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THe VC Firm That Thinks Different and Hires Bots with Brad Zapp
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What happens when a banker’s son builds a venture firm in a place most investors overlook? Brad Zapp, Cp-Founder, President and Head of Strategy & Marketing at Connetic Ventures, shares how rejection fueled his pivot into early-stage investing, eventually leading to Wendal, an AI-powered associate that reviews founders 24/7. With this remarkably innovative tool, Brad is reimagining who gets funded and who gets to invest. This episode unpacks how AI, behavioral science, and fund structure innovation are opening venture capital to a much broader audience.
Key takeaways:
- AI can scale deal sourcing and diligence, even from outside traditional VC hubs.
- Psychometric screening helps identify unconventional but high-potential founders.
- Interval funds are breaking down access barriers for everyday investors.
Connect with us below!
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Transcript
Introduction and Andreessen's Contradiction
00:00:00
Speaker
Andreessen basically said that out of all the things that AI is going to disrupt, it'll never disrupt VC. But in the same time, at the same sentence, I think he went on to say, well, you know, it's there's some art and some personality to doing this.
00:00:17
Speaker
But VC, but AI is disrupting art and AI is going to disrupt, you know, psychological assessments. Right. And AI is doing these other things.
Introducing Brad Zapp and Kinetic Ventures
00:00:32
Speaker
Hello everyone, it is Brittany Mason, your host of The Alternative Mason, where we are building your alt knowledge brick by brick. Today on The Alternative Mason, I'm joined by someone who is redefining how venture capital works in the digital age.
00:00:47
Speaker
Brad Zapp is the president and head of strategy of marketing at Kinetic Ventures, a firm known for its innovative approach to early stage investing, And he is a seasoned entrepreneur. but Brad has built a career at the intersection of technology and finance.
00:01:04
Speaker
And his legacy for financial advisors is where he has helped scale assets under management for two for 400 million.
Brad Zapp's Early Influences and Career Path
00:01:12
Speaker
All right, Brad, we are just so excited to have you on the show today and dig in um So I always like to start with, you know, someone's personal backstory. I want to know, like, what your introduction to the financial world was.
00:01:26
Speaker
You know, what was your earliest childhood memory? was my dad. um I can even remember the the chair that he would sit on and the and the gold you know lamp that sort of arched over his shoulder so he could read financial statements.
00:01:41
Speaker
My father was a banker and ah damn good one at that. He actually ended up IPO in his bank on the NASDAQ. so from a ah very young age um reading balance sheets and understanding you know money and how finance works was just a normal thing in in my household uh and that was um you know a lot of a lot of sons and fathers did different things we we did some normal things too but We weren't you know fixing cars or or doing you know stuff like that. We were we were reading you know financials and he was telling me why it was important and you know instilling you know different money principles.
00:02:21
Speaker
um you know And i I live by a lot of his isms still to this day. That is fascinating. I mean, so like just straight out of the womb, you were already, it was just ingrained in you.
00:02:34
Speaker
yeah he was Yeah, because so when when you're a banker, and this is going back you know in the early 80s, my early childhood, and banking was a lot different back then. So banks didn't just originate loans and sell them in a secondary market.
00:02:49
Speaker
Banks um you know we're were the very lifeline and the fiver of small, closely held businesses. So the way that manifested itself in my household is, For example, every Friday we were eating pizza at this place called Tom's Papadino's and we loved Dad would bring it home from work.
00:03:06
Speaker
And then one Friday he brought a new pizza home from some other place. And we were like all aghast with why did he make this change? And he said, well, I just loaned them money.
00:03:17
Speaker
And so we need to move our business so they can be successful. So, yeah it impacted my life quite a bit.
Overcoming Rejection and Embracing Stock Brokerage
00:03:25
Speaker
That's fascinating. Yeah. And it sent you on the trajectory that you are on now.
00:03:29
Speaker
So it was just always a ah passion. So did you and you and you're an entrepreneur, did you ever start any businesses in your young age ah as ah as a kid, as a teen?
00:03:40
Speaker
I mean, yeah, I mean, we did, you know, all kinds of, you don't you don't have a knowledge, you know, wide breadth or depth of, you know, business in the world and and entrepreneurship, even that term wasn't a term that was, you know,
00:03:57
Speaker
used very often, at least not in my community. We call each other, you know, small business owners. But of course I did all those i did all those things. I remember, um you know, as ah as a young kid, my my mom got me this um wagon, this red wagon I could wheel around. I'm talking, I'm young, like five.
00:04:14
Speaker
and um i would i would love when she would buy me coloring books and i would color every single page as fast as i can and i'd wheel them around the neighborhood and i'd ask people to i don't you know i don't know quarter or dime right you know i don't know and you know I'm sure they were terrible, but you know it's hard to turn down a little kid you know trying to.
00:04:34
Speaker
um But i would I would do stuff like that. And and I would say you know my entrepreneurial spirit as I got into like high school in my teens, it wasn't so much this wasn't my plan to be an entrepreneur. First and foremost, my plan was to be a banker.
00:04:50
Speaker
I wanted to be like my dad, full stop. And um it didn't really hit me that my dad was an entrepreneur um because he started his own bank.
Lessons in Hustle and Work Ethic at Fidelity
00:04:59
Speaker
You know, he worked at one before that. and And so what I was really like as a teen was just a hustler as I would I would regularly have two jobs.
00:05:08
Speaker
You know, you wanted to work at the the golf course, cleaning golf carts, you know, in the summer because that also came with free golf. And that's something that I, you know, enjoy playing. I used to enjoy it a lot more.
00:05:20
Speaker
ah But then you also, when, you know, at nights, weekends or during the winter, you you know, you want to do, I was a pizza delivery boy. So I guess pizza is a part of my story, too. But, you know, those were good ways to get cash money and tips.
00:05:33
Speaker
OK, so I was always, you know, I was always working. And that's really what I i saw, you know, and learned from my dad. he He was always working. I didn't really think about starting my own business.
00:05:47
Speaker
um The reality of what happened to me. which I didn't think was a really good fortune at the time, i didn't get to become a banker. And so when I was in college, you know full steam ahead, get my finance degree, get a second degree in economics, do real well.
00:06:05
Speaker
And um I interviewed for one company, not 10, like my advisor said, like one. like one And it was the bank that my dad started at. And I just sort of thought that my journey would mirror his.
00:06:17
Speaker
Yeah. Guess what? They turned me down. Wow. I didn't see it coming. Like, you know, egomania. I didn't see it coming. And it was like, I didn't even think about applying to another bank.
00:06:32
Speaker
You know, you're so young and you're so dumb and you're so Eric, it's just, it's hard to explain what was in my head that day when she called and she said, Brad, you know, it never crossed my mind that get, you know, not just, you know, a trainee. I never dreamed it would happen.
00:06:47
Speaker
And, um you know, it was just, I was just annoyed. And um yeah, it probably, would I'm sure you took that. Really hard. would Would you consider that one of the, at the time, that was probably the biggest setback or or so you thought?
00:07:03
Speaker
Yeah, for sure. The biggest rejection. And what's crazy. action is Redirection. Well, yeah. And that's what happened is is that was the 90s and you know brokerage and mutual funds and stock trading was you know hot like super like fire like even more so than the than the latest you know bull run and fidelity investments was a very progressive and forward future forward you know type firm and they were hiring stock brokers and and um you know some recruiter got a hold them got a hold of me through the university or whatever and said you don't want to be a banker you you know that's that's not where the future is you want to be a broker you know a stock broker and trade stocks and right
00:07:47
Speaker
And, um you know, i said, you know what, that fine, that's what I'm going to do. And that's what I did. i love it. And then I mean, how, what was that trajectory of breaking into that? I mean, was it entirely different than the mindset that you had going in as a banker?
00:08:07
Speaker
Did you have to shift gears entirely from your approach? No, like it was it was the perfect. It's the only job I've had as an adult. So I became an entrepreneur 14 months after I started Fidelity.
00:08:21
Speaker
Fidelity was great. And my story stays with Fidelity almost to this day. And I'm sure we'll get to
Innovative AI Use at Kinetic Ventures
00:08:28
Speaker
all that. But Fidelity offered me exactly what I wanted.
00:08:32
Speaker
So back then, you know, 2000 before the dot com bus is when I was starting at Fidelity. And it was basically work unlimited hour policy. And they were like, you can work as much as you want. You can get overtime.
00:08:45
Speaker
And, you know, you got to, you know, time and a half or whatever. And and if you worked past, you know, like 6 p.m. Eastern, then you got like ah a little little kicker. If you work Sundays, I think you got a kicker.
00:08:57
Speaker
If you worked holidays, you might have got double or triple time. um and then you could win awards and get these bonuses. And so if you if you wanted to work, if you wanted to dive in and make some money,
00:09:09
Speaker
it reminded me of you know hustling delivering pizzas and and you know just i was just hustling and i got to make you know at the time you know what i thought was you know really great money and it was and it was a wonderful time to to be in the brokerage business because i literally saw like one day we were doing mutual funds right and they were in you know fidelity funds to be one account and If somebody wanted to call up and you know buy some stock, that was like sort of done on paper, you know, and I'd send it to the capital market. Yeah, we had a reconcile.
00:09:44
Speaker
But that summer, um Fidelity rolled out brokerage accounts. I was there. And you talk about an innovation. It just, when they were explaining it to us and they're like, yeah, so you're going to be able to hold stocks.
00:09:57
Speaker
American funds and Fidelity funds in the same account. And my mind just kind of melted. I'm like, wait, what? Like how? You know, and they wanted to get everyone into brokerage.
00:10:09
Speaker
And then they did this summer blockbuster, the sales contest. And the idea was now that we had this you know, um account that could hold everything. the idea was just to ask people, well, what else do you got? No matter what they called in for, well, can I help you with anything else?
00:10:24
Speaker
Anything that you have, we could organize it for you. Let's just get it over here. And then, you know, you transfer them to a closer or whatever. And um that was just a really fun. ah was a really fun summer. And it was a great experience.
00:10:38
Speaker
What was the greatest lesson you took away from from working there that you still utilize today? Gosh, I mean, honestly, i mean, it's ah it's a playbook that works for me. I mean, it worked when I was, you know, a kid. It worked when I was in high school and it it worked when I was at Fidelity. was So they run they ran this contest and and I do think it was called the Summer Blockbuster.
00:11:03
Speaker
And it was for all the telephone brokers in, you know, i guess all the call centers across America. And, you you know, I don't know how they route the calls or all that, but I figured we were disadvantaged being in, you know, Cincinnati. But nonetheless, I did the math real quick because most people were basically going to get their production based on 40 hour work week.
00:11:25
Speaker
And I could make up for the lack of call volume if I just worked 65 hours a week, for example. And sort of that like hustle math. No, I wasn't probably the most efficient or, you know, who knows, but it didn't, it didn't matter. I just went for it.
00:11:41
Speaker
um Ask people what I want. Can you move any money here? You know, maybe we can, can will you just talk to the next guy on the phone? And I sort of just built this, let's get to some yes, no matter what mentality and just outwork the next guy. And you'll kind of have these advantages.
00:11:55
Speaker
You know, you might say that that doesn't do well for my health and maybe it doesn't, but it, but it's, it does good for your wealth. And just, just that, It's just works for me, just that worker, you know, mentality or finding your identity.
00:12:09
Speaker
um well You know, works important to me. I mean, it's, you know, I'm ah i'm a husband and a father too. um But work is important to me. And I sort of just, I took that um from Fidelity and and I just continue to apply it as I've moved throughout the ecosystem.
00:12:27
Speaker
That's fun. So I want to shift gears and talk about Kinetic Ventures. All right. So let's talk about what sets Kinetic Ventures apart from from other firms out there.
00:12:39
Speaker
Well, first, our geography. So, you know, I can count on my hand how many VCs are, you know, within 100 miles of me or 500 miles. You know, in the state of Kentucky, I think there's only three in the entire state. And if you were in some you know other parts of the country, they have you know, dozens, if not 100 VCs.
00:12:59
Speaker
So it's it's not like when I go to some community event um that I find, you know, any peers that I can talk to. So I'm sort of alone um from the geography standpoint.
00:13:12
Speaker
The benefit that that sort of has produced and and has made our firm unique is I realized very early on that if we did business and if we built a business model, the same as, you know, coastal VCs by way of example,
00:13:28
Speaker
then there is no way we can be competitive. There is no way that we will have staying power and be able to build institutional level portfolios. And so really early on, we sort of we sort of believed we needed to find a way to kind of, you know, get deal flow from all over North America.
00:13:48
Speaker
And that presented a logistics problem. And so because I don't know how many million square miles really North America is. well Let's say it's 10 million square miles. You know, you can't drive across 10 million square miles efficiently. You can't fly, you know, across 10 million square miles affordably. I can't be in two places at once.
00:14:08
Speaker
But you know who can? a chatbot. And so this was in like 2018, beginning of 2019, where, you know, chatbots were like all the rage, you know, service things and stuff like that. So I decided, you know what, we should build a venture associate, and it's going to be a chatbot.
00:14:28
Speaker
We gave it a name, its name Wendell, and Wendell lives in the cloud, Wendell never sleeps. Wendell works 24-7, 365, and Wendell takes meetings with founders anywhere in North America, sometimes two at once.
00:14:43
Speaker
as As long as you have access to a mobile phone or an internet connection, you you can talk to Wendell. And the advantage to us was we could get more deal flow. So you know you can imagine how many deals are really happening in Kentucky. Yeah, very not very many you know and you know, can I entice someone from, you know, Georgia or Minnesota to drive or fly here? We have never been big enough to do that. But if I gave them an easy access point and, you know, money, particularly even now is is pretty expensive and scarce.
00:15:16
Speaker
Then my theory was that that would give us an advantage on deal flow. And if you have enough deal flow, you could you could build you know a portfolio around that. And the advantage for the founder was this was our version of the warm introduction.
00:15:30
Speaker
Look, I just think it's bad business in general to require a warm introduction because you're um you're implying that everyone else that either can't do that or has a disadvantage to do that isn't as talented or isn't as good of investment as those that can.
00:15:46
Speaker
And there's all sorts of biases, geography being just one of them, that you know really limit you know that sort of mentality. And the benefit to the yeah entrepreneurs with ours is everybody gets to us.
00:15:58
Speaker
Everybody gets a chance. You know, whether they could get warm introduced to me or not, everyone gets to talk to Wendell. Everyone has to talk to Wendell and everyone gets, ah you know, gets a fair shot. i mean, we're still a VC.
00:16:10
Speaker
We still say no, you know, infinitely more than we say yes, but at least we took a look. um But I'll tell you what, 2018, 2019, didn't very well. it didn't go very well No, it didn't.
00:16:24
Speaker
I mean, and the testing, I mean, testing it out and working out the case. and We weren't a digital, we hadn't we hadn't had our digital revolution yet as a country.
00:16:35
Speaker
And, you know, you you forget it It feels like... On some hands, it feels like a different lifetime, but on the other hand, that feels just like yesterday.
The Impact of COVID on Digital Communication and AI
00:16:45
Speaker
But, you know, Amazon was really starting to, you know, be incredible.
00:16:49
Speaker
We hadn't quite started doing like grocery delivery and stuff like that. So it was still, you know, cutting that stuff. We weren't using... you know, no a i that's for sure. No AI.
00:17:01
Speaker
so people just weren't ready for it, even in a forward future thinking industry like venture, because these founders had all been taught to try to get warm introduced. And when they had an advantage, they wanted to use it and they wanted to pitch me, right? They believed that they could just get in the room that that they they could make me see what they see and in their companies.
00:17:23
Speaker
So it just, it it didn't go well at the beginning, but then COVID hit and that changed our life. And regardless- Changed game. Changed the game.
00:17:35
Speaker
Changed everything. And it happened so fast that no one else could really change any of their you know methods and- To adapt to it. Yeah. You guys, you had that innovative ah outlook so far in advance that you were already ahead of the curve.
00:17:52
Speaker
Yeah, so we kind of went from a no way to like, how how do you do this, right? And then all of a sudden, as we transform to the digital society that we are today, it is quickly becoming a preferred method of communication, right? I mean, you know there's plenty of meetings that I still have with people in town that we just hop on a Teams call and just, you rip it out because it's it's super you know efficient. And there's still you know some people you know working from home and flex schedules. And we just hop in and out of you know um different you know teams and and Zooms meetings.
00:18:27
Speaker
And so our deal flow transition from about 15 month to And serious multiplier, right? and that's a serious multiplier right And it's continued on ah to this day. And if you look at if you look at a map, we get but get deal flow from, I think, 45 or 46 states.
00:18:49
Speaker
um Four states got nothing going on. And ah three or four countries. ah We do do deals in Canada and Mexico. Sometimes some European companies you know find us or whatever. But it's just it's just easy. Just get on the phone, dial us up, and apply for funding.
00:19:04
Speaker
What was the growth period for that? I mean, that's a massive jump. You said within you said what a month? Is that what you said? one month I mean, yeah on one month.
00:19:15
Speaker
my gosh. And so how did you I mean, were you able I mean, were you guys able to, you know, have enough people on deck to work through all that new business?
00:19:28
Speaker
We didn't have to. That was the beautiful thing about having a venture associate is it wasn't just because you built that all out already to handle. Wow. So Wendell basically took the pitch.
00:19:41
Speaker
Wendell, you know, walked the founders through discussions and assessments. It was we call it 10 man AI and Wendell. you know We built it on Microsoft Azure's platform, which was smart because it just Microsoft has continued to invest in all their platform AI tools, but they always had really good machine learning tools. And so when you're working in a structured data sort of format with a bot, then we just capture all that data and Wendell could just keep getting smarter. And so the idea was if Wendell took 250
00:20:15
Speaker
what Basically, Wendell sorts them into a couple of hats and it says, you know, this group here, there's there's no way. This group in the middle, I'm not real sure. And then the top group, Wendell basically scores it and said, these are the ones I think you should talk to.
00:20:31
Speaker
And that might only be 20. um that month and with three vcs we'd split that up we each talked to six or seven and that's highly efficient and then we'd write one or two checks and then next month we would do the same so we were from an operation standpoint we've always been prepared for the well what if what if we literally was like what if one day pipe dream that we woke up and we were popular and everyone applied for funding Could we handle it?
00:21:00
Speaker
And we've sort of solved it. The answer is yes, we can. And that gives us um an advantage, particularly as we roll out into the future. Remarkable. So, I mean, so ah she's you said Tin Man AI is what you referred to her. Is that what you said? Yeah.
00:21:16
Speaker
So, I mean, I would imagine that Wendell has just evolved from tremendously then with the rollout of ai as well. You've been able to evolve her in that way. Does she have a personality?
00:21:30
Speaker
Uh, so here's what's funny. The answer is yes. And I don't know if Wendell's a she or a he or anything in between. We've never, uh, identified that you know, the bot as having any, any gender. yeah So it could be. Yeah. but the Good point.
00:21:46
Speaker
Good point. So one of the things, uh, this was a fun day when one of the things that Wendell does is Wendell does walk founders through a proprietary, um, personality psychometric assessment.
00:21:58
Speaker
And it's a little bit like money balling. You know, and all of us have traits and all of us have behaviors that are natural to us.
AI's Role in Venture Capital and Future Predictions
00:22:06
Speaker
And then particularly when you're under stress, they're more obvious.
00:22:10
Speaker
and And maybe there are certain traits that are beneficial to founders and maybe there are certain traits that aren't. And so one day we asked Wendell to give itself its own assessment and and sort of profile itself.
00:22:24
Speaker
And we were shocked when we found out Wendell's personality. And so you have, yeah, yeah, yeah, um that are very future forward thinking leaders, autonomous. You have some social personalities, you have some, you know, subject matter expert type personalities and you have some sort of, you know, process oriented, very traditional stuck in our ways.
00:22:48
Speaker
And I guess ah we thought for some reason that Wendell would be this very future oriented thing. because it was a bot. Well, that's not what it told us. it It identified itself as a traditionalist, that it like process and rigor and it like doing the same thing every day.
00:23:03
Speaker
And then we thought about it. You're like, well, that's pretty much what you do. Yeah. And glad so that was glad Wendell likes the job. It doesn't have a choice. so But yes.
00:23:14
Speaker
Yeah. So that that was ah surprising, but it was, um, but it was fun. and And yes, now we have been able to, and know people ask all the time, they're like, oh, you know you built this chat bot on this platform, and you know but now there's all this AI. And I say, yeah well, think of all the AI agents that are being built.
00:23:35
Speaker
And what are what are people using to build those after they plug them in to the public? you know, m um models, they're using proprietary data, but we have the most proprietary data on founder co-founders and the early teams of anyone in the United States.
00:23:53
Speaker
And so, you know, we have, we have lots of data, we have lots of documents and, you know, so as we've been building out, um, you know, our different models to enhance Wendell, we have a unique advantage because we have the most data by luck.
00:24:10
Speaker
So it's remarkable. I mean, my mind is blown and I think it's just so incredible that you had this idea so far in advance and just the timing of it. I mean, it was it was the perfect timing.
00:24:21
Speaker
um as As far as those who are applying, you know, and and talking to Wendell in you gets and she's handling so many meetings.
00:24:31
Speaker
How can someone stand out to get in front of you then? What are you looking for? Look, so we tracked probably, I'm just gonna say 150 unique data points about the founder, their team, what they're building, their categories, their raise, the milestones they hope to achieve, who they are as a human, who their team is is he all these things.
00:25:00
Speaker
You track a little bit of financials, but you have to think about financial diligence and early stage venture you know, doesn't really matter because you don't have typically any or very long histories. It's all about, you know, forward looking. But we do some of that um and it reads documents. And so if you're looking at documents, the AI kind of depending on the stage of the firm or if it's in co-investment opportunity or somebody looking for a lead, they have different documents. But if they have documents,
00:25:27
Speaker
you can kind of pull out some key terms and and through that whole process. OK, and and there's there's a lot of stuff there. There really is. If somebody has already set up a company, if someone's already built an MVP, if someone's already selling, you know, even a little bit, you know, to to strangers and other companies, there's a lot of data that, you know, you can extract on that. And our system, you know, Wendell, it lights up red and green.
00:25:51
Speaker
And what we do is we track all this data and for a certain stage company, you would expect to see certain milestones or certain things in place.
00:26:02
Speaker
And so it just compares company number one to all the other companies. And it it basically takes the mix of all the data and it gives it a score.
00:26:13
Speaker
And it says this company is 84% more likely to succeed than the average. So it's not a crystal ball. It's not, you know, um it's like it's a base it's like basic blackjack strategy i mean you you know you know you want to you know double down on a 10 versus a dealer five but it doesn't guarantee that that's going to win that one hand but if you play diversified portfolio you know our idea is let's let's build a portfolio of you know founders that are unique and special humans
00:26:48
Speaker
and we'll do better over time. And so one of the things that stands out that I will tell you is founders that are unique And I'm not gonna tell you everything of what that means, but if you're just the normal average Joe, you shouldn't be doing a startup, okay? And most people are just normal and there's nothing wrong that, okay? But founders, if you think of what is what is a CEO founder's main duties, right? are are they really Do they really need to be efficient operators you know that you hear people talk about? Like, operate what, right? They're builders. yeah you know
00:27:22
Speaker
And they also need to have a weird, view of the world, right? i mean, if you're going to build something different, then they need to they need to view the problem as completely different so they can build a different solution.
00:27:36
Speaker
They've got to fundraise, right? They've got to be in a bunch of, you know, meetings, whether it's in-person, Zoom or, you know, whatever. They got to fundraise. They got to paint a vision, not only to the people they're trying to raise capital, but how how are you going to hire talented people for less money unless you paint a vision that you want to be a part of? So anyone that's weird, off, very unique, has personality traits that are far abnormal.
00:28:02
Speaker
You know, we find those because we just believe it takes a special person to to build a startup. yeah What's super exciting is society overlooks a lot of these people. You know, internally, it's like, and you know, I feel like I'm a part of the island of misfits and I love it.
00:28:17
Speaker
Yeah. Yeah. why yeah But so they don't, it's not like, again, the warm introduction. So they don't, you know, it isn't it isn't about, you know, what they look or the tagline.
00:28:29
Speaker
it's It's just about, you know, there are some people that are born to do this and therefore they have an advantage. but doesn't mean That doesn't mean anyone can't be an entrepreneur. Anyone can.
00:28:39
Speaker
I don't think anyone's gonna like it. But yeah some we're looking for people that being an entrepreneur is in their blood, which ultimately turned out to be me.
00:28:50
Speaker
my dad was a banker, but he started bank, right? And he, yeah he, I moved the bank and then i ended up not being a banker and and starting my own, you know, first wealth management firm and and now VC, but that's kind of how it looks.
Democratization of Venture Capital
00:29:06
Speaker
In the next five years, how do you see VC changing now that we have all this rollout with AI and other companies are trying to catch up with, you know, what you started doing years ago?
00:29:18
Speaker
So I just saw yesterday, I don't remember what post and social media it was, Mark Andreessen basically said that out of all the things that AI is going to disrupt, it'll never disrupt VC.
00:29:30
Speaker
But in the same time at the same sentence, I think he went on to say, well, you know it's there's some art and some personality to doing this. But vc but AI is disrupting art.
00:29:44
Speaker
And AI is going to disrupt so you know psychological assessments. right And AI is doing these other things. AI is very sophisticated. And AI will disrupt VC, period.
00:29:55
Speaker
yeah um and so i think that's you know if you're not using ai particularly in venture capital i think you'll be at at a disadvantage um so i think you'll see tons of those elements particularly in the low-hanging fruit like diligence so ai diligence it just has to happen i mean you know i can only do so much you know read that you know thousand page binders you know AI is brilliant you know for these things. AI is brilliant for writing an investment memo and a thesis. right AI is brilliant for doing a competitive analysis or finding other companies out there. So I think you're going to see all that. But I i think the bigger thing you're going to see is you know where VC sits from a investment vehicle.
00:30:46
Speaker
And historically, it's been very coastal and it's been, and you know, ah dozen funds. And, you know, it's been this it's been this thing that most people haven't even thought of as a viable asset class, and therefore they don't participate. If you go outside today and just ask the next 50 people you run into, hey, just real quick question, you have any venture capital in your portfolio and your retirement account?
00:31:09
Speaker
And they're going to say no. Or what are you talking about? and You might run into one, but that would be it. you are going to see a radical transformation in um it It'll hit um non 401k monies first, but you're going to see retail offerings like crazy.
00:31:26
Speaker
You're going see advisors get educated and get more comfortable. You're going to see TAMPs and OCIOs start to cover the category. And then you're going to see this broader base of venture that's going to bleed across America from coast to coast instead of just on the coast.
00:31:42
Speaker
Mm hmm. With all this data that you're collecting, do you ever think that there's too much data through Wendell?
00:31:52
Speaker
I don't know. I mean, what I think about a lot, I mean, it it is shocking how much data you need in order to be predictive. I mean, every time we every time we've we've turned a corner, it's like, oh my God, I just need a thousand more responses or you know you know whatever um Maybe, you know, and but we're nowhere near, and which means no one else is anywhere near that threshold of of too much. I mean, we have, I don't know, 27,000, you know, company profiles and of the 27,000, about 3,500 have completed their journey.
00:32:32
Speaker
So we have we have outcome data on 3,500. And then some of our things we track are newer than others. And so we may not have, you know everything that we want on on you know certain characteristics and traits and so we're pretty far away i think from ever being like hey do we have too much data sometimes
Success Stories and Data-Driven Insights
00:32:51
Speaker
i want to make sure that we don't get biased in the data we collect because you don't want something to to be like stage driven you don't want something that benefits oh this company is at a later stage and they got more customers and you you know you you want to be very
00:33:07
Speaker
you want to be very thoughtful, sort of like aligning, you know, everything at ah at some, you know, entry point. um and And then I think about like, is the data we're collecting, is it timeless? Will it be classic? Like, will it be valuable 10 years from today as as it is today?
00:33:24
Speaker
And that's where I think, you know, collecting what a lot of people call soft data, they don't really know how to do it, but it's psychology is just, it's there's tons of math um you know interview a psychologist and ask them to walk you through a validation um process that they they do on a psychometric um there's a really bright woman up at i think at the university of wisconsin or one of them named kelly williams um and she's sort of like is a professional in building psychometrics
00:33:55
Speaker
And she can tell you sort of the rigor that goes into it and the mathematics behind it. And so collecting soft data you know around you know behavioral traits and personality traits and being predictive of how a person's gonna act under stress just makes total sense.
00:34:11
Speaker
And I think it'll be timeless. and i I absolutely yeah you know think it'll be timeless. And so hopefully um the more the better. do you have i would love for you to share like a success story from a ah startup founder um that maybe was maybe was dismissed until they got in front of you and you guys you know fell in love with their vision and do you have any success stories like that yeah or an underdog or an underdog story i always love those
00:34:45
Speaker
Yes. So um so we have a first off, that's most our founders. OK, let's let's be honest that they've they've been to dismissed by you know some traditional you know outlets. And so we kind of weed through you know what's left and then we find you know some shining um you know, shining stars. But so we we invested there was a ah founder, and I'm trying to remember what um geography I think they're from um Minnesota.
00:35:17
Speaker
And so again, that's what we do. We invest in founders we've never meet through the online and and they had this this idea um that they wanted to compete with five hour energy and they were doing it with like coffee shots like espresso shots.
00:35:32
Speaker
And it was, if you think of like the energy drinks felt very like NASCAR. And so they wanted to go after the work junkies, right? That, you know, it was like supposed to be a healthier version of a five hour energy because coffee's good for you And it was, it was during all that craze.
00:35:49
Speaker
And, you know, so a lot of, you know, first it's a consumer product that's not tech and that's that's always harder. And people were like, i don't know. And it didn't go so well at the beginning. and But here's the magic with gifted founders.
00:36:05
Speaker
is founders still had this vision. Still, I forget why they like coffee so much, but decided to instead of focus on the product, he pivoted and just focused. He let his creative juices out and focused on the on the brand.
00:36:20
Speaker
And so he shifted and rode the cold brew coffee craze. And the company is called Busy. And Busy Coffee Cold Brew is the number one coffee brand on Amazon.com. It outsells Starbucks.
00:36:34
Speaker
ah Busy Coffee is in every, you know, Kroger, Publix.
Expanding Access to Venture Capital through Interval Funds
00:36:39
Speaker
um you know, Target, probably in America. And every morning when I walk downstairs and open my fridge, um my wife loves cold brew coffee and I see two jugs of busy coffee. She has no idea that we own stock in this and this cold brew. And I've talked to several coffee snobs and they say busy coffee, um you know, is is the best. And they're doing,
00:36:59
Speaker
You know, they control all their own manufacturing. So they're, you know, tariff proof pretty much. And they've, they're blowing it out, you know, just millions and millions and millions of dollars of of revenue, explosive growth, ah a beautiful, beautiful brand. And that's just a great story. And yeah, we love that ah yeah yeah I love hearing the underdog.
00:37:22
Speaker
I love specifically hearing the underdog stories, you know, and, um you know, and, Like we were saying earlier, you know rejection is redirection. you know You just have to pivot.
00:37:34
Speaker
not Don't give up, just pivot.
00:37:40
Speaker
been yeah the biggest thing that we've noticed in the founders that were just sort of born to do this versus the ones that aren't is a pivot is just a different way to name a failure but not pack it in.
00:37:53
Speaker
and It seems to be, at least in ourwin our big winners, none of them look today like they looked when we when we first invested. Yeah. Just taking an alternative path, you know?
00:38:07
Speaker
no So what do you see the future for Kinetic Ventures? what do you What do you see for the future? How do you want to evolve and grow? And you've been on the forefront of this this technology revolution.
00:38:23
Speaker
Yeah, so we're happy with that. And now we think, you know, you're kind of surfing that that wave and that's gonna last, um you know, for a while. So the what we're innovating in now is our is our fund itself and the and the distribution model. And so um this year we've launched our interval fund. So we are still private markets investing, but our fund is available for public consumption.
00:38:50
Speaker
And you know that means we're we're evergreen. And so people, they don't have to make long future commitments. right We have very low minimums. We have no accreditation needed.
00:39:02
Speaker
So every household in America is now eligible to invest in venture capital. my dream, the reason we're doing this is I think that's going to be the big shift.
00:39:14
Speaker
So i'm one of the careers paths I took before was here was a financial advisor. And so the most frustrating thing that ever happened in my career as an advisor was even though I was aware of alternatives,
00:39:30
Speaker
I didn't have any products that were easy to allocate across my entire book of business. So in 2008, nine, you know, everyone's portfolios were terrible. And when they're terrible, that's terrible for my bottom line, too.
00:39:44
Speaker
And that was terribly frustrating because I wanted to do a bunch more stuff, but they were either accredited or super high minimums or these you know k-1s and scary sub doc process or they were call funds and people people don't like making commitment they had all these things and so i want to bring a product to market that i can you know help position for ah tribe of advisors that i belong to that they can allocate across their entire book of business
00:40:18
Speaker
just by pressing a button and be electronically traded. And so so that's what we've done. And look, we're in a rare spot. There's only four venture interval funds or venture mutual funds of any kind.
00:40:31
Speaker
Out of the 19,000 mutual funds in America, there's four that do venture. And so that's that's our next innovation. And that's what we're that's the newest thing we're working on and and we're excited for this year.
00:40:44
Speaker
Fantastic. i you know We hear that so much, why financial advisors don't utilize alternatives more. we it's this It's like the same types of themes. Maybe they don't understand. In interval funds specifically, it seems like a lot of people tend to snooze on them. What do you feel the benefits are for interval funds?
00:41:05
Speaker
What do you what are you like about them? So interval funds, if you think of like the modern, the the most recent innovation that financial advisors have gone crazy over is active managed ETFs, which is just totally bleeding the open-ended mutual fund market to death. And it's really just a race to the bottom.
00:41:24
Speaker
And we're about at peak tulip mania for active ETFs, right? Because eventually the clients are going to start demanding access to some things that they're listening you know to their to their high net worth you know friends to.
00:41:39
Speaker
the The thing about the interval fund is if you compare them to ETFs, then they're a inferior product. And i wouldn't I wouldn't manage public equities in an interval fund.
00:41:52
Speaker
So having said that, then you shouldn't compare Interval Funds to ETFs. What you should do is say, well, what are you buying in the Interval Fund? Well, in this case, you'd be buying private tech companies in North America.
00:42:05
Speaker
Okay, then how else might I access private tech companies. Well, i would do i would do a traditional LPGP fund, and that fund is a Reg D private placement.
00:42:17
Speaker
And that fund you know is a subscription process. That fund has super high minimums, $250,000 to $10 million minimum. um That fund is called out into the future.
00:42:30
Speaker
That fund has zero liquidity. That fund cannot be owned in your IRA. Interval funds solve all that. So you should not view it as a short term deal.
00:42:43
Speaker
But if you needed some money out for whatever reason, Interval funds have quarterly liquidity. Most of them do. Some of them are tender, but most Interval funds have some level of liquid liquidity every quarter.
00:42:54
Speaker
You can buy fund every day. Ours is priced every day. to a a fair value audit. And so you have some transparency. If you put in $10,000, you know what it's worth tomorrow, you know what it's worth next week and and so on and so forth.
00:43:12
Speaker
You can add to it. So you don't have to think in these finite terms of, oh my gosh, I'll make a $50,000 commitment and it's 10,000 a year for five years. No, just put in 10,000 this year and decide later.
00:43:24
Speaker
So it has maximum flexibility, but for the advisors, is they can trade it alongside in their model portfolios because it's electronically traded so no they can't daily rebalance but they can quarterly rebalance and so they can't do that even if you buy some of these things off these alt marketplaces Still, the Interfund structure is the closest thing to an ETF or an it's it's really an open-ended mutual fund, right? It's just instead of daily liquidity, it's quarterly.
00:43:57
Speaker
So there's just lots of advantages. And I suspect that that structure, just again, and maybe it's not going to be as crazy as ETFs, but I bet by 2026, it'll the most rapid,
00:44:09
Speaker
it'll be the most rapid rapidly used filings at the SEC will be interval funds because you're going to see all these alts. All these alts are going to come out through interval funds and then then advisors are going to, you know, you know, get on to that because that's the interval fund and the alts is the first thing that really fights back against robots.
00:44:33
Speaker
And the reason is most of the robots, particularly the ones that the major asset managers, they're not going to use interval funds and alts for a minute. So if you're a direct customer using, say, Fidelity Go, well, Fidelity Go isn't going to have interval funds.
00:44:48
Speaker
Fidelity Go is only going to be 70% equity, even if you're a 10 on the risk scale. so So if you have a financial advisor, your advisor can can bring in a bunch of these new products. And I think it's a great reason to have a financial advisor.
00:45:05
Speaker
Advisors are going to catch on to this. It'll be good for their business. And so it should be a good two or three years. Okay, so financial advisors that, you know, perhaps have not leaned into that space, you know, interval funds, where can they learn more information? What are some of your favorite resources?
00:45:23
Speaker
um there's a There's a website, I forget which one it is. It's like interralfunds.org is a place um that that you can track that. I mean, they can call me and um you know they can call Bon Ryan and there are ACIOs and there are there are plenty of um people that are ah in the alt space that fully aware of what interval funds and and so there's plenty of resources out there you know i hate to i hate to give him a big head but my lawyer is a great guy to call um he has a law firm called fintech law his name's bo how he used to be an sec examiner this guy knows more about fund structures than you know the dozens of lawyers i talked to before him and i
00:46:09
Speaker
Can't believe I'm giving him a plug, but he deserves it. yeah He's great, but um I would get educated on integral funds. And most of the custodians have resources. I mean, this isn't a new, it it was an old product that didn't, you know, it's been around legally for a long time, you know?
00:46:27
Speaker
It's just, what did you what did you need to put in it, right? theres It never could compete with open-ended mutual funds or ETFs on public securities. And but and no one thought about distributing alts to retail.
00:46:41
Speaker
But now that's going to be like fire and interval funds are going to have their day. Shana has I've heard her say the same thing about interval funds, like, you know, ah that financial advisors should be paying attention to them more.
00:46:57
Speaker
I think you're you're going to see it's going to happen so fast. You know, it's it's because it's when you think of it from once you buy one or two, you're going to be looking at the other platforms thinking, ah wait, I don't want to do why would I do that? It's work.
00:47:12
Speaker
but It's just a digital paper. It's why would I? Because those platforms are going to build like these bespoke portfolios. And if the SEC comes in and looks at the 400 households that you have and everything's different,
00:47:26
Speaker
That looks weird versus if you get an interim fund and you say, all right, well, we're doing 5% of venture capital. Everyone gets it. Everyone gets the same thing. Yeah. You know, that's what we've done with model portfolios.
00:47:39
Speaker
And so to think we're not going to do that with all, it seems weird to me. Yeah. um And so I wouldn't sleep on them and and you're going to see TAMP start to pick them up. Even the alt platforms are starting to pick up interval funds because they just, because the underlying holdings are are alternative.
Personal Advice and Maintaining Work-Life Balance
00:47:55
Speaker
Um, you know, and and yeah, I mean, I think that's that's definitely where it's headed. So, Brad, do you have any advice to your younger self?
00:48:07
Speaker
I mean, so much. but Like, where do i where do I go with with, you know, a question like that? i Here's the biggest thing that I I think about all the time is two two pieces of advice that I wish um i would have i would have known number one and the most important is the world's a big place big you should go see it um traveling will bring you a perspective that no lesson from a mentor will resonate when you're young but if you see the world talk to other people how they view the world
00:48:46
Speaker
Super powerful. I didn't begin networking nationally until about five years ago, six years ago, as we went to this national you know VC model. Right.
00:48:57
Speaker
And it's that that's a humbling just journey. And I would just, you know, it's what I tell my kids. I got one daughter that. She's taken me up on that a little too much. She's getting ready to go to Thailand.
00:49:11
Speaker
ah Amazing. like For how long? For how long? 14, two weeks. Yeah. I was like, was like, Andy, you need to watch this show called White Lotus before you go. It's so good. I love, I'm a huge White Lotus fan and I love, and I do love Thailand. I spent um six weeks there in 2018 actually. Really?
00:49:30
Speaker
Yes. I, Thailand's amazing. But yeah, when you go over, it because when you go that far, ah over on the other side of the world. You gotta stay there for at least, yeah, for at least two weeks.
00:49:44
Speaker
It's just 24 hour. She's doing two weeks there and then she's doing a few days in Seoul, South Korea, because it's where they fly in and out of. yeah And the other piece of advice is it's shocking how long life is.
00:50:00
Speaker
And you would do better to like, you know, I had one mentor tell me just walk. I think he said, take two aspirin, a glass of water and walk to where you're going. Don't run.
00:50:11
Speaker
And burnout, especially in startups, is the number one poison of what what kills a good or potentially great startup or ah or you know good or potentially great health in a human to yeah to poor health.
00:50:29
Speaker
yeah If you let the universe work for you a little bit, it might. But you got to give it that moment. And this is really a long journey. Um, and I was probably in a rush to get to certain stages and and points in my life that have cost me or sacrifice some things, you know, yeah I wouldn't change anything, but I think I would do well to have been more traveled and slowed down a little bit.
00:50:52
Speaker
yeah Well, I was, my next question was going to be, you know, how, how do you avoid burnout and how do you keep that, you know, that balance of life? Because it is important, you know, as hard as we work, you know, to have that, that balance.
00:51:08
Speaker
For me, some of what I already said, travel. um you know i i I have a wonderful relationship with my wife and ah she's got some flex with her job and she also likes to travel. and And I'm not an adventurous, I'm not going to Thailand, okay? there's so There's plenty of places, that's just me in the US I've not seen yet.
00:51:30
Speaker
And that that's a real escape. you know It's when you go with just one other person, whoever your person is, and you just see new place meet meet new friends try to build networks um i don't i don't think about work you know when i when i do that i and i think that's that's super helpful for me the other is um you know family your stuff uh yeah i've got three in that time Yeah, like I as long as my every time that I have a super bad day, I almost always call one to all three of my kids.
00:52:06
Speaker
And as long as they're having a good day, it's incredible how that perks me up. And then the final thing, and you got to be careful with this one, but it works. It's Kentucky bourbon. yeah
00:52:18
Speaker
Look, if you want to time out, take a few sips on some Buffalo Trace and you'll be all right. i was about to ask, what's your choice? i thought You know, I mean, I'm well-traveled in the Kentucky bourbon. so I mean, I like bourbon, not ryes.
00:52:34
Speaker
I like Kentucky bourbon. I'm from Kentucky. um You know, but I like i like all the stuff. yeah Yeah, yeah. One last question, and And then we'll wrap it up. What are you teaching this next generation? I know that you are also a mentor.
00:52:53
Speaker
um You serve on the board of Regents at Northern Kentucky University.
00:53:00
Speaker
I'm only teaching life lessons and, you know, I'm still, I'm not quite over the hill yet, you know, and so I can, and I do have three kids, you know, 19 to 21 years old, and I still can relate whether it's, you know,
00:53:15
Speaker
founders in my portfolio that they've been my ear on stuff. um you know Whether it's kids or students at NKU that I might interact with, or UK, which I interact with you know um several there you know from the time, or whether it's interns here at my office or even just the young developers. I mean, one of the developers came in this morning and she reminded me I was double her age.
00:53:39
Speaker
um But I'm those are the best lessons when you have an opportunity to connect and you just make it real and say, well, you know, if you're if you're actively listening when you're around, you know, the younger generation and you say, oh, you know, I went through something like that when I was younger. It worked out really well for me. Let me tell you, or it didn't work out well for me.
00:53:58
Speaker
But all the life lessons kind of some of the stuff we're just talking about. They got teachers to teach them the curriculum stuff. um You know, I definitely help the entrepreneur with ah sort of like the mental health stuff of how do we, how are we going to make it through this fundraise? Yeah. A lot.
00:54:14
Speaker
Yeah. But that's where my heart is. That's where I talk most authentically. I think, you know,
Conclusion and Invitation for Connection
00:54:21
Speaker
I'm not polished. I'm not, you know, whatever. I'm just like, well, this is, this is me and all its glory. mean, real talk.
00:54:29
Speaker
But i I enjoy that. And i I do spend a lot of time with a lot of the young kids. I love that. I love that. It's important. And not everyone is as fortunate to be able to have access or be influenced at such a young age to be able to learn these types of tools for success.
00:54:51
Speaker
So thank you for that. Thank you for giving back in that way. And thank you for you know giving us so much time today to be able to chat and learn from you. you know So I've really enjoyed having you on, Brad. Thank you.
00:55:05
Speaker
Yeah, I've enjoyed it I appreciate it Brittany. Is there anything that you'd like to leave our listeners with? um Look, I love, like I said, networking. I do travel a lot. I'm looking to build friend pockets, particularly along the entire East Coast of the United States.
00:55:21
Speaker
Hit me up on LinkedIn, you know, at Brad's app. you'll You'll find me. I will respond. um That's probably my favorite thing to do. I love it. Thank you so much. Thank you everyone who has tuned in, watched and listened.
00:55:34
Speaker
You know, you can also follow us on all of the social apps, you know, LinkedIn, Twitter, X, Instagram, all of them. So shoot us a, you know, shoot us ah a little hello, give a review and definitely tune in next time.
00:55:49
Speaker
Thank you so much, Brad. Again, it was just wonderful learning from you and we will see you again next time, everyone. Thank you so much. Bye-bye.
00:56:01
Speaker
The opinions expressed in this program are for general informational purposes only and are not intended to provide specific advice or recommendations for any individual or any specific security. It is only intended to provide education about the financial industry.
00:56:16
Speaker
To determine which investments may be appropriate for you, consult your financial advisor prior to investing. Any past performance discussed during this program is no guarantee of future results. Any indices referenced for comparisons are unmanaged and cannot be invested into directly. As always, please remember investing involves risk and possible loss of capital.
00:56:35
Speaker
Please seek advice from a licensed professional.