Triangle Tweener Talks

00:00:04 - Announcer
Welcome to Tweener Madness, the high stakes startup showdown where eight promising companies go head to head for a $25,000 investment prize from the Triangle Tweener Fund. But before the competition kicks off, let's meet the people making the tough calls. The judges. In this special Meet the Judges episode, we're sitting down with the investors and industry leaders who will be asking the hard hitting questions, evaluating the startups, and ultimately deciding who moves forward in this bracket sty competition. Each round, three judges will vote on which startups advance leading up to the finals in early April, where one company will take home the top prize from the judges. You'll hear about their backgrounds, what they look for in a winning startup, and maybe even get a little inside scoop on their decision making process. So if you're a founder looking for investment, an entrepreneur curious about what investors really want, or just someone who loves a good business battle, you are in the right place. Let's meet the judges. Here's your host, Scott Wingo.

00:01:06 - Scot Wingo
Hey, everybody, it is Scott Wingo. We are excited to have with us today Dave Neal. He is a venture partner at Duke Capital Partners and he is one of our Tweener Madness selection committee members. Hey, Dave, how are you?

00:01:21 - Dave Neal
Doing great this morning. Scott, good to see you.

00:01:24 - Scot Wingo
You as well. Looks like you're over at Duke. I can see the. It looks like. Are you in the. Over at Fuqua or where are you guys located?

00:01:32 - Dave Neal
So our offices are on Irwin Road, right across from West Campus.

00:01:37 - Scot Wingo
Yeah. Okay, I know that building. Awesome. So give us a little. You and I have known each other for, gosh, I don't know how long, probably going on 30 years, I would imagine. So you've been a. You're kind of one of the OGs. I've got to get you on the podcast for a longer form interview, but for this we're doing kind of a quick hit. So this will just be a little taste of all the things Dave has done. We do actually have a Chris Hively interview in the can, as we say in the podcast biz. So you get lots of mentions on that one, as you can imagine. So give us a little bit of background personally of what'd you study in school, where are you from, how'd you get to the Triangle, all that good stuff.

00:02:19 - Dave Neal
So I got to the Triangle the first time when I was almost 12, so ended up going to high school here in Durham and ended up as far as what I studied, I went to UNC for undergrad and law school and studied mostly finance and that area of the law. While I was in law school, I sort of figured out that that wasn't going to be the thing that I thought was the highest and best use for my career. And I actually did work for three years as an in house corporate attorney here in Durham for a financial services company, but then went back to business school out on the west coast at Stanford. And I was out there in the Bay Area for about six years in total, including the time I was in school out there. After that I lived in New York for about three and a half years before returning to the Triangle. And when I came back down here, I started getting into the entrepreneurial community as soon as I got back down here in 1993 and had been involved in that ever since.

00:03:30 - Scot Wingo
Awesome. So it's 1993, you're here. I guess you weren't practicing law, did you, were you, were you, did you join a company or what? What kind of, how did you engage with the entrepreneurial ecosystem back then?

00:03:42 - Dave Neal
So when we came back here, I met a woman named Robbie Hardy and we did a company together in 1994, in 1995, called CI Technologies, which we ended up selling to Seagate about a year later. And after that I just anticipated we created another company which did not succeed and learned more lessons from that one than we did from the one that did succeed. And then after that I continued to be on the C level team, first as cfo, general counsel type person and then later I did a couple of CEO gigs before pairing up with Chris Hively in 2011 to raise capital to do the Startup Factory, which was a downtown Durham based accelerator stage venture capital fund that invested in 35 companies between 2012 and 2016.

00:04:48 - Scot Wingo
Awesome. Cool. So then, so you've been an operator and then an investor for a big chunk of time and then how did you. So that ended in 2016, take us through to get us to 2025 where you're wearing the Duke Capital partner cool swag.

00:05:05 - Dave Neal
Yeah. So at some point In September of 2017, a guy named Kip Fry, who's well known around the entrepreneurial community here, reached out to me and talked to me about what was at the time then Duke Angel Network. And so I joined on a part time basis then and worked with John Glushick the first year or so I was there and then continued to increase the amount of time that I put toward Duke Capital Partners over time. We changed from Duke Angel Network to Duke Capital Partners in October of 2021. And the reason we did that was that given some of the deal sizes, we were doing like, we had done one deal in the previous year where we put $5 million into one round for a company. And we just said, that's not angel network behavior. So let's talk about what a rebranding would mean. And that's how we became Duke Capital Partners.

00:06:06 - Scot Wingo
You have the three in the triangle between. First of all, it used to be Dan can win or can Dan win? Which was easier to remember. But now you ruined the little thing. My mnemonic. So we've got the Wolfpack Investment Network, the Carolina Angel Network, and then now you guys are dcp. It seems like you guys have kind of, like gone in a bit of a different direction. So as you said, you're writing bigger checks. Give us kind of the. The reverse pitch for DCP and how you guys focus on things.

00:06:37 - Dave Neal
So our charter, our reason to be, is to connect Duke investors with Duke companies and Duke companies having a Duke connection as we define it. I think our definition on that's a bit broader than some of our sister groups here in the triangle. So we see a lot of companies every year, and we end up with a portfolio that I think is somewhat reflective of what the university is in the sense that we have about 40% healthcare, largely medical device, some therapeutics, maybe 40% software with a very heavy tilt toward B2B software. And then the remaining 15 or 20% is all across the board. And so we're looking for excellent entrepreneurs with really good ideas that have the requisite do connection, I guess, is the best way to describe what we do.

00:07:38 - Scot Wingo
Yeah, so most of the other firms have a. One of the founders needs to have, you know, a school affiliation. Sometimes there's a little bit loose in there. You know, I think. I think Wolfpack. I can't remember if it's Wolfpack or can. They had, like, you know, one of the founders kids was going to the school. So I don't know how. How loose you get with the Duke affiliation. Walk us through, like, the core of that.

00:08:01 - Dave Neal
So we take the position that if a major investor who has a Duke background has invested in a company, then that's something we can look at. We've seen companies where there's somebody there who's a key advisor that we've looked at, or we've seen companies that someone somewhere else in the Duke infrastructure has said, hey, look, we're thinking about using this company. Could you guys take a look at it? Because we love for them to be more financially stable, something of that nature. And we've looked at those kind of companies. And so we also. There are certain accelerators around the country that were founded or co founded by people who are Duke alums. And we take the position that those kind of accelerator companies we can also look at and to invest in. So, you know, we will go to those demo days of those accelerator groups and see if we like any of those companies. And we've actually taken action on some of those at some point. We've invested in about 62 companies at this point.

00:09:10 - Scot Wingo
Wow. Yeah. Any idea how much capital has been deployed?

00:09:14 - Dave Neal
About 75 million range. Yeah.

00:09:16 - Scot Wingo
Wow. Nice. Yeah, yeah. And then you don't have a geographic constraint. So I've noticed you guys are kind of wherever the Duke. Duke folks go. Can you do international deals? Have you even done. Okay, yeah.

00:09:27 - Dave Neal
So, yes, depending on where they are, I mean, we would certainly be more comfortable with countries where the legal system is more like ours. The UK would be an example. So we've actually had companies that started here who ended up being domiciled in other countries. So, you know, the primary thing for us is the Duke connection. Right. Strong enough.

00:09:53 - Scot Wingo
Yeah. And then the. Are you guys like. Is the form still like a syndicate where you guys see the deals, you offer them up to a bunch of people and they. They individually decide, or is there a committed capital kind of model now?

00:10:10 - Dave Neal
So there's not a committed capital model. There is what we call venture capital as a service. We have members and, you know, we search the deals to find the ones that we think are the best to put forward. The CEOs of those companies then present and each individual member makes his or her her own decision as to whether or not they'll invest and how much they'd like to invest in a particular deal.

00:10:34 - Scot Wingo
Cool. Then you form like an spv and then that SPV does the investment type of a situation.

00:10:40 - Dave Neal
Yeah, we've been forming SPVs, I think going on four years now. And the simple fact of the matter was the better deals we got into, the less tolerance the CEOs had for having a bunch of angels on their cap charts as individuals. And so the SPV cures that.

00:10:56 - Scot Wingo
Yeah, yeah. It tends to be the desired. It used to be back in the day, it was like a lot of it was hard to do an spv. Now there's like online forms. You just go and create them. So it's kind of nice. The hard part is like getting all the, you know, it's easy for people to raise their hand and say they want to invest and then like the, the chasing the cats to get the SPV done is always the hardest part of this. Angel investor closing is closing. Yeah, yeah, yeah, yeah, yeah. It's hard to do. Yeah. And you've done that 62 times. So that's, that'll, that'll make you lose some here.

00:11:29 - Dave Neal
Well, it, well obviously that was effective in doing so, but we've actually done about almost 120 rounds in those 62 companies because we also do follow on rounds in our portfolio companies that come back for additional rounds of capital.

00:11:45 - Scot Wingo
Yeah, yeah, absolutely. Cool. How did you, how do you describe, you know, because you guys have such a wide range, how do you, if someone's going to pitch you guys, how do you describe kind of like the sweet spot? Is it like is. Do you even talk about a check size or stage at this point?

00:12:02 - Dave Neal
So we have a couple of different vehicles. We have a vehicle which is designed to help with precede and siege stage deals. And you know, we did that because several years ago myself and one of my other colleagues realized that, you know, we were putting aside a lot of plausible deals at that stage. And the reason that was happening is I think that even though we had people in the network who said I would like to invest at an earlier stage, if confronted with a higher proof, more proof laden deal and a true seed stage deal, that they'll automatically unconsciously pick the more proof laden deal. And so we have that seed stage precede stage. And in those, um, we, I'd say the average has probably been about $300,000 in that entity. And then the check size is really dependent on the vitality of the venture capital market in general. You know, that said, we've done, I don't know what the exact number is. We've done quite a few deals that were in the seven figures. And we mentioned earlier we had a $5 million deal. I know we just did one in the last few months that was between 3 and 4. So lots also in the 1 and 2 million dollar range. So we've done a lot of fairly substantial rounds into companies in the last three or four years.

00:13:31 - Scot Wingo
Yeah, that's amazing. And then unlike most venture firms, whether squarely tech or life science, you guys live comfortably in both worlds because that, that Duke affiliation with all the life science and medical pieces that you guys have.

00:13:46 - Dave Neal
Yeah. And we also have people on our team who are life science experts. That is not me, but we have people on our regular operating team. And then the other thing that we do, which we really love over here, is that there are a lot of Students here who are in various fields who are interested in learning more about how venture capital work gets done. And so we have an associate program that utilizes people across a wide spectrum of life science and engineering type technologies and we make a lot of use of that. Of those folks in that program, a lot of them get academic credit, et cetera. So.

00:14:34 - Scot Wingo
Got it. Cool. You've been at this quite a while. What are some of your biggest wins over the, you know, I guess since 93 you've been at, let's see, you've been doing venture, I guess it really starts 2011. So call it 20 years. What are, what are the biggest wins that you've had?

00:14:54 - Dave Neal
Well, I think, you know, Archive Social was a great win for the startup factory and you know, that would be the, the great win there. And I think the guard of the Duke Capital Partners portfolio, some of the great wins are in there. You know, I said we've invested in 62, probably half of those are, you know, we're three or three or three and a half years in on average, probably and really haven't gotten a chance to get to exit yet. But in the older part of the Duke Capital Partners portfolio, I mean there's 6, 8, 10 companies that are really doing well. I mean probably good not to name them given our confidentiality set up over here. But yeah, we've got financial services companies doing really well. We've got back office athletic company doing really well. You know, there's quite a few that have valuations in the mid nine figures.

00:15:53 - Scot Wingo
Yeah, very cool. Anything in your anti portfolio? So that's like where the ones that got away that you wish you'd invested in and somehow you said no.

00:16:03 - Dave Neal
How much time do you have?

00:16:07 - Scot Wingo
Let's just do top three. Yeah.

00:16:11 - Dave Neal
So I'm thinking I'm not going to name it. We saw a drug company some years ago that I think is headed for greatness that we just couldn't get our arms around for a lot of reasons. One of the companies just exit here, exited here locally. The name is escaping me. You know we looked at Biospatial. Yes, thank you. You read my mind. Yeah, we, we saw that one, two or three times and you know, likewise couldn't get our mind around it. So you know we, we do think about the anti portfolio because you know we have, we have a good quality deal flow coming at us and we're not arrogant enough to think that we're not going to miss sometimes.

00:17:07 - Scot Wingo
Yeah, this is the hardest part. This is the reason I like the index strategy. We did is we don't have to decide. So. So it is. That is the. I, I have great, you know, respect for, for you folks that have to pick the winners. It's, it's a, a very, very hard thing to do. That's why everyone has a big anti. Portfolio.

00:17:27 - Dave Neal
The.

00:17:28 - Scot Wingo
You, you probably in your, your decades of doing this, you've probably seen thousands of pitches. What are. And you actually I, I know. Do you go to UNC and do a class? I know you do.

00:17:38 - Dave Neal
I was on the professor.

00:17:39 - Scot Wingo
You kind of bop around all over the place, so.

00:17:41 - Dave Neal
Yeah, well, I was on the professor of the practice team over there for 24 years until 2023.

00:17:48 - Scot Wingo
Yeah.

00:17:49 - Dave Neal
So okay. You know, but I think if you're asking. So one thing that Chris highly and I learned when we did Startup Factory is that when somebody's pitching, you got to practice it 15, 16, 17 times. At that point your pitch gets really high quality and you can turn almost anybody into an excellent pitch person with that level of practice, which is what we did at the Startup Factory. You know, you need to focus on what financing sources care about, which is, you know, what problem are you solving? How severe is it? Does your solution effectively address that? You know, what sort of market dynamic are you in? You know, you facing five firms that have been financed at 20 million Series A out in Silicon Valley. You know, and then, you know, what's the deal? You know, we are, we don't have, we don't. We really can't make any decisions until somebody has a term sheet and has solid idea of what they want out of financing, what kind of instrument it is, what kind of valuation expectations or valuation cap expectations they have.

00:19:05 - Scot Wingo
Yeah, got it. Last question. So you know, a lot of the university investment pieces, there's a tech transfer function in the university. My understanding is you guys aren't, you know, 100% affiliated that with that, but I'm sure you look at those deals. There's also. I've met Ned Gulali a couple times. He has something as well. Is that. That's a separate fund. He has some kind of an accelerator fund. That's a different fund. Is that, do I understand that right?

00:19:32 - Dave Neal
Yes. I don't do any work with the Gilhooly Fund, but I'm familiar with it. That is for early stage things that are coming out of faculty IP situations and you know, figuring out whether there's something there and you know, whether there's a real business to be made there. We, we are actually Scott, in point of fact, we're part of the Office of Translation and Commercialization, which is the tech transfer group here. So, I mean, they're literally across the hall from us over here. So, you know, we. We know those folks really well.

00:20:09 - Scot Wingo
Yeah. Oh, so you get to work near. Robbie Hardy is over there somewhere, I imagine. So that's fun.

00:20:13 - Dave Neal
Wednesdays. Yes, she's frequently here on Wednesdays, so. As are.

00:20:18 - Scot Wingo
It's like getting the band back together.

00:20:20 - Dave Neal
Yeah, yeah, yeah. What. What goes around comes around. So, yeah. Run into her pretty frequently.

00:20:27 - Scot Wingo
Yeah. The triangle is a big and simultaneously small place. Well, cool. Well, thanks. I know you're super busy. Thanks for taking time out of your day. We look forward to seeing you live in the studio where you'll be helping us choose some winners of our contest. We're going to actually, Thursday the 20th, we're going to have our selection show. I was just looking. We have a very large number of applicants, so we're going to be going through that today and picking our exceptional eight. And then you'll be part of the selection committee for one of those contests. So we're looking forward to seeing you. Appreciate you. All you've done historically for the community and all you continue to do. There's a lot of folks here that make the triangle the triangle, and you're a key component of that, and we appreciate it.

00:21:11 - Dave Neal
And right back to you, sir.

00:21:17 - Announcer
That's a wrap on this meet the judges episode. Now you know the minds behind the decisions, the investors and industry leaders who will be putting these startups to the test as Tweener Madness kicks off. They'll be asking the tough questions, making the tough calls, and deciding who advances in the bracket, all leading up to the finals in early April. Make sure you're subscribed so you don't miss a single matchup. And if you want to follow along with all things Tweener Madness and the triangle startup scene, head on over to tweenertimes.com also, if you're thinking about launching your own podcast or want to bring professional career to your brand, check out earfluence. Com. The competition is about to begin and we'll see you soon in the next episode.