How Small Venture Capital Firms Compete With Larger Names

**SPEAKER_1** (0:00)
Want to bring Sam back in, though, of course, and turn our attention to venture capital, as promised. Drew Glover is joining us, co-founder and general partner at Fiat. Drew, it's great to have you with us. Now, I said coming into this interview that we are in an environment where a smaller VC firm can actually have an advantage over a mega fund. So if there are billions of dollars chasing venture deals right now, how does a smaller firm get the advantage?

**Drew Glover** (0:27)
Yeah, well, ventures change quite a bit, I think, over the last couple of years here, where just being able to have a billion dollar fund and a ton of capital just isn't enough. So for us, we've really approached it at FGV Capital. We've really approached it as having a small, more nimble fund gives us more flexibility. But at the same time, we built a very unique model because what we built before the venture fund was actually a growth consultancy, where we do both strategy and execution with early stage all the way to late stage companies. And then we built a venture fund after that. So on year two, we launched our venture fund. What that's given us the ability to do is really build the platform of the venture fund before actually launching the venture fund. And so what we're able to do today with the team of 40 people at our consultancy, and another half dozen people at our fund, is be able to offer all these additional services beyond capital whenever we make an investment. And so similar to some of the big ones, right? When we write a check, we're able to put the full power and growth engine behind a founder. And again, that is the more than capital story that I'm talking about right now.
Capital is just a commodity. Being able to add capital plus all these other services and value is really where it comes in. That's how you win deals, unfortunately, a really good coffee and a really great venture brand isn't going to do it anymore. You have to be able to add more, and a lot of it's because of the advent of AI. It's just cheaper to build. You don't need $3 million to go build a platform anymore. It can be a weekend hackathon with a really great founder, and they're looking for capital that is strategic and smart, not just the money itself.

**SPEAKER_3** (2:01)
Okay, and when you say smaller VC firms can beat the larger firms, I'm wondering on what metric, I mean, what are you beating them on? What does winning actually mean?

**Drew Glover** (2:12)
Yeah, I mean, a lot of it just comes down to distribution. And we're just a big believer that especially in the early stage, distribution is the last surviving moat tier. And when I say that, I mean, if you have an unfair distribution advantage, when I say distribution, I mean driving revenue to your business, driving new clients, driving new users, profitable growth, affordable growth, then you have an unfair advantage against the rest of the market and the competition. And so what a lot of VCs will normally do, both the big ones and other small ones, is they'll write a check and say, good luck, like, let us know when you hit your next growth milestone. What a lot of these founders and companies need is they need a partner that can basically come in as a growth and distribution kind of superpower and be able to go and say, hey, we're going to be hands on with your company. We're going to go and help you find the next 25 customers that are going to get you to $10 million in revenue and supercharge your series day. And so for someone like us, when we write a check, we're basically saying to these two founders, hey, we're going to put a team of 10 on your back and go out there and actually close your next 25 deals. So not just strategy, but also providing execution and distribution is everything in this game. The other mode is data and you just need to be able to get clients and grow fast, be able to get enough data, proprietary data specific to your business, to be able to turn that into a superpower as well.

**SPEAKER_1** (3:28)
So Drew, is the venture business now becoming less about who can give you the most capital and more about who can give you access to customers and distribution and even support? I mean, you were highlighting having a team there, whereas you mentioned a lot of places will write you a check and say, check back in with me when you've hit certain milestones.