really felt like an organic next step for me. I really enjoyed the process of becoming a citizen. I know it sounds a little cliche, but it was really a moving experience. I never had earned a citizenship before. You're sort of bestowed upon it in Canada, right? And I really had this newfound patriotic connection. I really...”
2018-10-29 · The Twenty Minute VC · 20VC: The 2 Core Roles Played By The Best Seed Investors Today, What To Look For In Potential Co-Investors & Why Seed Funds Can Grow Ownership in Their Best Companies Across Rounds with Ron Bouganim, Founder @ Govtech Fund · IDENTIFIED FROM THE TRANSCRIPT · source