Transcription
you know, an AI. I've I've got an AI bot that basically runs 24/7 that, you know, can cook up information and and uh and give me kind of uh uh, you know, a one-pager on on potentially investors.
We use a lot of uh different data mining uh tools when it comes to going through the portfolio or the different types of matters that we're looking at investing in and helping us make decisions. But the one thing we don't do is allow it to replace our judgment. We have a detailed underwriting model that values every underlying holding in the portfolio company.
So, so Michael, it's not a question do you use any technological tools, but what are the tools you are using nowadays to attract the right investors to do the underwriting? Can you walk us through your process in your firm in 30 seconds to 45 seconds because I want to get through all the questions and have the opportunity for the audience to to ask their own questions.
So yeah, I mean maybe not the best answer to this particular question, but we're still pretty old school when we find our investors. We like to meet in person. We like to bring them to our sites. Um, obviously more and more now, uh, you know, an AI. I have I've got an AI bot that basically runs 24/7 that, uh, you know, can cook up information and and, uh, and give me kind of, uh, uh, you know, a one-pager on on potentially investors. And so, that's ready to go right before I meet them where I don't have to do a bunch of Google searching. But, uh, but yeah, again, I'd say when it comes to relationships, we're pretty old school.
Wow, I love it. Um, Lee,
I'll get it going here. Yeah. uh we use a lot of uh different data mining tools when it comes to going through the portfolio or the different types of batters that we're looking at investing in. And so we're presently reviewing 2,300 construction uh projects around the country. Um these range from 10 gigabytes of documents a case up to a couple of three terabytes. And so we need to go through those documents to make sure that there might be something of merit there that would warrant an investment uh into the dispute on the projects.
I love it. And Justin, would you like to add?
Sure. Yeah, we use a lot of different AI tools for our day-to-day operations, for workflow automations. Uh we use a lot of the family office tools for underwriting support and helping us make decisions. But the one thing we don't do is allow it to replace our judgment. At the end of the day, we're using that information to make the right choice for whatever it is we're we're doing.
Wow. Paul, would you like to share?
Yeah, of course. Uh, when 95% of startups fail, you need a very thorough process to figure out what to invest in. So what we what we did is we said okay we're going to invest in anything anywhere in and and but but it has to have a lead investor we trust and it has to go through our own screening due diligence process. So we vet the vetted and all the people making recommendations for investment or investors in our own fund. So everything's vetted twice and as a consequence and our bankers who are currently um process of listing on the New York exchange just can't believe that in eight years of investing and we made 200 investments we've only written off 12%. And I think our model was just validated by uh Robin Hood. Robin Hood just announced
your mic fund. Sorry. No, you're good. Robin Hood just announced a fund that's full of startups that they're going to take public. The world we talk to each other here the world we're missing is that there are a few million accredited investors in the world but there are billions of people who now are aware of investors. So I think the private fund model requiring credit investors is going to slowly evolve away and be replaced by public funds that have a large number in a certain asset class. Be it hedge funds, be it private equity.
Paul, can you hold the mic closer to Yeah. Sorry. No. And and and like I I I'm often a panelist at VC events and I tell you VCs, what's the biggest issue for VCs today? liquidity. Hey, we're going to be a public company. We're going to actually buy their assets from these VCs, funds, their individual shares at a discount with our public shares and grow our own stuff. And then we're going to do verticals K2X biotech, K2X India. So, we're going to create a whole ETF ecosystem of public companies to do to startups what ETFs have done to public markets. And I believe that as the 8 billion people in the world get wealthier, smarter, more exposed to startups, they're going to want to participate. And today, every all the other funds out there are closed systems.
Thank you, Paul. Peter,
um I would say with I have something very recent. Um the the Claude plugin to Microsoft Excel, which just came out a couple of weeks ago. uh we implemented that and it's unbelievable and if you have to do any type of fin financial modeling in your business um it will do the equivalent of what a uh $250,000 a year Microsoft you know financial analyst specialist will do and it will do in 10 or 15 minutes what will take that person maybe 10 days to do and um so I mean it's just a total game changer and and it's It's unbelievable. And when I think about it, it's I mean, we're only two weeks into it. We're not even at the end of this year where where that technology is going to go. So, so there are some real things coming in the AI space where you can grab them and implement them in your business right away that make a big difference.
Thank you, Chris.
What was the question?
The question was the technology, the AI. Are you using any of that in your company? So, I hear a lot about AI and I've heard a lot this week on stage and I think that's fantastic and we use AI where we can. I've also heard a lot about real estate. A lot of people hear real estate investors. We're looking at something different and something that's complimentary to all your venture capital investments, all your AI investments, all your real estate investments, right? And that is private equity secondaries. Um, the reason it's a compliment is that the minute I buy something at 61 cents on the dollar, you have an instant markup of 1.6. Okay? Uh, for your for your returns. Second of all, uh your the the cash flows are going to come back sooner. I'm buying private equity portfolios that are 10 years old. They're in liquidation mode. So, we often have our capital back within months of having done the transaction. So, it's derisked. But
Chris, Chris, how do you know that those values are right? Cuz the reason why they don't have
They don't have to be. We don't underwrite to that value.
No, but they don't have liquidity because the values of those private equity funds have come down.
Yeah. Exactly. So, we're we're buying them we're buying them cheap. So, here's the thing. Our underwriting model
is the 60% Is is it are you buying it at 60% or are you actually buying it at 100%.
You know, sometimes sometimes we actually assume that assets in the portfolio will go to zero. We have a detailed underwriting model that values every underlying holding in the portfolio company. So, it'll be a fund that might have four uh companies in the fund. We underwrite all of them down to the bottom from their financials up. And sometimes we say that company's going to zero. We bake that into our our bid. We say that company is going to 120. That one's going to go to 90 cents. That one will probably end up around par. We also look at the general partner who's managing those portfolio companies and we say, have they been aggressive or conservative in how they market their portfolio? That goes into our underwriting model, too. And we'll discount our bid if we think they've been aggressive. So, yes, we actually factor all that stuff in when we we take a look at these companies. Um but the the final thing really is um the the the the derisking part of this is that you know in private equity investing typically you hire a manager and you you give them the money up front and then it'll take 10 years before you find out what they're going to invest in. The advantage we have is we can look not at what they're going to invest in but what they actually own today. We can underwrite the actual underlying companies and there's some seller just wants to get out. Even though there's value in the portfolio, they have a reason to get out. Well, that's ours for the taking. And so we can come in and say that's a good company in there. I can buy that at a discount and I know my cash flow is coming back soon because I talked to the GPS. I underwrite that company. I know that that company is about to be sold. So that's a d-risking element of our strategy. Total line of sight into what's in that portfolio that's on sale.
Wow, that was great. Thank you so much.
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