Midwest House Panel: Fixing VC From The Middle 🎥

Wolf Starr: Dearly beloved.

Brian Hatton: Oh my.

Wolf Starr: Welcome to the inaugural episode of Feagin and Wolf Talking Shit.

Brian Hatton: Where's my-

Wolf Starr: That's what you wanted me to call it, right?

Brian Hatton: Where's my microphone?

Wolf Starr: I think we're sharing one.

James Edward Feagin IV: We'll give it to you, you got something important to say. So that's a great way to kick things off. So no, everybody, welcome to Midwest House, I'm James Feagin.

Wolf Starr: Wolf Starr.

Brian Hatton: Brian Hatton.

James Edward Feagin IV: Two microphones.

Brian Hatton: Brian Hatton.

James Edward Feagin IV: So what we wanted to do is have a little bit of fun because we've got great production over at the Convention Center Road. Shout out to Rally Innovation, putting together an amazing conference.

Wolf Starr: Yep. Midwest House for some of the best programming that we've seen, not only on this but in South By [Southwest} and everywhere, Midwest House is bringing it hard. In fact, that's how we got connected.

James Edward Feagin IV: That is how we got connected. It was actually at Grand Rapids Tech Week originally, Ted organized the dinner. We got to hang out.

Wolf Starr: He bought us dinner.

James Edward Feagin IV: He did buy us dinner.

Wolf Starr: Thank you, Ted.

James Edward Feagin IV: It's a good investment. It's paying off. By the way, his budget went up for this one. He's not on the outskirts.

Wolf Starr: We've had two meals this week.

Brian Hatton: Can I borrow your microphone?

James Edward Feagin IV: Yes.

Brian Hatton: We actually sponsored, so he does get some money from other people.

James Edward Feagin IV: There we go. I knew we had him up there for a reason.

Wolf Starr: So speaking about you sponsoring whatnot, Brian William, please introduce yourself to us and tell us about who you are and what you do.

Brian Hatton: Yeah, so I feel like this is a bit of improv to be honest with you. Ted asked me to be on this panel and then I came up here and these guys were like, " Who are you?" So in any case, I invest in Indiana companies. I was born and raised in Indiana. I left this state and said I was never fucking coming back. But here I am, spent most of my adult life in the UK. I've been a pre- seed and seed investor for five or six years now and I've done about 60 plus deals. And so I love working on entrepreneurs and love being in that early stage. My current fund's called Flywheel, we only invest in companies based in Indiana and we raise and deploy a fund every year and we deploy that capital pretty quickly. We make one commitment or we try to make one commitment a month. And we've been pretty true to that since September, 2020 when we started the fund and now we're on our fourth fund.

James Edward Feagin IV: So why does a fund launch in September, 2020? Where were you in life? What were you feeling? And also how did you get back to Indiana?

Brian Hatton: Yeah, well my wife and I had a child. That's how we got back in Indiana. So we were living in central London with a two- year- old and every time you want to go see the grandparents, you got to hop on a nine- hour flight and that's a pain with a young child. So we moved back to Bloomington, which is a great place. Indiana's there, it's a great town to be in. Indiana University, I should say. And so that's where we landed. And I've been kicking around in London doing pre- seed investing for a while. So when I got back to Indiana, I was not certain what to expect. And so I was surprised that there was so much going on. So I joined Flywheel first as an investor and I just got introduced to a group that is at a nonprofit called The Mill in Bloomington. They were just doing this experiment raising a small fund to support some local companies in Indiana. And that's how I got into it.

James Edward Feagin IV: So the actual official title of this is Fixing VC from the Middle. And so, one of the things you're pointing out, I'm facing in a different way, Wolf is facing a different way, is this idea of retaining talent, attracting talent, our most talented folks from all our community saying, " I'm leaving and never coming back." And how do we deal with that? So I'm based out of Detroit. I spent the last 20 years there in varying degrees of awareness that I was actually working in startup. My first job was with an education company in 2001 and I just thought I was working with kids every day in juvenile detention center. If you ask me this, I'm working for an education startup. And so a large part of what I do is really just demystifying that language around startup because a lot of people are just doing stuff. They're social entrepreneurs, they don't know it, they're doing this thing or that thing. But to get into that in a second, it's like there was a thing you had to overcome to come back here, which family changes had a lot to do with it. But all of us are facing that challenge of there are those of us who feel like what we want isn't in our home communities and home states, and where we need to be is somewhere else if we're serious. And so what was the conversation like beyond the kids with you guys coming back and then also with the startups you worked with? What do you have to do to get folks to be excited about staying and growing where they are?

Brian Hatton: Yeah, it's not easy at times in Indiana. I think the world's changed a lot since I grew up. You can do different things and you could end up in different places. And so we really try to encourage and support this idea of inclusivity, of helping people feel at home where they are, of helping people feel like they can be productive where they are and not having to move other places. And obviously if you have a fund and you have money to help them do that, that helps as well. And so helping to... Two sides of that, the investor side saying, " Hey, you can invest here." And for us, since we're an investor, having companies realize that you can start and build something where you are. You don't have to go somewhere else to do that. And so I think those are a couple of things we work at. And then you have to play around the edges, where can you help them find talent? Where can you do these things? But in today's world, you don't have to have 100% of a company in one place. You can be in a different place to get that support.

Wolf Starr: That leads me to a great question. So amongst the different funds which we have, we have an Ohio specific fund and I think that we deal with a lot of similar issues between, we share quite the border. But when you're looking at a company that is based in Indiana, how do you draw the line between how Indiana they are versus... How do you chop that up? Because we know with remote work, we know with Delaware corporations, we know with all of this stuff you don't always know, but I'd love to hear how you tackle it so I can steal it.

Brian Hatton: So we said the company's got to be based here or we got to have one founded here. So it's really, we look at a nexus and the state of Indiana's quite supportive in the way that they allow investors to capture state tax credits for supporting angel investing, early stage investing. So if a company can get those and we say, " You are in Indiana," and that usually includes having a founder here. And so that's the way we look at it, quite simply, is if they can give us tax credits then we think they're here. But it usually is a founder or the team.

James Edward Feagin IV: So I'm going to ask a question that you triggered there based on a lot of the work that I do. So if you can get the state tax credit, then we look at you. I often deal with the founders that don't know about the state tax credit and don't have the infrastructure, relationships, technical skills to get the tax credit. So do you flow into that as well?

Brian Hatton: Yes, absolutely. We work very closely with them and if a founder doesn't know about them, we help them to get those tax credits. If we like the founder... We don't screen for that at the beginning. We'll talk to a company, we'll talk to any founder as long as they... And if they're based somewhere else in different country, we won't talk to them and we'll say, " Thank you. We don't invest that way." But if a founder comes to us, we like the idea they're based in Indiana, we will help facilitate that conversation so that they know that they can capture those because that's a benefit to them too for other investors. They can get other investors potentially interested in that round outside of us by having that.

James Edward Feagin IV: So we're doing our extensive planning and prep for this panel. And you talked about your screening process where I was saying how do you intentionally bring in inclusive founders? And you were like, we basically go blind and you have a way of evaluating a startup without looking at anybody.

Brian Hatton: So we consciously think about not being biased. So we want to be very inclusive of founders. We've been very supportive. I think 30% of our portfolio's underrepresented founders. But one of the ways we do that is our screening process is agnostic of founder. So we see that what the company does, what the market size is, what their deck might look like, but that allows us to judge things in a way where we don't maybe commit unconscious bias. And so we look at things that way and I think it's led to some really good outcomes for us. But also, like I said, I'm very focused on not being biased. We try to be very inclusive in addition to that.

Wolf Starr: So in that process, first all kudos to knowing that you need to have that kind of process in order to be able to evaluate everything fairly and you're able to get to know the companies before you know how you feel about the founders.

Brian Hatton: We didn't invent it by the way, I stole that first.

Wolf Starr: No, of course. The way I end up seeing it is it goes one of two ways usually. No, it goes one of three ways. One, the funds don't care and they're going to invest in the people that they know and they're going to invest in the warm leads and the people who call them and they say, " Hey, here's this guy that is well recommended by this person in my country club. And because of that we think that you should invest into them." So that's the traditional route, quite frankly in our industry, all of ours. And then it breaks down into one of two buckets. Either it's being aware of intentional bias and cutting it out completely, or it is a situation which is where my funds are, where we fly all the flags and we say, " Give us everything. We want you to come in if you are an underrepresented founder." Ultimately though we end up investing in the same companies. So what I'm really curious about is at what point in the process do you find out who those founders are, and are you able to get to meet them after they've done the initial screening?

Brian Hatton: And I am actually a minority on my investment committee as the only white male on my investment committee. So that's great to begin with. So that helps guide my decision making in some ways. But we talk to everyone and the way that we deploy funds dictates that we have to talk to companies for a long time before... We can talk to companies for a long time sometimes before we invest in them. So we really work with founders. And so yes, we get them to a point where we bring them an intake form, but sometimes we'll meet the founder first and then we have them go through the intake form because we like them. So it doesn't always work quite as elegantly as you might think it does being blind like that. But we do meet founders multiple times and work with them. So I think that's important too, being on this committee, having this intake form, but also realizing at the end of the day, you're investing in people. You're not investing in a company, you are investing in a company, yes, commercially, hopefully viable, but you're investing in a person, you're investing in their dreams, you're investing in their desires. And so having that empathy I think is really important sitting where I am realizing, you got this process, but you are working with people as well.

Wolf Starr: Right before this and then you can go back. inaudible. I got you.

Speaker 4: We're way too professional.

Wolf Starr: We are, yeah. I know that's... Where's your tie today? Right before I came over here, I was at the main stage of the pitch competition and I believe one of your partners was one of the judges. Is that-

Brian Hatton: It may have been. He or she may have been, yes.

Wolf Starr: I'm giving, I believe, him in this case some credit because he said some really smart things. And there is a great difference between who he is and who you are. And so you mentioned your investment committee and every single fund has a different way of making that up, whether it's an LPAC, whether it's that. Tell us about your investment committee. I don't think most founders understand that it goes from associate to somebody other than the face of the firm.

Brian Hatton: We're a small fund, so it's not like I'm usually on every single call, but we do have one analyst and then there's another partner in the fund, but the committee is the three of us talking about ideas, talking about founders, making those choices about which ideas to take forward. And I think we're probably, since we're such a small fund and such a small committee, it's a bit different. But there's still this discourse you have on what's the idea, who's the founder, what's the background, what questions do we have to go back to them with? So we still have a formal process, but ours is just smaller than some funds and we're different as well. We don't go from that associate to the face of the fund. I'm on almost every single call we have with founders and that's really what I do and that's where my passion lies, working with these factors. So we're tiny, but we talk to 150 companies a year to invest in 10 maybe. And I'm on every single one of those calls. Let me say, 99% of those calls, sometimes I'm not. But I think that's really important differentiator for what we do.

Wolf Starr: And you do this cadence, how long is someone in your process before you... If you're investing one a month, kudos, because for our funds and many of the funds we work with, it is a weight. You are consistent. Please help me understand what the process is.

Brian Hatton: It changes. Quickest investment we made is like two weeks. Institutional lead, generative AI before it took off, outstanding founder. Longest time I think, I can't even... It's probably been six months to a year we'll talk to founders, because it's not that I'm worried about standing my own two feet making a decision. I want to make sure founders have enough money to do what they need to do. And so I want line of sight to 50% more of year round self committed before we jump in there. And so we'll talk to some people for a long time. I'm trying to think what the longest might've been, but we're priming one now to make a commitment to in October and it's been at least nine months that I've talked to them just trying to get it lined up. And what I think founders don't realize sometimes is when you embark on this fundraising journey, terms might change, investment amount might change, all these things might change over a period of time. So if we talk to somebody in the very beginnings of that journey when they're trying to get somebody to give them money and they're going to give those people equity, it can take time. And then we line them up on this landing pattern, we try to time it. So we've got founders that have worked with us for a while, they're patient, they know that we'll give them the money, but we need to a few extra weeks to get them in this...

James Edward Feagin IV: So a lot of what I spend my time on is simultaneously trying to disrupt this thing that constricts what we can do as funders while also trying to help founders better understand it. And it's a weird balance and almost conflicts with itself. So what's one thing that you think you do that other folks aren't doing that makes the best of the existing system? And then what's one thing that if you could have the right conversation with the right family office or pot of non- recoverable capital, what would you do different that could really make this thing just work better for founders?

Brian Hatton: Yeah, those are really good questions. I think I show up, I'm nice, I give honest feedback. I don't think everybody does that in-

James Edward Feagin IV: This is to the founders?

Brian Hatton: Yeah, this is to the founders. I don't think everybody does that, but that's the construct of the system. People are trying to choose winners, users, they get a lot of pipeline, maybe they have more money than us. So within the construct of the system, I think that's one thing we do well, but trying to do something different... There's not always good alignment between your investors, you, and the companies that you want to invest in. So your investors are giving you money, you're taking some fees from them, or maybe you get some other costs offsets or whatever. So I would love to see this idea of zero and 30 funds or something like this come out where it's like why am I paying you this money for... You have access to pipeline, but how do you get creative around offsetting your costs of the fund so that you're not charging LPs and then you get much better line on, I say there, from an investor side. Is that what you're asking, how to disrupt things or no? Is the question different?

James Edward Feagin IV: And that aligns with both progress I've made and things I've been frustrated with in Detroit. So for context, I worked for a prominent family office for three years. One of the things we built was a program called Venture 313, which was a $10 million commitment that basically funded first idea first round, so that$ 0 to$ 25K, which is just grants, and then the$25K to $ 250K was either lines of credit or debt. Or there was a, we'll participate in a round through a safe note. But the challenge I had up until my last day still really figuring out what do I do next is, the existing infrastructure that was trusted enough to allow me to deploy eight figures of capital was also not free enough to think about different ways to use the capital. And I think I naively thought that, if you have your traditional requirements and so you got to deliver return on this, you got to pay this money back, you've got to be evergreen, but I give you$3 million in free money, then you'll instantly know what to do differently with this free money. And that did not happen.

Brian Hatton: So let me ask you this question. Were you trying to relieve that funding pressure off the founder over stages of time?

James Edward Feagin IV: Everything for me was ultimately about number one, going back to your... You said you look at 150 investments. I wanted everybody, if your litmus test is 70, I was like, how do I give you capital look at 60 to 69 on your scorecard? Because if you can take that maybe, and you don't have the same level of risk tolerance, you can take a bet on somebody, I can bet some of those folks who are in there are in that pile that may fit the profile I'm trying to reach. So it's ultimately for me about the entrepreneurs getting more folks in the game, giving more ideas a chance to get to that next milestone.

Brian Hatton: But then you said it was like they didn't know what to do with the money. Is that-

James Edward Feagin IV: The system itself, if I'll had it to do over again, I understand now the more importance is less of the person I'm talking to, even if it's the CEO, the CFI or whoever. But the mindset of that lending committee and how they make decisions and what their just ingrained biases are risk tolerances are, what they're afraid of. And so even free money doesn't change how they think. So they just look at it the same way. Well, if I follow the same diligence pattern then I'm covered. And so a lot of it is me coming to understand at least different fears and incentive perspectives based on the different stakeholders in the ecosystem. But I'm also trying to understand how other people either thought about their dream partner or how they're making incremental changes now based on, we found that when we do it this way you can get folks to come along a different way.

Brian Hatton: And you're talking about other funds that come along or are you talking about founders getting other people to come along with them?

James Edward Feagin IV: Whatever the stakeholders are that are like right now, not... This was all based on the premise that we're not seeing enough founder focused support, regardless of demographics. It's not a thing that's designed. How do we get as many founders to yes? It's like here's the maze and a few randomly make it through and then kudos to them, but we're losing potential because the process is cumbersome and not focused with the founder.

Brian Hatton: I think that's tough. And for us, we try to help where we can, but we're a small fund. If I ended up introduce you to another fund, that's helpful maybe for feedback, helpful maybe for financing. But I think you're right, there's not this institutional process of founder support at every step. And so how do you think about that as an investor? For some investors, we're generalists, we're small, we help. I think 20% of my portfolio companies I help. They're really engaged. 80% we invest in, they might do their thing, they come back to me when they need more capital maybe or if they haven't asked. But it's very difficult I think to institutionalize that process at every step. Some of it is, it's not there yet. Maybe some of it is different founders, some of it is different companies. But I think it's a really good point, how do you relieve that stress from founders? And I think some of the ways that we're thinking about doing it is outside of capital maybe, but if you can help them solve problems that we see all our founders have or lots of founders have, and then how can you plug them into these support structures that maybe aren't within our fund but are external to our fund? And give them a pathway to see light at different pieces, whether it's like go to market and you work with some of the folks at GrowthX that have been involved here or whether it's like do you give them a piece of accounting software or an outsource partner that will do their accounting for them or do their bookkeeping for them, Help them with that. So I think there's some things around the edge that you can try to institutionalize as a fund to smooth that pathway. But I think it's really hard, like you said, how do you get more from the beginning to the end?

James Edward Feagin IV: So Brian William, you're not going to end on this really hard. I'm going to buy you some time and we're going to do an impromptu exercise here. So I know Michigan pretty well. We figured out how to get inaudible some states together. I'm trying to figure out, is it Michianaho or so we are bootstrapping rapid prototyping right now inaudible... We're fixing VC from the middle right now. So our three states come together led by us, we're the three partners in it. We've got a hundred million pot of funds and we are going to form this Michianaho innovation fund that will be the perfect, show you a- holes how to do it right thing. So Wolf, you can start and buy him some time, and tell us what this fund looks like and what it does.

Wolf Starr: First and foremost, it's Oichiana.

James Edward Feagin IV: Oichiana.

Wolf Starr: Oichiana.

James Edward Feagin IV: That's on brand with the Feagin and Wolff talking Oichiana. All right, here we go. Oich.

Wolf Starr: Our friends from Ann Arbor might want us to workshop that a little bit, but I don't think that there's going to be one fund. And this-

James Edward Feagin IV: You have to start with one fund, because let's not get into the details. Let's just follow-

Wolf Starr: All right. Commute Dream, one fund.

James Edward Feagin IV: There's a midwest fund that is our three states, not competing, but working as one Midwest ecosystem that says collectively there's 40 million people. There's this much infrastructure, there's this much land, there's this much old school wealth that needs to be converted, there's blah, blah, blah. And it's like a regional innovation engine, which hypothetically we were supposed to join together and do. But everybody competed not just between the states but within the states. But let's say that thing actually played out. There was a thing that looked at Columbus, Cincinnati, Detroit, Grand Rapids, and then Indianapolis, probably inaudible. It's like this triangle of innovation where there was shared infrastructure, capital, community, and whatever. And Midwest House just did this endless loop of community building and we were just a super fund. What does it look like?

Wolf Starr: So first we have to take a bit of a census into what our states are similar at and what they're very different at. And it would be an exceptional radical collaboration and that's what we're all about. Where we run into difficulties are a lot of the support systems which Flywheel's using, which is going on in Michigan are very specific saying that these dollars which we're coming in and giving you, especially the non- diluted to support of the tax credits, those are limited to what can be spend there. So we automatically have to start taking a look at who the LPs are, who the partners are.

James Edward Feagin IV: Describe, give me the dream LP, not the problems. This is the panacea. So somebody steps in and says, " Wolff, here's a hundred million dollars, you three work together here to start this pilot." Describe what it looks like.

Wolf Starr: Well, it starts with the roadshow.

James Edward Feagin IV: Okay, of course you start with a party.

Wolf Starr: You start with a lot of parties. But you do those parties not just in the Detroits and not just in the Indies and not just in the three C's in Ohio. You get to know the central Appalachias, you get to know the southern Indianas, you get to know those different areas and that you figure out what stakeholders are there that are trying to make something like this happen. And so you start to form your team and you start to see who steps up and then let everyone else step out. If we have that level of funding, which if anyone has that level of funding, we've got the Ochiana fund ready to go. And if you're based in Chicago, we'll put Illinois in that too.

James Edward Feagin IV: You give us inaudible we can buy in.

Wolf Starr: Yeah, of course.

Brian Hatton: inaudible letters in Illinois that we can fit in anywhere. We'll have an acronym.

James Edward Feagin IV: We'll throw an L in there somewhere. But I'm saying, here's the thing. We spend so much time analyzing the problem that just like entrepreneurs, we sometimes lose that magic of how do we create something that doesn't exist? And then we're mad at states and governments and whoever else for not thinking of the thing that they don't even know how to think of. So our task for this next few minutes here is to continue describing the thing and then we'll have the money by Friday.

Wolf Starr: I love that. Yeah, that's great.

James Edward Feagin IV: inaudible.

Wolf Starr: So first I think you figure out who's doing the work, how they're doing it, and how we can come into all of the region and say, " We're not pushing you out, we're not saying that we're the only ones doing it. We're saying we want you to come do it with us." So if we're a hundred million dollars fund, which we're going to be by Friday, he said it-

James Edward Feagin IV: Here we go.

Wolf Starr: We can say, " What are the funds which are already..." Thank you Adam. Welcome to the team. We didn't say, who is going to be officially a part of the game? Who are we going to have co- investing with us? How are we going to include the partners from outside of the region that are going to be jealous of what we're building here so that they can support in all of those ancillary ways? Because I think a big part of what we all do is we invest in the founders in our states, but then we also give that forward with momentum and that positive signaling that allows them to go get other institutional investors. When you're out there and Brian William, you're talking to a company and it's nine months because you need them to hit their 15% threshold in order for you to be able to cut the check to know that it's already filled. We're fairly similar in a lot of what we do. We cut really early checks, but mostly we like to see more of a powerful cap table that we can know secured it so that the companies are using it for growth instead of just runway. So we talk to those different groups which are coming in, but then at nine months you can say, " When you hit this bar, when you've done these three things, you'll have our check," and then they can go out to the rest of the country. Let's say that.

James Edward Feagin IV: So ecosystem partners and other funds.

Wolf Starr: Exactly.

James Edward Feagin IV: Can I ask you a question to think about? Well I didn't give Brian a chance because now he's got the stuff together. You described the stakeholders in the fund function, which is important. But I think one of the things I also want to hear from you is I would hope that part of our core values are centering the needs of founders. So from a human- centered design, user- centered design perspective, when you get the mic next, tell me about the founder outcomes and the founder experience that drives this part.

Wolf Starr: I'm back in time now.

Brian Hatton: I really like-

James Edward Feagin IV: It's a thinking.

Brian Hatton: ...A couple of things that Wolf said. I think he mentioned going to different places and I think that local knowledge is quite important. So if you set something up like this, I don't think it would be... You wouldn't pick the center of the three states and just plop down there and say this is where we're going to be. You would want to have some people, lots of people on the ground to get that local knowledge and be able to support the founders. I have this idea, and it goes back to something that you made me think of and also what you're saying about this funding journey is, how do you relieve that funding journey pressure? And so without not making founders work hard to prove things to get funding, so could you have this fund that was like a multi- stage fund? Obviously I'm not making it up, people thought this before me, but where you got local small check writing, they graduate, do something through bigger check that culminates into an even larger check, whether you call that through series of 3C's seed as we call them. Then you've got these ecosystem partners that will take notice. So you get founders somewhere, and not every founder is going to get to that final stage. But I think that's something that I've been thinking about a lot is, how can you support these founders? Some of the things I talked to value add support where it's accounting, whatever, but relieving some of that funding pressure and whether that's like, we're going to give you this money if you get this co- investor or not, whatever. But I think that's something that can help in the Midwest in particular because the funding team's so different here and there's not as much money. It's more critical. It wants more traction, it wants more co- investors. We are looking for different things.

James Edward Feagin IV: Can I pop... Is there not as much money or is there not as much risk tolerant money that is willing to investigate startups?

Brian Hatton: So you got some really good point. It's not that there's not as much money, it's not being directed. Yeah, you're exactly right. Sorry, that's a good way to correct me. I wasn't thinking that wasn't enough. It's just that the ecosystem in here, that risk tolerance isn't here to direct the capital. And so if you could help do that by de- risking stages with that fund, I think that would be interesting.

James Edward Feagin IV: You ready to come out of time-out?

Wolf Starr: Fine. All right. I'm going to speak on this one first and I'll get back to your question. I had too many thoughts in my dyslexic brain pop up in the last minute. So I think that's a really important point. There's so much money in the Clevelands and the Detroits and Cincinnati's and places. There are billions and billions of dollars sitting in donor- advised funds just collecting dust. A lot of it is going towards some really good philanthropic efforts, but most of it is just sitting on the stock market, just making sure that it doesn't go down. And so I'm really inspired by what Kansas City is doing, Cleveland foundation's starting to do it, CapShift is doing it, where they're unlocking some of those pockets of private wealth and being able to have it grow by investing in things which are a little bit riskier. And then at the end of the day, that growth goes back to the foundations, to the family offices. And then they can keep reinvesting and recycling it instead of it just sitting in something because that's what they know.

James Edward Feagin IV: Let me ask you the next question here is-

Wolf Starr: I still have that first one.

James Edward Feagin IV: Oh, go ahead. I'm really good at that.

Wolf Starr: Thank you. All right, so what do we provide beyond just the dollars? All right, so I'm all about the whole founder first mentality, but it's different for every single founder. We love to do peer- to- peer interactions. One of my favorite things that we do is annually we bring together our founders from the different funds, bring them to Columbus, Ohio, and you're going to have the founder we invested in through our LGBT fund that's running queer Netflix, sit down right next to the electric school bus company in Dunkirk, Ohio, which employs more people than Dunkirk, Ohio, but it's based here. And the two of them are sitting down and they're trading like, " Oh, here's this resource, here's this person, here's this thing." And then they even start running ads on this for one other of the companies. And so I think that one thing which a mega fund, the inaudible fund or whatnot would be able to do is with such a mass of dollars if we're doing some of these early checks. And I believe, and I think both of you believe to some extent, that that's where the checks need to be cut in order to move our community forward. A company in Ohio that already is on their series B and is about to take over the world isn't going to be in a situation where they need us as much as somebody who doesn't have that same exposure, doesn't have that same track record, that background, the professional services. So that's where if we're talking about cutting checks in the sub$ 500, 000 stage, that is a network that is a network larger than any network short of VentureNext in the Midwest that is able to combine these different things together. And to have that all under one fund is great because rather than dealing with control, we can deal with collaboration. But then also I think that we need to figure out the different resources, the education and the partners that are able to follow on the journey. My three and a half funds, your fund alone don't have the resources, for four funds. So our combined seven funds do not have nearly the resources tho have a full team.

James Edward Feagin IV: What's that? You left out my funds.

Wolf Starr: We're about to get to you. Gosh, James. All right, so your funds, our funds don't have that combined resources, but when you get up to a hundred million dollars fund, you start to have the economies of scale where you are able to have the dedicated person that can go on out and do the steroid version of what you're doing with the 20% that are in that weekly, that monthly cadence. And Feagin to the point of what you are building, if you had more funding and more support to be able to do what you were doing, you would be able to grow your team, you would be able to bring in those experts, you'd be able to cycle those experts that are on one team into another team. And so that is the collaborative part of where I see this Michiohiana fund being special.

James Edward Feagin IV: So let me ask you a question now on, and I think there's more we can talk about with the founders and I did like what you said in the beginning about tapping into Appalachian, they're left out communities in our states that if we're going to each be truly representative we need to talk about. The other thing is, let's be real, we kumbaya up here today, but we're in Indiana and next week you're going to be back to growing the Indiana economy. You're going to be back to growing the Ohio economy. And I'm going to be back to, I don't know what I'm doing, but I spent the last three years focused on my benefactor who wanted to see Detroit grow and Southeast Michigan grow. And so there's not really... Let me not say where there's not because I'm breaking my own rule. If we're truly going to fix VC from the middle, it can't be Michigan, Ohio, and Indiana competing against each other and having a zero- sum game. So what is the level at which there is actually some type of shared economic interest that gets us to thinking at that level collaboratively in that scale? Is there existing thing that I'm not aware of? Is there a dream thing we need to create? Where does that happen?

Wolf Starr: Well, you're talking about dream, which we need to create.

James Edward Feagin IV: So the three of us are the governors of our respective states and then we're buddies and we go play golf together and we decide to allocate$ 30 million each to this fund.

Wolf Starr: I'll drive the cart, but number one, three dudes should not be starting a fund period, to your point.

Brian Hatton: I agree. I don't golf either. Sorry.

Wolf Starr: You can go golf with Adam, Ty, you got a threesome or whatever they call it on the golf course.

Brian Hatton: I think it's a really important point because if you look at what's happening in the Midwest, a lot of what's been driven has been driven by the states. And so I think there is inherent competition that's not great. And so I think if we did have this fund and it was private capital, then you can actually do something that's different than what the states have done because the states are competing against each other in a way because they're thinking, " Okay, if I invest dollars here, it's going to create tax revenue. That's great." In starting companies, but there is a bit of not healthy or not great competition right now.

James Edward Feagin IV: Well yeah, to put it most simply, this what I spent a lot of time doing. I'm growing up from community organizers to inaudible this space, which is still community organizing. You just understand different people's perspectives like, well why don't you want this tree torn down and why do you want this tree torn down? So a governor of Michigan is responsible for growing the Michigan economy and answering to Michigan voters. Indiana, same thing, Ohio, same thing. So it's like where is that shared agenda that can either supersede that or function outside of that where someone actually caress about the economic growth of these three states? Is that a group of successful founders that we've all seen that can come together and care about it? Is it the federal government looking aggregately at this post and saying this isn't just West coast versus East Coast versus Midwest, but there's underperforming economic activity here and as a result there's 40 million Americans that are not actively participating in the economy. There's some dream stakeholder that cares enough about what we're talking about to actually move this forward.

Wolf Starr: All right, Feagin, no one puts you in a corner. You're inside now.

James Edward Feagin IV: All right, I will give... I'm sharing the mic.

Wolf Starr: That's so good of you. You're a sweetheart. So I'm going to give the best example I've ever seen of what you're describing in a very different kind of industry. Central Appalachia has found a way to work together across state lines and define their own region, get federal support for the region, and for anyone who doesn't know that is the entire eastern third of Ohio, the entire eastern half- ish of Kentucky, a big swath of Pennsylvania and then a few other bits and pieces along the way. So they were not funded specifically by any one state, but they put all of their funds together and they've worked with the federal government to say this is an area which needs this support.

James Edward Feagin IV: So is that like Rust Belt 2. 0 for us or did that not capture it?

Wolf Starr: No Rust Belt 2.0 is a little bit of a different thing because Rust Belt 2.0 is a specific area. It's not even about geographies as much as it is economic redevelopment of areas which were so prosperous that we're trying to find ways to bring back. Central Appalachia is just an area which has traditionally always been ignored because it hasn't had high population density, partially based on the geography, partially based on just the trade routes and things along those lines. So they came together and they said, " We're going to create funds, we're going to figure out how to get wifi here, we're going to figure out how we can build these roads." And they did it and it was individuals from the region that were saying it does not matter if I'm an Ohioan, I've got more to do with the person who's across this imaginary border that's dealing with the same thing than I do with a person who's in Columbus or Philadelphia or wherever. So it's absolutely possible, and I think part of why we all do this, and I'd love to hear from you if I'm online, is we're trying to support our neighbors. We're trying to empower and uplift those who are within our areas greatly because we see the potential, it's great business to invest in the Midwest. So when you raise this a hundred million dollars, make sure everyone knows that it's great business.

James Edward Feagin IV: I'll tweet it, or X it, whatever I'm supposed to do.

Wolf Starr: You'll X it for the exit. But yeah, it's definitely doable, but it's a little bit of us removing... When Ted brought us together and was like, " It doesn't need to be Michigan house, we don't need an Ohio house." That's what he said to me. He was like, " Yeah, that's really cute, but we don't need an Ohio house inaudible." It's how do we build this whole thing together and we don't have the states paying for it, but if someone in the states wants to sponsor, thank you again, then it uplifts and empowers everybody.

Brian Hatton: I think it's a really good point. And the funny thing is that now that we're having this conversation is we only invest in Indiana, but we talk to funds in Chicago and we talk to funds we co- invest with in Kentucky, Michigan. And so I think once you take a step back from it, the states are doing what the states do, but us on the ground, we're doing what we do and having those conversations anyway, it's just a matter of solidifying us and working for that common goal. So I think the foundation is already there. We're already talking about it. It's just trying to take this a hundred million raising and solidify.

James Edward Feagin IV: So I'm going to bring it back to your personal experience, which aligns with something that I have used as a tool in some of my economic projects in Detroit, which is this idea of grandkids. So you didn't want to have to travel nine hours for you to see your grandparents. I'm sure your grandparents also love the idea of seeing their grandkids. When I was working on regional transit in Detroit, a lot of what we talked about was like, " You may not care about this, you don't want to take the bus, but your kids that you slip to college want to go work in cities where they don't need a car." And as long as you're not answering that question and competing for that talent, you will have to go to Chicago or go to the East Coast or somewhere else to see your grandkids. I'm sure Ohio has the same challenge. So it's maybe, I'm trying to think common denominators here that get folks caring. So if it's the grandkid fund that's like Midwestern boomers, how would you love it if you could have a five- hour commute to see your grandkids instead of a flight and just something simple like that, that has enough primal pull to it to get people caring.

Wolf Starr: Really quick. So for all of you paying attention here and at home, we are now talking about the Grand Ohioichianacago Kids Fund.

James Edward Feagin IV: Yes. And we have the vehicle, which is Midwest House. So I've got the party. No inaudible, when I was a funder I had... When you have the inaudible rockstar and then there's people around him. So one of the guys around him was pitching us for funding and he came to us and he wanted us to pay$ 2 million from the inaudible, bring this incubator to us. And they're like, so if I write a check to you today, what's the first thing you're going to do? He's like, " Well, I start with vibes."

Wolf Starr: Like vibes?

James Edward Feagin IV: No, vibes like, I'm going to get jets and I'm going to bring all these different people here so they can see Detroit is cool. And for the first six months I laughed at him and then there was a point where I got to actually understand it in his crazy way. That was right, not right right, but right. If that makes any sense. So the importance of the community building the vibes, right? Midwest House, come for the vibes, stay for the deals or whatever that we call it. That is an important part of this, especially when we're talking about our collective brand. Our cities aren't as cool as other cities, but we've got to... Part of this thing is going to be the branding that retains and attracts the talent and that shared interest of this. We work on what we call it, the grandkid fund, the inaudible. Starting to sound like the Michioana fund.

Brian Hatton: Now you're literally just talking shit.

James Edward Feagin IV: I had to bring us back. This got real tactical and visionary for me. So yes, now I'm back on brand, but I'm also kind of serious.

Brian Hatton: Yeah, we're taking a circuitous path toward where we're going, but I do think you can look at it economically. You think evaluations are better here to invest or something like that where you can say, how do you take three guys, two of you met and one who has not from maybe not so different backgrounds, but a little bit and put them together and have this conversation. And I think those are the things that can happen in the Midwest. Because everybody's from a little bit of the same place. And so I think however you want to look at it, there are ways to conceptualize the Midwest as a place that's a collaborative place where people can actually work together instead of having to fly to California or New York, whatever. So I think it's, finish for me, it's like the real potential is here. I think a few of us are looking at it in that way, just trying to get everybody else to realize what we're thinking about.

Wolf Starr: Thank you. I'll make one very important point and then I'm going to thank you so much. So the reason why you think that the inaudible Grandkids Fund sounds Native American is because all of our states are Native American terms and we're on their land.

James Edward Feagin IV: Yes, we are.

Wolf Starr: And we need to-

James Edward Feagin IV: This is turning to an absolutely Yellowstone real quick.

Wolf Starr: The reason why all the inaudible is that's what it was. But I want to continue these kinds of conversations because like the Ohio Impact Fund, I have an idea where so many of our companies are going to outgrow just being able to do business in our state and I want them to be able to go and grow into these other areas, stay close to home. But the beauty of our Chicago, Michigan, Indiana area is that looking at-

James Edward Feagin IV: inaudible.

Brian Hatton: It goes around...

Wolf Starr: Are we going to sponsor that? Anyways, all of the coasts are surrounded by water and here in the Midwest we're fully surrounded by people and that gives our companies-

James Edward Feagin IV: I have water. I have water you can drink. I want to throw that out there and we'll share.

Wolf Starr: You worked hard on that. Don't worry. It all flows down to Ohio, it gets there. But I'll stop talking shit for a second I guess. And I just want to thank you, Brian. I want to thank you for investing so much, so quickly, and so often and doing it here in the Midwest because I want to invest with you and I want to know that you've gone through the process with these founders and I just look forward to sharing more cap tables with you and really appreciate you taking the time today.

Brian Hatton: Thank you guys.

James Edward Feagin IV: I just want to quickly say two things. Number one, this has been a bit of a cathartic exercise, but I think also you've heard enough panels where, "This is what we do and this is what we do. These are the challenges." AI can do that, we've all been replaced. But I also think that if something like this is going to happen, it's going to start with a conversation like this and a relationships like this and a platform like this. I think also we know it won't start with a hundred million dollars, right?

Wolf Starr: You told us Friday.

James Edward Feagin IV: I know, we'll get there. So really the little part that you just described of you guys sharing cap tables together and then we know what I bring to the table in terms of diverse talent, pipelines, looking at things, relationships, this is the origin of it. I just need to diversify it a little bit. But it's not going to start with three governors having a lunch at a conference room and talking about it, or even with a bunch of CEOs. It's going to start with us and it's going to do its first hundred thousand before it does its first million before it does it first hundred million. So it's like we can actually keep this going and whiteboard it and pilot it and do the next Midwest house somewhere and grow this thing and make this a continuing panel of now I'm committing each other. This is an ongoing thread and workshop of Midwest House is this Michohioindiana fund that all comes together, and what are the design principles of it and who are the stakeholders you care and how does it perform and what does that tri- states... The tri- states inaudible we'll come up with this, they'll be branding such, what does that economy look like and how do we start to build some actual shared interest? Say, " Ohio, Michigan, and Indiana might think we're competing, but it's a lot easier to do business with an adjacent neighbor versus if the talent's not here." So there's a shared interest there that we can start to think about getting tactical about. And that's the last sensical thing I had to say.

Wolf Starr: I was going to say, you're not talking shit now. That came full circle.

James Edward Feagin IV: It's a battle internal, isn't it?

Wolf Starr: No, thank you. Thank you both.

Brian Hatton: All right. You heard it here first. All right, let's get this right. Michianahioittsburgh inaudible, icago grandkids fund.

James Edward Feagin IV: Let's build the skateboard first. You're building the race car now. Let's start with the three states.

Brian Hatton: Well, we're in Indiana. We'll explain.

Wolf Starr: There's always a race car handy.

James Edward Feagin IV: Yeah, it starts with a clay model in Detroit, we build car. So we'll start with the model and then we'll expand.

Wolf Starr: Let's all start with the model and please start with the model with us, and especially to the women in the room. Let's do what we can to give up our spaces because as we move forward, we need your help to help unfuck our industry. So thank you all so much.