Intro: 0:00

Dayakar Puskar is the founder and managing director of Dallas Venture Capital. A serial entrepreneur turned visionary investor, dayakar launched one of the first tech-focused venture funds, investing in groundbreaking early-stage startups in cloud, ai, ml and mobile technologies. In this conversation, we discuss Dayakar's venture journey, how startups get funded, how equity works, startup exit strategies and much more.

William: 0:38

Hello and welcome to another episode of the Cloud Gambit. This is going to be an episode where we're kind of going down a different sort of a different path, um, with a few different areas, and um, for that I have a special guest, someone that is an expert, um in these areas. So, um, if you wouldn't mind introducing yourself, lady carter sure, sure, my name?

Dayakar: 1:03

My name is Daya Akarpuskur. I'm founder and managing director at Dallas Venture Capital. And my background I started my first job at Motorola for 10 years. That was then, after that, started a company here, a company called JP Mobile focused on mobile messaging software. And that company in 2000, we raised a bunch of money and planned to go public. Then that never happened, did not go public, but then we were able to merge that company with a company called GoTechnology. Then it was acquired by Motorola. I had a short stint at Microsoft After that. Then I started a venture fund used to be called Naya Ventures in 2012. Then 2021, we changed the name to Dallas Venture Capital. So now our fund has grown, first fund to now the latest fund, close to $150 million in AEM assets under the main mentality now.

William: 2:08

Awesome. So first of all, I just want to say thank you for your time, thank you for joining and I'm really glad we could get this together and make it happen. You know, I believe both of us. I think we happen to be on a rooftop eating dinner in dallas and I was talking to one of your advisors just about the challenges for new technologists that are new engineers that are kind of going into the startup space with just understanding the equity component of it, understanding how venture capital works at a high level.

William: 2:38

A lot of those. There's a lot of misunderstandings and just not knowing. So I think this will be a good conversation. We can kind of dig down into a few of those areas. Thinking about venture capital, it's much sort of beyond funding and that goes into how VCs support founders. Every founder at some point was a first-time founder and many were actually engineers. So how does Dallas Venture Capital sort of support founders and provide value, like, say, mentorship or strategic guidance or whatever, to just make a bigger impact and drive success for founders and for the startups? Sure, william, one thing I wanted to say to just make a bigger impact and drive success for founders and for the startups.

Dayakar: 3:26

Sure, william, one thing I wanted to say congrats. Looks like you've been doing for a podcast for one year. Right now Looks like you're coming up in August. I listened to some of them. I've done a great job with some of the founders. I listened to a few things. I learned a lot what kind of questions you asked and really how other people were able to provide good information. So it seems like really it's a good session for me to kind of express what we do at Dallas Venture Capital.

Dayakar: 3:56

So, as I mentioned, I became an engineer, as you mentioned, then became a founder, then really decided to go into venture. So a lot of people ask me why did you go into venture from a founder? So I felt really I learned a lot from my early days. We'll talk about how I have raised capital and all that, but from those learnings I felt venture capital is one of the best asset class If you look at a financial stack to really if you want to contribute and also, same time, learn. I really feel like I learn every day from these founders, from ecosystem players. So with that, really, but focused in a b2b software, you know, uh, venture fund and being in dallas, uh, and coming from uh, as I mentioned, like with my technology and operational background, we want to make sure, like we add a value. All most of the vcs do a great job in my opinion, but we want to make sure, like what we say really, you know, show in results.

Dayakar: 5:14

To do that one, we have created a within our venture fund. Usually most of the funds call usually most of the funds call portfolio growth. We created what we call a Dallas Venture Capital DVC advantage. Dvc advantage is nothing but really how do we help our portfolio companies, once they have product market fit or some traction, take them from that $1 million to $10 million revenue? How do we help them to do that one? We actually created a uh within this dvc advantage.

Dayakar: 5:51

You can call we have four pillars. First pillar is really the most important pillar how do we help them? And the go-to-market strategy, business development and sales as the biggest problem. I have seen a lot of startups face like I faced. I went through almost seven VP of sales until we find the right salesperson. So that's where really I thought we can add most value, but not just saying it.

Dayakar: 6:19

We created, even though we're a small fund, we have three full-time partners working on how do we help out these portfolio companies Mostly they are coming from operational business development backgrounds and using our own network of advisors and investors. We were able to have a goal to close at least two customers for a portfolio company, and not only closing two deals, but also how do we get them close to one million dollar annual recurring revenue. As you know, like that day when you met us, we had three or four of our advisors, you know, trying to talk to our portfolio company sales team, what kind of hurdles they're facing, how we can help them right. So that's, I think, really the first pillar. Second pillar is how do we help them hiring, uh, mainly on the sales and financial side. Uh, one of the major problem I have seen, uh, startups, you know, have a hard time recruiting good sales leaders Because really, sales leaders come with a what I call a wolf pack. They come with their team and they had to make sure, like, execute what they need. So to hire that kind of a sales leader, until they get to series B and C, you will not be able to, you know, afford to hire those sales people. To be honest, I think that's what really we feel like you know, using our Rolodex and our network, how we can deploy this CROs, and we have done with a few of our companies. For example, coreai CoreStack, we were able to actually help them. A VPF channel, a customer success officer it made a big difference for the company.

Dayakar: 8:10

The third pillar we kind of call like a follow-on investment. As you know, startup founders they're, as you mentioned, mostly engineers. They're very good at really getting the product going, maybe raise initial capital, but when you had to do next level of capital or growth capital, you had to be prepared. So that's where we have a good set of relationships with other VC funds and even some of the companies you dealt with, we invested, we were able to introduce them to growth capital funds, like it could be Goldman Sachs FTV Capital, some of the funds, as you know, they deploy $40, $50 million in growth capital. Then the last one is the strategic partnerships. So there's four pillars we really practice at DVC.

William: 9:00

Okay and kind of taking. I guess I got a little bit of. I mean, first of all, thank you for that. I think I got a little ahead of myself. One thing I wanted to just sort of think through, like when a founder, maybe a new time founder, comes to DVC first time maybe, what sort of like key elements would a VC look for like in a pitch from a founder? And, I guess, can founders make their? How would a founder make their pitch stand out, you know, in the crowded, you know this crowded market right now?

Dayakar: 9:35

Very good question. I think like the first thing really we look for, then I'll talk about in general, I kind of call it three T's. You know team total, available, market time and traction. I'll talk about in general how, what you know, I kind of call it three T's, you know team total, available, market time and traction. So when I say team, the most important thing for a VC, you know because you know we want to make sure, like a, you know, the team, the way I kind of look at you can change always horse, but not the jockey, right, we want to make sure the team is the most uh, you know uh, jive and from technology, a ceo and also somebody able to sell. I kind of call it three-legged stool do they have, at least, maybe they may not be able to get all three members right away, but do they have an idea once they get some funding, will they they be able to recruit, you know, somebody to work with them, because you know, as you know, startup takes a long, long time and to make sure, like, the team is able to jive together. That's the number one thing, right? So the second one is really always, you know, did the founder go through? You know what the total available market, the space they're planning to go to. They don't have it really. You know we'll try to kind of tell them and give some ideas how to do that research or get that data back to them.

Dayakar: 10:56

Then the traction you know, have the thought through. You know, especially, depending on where you are, if you are looking for angel investment or basically what we call a tree seed to seed, you may not have any customers yet, but did you think through? So that's where really, depending on really where you are in a life cycle, could be product definition all the way to getting that early stage, what we're going to call design partners. Have you thought through design partners? And you know, make sure, like you get, you know what I'm going to call a. You know within your network should be able to find two or three, you know potential customers willing to give you that feedback. That early feedback is the most important thing. You want to validate what you're thinking. So I think that team time traction. Then, of course, the technology also always people look at, because most of the investment really in the you know, software said, as you know it started with the technology. You know, uh, have they built it or did they think through where they are on the account?

Dayakar: 12:05

So I think then, pitching to you know any angel investors or vcs, you know you want to make sure, like, really prepare your slide deck not more than 10 slides, I kind of call if you have more than 10 slides, you know people get really get really frustrated to go through all these slides, right? So if you want, like, we can send you a slide deck you can share with some of these. You know, founders, I kind of call the first slide, you know start with really problem statement. You know what problem are you trying to solve. And then a second one would be like how you would solve that problem, and then a second one would be like how you would solve that problem. So I will say, like you know, after you define the problem, what are the solutions you're offering and the market size.

Dayakar: 12:53

Educate your investor, because most of the time really, you know we don't have all the knowledge, as a founder has the area they are focusing. Educating the investor, the one of the most important thing. And also, before going to this pitch, I would say, do some research about the investor too. It could be angel investor, you know the angel especially. Make sure, like they have some expertise in that area, they can help you right? I mean, that's one thing I have seen people think you know, just as long as I get the money, you know I can go and build the product, I can do everything. But in the early stage, this so important getting that, uh, angel investor who knows and can help you be a mentor. There's so many good angel investors nowadays. When I started my, I don't think we had that many people really willing to work in the startup area. Now so many people have been successful people or some of the executives in large enterprises. They're willing to be a mentor. So I think I would say make sure you get a mentor.

Dayakar: 14:00

So a few other slides. I will say competition pricing. Really, you want to make sure you get thought through. If you don't have all the ideas, it's okay. You could ask investors also what they think about the pricing. Vc even pre-series A, series A, you do have to have some you know these things nailed a lot more than early stage. Then once you kind of hopefully get funded people like us in pre-series A and series A and they can help you to get to what I'm going to call a series B and hopefully to next level. So I hope I answered the you what, what, what a founder should prepare in their pitch deck and also how they should really, you know, educate themselves before going to any investors.

Eyvonne: 14:57

Yeah, that's great info and I think that constraining the slide deck and requiring them to make their message very succinct and strongly suggesting that is something I think we all can learn from if we're preparing content for anybody at any level, at any level After a founder gives their pitch. Can you talk a little bit about the decision-making criteria that you use to evaluate? I know you talked about, you know tech, tam and traction. How do you take those focus areas and then map them onto a presentation that you've seen? Is there gut feel involved? Are there metrics that you use? How do you think about that?

Dayakar: 15:42

Sure, definitely, as I mentioned, the team is the most important for us, right? So when I meet any founder, I tell our team I can't really get a gut feeling within half an hour, are they really able to for a long time, because it takes, you know, five to 10 years for any startup to have some type of really you know could be a conclusion you can call like exit or really whatever, right? So I think that's what I try to get the gut feeling, then go to the next level, right. Get the gut feeling, then then go to next level, right. So we invest, as I mentioned, mainly very focused b2b software companies right within that. Also, we invest in the what we can call infrastructure companies like alkira, core stack and companies like a what we did, like a in the cyber security space and all that. So, with focus, we are able to, even before we take a pitch, we have gone through pretty good a level of really the company technology. So then now really deciding on the team and with the traction, so far, what they have made, is the traction really what we're gonna call like a, is a concentrated or really they have multiple customers? The one thing we look for. You know what I'm going to call like really, you don't want to put all you know eggs in one basket. Like you don't want to have one customer paying you know your entire revenue, right. One or two customers, it happens in the beginning, but have they expanded? You know customer base right. One or two customers, it happens in the beginning, but have they expanded? You know customer base right. So because we are looking at the companies already have some, you know traction I mentioned have close to half a million to a million dollar, you know annual recurring revenue. With that they should be able to have at least, you know, depending on the company and what type of product they're selling. But at least they look at you know they have 30, 40 000 per customer revenue, right. So with that uh, you know that gives a good validation. This sec.

Dayakar: 17:53

The third one, I would say like a uh, within that customer base, have they landed and expanded? If the company even started $5,000, we are okay with it. But you know that gives you an idea customers really using the product. You know it's kind of funny. That day I was talking to one of the CTOs of a company. I was asking him about the AI. He said there are a lot of pilots out there but not many passengers yet, you know right. So and other end users using the product. If you don't have the end user using it, the company is not going to expand. Especially in the B2B SaaS, most of the revenue comes, really, it could be user-based or it could be transaction-based revenues. So if you are priced by user base, that means you want to make sure, like, expand, you know number of users using a product. So those two things really kind of gives us a good you know idea with the companies right now.

Dayakar: 18:52

Uh, so you know, then of course we also kind of look at can we also, uh, get other coin west with us? Us, we do lead the rounds. Basically, check sizes are $2-5 million in pre-series A and series A. But we like to get one or two other investors. Are they really willing to co-invest with us? Even the founder may have some people already. Or we also try to bring other co-investors with us. You know, even the founder may have some people already. Or we also try to bring other you know co-investors with us into the you know this. This round of financing. Our timeline is what we kind of have a goal uh, touch to turn sheets.

William: 19:31

We would like to get it done within three months you know that you brought up kind of a point of. Well, I guess got me curious about another question and something I get get some questions about sometimes. But you know, a VC fund doesn't just magically appear and populate itself. What role does a like a limited partner, like an LP, play in a fund, you know, versus kind of like what a general partner plays?

Dayakar: 20:00

Got it, got it. So, as you know, vc funds just to mention limited partners are investors. Most of the limited partners are silent investors. They're not involved in a fund day to day. General partner think of like a CEO running a company. General partner think of like a CEO running a company, basically responsible for sourcing. The way I kind of look at it, there are three S's.

Dayakar: 20:28

A limited partner look in a fund like ours. One is how we are sourcing, how we are selecting, what our stewardship is. The stewardship is nothing but what I talked about, or DVC advantage. You know sourcing, selection and stewardship. You know how these funds are making progress, how they have done. That's the way the LP should look at it. So, limited partners you know they invest anywhere depending on the fund. You know there are limited partners could be individuals, high net worth individuals who have exited a company or maybe an executive company. They could also invest in venture funds. Then the family offices could be limited partners.

Dayakar: 21:12

Then the third or fourth I kind of call institutions what are you going to call? Almost like some of them, you know, like a California retirements. You know. Teachers fund right, you know. And the Texas teachers fund. They also invest in VC funds because they want to allocate their capital into different buckets. You know it could be hedge funds or real estate, some into the VC funds also right. Then there are funds totally set up as a fund of funds People really they invest in VC funds like ours.

Dayakar: 21:47

They have, you know, experience really running a VC fund already or maybe they were a part of a large institution, like it could be Stanford or really Harvard, you know they basically they're all my funds. So those are the LPs.

Dayakar: 22:08

The GPs are usually people like me who are coming from a background of really starting a company, learned a lot and hopefully able to invest their own money and able to raise capital because money and able to raise capital because you also had to raise capital from other people. People also come from the investment banking backgrounds. People worked in different big banks and helped basically fundraising for other startup companies or bigger companies, basically fundraising for other startup companies or bigger companies. Then other people also come where they have done a pretty good job as a product manager, really a good sales leader in bigger firms. They also join as GPs. But then there are other people also could be where they joined a venture fund, as an analyst, grown in the venture fund as an associate, then they will also leave and start a venture fund. So that's the way the GPs come. The LPs are I've kind of mentioned four or five buckets. The GPs could be coming from three or four different areas.

William: 23:25

Okay, and so this kind of I eventually want to pivot to sort of how employees of a startup should think about equity and compensation. But I have one last question on, I guess, just the funding and investment cycle. So as startups grow and they begin to scale, there's likely going to be some sort of subsequent funding rounds and when this happens, additional shares get issued, which causes dilution of ownership to some extent for existing shareholders within a company, for existing shareholders within a company. Is that something that maybe a potential employee that's going to look at a startup to maybe work there, that they should understand, and can you kind of give a brief explanation of what this means, both in the context of the founders and the team that's running the company, and also it also impacts VCs as well. They have to think about this when they go to invest as well.

Dayakar: 24:28

It's a really important question. So if you look at it like that, you know I always tell people, you know, if you don't have to do fundraising, you should not do it. You know we would rather. Really you can grow the company keeping most of the equity for yourself. But in technology side it's pretty hard because technology is changing so fast. You need to move fast, as you know. Really, if you look at top eight companies in the world all venture-funded companies if you look at Amazon's of the world, google's of the world every one of them they did a great job, so able to basically grow the company faster. That's the reason really you want to raise funding.

Dayakar: 25:13

So with that, I would say, when venture funds come and invest, you want to make sure as a founder, you had to know how much dilution you're going to take. You're going to take some dilution, but you had to be very clear what the dilution will be. The more traction you get in the early stage, the less dilution you take. Because when venture funds are coming in, they look at what kind of risk they are taking. And if the company, as I mentioned in those two T's, when venture funds are coming in, they look at what kind of risk they are taking and if the company, as I mentioned in those two T's one of the traction, if they have a pretty good traction, they got a better valuation right, depending on the revenue and all that. So that's the number one thing is the founder should focus and try to get the traction before go to a lot of funding. Try to go to friends, family, angel investors, get the product market fit PMF as quickly as possible with some good customers and revenue. That makes a big difference. So I would say, really, initial fundraising.

Dayakar: 26:20

When you go for series and all that, the rule of thumb is maybe you give up 30% of equity, right, you're still keeping 70% for founders and also to your employees and all that. You do want to create an environment where not only you as a founder you should definitely benefit because you're the one started, our founders, I should say but same time, you want your team to feel also have skin in the game From the day one. You want to make sure, like the setup, at least 20% of your equity for employees. If we you know we never like to invest in a company they're not thinking about their employees, right? And ecosystem players too, and I talked about, really, these advisors and mentors. You know you can't afford to pay them. You know they cost a lot of money if you had to pay, but if you can give them some equity, they also will help you. They feel that they have skin in the game, right. So that's it. From that 20 pool, you can really take care of your employees. Uh, that that should be replenished. You know. Whenever you do next to fundraising too, by the way, right, initially you will be giving up maybe five, ten percent. Then, when you want to hire a good vp of sales, you may have to give up some more equity to you know those employees.

Dayakar: 27:39

So I think, really, you know, uh, for me, you know, successful companies have done a great job. Uh, sometime, unfortunately, founders think you know, hey, I know the whole pie for me is more than really. Instead of owning a small pie, I would rather own a small piece of big pie, and that's the way I look at it. Even my own company we raised capital and $3 million revenue. Until that we did not go outside at all. So, only from angels and all that.

Dayakar: 28:13

But sometimes, when you are really going into some of the stuff that's happening in the AI space.

Dayakar: 28:19

As you know, it requires a lot of money.

Dayakar: 28:22

You know, really, you really need that capital just to run the infrastructure and the AI models.

Dayakar: 28:28

Right now, it costs a lot of money. I'm pretty sure you've been hearing how much OpenAI spent really for them to get the model. You know where they are today, right, so I think that, depending on what you're working on but the beauty of really, I'm pretty sure you know you've been working on the cloud, the cloud you can start a company nowadays with $500 in a bank and get an account on Amazon. Get started. Then, really, you know, of course, eventually you have to get good funding for you to grow, for you to grow. So I think you know. To answer your question, I hope really I told you, like the founder need to make sure, like, get some advice in the beginning itself how they really get diluted each stage in a series A, b, c, but I would like the founders to own, when the company exiting, a pretty good chunk of the company. We want to make sure, like the founders get the most benefit than, of course, the employees, of course, the investors too.

William: 29:26

That's really good information. I appreciate that, and I guess we don't have too much time left, probably. But one thing I really wanted to discuss is Just thinking. You know, if you're an employee and this is something that Yvonne and I both are really interested in is understanding equity. So, if you think about, like many, many top engineers out there will give up a lot of base salary in favor of you know some founder stock or good, maybe like a restricted stock options plan, and you know, you know, when they go and work for a startup, and I know a few common, you know a few of the common types of options, like incentive stocks options and like non-qualified stock options, or even, like you know, rsu's, you know restricted, you know stock options.

William: 30:17

Um, what, what should, I guess, what should a employee that's seeking to go and work for a startup understand about how these work and also when they negotiate? Because what I see a lot of times is, you know, engineers or new timers are just confused about this and they're actually afraid to ask questions and they're going out and they're looking on the Internet and there's just so much out there. So, like, I guess, just trying to boil it down to a, down to as simple as possible answer, if it's even possible.

Dayakar: 30:47

Sure, sure, you're exactly right. It's kind of funny. My own company I remember most of these young engineers and I was also young at that time didn't understand much about the stock options and I learned. Some didn't understand much about the stock options and I learned some. Then when I used to give stock options, most of the time they never understood hey, no, no, I don't want any stock option, I want my salary increase them some of them they used to have, like you know, I want to get to my uh number. They have.

Dayakar: 31:17

But I'm glad to see some of these employees benefited a lot, were able to buy an apartment or a house when we exited our company. That made me feel good satisfaction as a founder, a CEO of the company. It's really important when you're giving up a good job in a bigger company where the big companies also nowadays they give you know basically stock grants and those stocks you get from a company like Microsoft and all that. They're liquid, also right. You know once you get it, you know within one year or so you can sell it and make you know some. You know at least to use that money for buying a house or something right. But when you're joining a startup. It's a long, long journey, you know you don't know when are you actually going to make that money. So that's one thing you had to get to your head. You are here for a long time too, but good news is I'll tell you there are some options available for some of these employees.

Dayakar: 32:16

When I started it was not there. You know that time, once you join a company until the company exits, you don't have any exit plan at all. So you want to make sure, like, understand how many actually stocks the company has, right, what are you getting? Point zero, one percent. Are you getting one percent of the company through your employee stock options? Just number one, right, and uh, most of the time, really, the good news is, uh, um, the stock option grant, the price is lower than the actual price. Really, the common, uh, you know, uh, other investors are paying, so usually you get a strike price which should be a lower than really. You know what, what the price is going for, and that's where it makes a difference, where. But they had to make sure you know, understand the tax implications. Also, they need to consult their CPA if they're getting a lot of stock at lower price and they're going to exercise it and there are some implications. Until you exercise, there are no problem, but once you exercise, there are some. You know you exercise, there are no problem, but once you exercise, there are some tax implications. They need to consider. So again, how many stock grants you are getting and how the vesting happens. Is it a vesting? Most of the time it's a four-year vesting. Most of the startups do, because you want to make sure both sides are giving the time to make sure both sides are giving their time to make sure the company grows. So, with that investing, then, what the strike price is and do you want to exercise those options once you're able to exercise, once you exercise?

Dayakar: 34:01

Nowadays there are also options available when the company is raising next level of capital.

Dayakar: 34:07

You should be able to tell the CEO or the founders hey, when you're raising next level of capital, I would also like to take some chips off the table. That's happening right now, before it never used to happen. Even founders right now before it never used to happen even founders, even initial angel investors, are taking some chips for the table when they're doing a series B, a series C fundraising. So you should be educated and you talk to, you know your CEO, who it is, don't be afraid of.

Dayakar: 34:36

Hey, I would like to take some chips for the table if you, if you need it, if you need the cash, if you don't need it, if you believe in the company, and go for it. But it's always better to take some chips for the table. I always encourage nowadays when the founders because you've been working, you know, with the shoe strings and really taking less salary, you know you do need, you know to make sure you can take care of your family, so you, you want to make sure, like you, get some cash out. So so I think those are the good. You know, at least really evolving stuff is happening in the venture world. It was not there before.

Eyvonne: 35:11

Yeah. So let's say somebody is looking at a role in a in a in a startup and they they take some, some shares, and is there a mechanism for them to sell those shares before exit or before the org goes public? Is there a way to exercise that capital as an employee for a privately held company?

Dayakar: 35:44

Yeah, as I mentioned before, we did not have that many options. But now, as I mentioned, when the company is doing next level of fundraising, the Series B investor sometimes what they do, what they call they're buying primary shares and they're also buying what they call secondary shares. The secondary shares are nothing but really employee shares or angel investor shares and you know you could. You know you don't need to sell all of your shares, but you could sell some of it because they're, you know, the founder or CEO want to make sure everybody gets an opportunity to sell some of the shares. You may get some allocation too. Then, if the company progresses very well into Series D and all that plan to go public.

Dayakar: 36:35

Nowadays there are some platforms available. People are coming and buying employee stock actually and what they call a pre IPO stock. That's also available nowadays. You know, you see, like some even I saw, like right now some of these companies like OpenAI and all that they're not public, some employees already selling and people like us we could go and buy in open market. It's not a public market, but there are systems set up like that you can go and buy them.

Eyvonne: 37:09

I would imagine if you have pre-IPO shares and you believe in the company, then you would have to think very carefully about whether or not you wanted to sell those pre-IPO, because if people are wanting to pick them up, it's likely people believe that it will be more valuable after IPO, right? So you'd have to think long and hard about whether or not the cash now is worth it and what that risk calculation is post-IPO right, and that's an interesting calculation, I would think.

Dayakar: 37:43

I agree with you. I think that's depending on I always tell people you know, like right, you know, especially if you're a young end dollar, if you believe in it, keep it. You know, you know the company more than anybody else. Right, why you want to sell it, right, so you know. But no same time again, there's nothing wrong. Really, I did not. Do not do be honest with you. When I raised capital, uh, we won 80 of the company and the investors who are coming in. They asked us you know, do you want to sell some of your equity? I was like no, no, I don't want to do it, you know. But it's always good to take some chips on the table.

William: 38:15

I'm not selling, saying all of it, but they should, they should think about some some, you know, cash out, you know what about like, uh, so you can, you can like exercise, so exercising is like a multi-part process, but you can, you know, exercise options early sometimes and you know, for the audience, this just means purchasing your stock options before they're maybe I think it's before they're vested um, at time when, like your, your strike price and, I guess, like the fair market value, are closer together. You know, to avoid, you know, getting just obliterated with taxes. Am I saying that correctly?

Dayakar: 38:57

I think, william, most of the time you can can't exercise options until they're vested. Once they're vested you have an option you buy it, not buy it. Usually you have the company's stock option plan. It is clearly one thing you want to make sure read the stock option plan when somebody gives you. It should detail everything right how long you can keep, even if you leave the company, how long you can keep those stock granted. You know vesting happens. So I would also recommend you know request your manager or CEO. You know stock should be all of the stock should be vested sometime really and some goals also, not only the timeline but also you can set up goals too and they should be vested or really the company is sold. You should make sure all your options get vested.

Dayakar: 39:51

So I would not recommend really any company. Anyway, the company cannot really let you buy your equity unless they are vested. But once they are vested, the strike price you had to look at depends on really you know the company. You know right, like what do you think if the company is going to get acquired? You want to make sure like really at least the stock options, really the shares you are buying once you acquire those are your shares. If you keep for one year, more than one year, then you pay a long-term capital gains, right? If you really you know if the company is going to get acquired within a few months, then you'll be paying, you know, like a regular, ordinary income tax. So you need to look at, really, you know again, depending on you know which company you are in, you know you want to exercise those, you know stock options, all right, yeah.

William: 40:51

I guess it makes a lot of sense, you know, to not see yourself as a financial advisor and you know be read up on the Internet, but having a real financial advisor in these situations is highly highly recommended.

Dayakar: 41:05

Yes, I would say yes, yes, yes it is. It is Sometimes, as you know, like I don't know. This is when my first company this is in 99, 2000, when they had a dot-com bust happen. Unfortunately, a lot of these employees, you know they hit by so much of stock. You know it was a big crisis. I don't know if you remember or not, maybe you're young it was a big crisis.

William: 41:33

One last thing that just popped into my mind, you know just kind of from your last answer a little bit was so we've been talking about, we've talked about startup exits, just a little bit, and you were talking about, like acquisition Is there? I mean, there's certain, like I imagine, profiles of companies that are suited for IPO versus not. What indicators might a startup see or experience, you know, that make it a good fit to IP?

Dayakar: 42:03

Yeah, I think, really you know. It's all I talked about, the three T's, right, you know, especially, is the team also has expertise or will they be able to go and get good CFO? There's one thing in my own company we are planning to go public. We went ahead and a good CFO. So the team needs to have a combination.

Dayakar: 42:27

Going IPO is very, very expensive and it is really very taxing for the company because now, every month you had to produce results. Every quarter you had to produce results, otherwise the market is not going to like you. So that's one thing that you had to make sure you're ready for for that stuff, right? Number two is, really, you know, it's all depending on really the market size, right, you, you want to make sure you know, uh, this company goes ipo, you know, is it 100, 200, 300 million dollar revenue it can generate by itself, right? Or, you know, does the team has expertise to go and acquire other companies once they got IPO, for them to get to the 300, 400 million dollar revenue, right? So if you look at, I think there's a number, I think almost 95, 97% of companies get acquired right and versus going IPO, especially nowadays, right, like, really you know, of companies get acquired right and versus going IPO it's failing nowadays right, like really, you know most of these acquisitions also happen less than $300 million. So I think you know there's numbers out there you want to make sure you know, depending on you know where you are, you know the product and also the team, the traction you got.

Dayakar: 43:46

If you can really prove those three things, really you should be able to prepare for yourself for IPO. But otherwise you should always look at how you could be a major role played in a bigger platform. A major role, you know, played, uh, in a bigger platform. Right, there are really that's. That's where I tell most of the founders start really kind of who I hate to say, but almost like a you know um, dating these bigger companies.

Dayakar: 44:16

Uh, you know, while you know you're building the product. You know, for me I was fortunate enough to work with Microsoft and other companies while I'm selling my product. So, right, you know they should become your kind of what I kind of call a sell-with or a sell-through partners. Their sales team is selling their product team. Really, knowing your product, it makes a huge difference. You know it's a lot easier when you're looking at exit when the product team makes to their corporate development team saying, hey, we do need this product, versus you going through the cartel. So I think my advice to founders always look at what are the best path for you and the employees and your investors. Trey Lockerbie.

William: 45:02

Gotcha, thank you, that's, and your investors, gotcha, thank you. That's great advice, great guidance. We're definitely at time. We used, I think, the whole block, so I guess this is where it ends and I just want to thank you. So thank you for being so giving with your time, and I guess do you have anywhere on the internet that you post or do anything like linkedin or twitter or any of the social platforms?

Dayakar: 45:32

mainly linkedin. I would say like I'm not on instagram or anything like that, but I am. But I don't think I post a lot of instagram, but on linkedin I do post, you know, uh, some of my thoughts and you know, and especially some of it is on technology, and also I post a lot about our portfolio companies because they are the one really doing actual work, so I like to promote them and the founders. You know. You know, I don't know if you have seen or not, but we post a lot about Alkira and lately, some of the investments we have done in a company called Dice. So we've been doing a lot of kind of really, why would you invest in a company also and their company making any product announcements or any other major partnership they have done?

Dayakar: 46:21

But I do post my own. Really I'll be, you know, hopefully able to give you other good news. You know I'm, uh, hopefully, finishing up a book actually right now and it's kind of almost what the questions you asked about it I'll be able to send you once the book is done. So I'll be posting some more great.

William: 46:39

Yeah, I don't know the timing on that, but I think, uh, we have a few episodes that are going to be launching before this one, so maybe we could time it with the publishing of the book. I don't know if it would work out, but we can discuss the logistics, sure.

Dayakar: 46:54

Thank you again, both of you taking your time and really enjoyed your questions, especially pertinent to founders and also employees. Very, very thoughtful what you thought about it, Thank you. You know, always we think about founders, but really you guys really thought about employees is very, very important.