Tzakhi (00:00.282)
Hi Jason.
Jason Mackey (00:02.13)
Hi, how is everything?
Tzakhi (00:05.146)
All great. Thanks so much for coming. We're at the Meet .Capital startup podcast with Jason Mackey, managing partner at Athenian VC, a venture capital fund from Massachusetts, and very happy to have you.
Jason Mackey (00:23.41)
Thank you for having me. Great to be here.
Tzakhi (00:25.85)
Yeah, so maybe let's just start, you know, just if you can quickly introduce yourself and Athenian and then we'll get into it.
Jason Mackey (00:34.77)
Sure, sounds good. Well, again, thank you for having me here. My name is Jason Mackey. I'm the co -founder and managing partner of Athenian VC. We are an early stage venture fund based in Boston, Massachusetts. Our thesis is centered on the idea that much like the internet was a novelty back in the 90s, AI is often seen as a novelty today, but like the internet.
It eventually became ubiquitous and every single company found itself online as we do today. We think the same thing will happen with AI. AI will eventually be just as ubiquitous as the internet. And so our investment strategy is to find companies that are facilitating that transition from the world we have today to the world of tomorrow where AI is part of every facet of our society. So...
We invest in pre -seed and seed stage companies, primarily in the US, but we're looking at companies in Israel, the UK, and well, primarily Israel and the UK will be our first stops outside America. But again, thank you for having me here. I'm looking forward to the conversation.
Tzakhi (01:48.492)
Awesome, awesome, Jason. So we'll talk a bit about AI in a bit, and I'd like to hear more about your take on how startups should use AI, what types of AI are interesting now. But before that, I thought it would be a good idea, since you're now raising your first fund, can you explain to us a bit how the cycle of money works from the VC?
to the investment in a startup. So VCs have to raise money too, right? It's sort of, you go through a lot, in a way, similar difficulties as founders go through.
Jason Mackey (02:23.858)
We do.
Jason Mackey (02:29.618)
Yep. Yeah, yeah. Which a lot of people don't realize. Yeah, VCs have to raise money to be able to invest in the startups that they're interested in. So that whole process is very similar to the process of a founder getting out there to raise capital for his company. So our investors are limited partners. And limited partners typically come from a few different areas. They're either...
you know, high net worth individuals, angel investors, institutional investors, like a endowment or an investment fund, Goldman Sachs, JP Morgan, et cetera, et cetera. Or they could be like a family office, which is I think most common for first time managers is to approach family offices run by
you know, ultra high net worth individuals and we basically pitch them. We create a pitch deck and we have to make sure that it's concise, that makes sense and we're conveying our thesis in a way that makes a lot of sense for them and it fits what their mandate, what they're interested in. It can be difficult, but it's certainly a core aspect of venture capital and startup.
investing, without this, there can be no startups, invested in. So, but yeah, no, that's the, that's the, the gist of it right there is that we go out and we solicit limited partners, for investment into our fund. And in, in exchange, they get, an interest, share of interest in the fund. and, and that's much the same way a company would give up a share of equity. we do the same thing for them.
and they share in the profits, which we call carry. Once we have an exit, and an exit could be a company gets acquired or a company goes public. And whatever we're able to attain from that, we split it in such a way that the limited partners get around 80 % and then we get the remaining 20 % as carry. So, but that's a very high level overview of venture fundraising.
Tzakhi (04:54.01)
Yeah, so maybe I'll just kind of rephrase it just to make sure that people understand. So you make sure that your interests are aligned with the people that invest in your fund by making your profits come from when they make money. So when there's a liquidity event, when there's an exit, there's a distribution, the limited partners that invested in the fund.
get their money back and then whatever profit is left after that they get 80 % of and typically venture capital fund, the general managers share on the 20 % that's left.
Jason Mackey (05:34.098)
Yeah, yeah. The only difference might be that they might not get their money back. So when we split the profits from any liquidity event 80 -20, where limited partners get 80 % and then we get 20 % of the carry, it doesn't mean that they will be made whole per se. Some funds have a requirement that...
they, you know, once the investors are paid back, then the general partners of the fund would be able to see some benefit, see some returns. But typically it's just 80 -20 of everything that comes back into the fund.
Tzakhi (06:21.914)
Okay. Maybe you can tell us a bit more about what drives investors to invest as LPs in a fund. So obviously it's financial returns, but what other incentives or interests do they have?
Jason Mackey (06:40.914)
Well, there are some investors that are interested in a particular sector or particular social cause. Let's say they want to see more women founders. So there are VCs out there that are investing exclusively in women or Black founders or minority founders in general. And so some limited partners will seek out managers that are raising a fund to do that, to facilitate some social good.
Most, however, I think just are interested in a certain technology and they're interested in getting more involved and learning more about it and supporting that technology. So you'll see a lot of exited founders from a certain space get involved in the space they came from. So they might invest in B2B SaaS companies if that's the company they founded, that's how they made their money. Or we have some, you know,
Some limited partners that come from real estate and they might want to find an investor that's working to facilitate real estate tech and make real estate transactions easier and more manageable. It really just comes down to their interest. Whatever they're interested in, they'll invest in. Obviously there is a profit motive, but for many LPs it is strictly where can they make the most money? But...
Oftentimes you'll see LPs focus on their interests.
Tzakhi (08:16.122)
Okay, now, another thing that I don't know if people have a lot of clarity on is the cycles in which venture capital funds operate. So you raise a fund and then you deploy it. Maybe you can tell a bit more about that.
Jason Mackey (08:32.498)
Yeah, so VCs notoriously operate on longer timelines than founders. So we're looking at five or 10 years before we can see any type of return really. And so right now I'm raising fund one. And fund one, it's taken a little bit longer than expected to raise this capital because of the economic environment that we're in.
It's very difficult at the moment. But once we raise this fund, we will then begin deploying capital. And we do so at our first close. And the first close, in the US at least, there are some filing requirements and legal requirements which force us to finish fundraising within the next 12 months. So if we're, let's say we're a $50 million fund, at first close, you might have...
five million or ten million and When you do that you now only have another 12 months to continue raising the remaining 45 million or 40 million to hit your 50 million 50 million dollar mark So while you're fundraising after your first close you can start deploying capital into into companies and You'll do that while you're fundraising and then once you hit your final close at 50 million dollars
Now you're fully invested, you're ready to go. You basically are, you know, you're ready to deploy capital consistently into companies and execute on your thesis. And from there, that will take about, you'll have a deployment period of about four to five years. And that means you'll try to allocate your capital in such a way that it builds out a portfolio that
makes sense. You don't want to invest in too many companies upfront because you're still going to have opportunities down the road that you might want to invest in. So being able to spread that capital out over the course of five years is important. And that's the only job of a general partner is to invest in these new companies over that five -year period. After that, now you're getting into the harvesting
Jason Mackey (10:56.592)
time period where you're hoping that these companies will see some exit event, liquidity event, and they're either acquired, they go public, many of them will go belly up. But that's when you start working with founders to really see how they can scale their companies. And then the process just repeats. You go back out and you raise another fund. And if you want to continue investing in the same sector, you continue with the same thesis, you can do that.
Or you can develop a new thesis and invest in a different area, a different stage instead of early stage, maybe late stage companies. But it just repeats and it can be a never ending cycle.
Tzakhi (11:37.836)
But it also means that a venture capital fund isn't always at the same rate of deploying or investing. So how should startups be mindful of that when they approach VCs?
Jason Mackey (11:52.978)
Yeah, certainly. So if you approach a VC and they've been around for a few years, it might be worth trying to figure out exactly which fund they're on and when they raised that fund. If they're at the beginning of that fund, then they'll probably have plenty of capital to invest. If they're toward the end of the fund, then they're running low on capital. They're going to be a little bit more restrictive.
on how they spend their money. So it's difficult to tell, but oftentimes there'll be a press release and you can sort of gauge how far along the fund is. But yeah, that's important to sort of know, does this VC have any money to invest in my company?
Tzakhi (12:40.602)
Is there, do you think VCs have more of a sense of urgency to deploy in the beginning or especially if they're still raising their fund?
Jason Mackey (12:51.282)
Yeah, I would say so. Like for me, I certainly feel some pressure to get out there and make a few bets. You know, we've been fundraising for so long that we really want to get out there immediately. And we're almost afraid that we're missing some opportunities. So I would say that, you know, first time managers or rather at the outset of a new fund, there is some pressure to get out immediately and start making a name for yourself and building a brand.
And you often do that by investing in companies that align perfectly with your thesis. So you can showcase them to other companies. So yeah, I would say there is some incentive or urgency rather at the beginning of a fund. Toward the end, I think people get more, they're more relaxed and they only can make so many investments after that anyway.
Tzakhi (13:28.474)
Right.
Tzakhi (13:47.002)
Okay, brilliant. Okay, I think this was very, very useful. I'd like to get now just a few minutes to speak about your AI thesis. And you gave it very, very clearly in the beginning, but maybe you can now say a bit more about what exactly do you think is interesting to invest in now in AI? Because AI is, like you said, is going to touch on everything. So...
not everything is going to be a good opportunity. So what do you think is now like a good moment to build and to invest in?
Jason Mackey (14:26.162)
Yeah, yeah, very true. You know, so I think that AI in general is likely going to be the most important invention that humans have ever come up with. And we're just getting started. So with that in mind, it is crucial to now look at certain industries where we think AI might have the most impact within our lifetime, which...
which industry in particular will AI have the most positive impact? And to me, that is probably healthcare, probably healthcare, drug discovery. We're looking at, we're on the brink of solving some of the most devastating diseases and ailments afflicting human species, humankind. And the prospect of being able to cure cancer.
eliminate AIDS is astonishing. And we're nearly there. And we're nearly there thanks to AI. Being able to invest in companies that are facilitating that, this sort of revolution of improving the way we live is one of the most important things that I think an AI investor could do. So finding these companies is difficult.
but it's important and we're doing as much research as we can and we're investing as much as we can into outreach and making sure that we're present to find these companies. But healthcare is certainly important. I would say that's the most important area.
Tzakhi (16:16.766)
Is it because AI is going to enable to look at a bigger data set and analyze it quickly and get to refine results and do tests and experimentation at a greater pace?
Jason Mackey (16:36.594)
Absolutely, yeah. What once took 50 researchers will now take one machine, one hour to do. 50 researchers might take weeks or months to do the same amount of work. So the computational power available to researchers today dramatically cuts down the go -to -market time for a lot of these drugs in particular.
And it dramatically cuts down the error rate in a lot of these manufacturing processes too. So yeah, I mean, the amount of compute, the amount of data available as well is to be processed is just dramatically cut down the processing times by using AI. So that's really what I'm most excited by.
about is the fact that we can do so much more with so much less.
Tzakhi (17:37.498)
Yeah, you know, in my mind, I always, I use a kind of very simplistic maybe term, but I think of two types of AI. I think about two types of maybe AI companies. So one is easy AI and one is difficult or complicated AI. And you're interested in complicated AI. What I mean is that because you now have access to
Now there's 4 .0 and Gemini. It's easy to build a lot of applications that are based on AI and can do amazing things, but the technology isn't owned by the startup or the founders. They're just...
basically during application on an existing technology. And that's easy AI. There are a lot of companies built like that, and some of them will be very, very successful. But that's one type of AI, application of AI. And another way is to look for places where really require another level of sometimes scientific revelation or
technological innovation to deploy AI in places that open new frontiers basically.
Jason Mackey (19:02.546)
No, you're completely right. One thing we're trying to avoid is investing in these sort of chat GPT wrappers. So companies that are, you know, easy AI, if you will, and, you know, they're tackling the low hanging fruit. And I get it makes a lot of sense. It is incredibly expensive to build out your own language model to the compute required is still very expensive. So it makes sense to utilize chat GPT or
Gemini as the backend. What we're looking for companies, to your point, that can, it's the hard AI, it's the infrastructure, it's the companies that are revolutionizing their industries and doing so using proprietary technology that's theirs and not built on the backs of someone else's creation. That's where we think there'll be the most amount of...
opportunity and value creation is in building things unique and proprietary. So, so yeah, it is going to be an expensive journey for a lot of founders, but we're hoping that, you know, we can provide some help in building and facilitating this new, these new technologies and making AI accessible to all. You know, we, we named our fund Athenian.
because we're attempting to democratize founder access to venture capital and also to democratize artificial intelligence to the masses, make it as readily and easily as accessible as the internet is today. So building that, you know, hard AI is important and that's where we hope to focus because that's where we believe the most good will come from.
Tzakhi (21:00.186)
Awesome, Jason, thanks so much. Before we end, I ask my guest to give five tips for startup founders. So would you please?
Jason Mackey (21:10.642)
Five tips for startup founders. Well, I would start with be authentic. You wanna be yourself. It's incredibly important. And I think that resonates with investors as you're speaking to them. They wanna know who you are and they wanna make sure you're genuine. So be as authentic as you can. Be patient, number two. As much as we want our...
projects our companies to excel and get off the ground quickly. Oftentimes it'll take a lot more effort and work and I can almost guarantee it will take a lot longer than you think it will. So be patient and stick with it. A third recommendation here, be knowledgeable. Know what you're talking about. You know, if you purport to be an expert in your field, be an expert.
Make sure that you're able to speak to your product, speak to your company and your industry and do so fluently and articulately and confidently. So that's number three. Number four, embrace diversity. I think that the more voices you have in the room, the better.
And you want to be able to listen to perspectives that come from a different place than you. And doing that, I think, will help vet your product, vet your idea, and ultimately help you build a better, more successful company. So make sure you're listening to as many people as you can from as many different backgrounds. And then the last thing, you know,
Build something you care about. You have to be interested in what you're solving, in the problem you're solving, in the technology you're using. Make sure it's something you like. Otherwise, it will come off as inauthentic. And so try to work in a space that you're familiar with, that you're comfortable with, and that you know the in and outs of. So.
Jason Mackey (23:36.37)
That's what I would, I think that those are my five, my five tips.
Tzakhi (23:40.794)
Awesome, awesome Jason, thanks so much. How should people reach out to you and who should reach out to you?
Jason Mackey (23:49.01)
Sure, well, if you're an early stage founder looking for an investment in your company, reach out to us on our website, atheneon .vc. I'm also on LinkedIn and Twitter and whatnot, my Jason Mackey, that's -A -C -K -E -Y. You'll find me all over the place. So very approachable. Feel free to reach out on any platform and however you like.
Tzakhi (24:16.858)
Awesome, we'll include the links, of course. If you're listening or watching on YouTube or on Spotify, subscribe. And if you haven't done so already, come to meet .capital, subscribe to our newsletter. You get the five startup tips into your inbox and a lot of other stuff. Jason, thanks a lot. This was great.
Jason Mackey (24:39.442)
Thank you so much for having me.
Tzakhi (24:41.722)
Bye.
