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trace welcome to the show hi there thanks for having me yeah i appreciate you taking the time and lots to discuss with your back on your journey things you're doing in terms of uh investing i'm curious because i'm always going to ask people to start like why did you first get started investing so investing for us is kind of a family business where my parents are entrepreneurs they built and sold the company and they kind of instilled in my family my older sister younger brother to be entrepreneurs basically we had to start our own companies by 26. and so when you're in high school you have no idea what that means i was fbla future business leaders of america and so i applied to all these different business schools undergrad and ended up going to syracuse i was talking about my dad went there i went there and i actually started um as a major in entrepreneurship which in 2006 no one cared about this was like the rise of facebook like a billion dollars is cool and so i actually started my first company there called brand yourself did that for two years out of my dorm room with my best friend and roommate at the time and then uh graduated uh 2010 resigned from the company had a few companies after that in media analytics and to answer your question after my last startup in 2015 i joined my father full-time investing he's been a professional angel and we can distinguish the difference between a professional and an angel um later on but i joined him full time around 2015 2016 when he had about a dozen or so investments he was currently chairman of the new york angels and today we just made our 65th investment that's crazy that's a long way to come from that and actually i'm curious your distinction between angel professional angel tell me more about that so a lot of people always ask right was a professional angel back when there wasn't as much money and funds and the promiscuity of everybody being an investor a typical angel was someone who wrote a 25 000 check and they would make a few investments a year that was what was considered an angel yes legally you have to have the 200 000 or net worth in the eyes of the sec but similar to the word mentor which has been bastardized everyone is a mentor these days if you don't know like their family where they came from like their birthday and they can't call you at like two in the morning you're not a mentor and the same thing as an angel if you write a check you're not an angel and i'm hung up on it i don't want founders to waste time with somebody who is in the professional and in the sense of whether they're an operator they don't have to be full-time um even if they work at a vc and they're doing one-off checks i've seen thousand dollar checks and i know we go about this on twitter all the time be more powerful than a million dollar check and so at least for me as an angel when i say professional i have a thesis i have a process an operation and i add value i pay to help you that's my job and so if you can write check and just move on and not be value-added and annoy founders and just oh i got a 2x markup like oh yeah take the highest valuation not understanding the actual game of well one of our companies just took an extra strategic few hundred thousand dollars and uh another angel is like you should take a mark up like i need a markup i was like no i don't care for a 1.5 x after six months this is strategic i want them in i'm in the long run the understanding that if you make an investment you should one expect to lose it as like a expected value but two with this whole diamond hands thing we're the most diamond hands people in the world we come in when you have nothing your pre-product pre-revenue generally we work with a founding team and i know i'm not gonna make money if i ever do for seven to ten years that's a professional angel who understands that going back to what you mentioned there with process take me through a little bit behind the scenes of what your process looks like some people have different different ways to go about this i'm just curious for you and you know your firm as well like how you go about that yeah and we are professional angels in the sense of like new york venture partners sounds big and fancy it's my father and i it's kind of our holding company uh and so we manage only our capital we have no outside lps just for anyone listening that's the major difference between angel and the vc angel it's our money vc is someone else's money and our process is simple there's two of us we can both make decisions we get our deal flow from demo days from accelerators from other angels from operators uh we made i would say 30 of investments this year alone came from founders that we've invested in uh one of them was a previous acquihire that we reinvested in because we love the founder but just other founders of ours have gotten pre-seed seed series they say look uh i met some people they read the announcement they want introductions what do you think was like i love this so let's get introduction let's meet thank you and we love when our founders go to bat for us which is great um otherwise we find a company and we send it to our institutional kind of pre-seed seed funds where they can write and lead around we don't lead we are term takers and so uh and vice versa the vcs come to us as well saying great here's a lead here's a term sheet uh we need to fill out the last few hundred thousand dollars we'll generally invest 25 to 50 000 initially and we're pretty price sensitive i know it's hard these days to do that but we kind of cap out a 10 million valuation and so almost every single val i would say almost every investment we've made has been below 10. i just did a five a six a seven and eight and nine how you come up with evaluation is part of the process as well uh especially when it's like notes with caps or saves post caps pre-safes and so i'll take a meeting if i like it i'm kind of going in having seen not so many unique ideas anymore if you're actually a unique idea it's kind of weird it's like why haven't i seen this why hasn't this been successful it's kind of ironic uh but we'll take one to three meetings generally with the founder for our check size and also just the diligence process we call it due diligence d-o not d-u-e actually talking to experts and trying not to fomo like oh this person's in they're leading it by this person well you know that is a billion dollar fund so a two million dollar check really means nothing to them oh it's actually a scout so it's not the fund so just trying to figure out all the other aspects but early on it's red flags do the founders have experience do they know what they're doing have they built this before they have 5 10 20 years of experience their unfair advantage early on moats are basically if they succeed and it's really opium if you're raising enough capital so we are generally in rounds or a million to two and a half million there's any less than that you're gonna have to be constantly raising on notes and safes and stacking them and if you raise a million dollars you really have at least a full year runway to achieve what you want to and need to with that too so with you and your dad working at this and geosourcing can be from a lot of different things as you as you kind of mentioned how do you prioritize that sift through i know one thing i vitalize i mean we see hundreds of deals we just hired two new investment associates to kind of help us on that but like it's a venture firm a few more people involved with junior dad doing that how's that going in terms of going through that yeah that's what i do so as our portfolio grows that takes up a lot more of our time like right before this i just spoke with one of our preschool investments for an hour and it's great because it's not just about the business it's also understanding their mentality they're hiring how they're feeling and being a sounding board for them where everyone thinks it's all tech crunch and great headlines but they had to fire somebody and then they hire four more people and it's not easy to fire people but it's easy to say if it's not working out fire them right you have x amount of time and we love talking to our founders we say about a third of what we do is marriage counseling between founders and then somewhat therapy mixed in because they don't really have that many people to talk to they don't show confidence and bravado uh which is what they always have to express right if you ever ask the founder like hey how's it going killing it going great if they said anything else like this it's actually not going that way like oh i'm going to stay away from you right it's always putting on that sense that everything is going well and so when we're talking with founders right i'm meeting with probably or i get cents introduced to like 100 a month i'll probably meet with maybe 30 to 40 of them because i know what i'm looking for to some extent and then you know what uh you're looking for when you see you're like aha i like this and so uh we had five investments from previous founders so great that's like a warm intro um kind of vetting to some extent they said they're good enough and then i like the idea so i'll meet with them uh we made three investments completely proactively like reaching out actually four three from techstars we watched the demo days from comcast and uh barclays uh and fintech invested in those we went out and found them uh and then the one from twitter uh one came through memes which we'll talk about and then uh the other ones were warm introductions uh from other angels operators and vcs but i meet with them and i have experts so i have vcs who are experts i have operators who are experts and then actual people who don't work in tech who are my experts i'm like great give this a smell like a smell test like what do you think and if they come back like actually that's pretty interesting like i might actually use this or like no that person has no idea what they're talking about they're making it up and that's also a huge red flag if you ask a founder a question and they don't know the answer but they make up an answer that is basically just a bad business like ethical way of just doing work and so kind of catch him in that sometimes but i like to tell people we're in two businesses uh we're in the business of saying no because unfortunately 99 time i'll say no and a lot of people think that we're in the business of actually investing because writing checks is easy but we're actually in the business of exits and so when i meet a company i have to figure out could this be at least from an angel perspective a hundred million dollar business for now and then will they be able to convince next series a that they're a billion dollar business and to that point i mean what are you looking for you mentioned 100 million dollar thing and there's differences between angels and their expected outcomes potentially versus like a vc firm you know a fund to return all that profile for you guys what does it look like in terms of your kind of exit profile you're looking for well i mean a company i just need to see how this could be like a 10 to 20 x initially right i'm yes i want the billion dollar exits i need the home runs and the fund returners and we have a few of those fortunately but i just need to be convinced that you could get this to 100 million dollar business right minimum 10 to 20 x uh and so i get sent deals and it happens all the time where they're like oh i think this is a good angel investment what's that mean well it could be like a safe 5 6x i was like that's not the business i'm in and i don't want anyone to tell you otherwise like a professional angel if you're in finance if you get two or three x on your money that's amazing at the end of the day i need minimum 10 to 20x on my money so it completely screws up everything else in my financial life right it's like oh get this 10 aprs like i don't understand how that works uh and so unfortunately when i say no it's either like i just don't believe in the founders that they're good enough i don't like the idea i don't like the market i've seen so many different ideas uh but also i don't know if it's a big enough business you as a founder take offense when it's a lifestyle business ooh you're just a lifestyle business you're not vc backable and you know what that's fine you can make a few million dollars a year throw off cash flow and i dare say the word profit net income right exactly fugazi that just don't exist in our business right because i need to find a company that can go on and raise more money because it's somewhat growth at all costs and so when they're like yeah we'll be profitable in year two or three i'm like okay that's completely made up do you actually understand financials but most of all do you understand the game that you're going to have to play right so like you watch like game of thrones and watching the new wheel of time i'm like do you know like once you start raising capital everything changes expectations change you have to hire you have to grow like are you ready for this and so that's like the last test of like do i believe that you can play this game there's so much to it there's so much involved in that and i one thing i want to go can i talk a little bit just any any investments of yours that stand out as an example for others when you're looking for investments or you know they say oh looking for great founders okay what does that mean or the warranty that in your portfolio that you're like why talk about this one for this reason i would love to hear more about that so one of my better investments is just this maniacal founder uh jonathan of a company called phi it's a smart dog collar we invested in the seed around and it's hardware so people generally do not like hardware this was three years ago no one really liked the pet space so great i beat a trend right because by signing by the time something is trendy it's too late uh and so got an introduction through a friend of mine lily masterman they were kaufman fellows together and i'm a dog person so i was like yeah this is cool good background and we literally invested in an idea they had cad designs and met him like 3d printed like some casing and there are certain mannerisms when you can meet people in person and the way that people speak my background family backgrounds and pr and calm so we listen really to how you present yourself and we always correct founders like yeah if this works and we might do this from day one he's like i'm going to do this this will work and with this money this will happen and so it's rare yeah you can be egotistical and you can kind of get that bravado but he's day one just felt that there wasn't anything that wasn't possible where he achieved everything either earlier on time of what he said he raised a series a still pre-pre-launch which in hardware in the dog space was somewhat unheard of and now i'm learning so much from him i wish i could share and i told him he has to be a professor someday that his updates are 15 pages long i know where every penny is and how they're doing and they went on to raise like a series b and because of him i directly correlate a founder update every single month to the success and so that is one thing i tell all founders send updates because one it gives you a benchmark of where you stand you know what's going on two it keeps your investors engaged because i don't hear from one of our investments for six months and then they're like yeah things aren't going that well and i need money i'm just like hmm no like i'm not really that involved i don't really have too much faith in you and like if it's going really well great i can't always help you and i haven't been able to help five from the early days like at that seed investment but i've been more helpful now so i always figure out a way to be helpful and that's always been fun we're friendly right i'm gonna make some means for him he asked about it um and then on the other side we have an investment uh wizard so a very technical team actually based off copenhagen we've always wanted some deep tech i'm not phd our friend evan nielsen ldv capital introduced us i met the company at his um his uh his summit that used to be uh in the city i was like this is really cool i can hand draw an image take a picture and it will print out the code for me i was like this is magic i don't fundamentally ha understand how it works you only have a white paper i'm i'm in i love this idea and you meet the founder and they're just humble technical and was like there's something here but it was years ahead of its time and like the no code and so we worked got a seed round after like two years and then they just raised a series a after like another year or two and it was just amazing seeing his updates trying to figure it out how they somewhat pivoted in their branding their marketing i actually disagreed uh with the branding of the company and i pushed back a little bit and he stuck to his guns tony the ceo and it worked out and so that's also something that we love with founders that they'll take our input i felt heard i felt acknowledged and he still said no i i disagree with you and it worked out and so that is something as a investor i take one a lot of pride in liking the founders um that they at least listen to us and make their own decisions but also that they're coachable and that's also another red flag that if you give input they'll listen they'll figure it out and they'll make their own decisions because at the end of the day we like to say they're benevolent dictators they're in charge it's their company we're just humble investors along for the journey yeah absolutely and at that point you're investing all over the world or how do you focus on that it just depends on opportunities us and delaware c corps most almost exclusively um they were based in copenhagen but they were delaware c corp around the precede funding they did all the fun incorporation uh right the whole holding company stuff it all worked out um and new york venture partners so nomenclature it used to be only new york companies because it was in person social uh wasn't as big and we had new york angel investments it was our network and so it was my time prerogative when i joined five years ago to expand upon it so i was just talking to somebody i think we're about 75 percent new york now and 25 and kind of growing uh in washington in california uh in nevada new jersey maine florida and uh i guess technically toronto as well so trying to expand talents everywhere and as long as you're a precedency less than 10 million valuation and a delaware c-corp we can kind of consider it i know what we don't invest in everything else is somewhere opportunistic yeah and with that too so the expansion and going all different markets you say you're helping with that as well talk about these memes and how that contributes because i i'm seeing i'm just analyzing what you're doing i'm like getting in the mind of trace and saying well you know attention is everything and realistically i'll talk about the viral one first the most viral one you had i can't like not talk about that first time founder meme just take me through posting that prepping for it you see the idea of like oh i should post this and then the reaction too you have no idea what's going to work and so when kovitz shut down the world i started a newsletter i used to host events online uh in person a lot of dinners and so i started this newsletter uh the active investor list and i figured well if i'm gonna be at home i can't see people i need to help founders and my investors my friends uh i just started with about 50 of them i put it online and i sent the newsletter out turned out to be like a a weekly thing for 70 weeks so every monday i would send out an ugly bcc i copy and paste all the names as a group it's up to 400 people now um i would take the list of what's going on this week like what i'm seeing and all the companies that pitch me i just send their urls it helped raise millions of dollars and that entrepreneur the entrepreneur mentality if i'm never doing enough so it's like great this is working out well keeping top of mind how else can i stay top of mind um this is like turner novak is crushing it there liquidity and all these other memes on twitter which i've been on since like 2008 but probably took it too seriously and so i had to get in on it so found the app pinata uh through i think turner and just start making memes because it was fun it was mostly like therapeutic and cathartic just kind of easing our industry where yes i get millions of dollars billions of dollars founders business relationships sales customer service just make people laugh that's all i've wanted to do i'm not competing by any means but i can convey something my brain is like i see this image these are the words that appear and so at least for that one i think it was i don't know like my 20th or 30th meme i probably posted a hundred right now um my first one was spec so i was like oh i'm gonna try this and so it was um night the roxbury they're about to get married it's like baby don't hurt me and like he's holding up uh the uh boom box and it's like smack and it's like all the old bankers and the finance people were like what is this no take that down it's ruining it so it's like okay i'm on to something here this is fun uh and that one i work with founders all day i know exactly what it's like being dainty like taking off your shoes and like startup life i'm like do not do it it's gonna be the most painful amazing horrible experience you can have and so when i saw that scrolling through the app i was like okay founder startup life super simple five words but it means a million things um and so i post them some get a few hundred views and then that one got um across all the different uh apps of um twitter linkedin tick-tock i don't know where else i posted it got like a million views and it actually destroyed me for two weeks because one it destroyed my twitter feed two it destroyed my linkedin feed and then i got overwhelmed with hundreds of emails hundreds of linkedin messages and hundreds of requests which is like kind of a good problem to have but like my dopamine was like shooting for weeks and i was exhausted i actually had to stop for like two weeks i just couldn't handle it i felt indebted to everybody to like respond back and get in touch and it did lead to like a few investments like over time between all of the mediums of people being like i saw your memes and then the more i get the more people that follow me and like my only goal and i only the only ask i have with people is introducing the smart people and smart founders and so when i now share my founder uh company information it just has more of a reach and that's all i really care about yeah i i followed along with with that meme he posted and i looked back at the numbers too and i was just like yeah it's like a hundred thousand plus on twitter alone yeah five hundred thousand whatever plus on like linkedin i'm just like this is insane i'm like how and then i'm back and i know from uh some of my stuff gone mini viral and some of our stuff gone many viral and then even seeing other people go way vowel to like sean perry some of the stuff he's posted on twitter has gone insane he's talked about in the podcast and his podcast and like seeing that but when you look at and take a step back like attention getting more attention if you can you know shift through filter through everything it helps you it does help everything you do more followers more like you know founders like oh that was pretty funny like who is trace and like you hearing about that i can see the benefit of it but to your points i don't take it too seriously have some fun with it i try to take it too seriously i try not to be too offensive with it but um i have no idea which ones will go viral like i definitely had some like funnier ones that i when i made it laughed and that one just hit home it's like great founder taking off shoes jumping in and disappearing yeah completely i i tell people i love you like when you start a company if you have never done this never in the tech world you won't have anything to do you're just gonna be like i need to do something i'm passionate like i'm bursting the seams but there's literally nothing for me to do so i just tell people like don't quit your job use this high project until you have to go full time and then that's the life that you have and behind the scenes i know a lot of founders that i've invested in worked with over the years and said no to like that's what they're experiencing and if i can make him laugh that's my goal i love it i love it trace i know we're out of time what's where's the best place for people to connect with you if they'd like to get in touch twitter that's definitely where i spend a lot of my time i'm on there um my wife is like you are tweeter twatter like it works i get to connect with people around the world i'm here suburban dad um best uh boy now seven months i'm so happy and that's where i spent a lot of my time on email on twitter and love replying to people it's quick little like text messaging to anyone i want in the world so uh at trace underscore cohen or email me tnyvp.com as long as it's not spam or copy and paste i get back to almost everybody so feel free to uh reach out we'll be sure to link that up as well thevitalizepodcast.com so you can find that there trace thank you so much for the time today really appreciate it appreciate it thank you