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)
Moshe is a managing principal of Maccabee Ventures. A YU faculty member and attorney, he has more than 25 years of experience as an entrepreneur, strategic investor, and trusted advisor to early stage technology companies. Moshe’s expertise includes SilverTech®, Digital Health, PropTech, FinTech and Cybersecurity.
We talk about:
Moshe’s story and how he started investing?
I grew up in Chicago, in the Midwest, and both my father and grandfather were incredible business people and philanthropists. And when I was young, they really wanted to teach me about the financial markets, particularly the public markets and responsibility. And so the Apocryphal story is they walked me into a bank where I took out a small loan from that bank, and they said, okay, now you got to figure out how to pay it back.
So aside from doing odd jobs and mowing lawns and that kind of stuff, I really got interested in the financial markets. And so as a teenage kid in the Midwest, in the Michael Jordan era, I started looking around for things that I thought could be good investments. And so the first investment I made was Nike.
Originally I had seen their shoes, and then as a high school ball player, I started seeing basketball's, clothing, and so I saw that, and so that was the first stock, and they would guide me and say about my thesis. And so I really got interested in the financial markets, all the different kind of risks, associated geopolitical risk, which unfortunately, in today's day and age, there's a lot of that. And so that's how I got into investing to begin with.
Then I came to New York and went to a bunch of school, practiced law for some time, and then ultimately ran our family's operating business, which is senior living and also a real estate portfolio, and then ultimately ran a family office for a while. And then five years ago, there was a movement at my university called Yeshiva University here in New York to have practitioners come back and teach in the university. And so I decided to go back and teach venture capital, angel and venture investing. And I teach with my co professor is Bruce Terrigan, who runs Bloomberg Capital. And we decided we would teach. One semester is Angel and Venture Capital Investing, and the second semester is fund management and administration. And we were doing that. The class became popular, I'm sure more because of Bruce and others than myself. And then two and a half years ago, Bruce looked at me and he said, why don't you start a fund? And I said, I'm quite happy where I am running a family office. And he said, start a fund, you'll love it. And so about two and a half years ago, we started Maccabee Ventures. And so that's the origin story.
What's the difference between working at a family office and a venture fund?
Lots of differences, both sort of positive and negative, and lots of similarities. So generally in a family office, your time frame is different. So when you run a VC and you have LPs and you have that fiduciary obligation, they want to see a return, and they want to see the return as quickly as possible. So the time horizons are shorter. At a family office, especially ours, we would really leverage our network, leverage our core businesses.
And so the time frames tend to be there's less pressure on time frames. Of course, you want to provide a return, but less pressure on time frames. And ultimately it's family. So you want to do good by them, but there's a lot more latitude, I think.
Investing thesis at Maccabee Ventures
My thesis, when I ran our family office and our venture thesis is very similar, and just to fine tune it. So our thesis was we're always a value add strategic investor. So my mantra is that everyone that knows me here is if I don't have 15 or 20 companies or people to introduce a company to tomorrow for an ROI, we don't get involved. So we're really a value add investor. So when I was running our family office, I would look at things. I own the trademark to SilverTech Seniors and Technology. So since we ran senior living communities, that area and bringing technology to improve care was very important to us. And so that seemed like a great place to start.
And then Prop Tech and Fintech were also in that space. And so when we started the fund, those are the areas that we focus on. Silvertech, proptech, fintech, SaaS AI. B2B SaaS around that. And we're really looking to be strategic.
So to move forward on that, what does that mean, to be strategic? And a lot of venture capital firms talk about it. We hope that we actually do it. My thesis is we're super founder-friendly and we believe we need to constantly be giving value. So I tell my founders to literally ask me, what have you done for me this morning? Not even yesterday. Five minutes ago, maybe.
And it's really around three areas. So 3 legs of the stool one is to assist in bringing in additional capital. But that's really not the majority piece, and I won't do that barring the other two pieces. And the other two are helping them find clients and helping them find talent, which in this environment can be really tough. So helping them find talent is huge and definitely clients. And we do that in, I think, a creative way during our due diligence process.
How do you conduct your due diligence?
Yeah, so, first of all, we're very collaborative. So in Maccabee Ventures fund one, we don't lead, we follow. So generally we're looking for a lead. We have wonderful relationships in the VC space, so we believe in being really collaborative. So we talk to that VC as well as others. One of the, I think, interesting things that we do that founders tell us they love is we make introductions to potential clients for them.
And so what that does is really immediately we can see and hear all the feedback if they're interested, if these potential clients are interested in having additional meetings. We have several companies, many companies, where we've made the introductions and before we're even done negotiating the terms of the deal, the companies are already clients. So what that does for us is it's super efficient for the founder.
We're both doing due diligence with venture capital funds and potential clients. And if those clients materialize, their company has materially been altered. And so that happens, I would say, pretty often. And we love that efficiency and it also de-risks the investment for us.
Exciting portfolio companies
Some of the companies we're investing in, there's a company called Vayyar, which has next generation remote healthcare monitoring and fall detection.
We have a great company called CoreCare, which is an AI overlay for skilled living facilities that eliminates billing errors, which is a big part of the senior living space, billing errors, reimbursement. So they have this AI product that literally automates that.
Tembo Health is a specialty telemedicine company specifically for assisted living. So specialty telemedicine, Neurology, Pulmonology, all that kind of stuff.
Eleos Health is a beautiful company that's helping the mental health space. They call it Care Ops so that therapists can be better therapists. And that's a beautiful product.
And finally, as an example, we have a company called YesHearing. It's concierge audiology and hearing AIDS. In the home or in the community, folks will come out to you and give you hearing tests and give you 40, 50% off of hearing AIDS. And most seniors, unfortunately, don't get that care. And hearing is huge. It's their window to the world and communication with other people. And without it, there's a lot of social isolation. So those are just some of our beautiful companies doing amazing things in the space, and we're really proud of them.
Teaching Venture Capital at Yeshiva University
So Bruce and I teach in the Sy Sims School of Business of Yeshiva University, which has a wonderful reputation. I think it was just straight 59th out of all universities. I might be wrong one or two spots one way or the other. And so we're incredibly blessed that we have some really incredible self selecting students who just love the space or interested in the space. And our first semester is angel investor capital. Investing. So we teach them about who are the players in the space, what does it mean, what are the components to a great company. And we teach them really hard and soft skills.
So I can tell you right now to your whole crowd, your whole listenership, our midterm is they have to source a deal, get the deck, and then tell us what's great about the deck. Tell us what's not so great about the deck and fix it. And that's a proxy for identifying what makes a great company, right? So they'll have to look at the team slide, the problem slide, the solution slide, and then present that to us. So that's the midterm, the final actually is sourcing a deal and writing an investment memo. So actually looking at really identifying again what makes a great company, what are those elements, and this particular company talk about their team, talk about their product, the market, and again, it just makes them, whether they go into venture or not, we have a lot of engineers or technologists data scientists in our course. And even if you're going to be working for a founder, it's great to know what their perspective is. And certainly that if you're going to launch your own company, it's great.
So now we have one of the beautiful things about our partnership with Yeshiva University. So our fund is separate and distinct from Yashiva University, but we have this affiliation, so we get to leverage 70,000 alumni worldwide, captains of industry, which is incredibly helpful for product market fit. And now we have over 180 students over the past few years that are now at banks, they're at technology companies. And so it's this virtuous flywheel, and we sort of read them the riot act, you know, day one of our class, and that is we're a family and we're a network. And, you know, the the greatest things of, you know, obviously Bruce and I help our students get jobs, although they can get jobs on their own. They're wonderful. But it's amazing when older students get the younger students jobs.
What’s exciting about the Israeli Startup Ecosystem?
There's a great book, Startup Nation, that people, your listenership should read if they haven't already. It talks about how Israel became this technology superpower and now they're calling themselves Scale Up Nation because it's moved on from that. And I think that's really important. The underpinning, I would say this sort of in the early days, what made Israel two elements that made Israel founders, in my opinion, so great were generally you had two founders, one was a subject matter expert and one was a technology expert. And so in America at the time, a bunch of years ago, people came up with an idea and then they hired for that and that wasn't so efficient. And so in Israel, I think you really have experts in their craft, starting companies. I think the other advantage you have in Israel is most folks serve in the army. And in the army there are different units. One is called Shimono Mate 8280first unit, and they're intelligence units, but computer, cyber, all those kinds of things. And so those folks are generally starting companies when they come out of the army with commercialized technology out of that.
But then it's also this virtuous flywheel where as people graduate from those units, they're just by Osmosis, looking at older folks that came out of those units and going to work in their companies. But they're always coming armed with the latest technology, the latest knowhow, the latest everything. And so it's just really, really exciting, really new and really fresh.
For those of you that had spent time in LA, in a previous life, I was an actor, a TV and film actor. And so when you go out to LA, every person has a script, right? Everyone's got a script. So in Israel, when you go to a coffee shop, every two people have a startup and so they almost feel entitled to start a company. And it's an incredible mindset.
Importance of writing skill among VCs
The VC world is all about networking, deal flow and networking and stuff like that. So I think it's really important to be able to communicate. I think writing skills are really important. One of the things that we always talk about in our course and just in general is I think texting and slack and all of those modern tools are really incredible and important to get business done.
But you also have to know how to write a cogent paragraph, even when you're putting a deck together. Being really concise and strong language as opposed to sort of just your next tweet.
Also people read into emails so much. You might type something that you think is benign, but to them it's a little off putting and so you want to really be careful with that. But also, I think good writers, it sets you apart from VC is very competitive. Oftentimes you're going to be asked for a writing sample or to do a case study, certainly in investment banking. And good writing skills really can separate people and bring you to the top of the pile.
Investing in SilverTech
So Silvertech. I own the trademark to it. It's a term of seniors and technology. And look, the healthcare system pre COVID in general, but certainly for seniors, was very sort of old and tired and we needed real technology in the space for better care, better staffing, a lot of things better building for purpose. So it was a really big space. And so I coined the term Silvertech.
Third generation senior living owner, operator. Look, 10,000 folks are retiring a day in America for the next foreseeable ten years. That's a huge swath of people. That's a huge vertical. And so you have folks that are older and in need of communities, whether that's skilled living facilities, nursing homes, assisted livings, independent living, just a little more help. Or I don't have to tell you, people are living longer and they're living healthier longer.
So I call those gogo seniors, folks who want to travel, folks who want to do a whole slew of things, and we should cater to them, too. So there's a slew of companies doing amazing things, even in housing, and then there are those companies who need to cater to that community that you and I know. So whether it's transportation companies, Uber or Lyft, whether it's hospitality companies, all the hotel chains, food chains, there are things that they can do to improve their connectivity to seniors. And all of that's really important. And so we invest in that space with some really exciting companies doing amazing things.
What change you want to see in the VC ecosystem?
With the downturn in the market, potential recession, increased interest rates, I think you're seeing a real bifurcation in the market. And I think you're seeing that bifurcation both in public and in private equities or private investments. And that is companies that have no revenue and are haemorrhaging money versus companies that actually have a real business model and have a real path to revenue.
We're blessed at Maccabee Ventures, but our thesis, we don't chase valuations. We invest really early, but we like to see traction, a real product. But a lot of my colleagues are being impacted by down rounds, flat rounds, having to do bridge rounds in this environment. And I think that's really tough. I'm being asked by other VCs to talk to their founders, to speak rationally to them, because I'm known as pretty rational. So while I think those VCs should do it on their own, I'm only happy to be helpful and gentle. But I think those conversations are important.
So we were counselling 8-12 months ago, our portfolio companies. We wanted to make sure, how much runway do you have? What does your hiring look like, what's your burn, and how are you going to get through 24 months? What's your 24-month plan? Well, normally it could be twelve months. Now, 18 to 24. I think we've done a good job. I think our founders have done a fantastic job. But that's where I see the market going now.
The other side to that is recessions are amazing times for early stage investing. So when we're going to our LPs, and we're on the precipice of raising a fund two. But as we talk to these LPs, or potential LPs, most of them understand that in a recession and if you look back to the past two recessions, if not three, you'll see some of the amazing companies there are slides on it online of some of the great companies that came out of those recessions. So when valuations come down and when founders are rational, those of us that have capital, it's going to be a wonderful time to invest. And I think the vintage of 22, 23 is going to be a great year.
Rapid fire round
What sectors and regions you invest in?
Silvertech, fintech, proptech, AI mostly in North America and Israel but we'll do anywhere.
What stage do you typically invest in?
Pre-seed & Seed.
What's the typical check size?
$50k to $150k.
Where can founder apply?
Maccabee.vc is our website and there is an application there. I will say to this, I know it's rapid fire, but I will say to Founders, if you find a warm introduction or do your homework on VCs and the particular partner you're reaching out to, why you're a good match, who you know, show us that you took the time, you get a 10X better return on your email.
Where can our listeners follow you?
Your listeners can follow us on social Twitter. We have @Maccabeevc as our handle. Mine is @BellowsProd on Twitter, but we're also on LinkedIn and we're on the old school Facebook.
Maccabee Ventures website - https://www.maccabee.vc/
Maccabee Twitter - https://twitter.com/MaccabeeVc
Follow Moshe on Linkedin - https://www.linkedin.com/in/moshebellows/
Follow Moshe on Twitter - https://twitter.com/bellowsprod
Hosted by Prashant Choubey