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This is Pete Moore on Halo Talks NYC. I have the pleasure of bringing to our podcast, Chris Van Dusen, to start off 02/2025. We're gonna talk about venture capital. We're gonna talk about Sudeikko, and we're gonna talk about the pros and cons of bringing somebody like him into your business to help you scale it. Chris, welcome to the show. Thank you so much for having me. Appreciate it. So, so we met through, through a very passionate, networker and entrepreneur, Cirox. I wanna give a shout out
to him. And, Chris, wanna take this episode and really try to hone in on for entrepreneurs. You know, what is the benefit of going to somebody like you, taking capital from you, the way your fund is structured, you know, to really match up the right opportunities with the right investors. So maybe you could give a little bit of your background coming from SoCal and, you know, talk about, talk talk about the pros and cons of taking capital.
Sure. Yeah. So background, originally from the Northeast, came to California at the end of o nine. You know, I wasn't always in venture. I did get a degree in economics from William and Mary in Virginia, but my career was anything but but but linear. Right? Not the traditional route. You know, is in sales for many years.
Had the opportunity to then go on the marketing side, and started understanding how companies really scaled, how they worked, started by an agency, and then had the opportunity to meet some some great cofounders, of ventures along the way, all kind of culminating in three exits, two in '21 that we sold and one in '19 02/2019. So I have, you know, three exits under my belt, if you will. Congrats. Many other gravestones along the way
as we know because everyone likes talking about their successes. I'm happy to talk about the failures as well. Real highlight reel. The real real highlight reel. The real. Right? Everyone shows you that home run swing. No one shows you the other strikeouts. Right? Sure. So I had these three exits. And, you know, during that journey, I met, this gentleman, John Garcia, who founded Sligo Capital back in 02/2017. And,
loved their ethos of what they did. You know, we we talk a lot internally, about the difference between capital and smart capital. Right? Money and smart money. I thought they were really a a smart money type group. Again, love their their strategy. They invested in one of the deals that we took full cycle. So I joined them January 22, and our firm is different. You know, I was kind of alluding to that. The reason I see that is traditional venture.
We're gonna go raise a fund. We're gonna find we're gonna have a mandate. We're gonna have something we're interested in. That interest could be around AI. It could be industrial manufacturing, ESG, you know, you know, consumer goods, you name it. And then you go raise capital for that fund and then find assets to deploy. What we like doing is a little different. We're gonna find great assets, great opportunities. We're
gonna set terms on deals. We're gonna come in and help you. Then we're gonna go to our LP base and we're gonna or we're gonna go out, generally to, you know, what we call our COIs or our network and go raise the capital for that specific venture. It allows us a little bit of flexibility in that we don't just take on specific deals. We may do biotech to fintech to straight play real estate project. We're finding great ways to,
to never make alpha for our investors. So when you take a look at, you know, one of the benefits of a private equity fund that would have dedicated capital or venture is that they say, hey. Look. I got a term sheet. I'm gonna give it to you. If everything checks out, you know, we could call the capital, and and fund this deal. Obviously, you've got guys that have had a lot of success, Garcia. So have there been instances where you have to pull back a term sheet, or would you guys have
conviction on a deal and you wanna put down a term sheet? Look. We get this funded. Yeah. It's we'll get this funded. You know? To say it perfectly lays out to the timing that we had, I would think would be a little shortsighted. Right? I would say from time to time, we may delay, but we also make that in. And so I wanna make sure I'm clear here. You know, we're not causing delays or or hardship. What we're saying is, you know, a traditional venture shop may
deliver that term sheet and fund within a week. We're going to discuss, hey. We need three weeks or we need a month to fund, but here's how this is gonna happen. Here's how we're gonna ladder in capital. That's really how we bridge this because you're right. It's the one thing we can't control in our model is is is time. Right? But, again, it allows us and our LPs flexibility. Yeah. Look. The private equity deal, the under over, I'm getting a deal funded from from an LOI is
for, like, six months. So if you get deals closed in, like, a month, you know, you know, serendipity to, to everybody involved. You know, I would say it's, those are gonna be a little different. So maybe our full underwriting is the six months. Right? But from term sheet to delivery. And and the difference between the p kind of VC side and not to be pedantic is they're doing my you know, big minority or majority recaps are
buying the company. So they're going, hey. We like what you have. Now we wanna really get in that data room and make sure our assumptions are correct. And that's your time. For us, we're gonna do that before we ever deliver a term sheet in venture. So there may have been and, you know, I would say last probably three, four deals that I've brought in have been what I would call incubated, meaning I've known or met the
founder. I've been looking and understanding the company. We've been in the data room, and this could be upwards of four or five months at this point before we're ready. Mhmm. Because the type of deals we like to be a part of are ones where they are capitalized. Right? So think of seed round and and above, seed a b. They're capitalized. They're on their glide path, and maybe they're anticipating a raise in six months. So we're gonna watch them hit their KPIs towards that raise. We're gonna start
discussing what realistic valuation is gonna be. We're gonna start going into the data room, and and that is that multi month process. But the minute we deliver a term sheet, we were already at the point where we know we have conviction we're going to do it. And then a lot of times, we're already having conversations with those LPs on our side to say, we're
getting close to funding something like this. Is this in or we know it's in your wheelhouse, or is this in your wheelhouse, or do we wanna do something here? Yeah. Yeah. I was I was doing a rift the other day on, you know, seed round, series a, series b, series d, and I was trying to remind the audience that the reason why you get a series b
is because the series a went well, whatever experiment that was. Could you kind of, you know, pour some either cold water, warm water, or, you know, lukewarm water on the fact that, like, look, you don't automatically get to, you know, swing at the bat every time and and your valuation just because the valuation of series a was 6,000,000, you have to, like, prove that and then validate, you know, at each
step, of the way. Maybe just like an education for entrepreneurs to kinda think like we do and understand that, like, value is created or it's not created. And if you get another swing at the bat, I can't give you the same value for that swing. Yeah. You know, a a great way to look at it is and it almost goes up to a little bit of a more macro question, which is, when is it the right time to take capital from someone like me, right,
who does this for a living? And it's really saying and it depends. It's saying, I'm ready to grow to this next stage, and I have market signals. I have new clients. I have manufacturing needs to get done, whatever it may be, to get to that next level. So let's start. The reason why you you received that valuation for your series a is you are on glide path towards it. You just needed capital to really grow the team, grow your grow something. Right? Now to qualify for your
series b, did I hit that, those goals? And then secondarily, am I on glide path for the next big growth or step function of my business? And if the answer is no, then you're not gonna get this large new valuation. If the answer is maybe, but I need a little bit more time, maybe you do an extension round, what they call an a extension. Right? Where it's maybe the same valuation because you really haven't hit it, but you're very close or
you're you know, things are looking like they're going to be at. There's a macro factor that that slowed it down. And so but to to your point, if we're underwriting the next round, we've set up modeling around it to say, here's what you should be at with the capital we have provided. And if you're there, great. If you're not, we're really gonna wanna understand why. And we're certainly
not gonna give you the valuation you'd want. And as a founder, every time you take capital from us, you're being diluted and same with everyone else on the cap table or on, you know, on the the ledger of owners, if you will. Right? And so I don't wanna raise it that 6,000,000 and then come back and need more capital at the same 6,000,000 because that's just dilutive for I don't wanna say no reason,
but that's extra dilutive to everyone involved. But if I go out and hit my goals, I'm gonna bring in more capital at a higher valuation, and it's gonna be less dilution because I am on path to where I need to go.
This is Pete Moore. I wanna let you in on a little secret. There's this company called Promotion Vault, and what they do is they give out rewards from retailers that allow you to incentivize your members without having to do zero down and one month free or giving away shakes or giving away t shirts. What you wanna do is build a rewards program that lasts, that people value, and that doesn't discount your own products and services. So here's the deal. There's something called rewards vault.
The rewards vault is going to allow a member to set up their own profile. They are going to answer questions. You are gonna get those answers. You're gonna be able to target those members, and you're gonna reward them inside your club, inside your spa, and outside of the club, and outside of the spa to get them to become loyal, to get them to pay their monthly dues, and to be rewarded properly for the actions. A lot of companies are cutting back on
rewards. You shouldn't be. Promotion Vault's your answer. Trust me. This is real. Yeah. One of the mistakes I made, which I am very vocal about my mistakes in life, you know, and and and things that I don't want other people to, to have to experience. So at least I, you know, tell a story and say, hey. Do you want this to happen to you? Yeah. I was kind
of, like, trumpeting the fact that, like, I'm a I'm a angel investor. And I realized that being an angel investor is a great way to kinda lose money because, you know, like, I'm supposed to kinda be an angel and, like, really nice to the entrepreneur all the time, and, like, I'm just trying to be there to help. And then when I give advice and they don't take it, you know, like, somehow, like, this angel from, like, what was that movie? Like, revenge or something or, like, yeah,
something like that. Like, Chip Belushi. I think it was you know, like, the angel's like, okay. No problem. No big deal. You know, pat on the back. Good try. And if that happens four or five times, you realize that, like, the angel is kinda like could be like the angel of death because it's like, you know, like, how many times do you not listen to me? And I'm, like, still trying to be, like, helpful. So Yeah. One, do you ever use that term?
Two, why does that term exist? And, like, when does the angel become, like, rational? Yeah. Right? So it's it's tough. Like, let's let's let's go up on and say, let's start adventure. I'll I'll answer the angel question, but let's start venture what we do. There's some there's some facts out there. Right? One is if you look at traditional venture, they're gonna do a fund as we were talking about. And those funds traditionally apply portfolio theory.
Now portfolio theory, very kinda 30,000 foot, is I'm gonna make 10 investments, and let's assume they're the exact same. And I know that four of them, just like baseball we're talking about, I'm gonna strike out four times, and then I'm gonna have one home run. And that thing is gonna return a really good, if not the entirety of what I've raised out of that fund. And then in the middle, there's gonna be some singles, doubles, triples, hopefully. Right? And that's gonna get us our overall return.
Typically, as an angel investor who's not doing early stage investing in a fund but is actually angel investing in a deal, I have one deal. Meaning, there's no portfolio theory. You have your one at bat. Right. And so that just by the law of statistics and probability says I have a much more a much harder path to getting a return there. Now I can build my own portfolio by making 10, but now my cash outlay is much larger than,
than it would have been on that one. Number two, Angel, if we think about it, the reason it's being used is it is extremely early stage. So, traditionally, I call it friends and family and Angel all being around the same thing. Mhmm. We invest in seed. Why that's important is, traditionally, these companies are in revenue, have market signals, and need capital to expand up
before they do a large a round. If I go precede or what we call angel, they may be in r and d. They may be just have their ideas or they're about to start a beta, but they're traditionally not in market, which means you believe in their idea. You just it's not in in practice yet. So you're taking a higher risk overall. It's tough to be an angel in a series b because this company is now doing revenue, might even, depending on the sector, be in EBITDA, meaning
in profit. Are you much of an angel anymore? No. You're an investor at this point because you're investing in a in in something. So it's, you know, me and you saying we have an idea to revolutionize this space. We have put our capital in and gotten it to this place to show you there's something here. Now we want angel capital to come help us bring it to market, and then you come to someone like me to actually commercialize it from a growth
perspective. Okay. So I might be treating this almost like an entrepreneurial of, angel therapy session with Van Dusen, you know, therapy. Some of the things that I've dealt with, you know, just to get it out there because your perspective on on things that I've that I've experienced is kind of like how I feel like this should play out now because I'm I'm telling you what I did, and now people can say like, Maybe he shouldn't have done it that way or
you're giving a perspective. So let me ask you this other question. You've had LPs in deals that crush it, and and those same LPs, you know, are in in your other deals. That's fine. But then you've got LPs that have they're in, like, the four strikeouts, and they missed the home run, and they missed the single, and they missed the double, and they missed the triple. You know, how do you kinda say, like, look.
We didn't do a fund. We came to you on each one. That's kinda like the pros and cons of, you know, being able to pick your own vegetables. Yeah. So so I'll answer two ways. One is, you know, it's it's a delicate balance because every deal if we put up 10 deals right now that we went and sourced together, Pete. Right? We look at it and go, oh, these
have amazing potential. Maybe disproportionate. Maybe some are gonna be the next huge, you know, unicorn, and some you're like, no. This is gonna be a great return. There are things like interest rate cycles we just went through and are still going through. Global pandemics that happen, right,
that end up derailing things that you can't foresee. Traditionally, the reason why you'd invest with an organization like ours or many others out there is there's a level of due diligence to say, do we believe in this, and do we have modeling and the right underwriting to say we believe it can happen versus an individual investor finding what we'll call a club deal, right, the country club deal, trying to figure out whether or not this is right. Right? So there's a level of sophistication that
starts there. Number two, our investors, especially, I mean, certainly on the equity side, are what are considered accredited investor or qualified investors. These are individuals who do not want to lose money but also are making small bets. And anytime you're gonna do and I'm not a financial planner, so this is not financial advice. But when you are looking at, I have x amount per year or in my net worth to invest.
Right? There are certain ways to build portfolios. And, traditionally, something like this is a very small part because it is going to naturally be more speculative than a mutual fund or a CD or an ETF you're going to buy. And so you're gonna look at this as this small piece that if it goes away because of reasons within the, you know, growth trajectory doesn't happen, then this is my exposure, and
that exposure is x y z capital. And so but if it hits, that could be the biggest return in my portfolio for the year. And so there's just a little bit more of a speculation there. I would also say, and it's a weird way, and I don't take credit for this. I heard this, from someone a few years ago, and it's such an interesting way of looking at it. Most professional investors, which I hate to call myself one, but this is what I do for a
living. Right? So by technicality, it's a professional. We are not as mad about the money we lose than the money we did not have the opportunity to earn. So let me break that down for one second. If we invest, let's just say, $100,000 into a deal and it goes wrong, that is not good. We understand that. We have lost $100,000. If we pass on a deal and that 20 x's, I didn't lose a hundred thousand. Right? I lost 22,000,000. Yeah. And
so you've gotta That's tough. That's tough love on yourself for sure. Exactly. Right? We're like tough. That's where there's this balance of we wanna participate in great opportunities, and we wanna be able to try to see into the future on what these things could be. But we're constantly having to evaluate and underwrite and do due diligence on, is this going to be something? How do we see
it? And then with that capital outlay, do we believe we can be good fiduciaries to see it through from an investor side and investment side? Also, if we miss, what's the lie what what would be that miss? Right? Yeah. And there are no one bats a thousand. Never met that person in my life. So it Well, he's not be there today, buddy. Yeah. And so there's this level of, you know, we're constantly trying to figure out those great deals. Right? We'll use this, and it's a little
kitschy, but, like, we wanna be truffle pegs. We wanna find these amazing deals and bring them to our investors to to participate in. But there's definitely a difference between the the hard capital lost and the, opportunity cost of not not participating. So so different stories over the years where, you know, like the guy from FedEx, he was kinda, like, on his last leg, and, you know, he got, like, a c plus or t t t plus or something on his business plan and then,
you know, had, like I don't know. I think he might have gone to Vegas or something, like, put his last $10 on to cover payroll, and then, bam, it turned into, you know, what it did. One of the things that I've dealt with, going along the lines of our, you know, you know, this, you know, CVD therapy session here on the on the venture path, is, like, it's really hard to go to an entrepreneur who's like, you know,
they're working eighteen hours a day. You know, they're they're trying to make it work. And, like, look. Like, it's like, the market's not resonating with your your product. Like, I put in here, you know, you know, capital to I put in rocket fuel, and, like, we're not going any faster or we're we're going in reverse. And you gotta shut those four out of 10 companies down, or you gotta kinda let them die on their own, or they gotta just turn into, you know, like, three or four people doing
something that kinda keeps the lights on. One of the things that that I ran into is like, hey. You're an angel investor. You know, a big advocate of the business, and you're like, hey. Look. You you didn't make it work. You know? Now I'm gonna have to, like we're probably not friends anymore. It's it's not my fault. Right? But, like, I can't support you. And we were friends, but I was your investor. Like, I wasn't, like, your buddy like, you're not
my fraternity brother, and you're not, you know, we're not related. So what are some of the things that you've had to deal with maybe on a no names basis or maybe an elegant way to kinda say, like, look. I'm taking this exit ramp, and, like, I'll give you back my equity. I don't think it's worth anything. I'll write it off as a as a tax write off. But please don't call me to ask me for money because I'm not your I'm not your
bank account. Right? Yeah. You know, personally, I haven't had that happen, so I wanna be clear there. What I have had is you have certain investments, and we can see them you can see these stories a lot when you look at the origin stories of some companies that may raise good money, their own path, but you're right. There's something
within the business that just can't be worked out. Yeah. Or you'll hear things in, let's call it, fintech or biotech where there's some government change that comes through that affects all the way through your business, and you can't recoup costs or the entirety of your model changed. Right? And so when you're looking at that, that's what we call in the business a pivot. Right? Is there a pivot place you can go?
At its largest, and there are multiple, you know, Silicon Valley dream companies today that started one direction, really couldn't execute and then pivoted and went a different way, and now they're thriving. What is incumbent is having, especially when you're making an early stage investment at our level, right, Angel's gonna be different because you can't command the same power traditionally, is to
get a board seat. And that is traditionally a minimum that we look for depending on if we're leading or or following into a into a round is a board seat or board observer because we want the ability to understand that level of detail in the business early on to help. Now one thing about Sligo's model that's a little different is, you know, we we're a fairly large team and all. You know, there's there's 11 of our senior partners. We have about 40,
40 team members, including our leadership. And in a lot of cases, we go in these companies similar to what private equity would do, but early stage, and help them during this formidable time. So we can help them see over the horizon, not only capital needs, but certainly strategic needs. And if something doesn't resonate, start having those conversations now about where you can pivot to try to mitigate that issue. Right? But you're not immune to it is is the problem, and it happens.
You know, I would say if if it's tough when you come in between someone and their money. Let's just start there, right, to go to the therapy session. Sure. And so there's a level of if you are an investor and you're a minority investor, which angels are, especially early on, Are you a past investor? He goes, here's some cash or here's some capital. Let me know how it goes. I'm in your corner. Or are you, as
part of your angel strategy, rolling up your sleeves and helping? Because that's traditionally what these founders want at that level of investment. And if you're not doing that, then my question is why are you an angel investor in the first place? Traditionally, angel investors have something to give to that company to help other than capital, which means you're gonna understand what's happening early on, and you'll be in the foxhole to your own level. And at the end, if it goes
away, you're gonna go, wow. We did everything we could. This just didn't work. And that puts you in a different understanding or understanding position, around it. If you're just throwing capital and saying, why didn't it work and you took my money? Well, I'd question whether or not you actually know what was going on and whether or not that founder was doing everything they possibly could. The answer could be yes, and then I'd say, okay. What not why are you mad? You lost money. What could you
have done? And on the other side, if you just throw money and the founder didn't do everything they're supposed to, my question is, how do you not know that being that early on? This is Pete Moore. Here's the last tip for you of the podcast. We are partnered up with a company called Higher Dose, higher dose dot com. They are the leader in workout recovery products, infrared technology, LED light masks, neck enhancers, and other products such as PEMF mats and sauna blankets.
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80% is, selling companies. This is usually selling companies that have EBITDA and have, you know, either under a franchise or a franchisor. Quite frankly, you know, I'd say probably 50% of the deals close, whether it's, you know, valuation expectations are met. Something could happen negative in the business like you're talking about, like a Sundan tax that came on one of our company's litigation on a wage an hour with,
in the state of California where you have to pay overtime. Well, actually, you have to pay everyone hourly for, like, waiting for a massage, or personal training, things like that that that are not, you know, somewhat uncontrollable. In the deals that you work and the and the ecosystems that you work in, can you explain to the audience here, like, how hard it is to actually sell a business and, you know, actually get liquidity? Because I think
sometimes people think like, oh, I could buy. It's like it's like oat milk. Like, that that flies off the shelf. You know? So I think that flies off. It's like, no, dude. This is like cottage cheese with, like, a cover that really nobody knows what's in it. And I'm trying to sell something, and I have to explain everything that's in it, and it's not that easy. Yeah. I, I had the great fortunes, let me start there, of selling two companies in one year that I was involved
in as an operator, meaning they were mine. Right? Just one of the either cofounders or partner in, I was operating within the business. I will tell you late late nights, very early mornings, everyone's yelling at everyone. Now you think it should be a kumbaya. Right? But it's not necessarily. You as a founder, entrepreneur with your cofounders or or yourself, this is your baby. This is what you've spent years of your life, which means, naturally, you have a bias towards its value being
high. As a buyer of a business, you have a bias that you know it's valuable. That's why you wanna buy it. But you also want to buy it at the most fair price, which traditionally is not the same as the founder's value for their company. So there, we start the negotiation. And the buy side is looking for reasons to retrade the value down or question your assumptions. And as a founder, you're saying, no. I know my business is worth this because of all the amazing things,
both hard things. I use hard things like, contracts and IP and inventory versus soft costs. Like, I've spent all this time, and I know how it's how it's valued to me and everyone who works here. And that starts being its own rub as well. There was an old joke an attorney told me a long time ago. If you're not dropping excluders and yelling at each other, are you even really negotiating for this deal? So the harder you the harder it becomes
sometimes means you're actually driving towards progress. But I will tell you every all the sales I've been a part of, every day, just like the entrepreneurial journey, it's this is the best day of my life. We're gonna get it, and this deal is already over. I just am realizing it now. And it keeps going like that for months. Right? And then you get it done. Yeah. I joke I joke around that every you know, depending on how many deals we're working on at a time, it's kind
of like playing a doubleheader in baseball. You win one, you lose one, you're trying to, like, figure out, like, what really happened today. It's like progress that, like, 50, you know, the, you know, one on one or two and two or what have you. Yeah, man. So so in closing here, you know, we'll, we'll put all the information up, and and hopefully entrepreneurs find you or vice versa, because I like your your model and also seems like, much more value add than, you know, a group that's coming in
and just trying to portfolio theory, on its own. I think that that that ethos and and and that starting point actually makes your the psychology of you putting money into a deal different. So so kudos for that. And if there's any, you know, advice or, you know, you know, quotes or, you know, like, you know, something else somebody told you, that, that you wanna share with us here on the, on our audience for the health and fitness industry.
You know, I so sports tech in general, I love. And, you know, specifically around what you guys are are focused on, with the advent of of I don't say advent. That's not correct. But with AI being as pervasive as it is right now, there's a lot of amazing technology out there. We are invested in a company that's in AI for
sports, specifically around scouting and player development. And when you're looking at adding and appending that layer of data and then democratizing scouting globally, it's quite amazing what technology can do. Really, at the end of the day, I talk about it a lot, and it's something that I think everyone's ripped off of Warren Buffett over the years. But invest in what you know. Right? I'm a former d one athlete. I love sports. I understand what we're doing in AI, and that merge
together works really well. So inadvertently to me, I've become more of the sports guy within our within our firm, and I've originated a few few deals in that space. And so very much, enjoy that that sector. Great. Okay. Well, we'll hit you up on those. We got a pretty good, flow. And, whenever you don't wanna use the word wellness, you can use the, the term halo. Yes. And, appreciate you, coming on here to, kickoff 2025. Thank you, guys, for having me. Really appreciate