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, I am your host, Scott Wingo of tweenertalks and we are here to talk Tweener Madness with Lister Delgado. He is founder, general partner, grand poobah og of Idea Fund. Lister, good to see you.

00:01:25 - Lister Delgado
Good to see you, Scott.

00:01:26 - Scot Wingo
Yeah. So tell folks a little bit about you. We're. You haven't said much, but I can tell you're probably not from North Carolina. So where are you from? How did you get here and how did you get into this fun venture business?

00:01:39 - Lister Delgado
Yeah, the name gives it away. The accent. Also. I was born in Peru. I'm an immigrant. I came to the US at age 17. So what is that, maybe five years ago? I guess a little longer than that. I can't do the math. So English is my second language because the accent can, can hint that I do have, I don't know. You want personal information. I'm not going to get too personal.

00:02:06 - Scot Wingo
But not too personal. Yeah, but how did you end up as a immigrant from Peru? How did you end up in venture capital?

00:02:12 - Lister Delgado
Gosh, I, I became an engineer, I worked in Bell Labs and I realized they're working in a huge company that I was not going, it was not cut out to be the best engineer in the world. And, and I have more gifts to offer than sitting in a, than being frustrated sitting in a cubicle, being building a tiny part of a bigger part of a bigger part of a system.

00:02:40 - Scot Wingo
Was that, was that hardware type of.

00:02:42 - Lister Delgado
I was a hardware engineer. I did software engineering, systems engineering, but I was doing a lot of Hardware engineering, which is what I liked. And I was doing a controller of a chip was part of a bigger chip, and part of a board was part of a bigger system. I was building Sonnet systems a long time ago. A lot of people probably don't even understand, don't even know what's. Never heard of that.

00:03:05 - Scot Wingo
Yeah.

00:03:06 - Lister Delgado
You old enough? You might have.

00:03:07 - Scot Wingo
Yeah. Cool. So then you left Bell Labs and immediately started doing venture capital?

00:03:13 - Lister Delgado
No. Well, I went to business school first to try to figure out how to become an entrepreneur. I figured, I don't know anything about business. I'm going to go to business school. And in business school is when I discover venture capital. So it's kind of like the way I figure is I can work with entrepreneurs, but get paid. Get paid a salary. What I didn't realize is how few jobs were available in venture capital. But I got lucky. And the fact that I started working in venture capital when the Internet bubble. Bubble burst, which meant there were no jobs in venture capital because there was nobody. All my competition was wiped away, basically. And I did end up getting the only venture capital job probably in the whole Southeast, available. And that is because at that time, a company called mcnc, based in rtp, had a big success after the Internet bubble burst. And they were looking to build a venture fund and looking to hire an engineer to help build a venture business, an economic development entity, which later became NC Idea, and later that became Idea Fund Partners.

00:04:29 - Scot Wingo
Yeah. Yeah. Let's go back on the story there. So where you went to grad school is.

00:04:36 - Lister Delgado
I went to grad school in two places. Engineering grad school was UT Austin in Texas, and then I went to Kenan Flagler business school.

00:04:46 - Scot Wingo
Is that what brought you to the Triangle? Was going to unc or were you already here?

00:04:50 - Lister Delgado
Yep, yep. But also my wife, who went to medical school, matched to do residency in pediatrics in unc, and that's what brought us down to Chapel Hill. But honestly, I love Austin. I really liked it. I thought I was going to live there, but I wanted to be in. In the east coast because my family was in the East Coast. My wife's family at that time, just crossing the Mississippi on a flight was. You couldn't do it on a direct flight. It was kind of hard. It was long. And Chapel Hill reminded me of Austin in a much smaller version of it. The triangle. Yeah, the triangle there.

00:05:27 - Scot Wingo
Cool. Well, your instincts were good. I think. You know, Austin's now considered by many to be too big. And we're still kind of like humming away Here in the Triangle.

00:05:34 - Lister Delgado
I know we're. We're perfect right now, but another thing.

00:05:37 - Scot Wingo
A lot of people that's kind of been lost in the history of time, but you and I were here is mcnc. We actually had a. A fab. You know, they would actually. You know, they were a. A fabrication facility here in the Triangle.

00:05:50 - Lister Delgado
Yeah, they had clean rooms and. And they had. I mean, the whole purpose was to bring in and help collaborations between at that time, Nortel, Cisco, Motorola, IBM, all these entities. And some of the collaborations happen in those fabrication rooms and those clean rooms where you can build, I mean, systems and chips. And when we started investing, we were investing in hardware. It was really silicon that we were investing in, and it helped to be a hardware engineer. And that's why I ended up as a vc.

00:06:21 - Scot Wingo
Neat. Yeah. I actually didn't know that little part of the hardware. I didn't know that mcu. I knew. I kind of knew it. I didn't, like, put you right in there, though. Very cool. So now you're part of Idea Fund Partners, and you guys are on which number fund is it?

00:06:36 - Lister Delgado
Fund four.

00:06:37 - Scot Wingo
Four. Yeah. Yeah. So give us the progression. So started it.

00:06:41 - Lister Delgado
Well, actually, before Idea Fund Partners, there was a fund called MCNC Ventures.

00:06:47 - Scot Wingo
Okay.

00:06:48 - Lister Delgado
And that was the first fund that this group was involved in. So this was before Idea Fund Partners, and this is even before NC idea. MCNC turned into NC Idea. So MCNC Ventures is like Fund zero.

00:07:04 - Scot Wingo
Got it.

00:07:05 - Lister Delgado
And then we spun out, and then it became Idea Fund 1 in 2007 and Idea Fund 2 in 2013 and Idea Fund 3 in 2018, and Idea Fund 4 now.

00:07:18 - Scot Wingo
Got it. And then what's the relative size of those, you know. You know, to where you are today?

00:07:25 - Lister Delgado
Yeah, I think. Let's see. We grew from 10 million to 15 to 25 to. Or 23 to. To 30. Hopefully getting to 50 when it's all said and done.

00:07:40 - Scot Wingo
Cool. Awesome. Yeah. So, like, a lot of the other funds here, like the Bolster and Idea Funds, you guys have kind of grown up with the region and gotten bigger and bigger, which is good. There's more and more capital here in the Triangle every year.

00:07:50 - Lister Delgado
Even. Either you get a little bit bigger each time or you're dead. Or you're dead. So that's just how it works.

00:07:57 - Scot Wingo
Get bigger D. So you know what. When. When people come up to you at an event or something and they're kind of like, you know, what's Idea Fund invest in? Give us kind of the. The reverse pitch of like your sweet Spot and the categories you guys like to invest in.

00:08:13 - Lister Delgado
So. So I mean, I think Idea Fund Partners has evolved a lot and change molded to the times, maybe more than most for good and also to our own detriment. I think we react to the market quite a bit and there's been some changes in the partners, maybe more than other funds locally and you know, but one of the things that happened recently post Covid is that we realized that we had a ton of companies that were being formed here, staying here, no longer moving to Silicon Valley as they used to happen. And as well as new entrepreneurs moving to the area with a lot of experience. Therefore we started to see a lot more big outcomes and big exits in the whole region. So Idea Fund Partners had grown to invest nationally and even in a couple of cases internationally. So with this new realization of both the potential that we had as a region, which honestly didn't exist 20 years ago when I started to this degree, and the lack of dollars today, I mean a lot of people listening might remember inner south 10 years ago was a 200, they were running a 250 million dollar fund. Well today I think the biggest fund is probably bull city, local founders, maybe 50 million or so. So. So we have a lot less money in the region. There were a lot more funds and so it's funny because there is, there was a lot less money and a lot more, more exits, better exits. So that has driven us to be more geographically focused and that has made us be more sort of broad in the sectors that we invest in. We invest pretty much everywhere in technology. We don't do pharma, we don't do medical devices, but pretty much anything in the technology sector because we are trying to narrow the geography or the boundaries of our sourcing focus to the region between Baltimore and Atlanta. And as we're doing that, we're starting to focus this on in the area of Virginia, in North Carolina mainly. And in terms of stage, we're pretty broad also. I mean I would say precede a company with an idea on a paper napkin. It's something that we will listen to, not always invest in, but listen to all the way to maybe a company that has got a couple million in revenue and looking for a series A. So that is all fair game for us. For a first check. However, the sweet spot is probably a seed round company with a little bit of revenue, hopefully, hopefully a little bit of product market fit and, but still a lot, a lot to build.

00:11:04 - Scot Wingo
Yeah, how about check size? You guys gotten bigger so now you're probably writing bigger checks.

00:11:09 - Lister Delgado
Yeah, but actually not necessarily. It depends on the stage of the company. We, we do have more money to allocate per company, but we don't necessarily start with a bigger check because sometimes you, you, you want to be part of a syndicate and we want to be part of a syndicate. We want to build along the way and make sure that we have money for, for future investments. Also we are investing in more companies that we've ever invested in. So our portfolio construction model calls for more deals. We do concentrate our follow ons though. We don't necessarily say hey, everybody gets, you know, two or three million dollars. That's not how we operate. We write a check, a first check and we guarantee support but we don't necessarily guarantee a second check. And those second checks and third checks might go to those companies that they really are starting to take off.

00:12:03 - Scot Wingo
Got it. Cool. You've been at this a very long time. What are some of the more successful investments that, that you've had in your career?

00:12:11 - Lister Delgado
Oh gosh. Well, we've been lucky to have a lot of successes, otherwise we wouldn't be talking to you here. But let's see a couple of our most recent investments. One was Biospatial, which it was a neat company that a lot of the investors in the Triangle participated in. Pacer, another company in North Carolina that was in Charlotte. The pretty recent investment Exit as well. But all the way to eye contact, automated insights. I have to call out Robbie Allen's company first, First Success, Social Solutions, Finmark, a bunch of companies all the way to maybe Second Nature, Filter Easy, which is not exited and probably our biggest investment not yet Exit is Pendo. We invested in Pendo when it was an idea on a PowerPoint presentation and investors in the first round and investors in every single round that followed after that. And it's been awesome to see them grow into a unicorn and a company that hopefully will, will exit via an IPO one day when the IPO window opens up.

00:13:19 - Scot Wingo
Yeah, I did a long form interview with Todd. I don't know if he had a chance to watch it, but he was, he was pretty passionate about the ipo and I think I got to kind of like the kernel of what, what was driving that. I've been dying to figure that out and I think I got there. So we'll see.

00:13:31 - Lister Delgado
You know, I think we do need more Todd's. I do want an exit obviously, but I think, I think one of the things that Triangle has been missing is, is people who want to build Long lasting companies here that was brought out other successes. But having headquarters here, having companies that are public, that are institutions that are going to last beyond the people who founded them I think is going to be one of the pillars that will bring the growth for the future for our region.

00:14:03 - Scot Wingo
Yeah. And then I always ask people for their anti portfolio which is the ones that get away. And you'll be interested to know the number one so far that's come up is Pindo. So congrats to you for either being genius or crazy enough to support a PowerPoint. You got that one right.

00:14:18 - Lister Delgado
Both are pretty similar. Genius and crazy. You know I honestly and really I have had a lot of anti portfolio companies but I tried to forget them. One that keeps coming to mind is a company called Leap Motion which I'm not sure that qualifies as an anti portfolio company because it was a company that wasn't a huge success necessarily but it seemed like it was going to be a huge success. This was a kid, 18 year old kid coming that was introduced to by the tech transfer office in UNC and who had worked at NASA and came up with this incredible technology to you to use virtual reality 15 years ago and manipulation of objects with just gestures. I mean right now it sounds pretty mundane but 15 years ago this was quite a breakthrough. You know I tried to invest in the company but my advisors told me no to, this is, this is no big deal. Six months later Andreessen Horowitz invested in the, in the company Highland park created a venture fund to invest in companies that came out of this product founders fund invested huge number of, of, of following investments. I, I saw the product in Best Buy, I saw the product in, in offices and so it felt like a big anti portfolio since then the company I think was sold eventually but you know I think it was, I think they raised 100 or $200 million. So it really felt like one that really got away. But you never know because what really matters is the, the exit. I'm pretty sure that it would have been a good, a good outcome but not as spectacular as I felt. Six months after we passed on the deal.

00:16:10 - Scot Wingo
Yeah, I, I had one of those. It was like very Minority Report but then like there wasn't much you could do with it. So the ecosystem didn't develop very quickly.

00:16:19 - Lister Delgado
Yeah, you have to have a bad memory. You can't just dwell on them and you move on. I think the other thing that is important to recognize, to think about is sometimes great companies don't fit your strategy and that is perfectly fine. I don't know that I would call those anti portfolio. I mean that may be anti strategy perhaps, but if you stick to your guns, if you stick to your strategy, some of the things that feel like failures, you don't notice, but it's what brings you success in the future. So, and not. And not chasing every single thing that looks good, I think that's important.

00:16:54 - Scot Wingo
Yeah. You've probably seen in your career at least, you know, thousands of pitches. What, what's your advice? You know, so we're going to narrow this down to kind of eight. They're going to give about a 10 minute pitch and answer some questions. What's your advice to folks in the contest that you know, either some do's or don'ts that you've seen over the years?

00:17:14 - Lister Delgado
I think you probably are going to get advice that makes a lot of sense from a lot of other people. But the one thing I think that is very important is to be yourself is to not try to pretend or not try to put a facade so that investors like you, you need to tell your story and, and, and everybody's going to be unique, to be unique, to be yourself. And that comes through when you're trying to convince investors to support you. You don't want to invest in somebody who is pretending to be somebody else. I think also the other thing I would say is to learn from the competition, from their competitors, but to not dwell, not to focus too much on them, do not dwell on what they're doing. I think companies sometimes get paranoid and, and there's a little bit of paranoia. Is, is, is healthy, but too much is definitely detrimental and you want to just stick with what you are convinced will make sense in the long run. And, and so both be truthful to yourself. Be yourself in on what everybody else is doing. Focus on what you're doing.

00:18:26 - Scot Wingo
Awesome. That's great advice. We appreciate you taking time to do not only this interview, but we're gonna see you live in the studio for the contest coming up here soon. So we appreciate you taking time and representing North Carolina so well with everything you guys do at Idea Fund. We appreciate that it is a community here in the Triangle that's pretty unique. We sent out a call for folks to be on this committee and everyone raised their hand and said I'm in. So it was like pretty, pretty amazing, you know, the, the community we have here. So we appreciate it.

00:18:54 - Lister Delgado
Thank you. And thank you Scott for organizing this. I think you have been a pillar of the community. So I. Kudos for it.

00:19:01 - Scot Wingo
Thanks. It'll be fun. Well, it'll either be awesome or total chaos. So we'll see. We'll see how it goes.

00:19:06 - Lister Delgado
We'll see.

00:19:08 - Scot Wingo
All right. Thanks, Lister. We appreciate it.

00:19:10 - Lister Delgado
Sure. Take care.

00:19:15 - 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 production to your brand, check out earfluence.com the competition is about to begin and we'll see you soon in the next episode.