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VC10X - VENTURE CAPITAL PODCAST

Venture Capitalists (VCs) & Angel Investors share their investing thesis, screening process, value-add, exits, and more. Hosted by Prashant Choubey (@ChoubeySahab)

  • venture-capital
  • martech
  • adtech

Musician turned Venture Capitalist | Drew Leahy, Managing Partner, Hawke Ventures

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Drew is the Managing Partner of Hawke Ventures Funds 1 & 2, where he operates the venture firm through fundraising, diligence, and operating investments. Drew is a data-driven, product-focused entrepreneur and VC. Driven and motivated by the thousands of softwares that power brands, He has extensive experience in consumer mobile & web, b2b SaaS, social media, video, apparel, and entertainment verticals.

We talk about:

  1. Drew's story & how he started investing?
  2. What are the similarities between a music producer & a venture capitalist?
  3. Emerging trends in Mar-tech and Ad-tech
  4. The Entrepreneur Mindset V/s The VC Mindset
  5. Hawke Ventures Scout Program
  6. How do you evaluate startup pitches?
  7. What's your biggest learning investing over the years?
  8. Rapid Fire Round

Drew's story & how he started investing?

So I like to say that I'm a musician turned venture capitalist. I started off playing in bands in high school and even been in middle school, writing songs, recording in the studio. Had my little at home studio that I had with one of my writing partners at the time. We started a record label. We started recording other bands. We started putting out bands records. We would hold events and put out sampling artists from all the people that we would work with.

Funny enough, being a venture capitalist is very similar to running a record label. It's finding talent, it's producing talent. It's being an adviser, it's being helpful. So did all that. Went to college at University of Michigan. And the summer of after my freshman year, I went and worked for a record producer, a buddy, and I had an idea for a website where you could buy and sell stock in artists and bands on a website online, and that stock would trade and go up in market value based on their performance.

So I started a company in 2007. I switched from being a music entrepreneur to being a technology entrepreneur. So we started a website, we raised some capital. We ended up moving to Los Angeles in 2010. And so that was my first tech company. It didn't work out, and so we had to move on and get jobs. So then I became an operator at a couple other startups doing marketing, doing product. And then I left LA to go back to school to finish my degree.

So I actually started a business with my brother called Snapsuits.com Custom Suits for $250, delivered to 14 days. So that was in 2014. We achieved the return on our ad spend and built this really cool kind of marketing automation, kind of deep platform for doing marketing. And that's when I met the guys at Hawke Media. I actually left Snap Suits to go run the investments at Hawke Media. And then we started the fund. And here we are in 2022 on fund one, fund two made the turn from musician to venture capitalist.

What are the similarities between a music producer & a venture capitalist?

So from a talent perspective, think about it this way. You have a band, you got five guys and girls. Somebody's got to be the leader. You have to have a brand. You have to do marketing. You have to do sales. You have to have a team, dynamic collaboration, you have to produce a product, you have to take it to market. You have competition, you have to be better than it, and then you have to do things to put yourself out there, to get interviews, to have people know who you are.

And the thing about being a musician is that your entire life is about making product and marketing product. And when you're in a startup, all you're doing is building product and marketing product. Now, one just happens to be less of an artistic pursuit than the other. But aside from that, there are so many similarities.

The Entrepreneur Mindset V/s The VC Mindset

Over the last six years, I've truly learned what it's like to invest, run funds, and understand what it's like to have the risk management side of the equation versus just the opportunity side of the equation, which is what you do when you're an entrepreneur. The risk, you can't even think about it. You just have to go sell, make it happen, problem solve, and ultimately not fail. That's the entrepreneur mindset.

The VC mindset is, this is most likely going to fail. You're most likely going to run out of money, your customers are most likely going to either cap out or go away, and you're most likely not far enough along for me to invest yet. That's the venture capital mindset. And those are very two mindsets are at odds with each other. 

Hawke Ventures Scout Program

I teach a Scout program in a venture fellows program where it's a twelve to 15 week course on venture capital, looking at deals, how to think like an investor. That's ultimately what the Hawk Fellows Program creates, is that venture capital mindset. And one of the things that I tell our students or tell our fellows is like, your job is to not invest. But your job, because it's the inverse of that equation, it's your job is to figure out, why do I not invest? How do I not lose money? And that's a very hard perspective to gain when you're an opportunity seeker pretty much your whole life before you're an investor.

The focus of the program is on producing diversity in venture capital. I want to see the next generation of general partners, principals, investors who are making investment decisions and ultimately deciding where capital goes into companies. And so my contribution to that system is I want to teach and give people perspective, show them deal flow and maybe they become a scout for our venture fund. Maybe they find a deal and we compensate them. We just had one of our Venture Fellows find a deal, do all the diligence for it and he's going to be supporting that deal. And he's a fantastic individual from Miami, comes from a family business background and he's amazing. And he came through our Diversity Venture program and here we are helping get some Latinx perspective into the venture capital community, right? So if I can do that with our cohorts and I can have people scout deals, one of the things that I'd like to do is work with other VC firms to tap into our Venture Fellows to become potential scouts.

Maybe someone is a little more interested in biotech and has an interest in biotech than they do commerce enablement, which is what I do well, go talk to the biotech VC and be a scout for them. Learn their ways, So I like apprenticeship, I like teaching, I love giving people a chance to do the work, to learn and become come to the next rung on the ladder, right? But it takes time, it takes energy, it takes learning, it takes osmosis, it takes apprenticeship, it takes understanding how deals are done, right? Understanding what the nomenclature is. And so that's what we do. We help provide context and training and education for the next generation of hopefully GPs and principal investors.

How do you evaluate startup pitches?

One of the things that I like to help entrepreneurs with is the story. It's the narrative, it's the why, it's the how, it's the what. Entrepreneurs get really hung up on their product and the features of their product, and they're pretty bad at explaining the benefits. Here's the why. This is where it connects. This is the problem it solves. This is how big the problem I'm solving. Here's what customers are saying. Focus on the results of what you're doing. Don't focus on what can happen. We can sit around in a room and talk about what could happen or how the world could be all day long. You get one slide for that. It's the first slide or the second slide. It's here's where the world is going. And I'm like, okay, validated right now what? Like, so what?

So I'm always looking for in pitches, the so what? What's the meat? What's really happening here? How do we cut through the fluff? And so I'm an investor who comes in. I'm not a first check investor. I'm not a pre product investor, not a pre revenue investor. I come in when the thing is doing what you set it out to do, and then I try to see where that can go once you already have that basis. $10,000 15,000, $20,000 a month in sales. Where is this going? How big can this get? Those are the conversations that I like to have after I'm seeing what is happening in the market with the product right now. 

What's your biggest learning investing over the years?

Somebody asked me this on another podcast, and the truth is that just because something makes sense and it's smart doesn't mean that other people are going to get it. Straight up. I've made investments where the product is so obvious, it works so well, it does exactly what it's supposed to do. It solves a problem and people won't adopt it. They don't just obviously get it the way that you do. And I think that's one of the craziest things that I've found in investing is that, like, smart people doing smart things, solving smart problems, and people still won't get it. They won't adopt, they won't pay, they won't go through and buy the product and use it, right?

And so you always have to ask yourself, like, where is the gap between what I think is smart and solved the problem and where does the market actually truly see that, right? And so time and time again, you can outsmart yourself. And what I try to do is make sure that we're not outsmarting ourselves and that the market truly wants something. And that's sort of the battle that I've come to realize as an investor is that like, you're investing in people to solve those problems and figure that out. And it's the CEO, it's their team, it's the founders that are going to figure that out. Not me, not my partners, not the agency, not my investors. The founders are going to figure out, solve problems and be next to the customer who wants to pay. 

Rapid Fire Round

What are the sectors and regions you invest in?

Typically North America, but we're open to companies in other countries. But it gets a little murky with owning stock ownership and tax and stuff in other countries. So we typically focus on North America in the US. But anywhere in the US. There's no real geographic region sectors like we discussed it's commerce, enablement, ad, tech, ecommerce, tech, marketing, technology.

What stage are you typically investing in?

Early stage. So preseed and seed. Typically around 20,000 monthly recurring revenue or monthly revenue. Anywhere between 20,000 to 100,000 is our sweet spot.

What’s the typical check size?

$50k to $2 million.

Where can founders pitch you?

Find me on LinkedIn.

Where can I listeners follow you?

LinkedIn is the best spot for following. That's pretty much where all my content is.


Hawke Ventures website: https://www.hawkeventures.com/

Follow Drew on Linkedin: https://www.linkedin.com/in/drewleahy/

Hosted by Prashant Choubey

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