Jahn Karsybaev, co-founder and managing partner of Big Sky Capital, joins Vlad Cazacu, co-founder and CEO of Flowlie, to discuss his journey from a multi-time entrepreneur to an angel investor and now fund manager.
Jahn Karsybaev, co-founder and managing partner of Big Sky Capital, joins Vlad Cazacu, co-founder and CEO of Flowlie, to discuss his journey from a multi-time entrepreneur to an angel investor and now fund manager. We unpack insights on fundraising for first-time fund managers, and the role of relationship-building in securing fruitful partnerships with LPs. John emphasizes the importance of maintaining a long-term vision, cultivating reputation and credibility, and bringing value to portfolio companies.
00:00 Introduction and Background of the Hosts
00:17 The VC Architects Podcast: An Overview
00:56 Sponsorship Message
01:07 Beginning of the Interview with Jahn Karsybaev
01:32 Jahn's Journey Before Angel Investing
04:00 Jahn's Entrepreneurial Journey and Lessons Learned
07:55 The Investment Thesis of Big Sky Capital
10:27 The Process of Discovering Upcoming Entrepreneurs
14:36 The Importance of Building Relationships in Venture Capital
14:50 The Fundraising Journey for Big Sky Capital
17:20 The Vision for Big Sky Capital
31:21 Mistakes and Lessons Learned During Fundraising
39:01 Looking Forward: The Future of Big Sky Capital
42:07 Rapid Fire Questions and Conclusion
You can find Jahn Karsybaev on LinkedIn at https://www.linkedin.com/in/jahnibek/ and on Twitter at https://twitter.com/jahnibek_ and learn more about Big Sky Capital at https://bigskycapital.co/.
Learn more about Flowlie and how the platform can help you screen deals faster and discover the right connections from your network at https://www.flowlie.com.
Stay up-to-date with all our episodes by checking our website at https://www.thevcarchitects.com, following us on Twitter at https://twitter.com/thevcarchitects, and on Instagram at https://www.instagram.com/thevcarchitects.
The VC Architects (Ep. 9) - Jahn Karsybaev (Big Sky Capital)
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Jahn Karsybaev: [00:00:00] My name is John Karsibaev. I'm a co founder and managing partner at Big Sky Capital. We are a 20 million early stage fund investing in very, very early stage enterprise SaaS companies.
Vlad Cazacu: Hey everyone. Thanks for tuning in and welcome to the VC Architects, the podcast where we share the real stories behind new VC fund managers and the blueprints used to make them successful.
Vlad Cazacu: My name is Vlad Cazacu, and I'll be your host today as we interview John Karsybaev, a friend and fellow immigrant investor based in South Florida.
Vlad Cazacu: He has started and led numerous businesses and leans on his experience as an operator and a vast network to provide great insights in today's episode. He's also the co host of the Ivy podcast, where he interviews. Senior leaders of Fortune 100 companies.
Vlad Cazacu: For more information about starting and growing your venture fund, including show notes, highlight clips, and exclusive scenes, follow us on Twitter and Instagram at TheVCArchitects, as well as on our website at TheVCArchitects.com.
Vlad Cazacu: This episode is brought to you by Flowlie, the number one choice for deal [00:01:00] screening and network management used by hundreds of investors from 50 plus different countries. Now, let's dive right in.
Vlad Cazacu: John, such a pleasure to have you on the podcast. It feels like not long ago, maybe what, two years ago was on a guest on yours. So it kind of comes full circle as we're starting today's conversation.
Jahn Karsybaev: Yeah, it definitely does. It feels like forever. I'm excited about this. I'm excited for you. Congrats on the launch as well. And I know how exciting that is.
Vlad Cazacu: Really appreciate that. I think there's even bigger news to discuss in this conversation, which is really the launch of Big Sky Capital. But before we get into that, we'd love to go back to time a little bit and discuss about your life and your time before you started angel investing, right?
Vlad Cazacu: There was a mix of consulting and entrepreneurship work. You started a few companies. So tell us a little bit more of what Jahn was like before he started investing.
Jahn Karsybaev: Yeah, for sure. I try to keep the thumbnail in a high level, so not to not to bore anybody, but essentially the journey starts at the University [00:02:00] of Montana, where I did the undergrad and hence the name for the Big Sky Capital.
Jahn Karsybaev: Uh, because Montana is a big sky country and that's where me and my fun partner actually have met during undergrad studies. And then after that, I spent a few years at the in corporate Fortune 100 organizations in various roles as a technologist, technology executive. And throughout that journey also had multiple startups of my own, um, quite a few successful failures.
Jahn Karsybaev: We had one exit, me and my four partner as well, where we, we've built a, uh, essentially a professional network for Central Asia at the time. And throughout the journey as well, just the experience we've had fundraising for different startups with different funds and investors that led to a formation of a certain thesis as well.
Jahn Karsybaev: And some of the, you know, things that we wouldn't necessarily do as investors throughout the journey. So that really helped shape some of our vision. If we were ever to do this and we also through some of the smaller exits that we [00:03:00] have, we were able to build up some smaller capital to be able to Angel invest into startups, been writing very, very small checks, mostly getting access to startups through the actual sweat equity and trying to get myself plugged in as an advisor or some type of a consultant and essentially squeezing myself into the deal.
Jahn Karsybaev: And that really kind of exposed me to the whole world of venture and so in the past couple of years, uh, me and Adil, we've, uh, we've kind of reconnected and decided that through the both of us experienced that we've had, we have decent enough of a track record that will resonate with some of the potential LPs and went on the fundraise journey for the past, you know, year and a half or so, and we've closed the fund on New Year's Eve of last year.
Jahn Karsybaev: And it started great, but we can talk further a little bit through the fundraise journey. It's been a great learning experience and we've been actively investing, uh, deploying capital as of February of this year. So that's essentially kind of a thumbnail version, 10, 000 foot view into the journey so far.[00:04:00]
Vlad Cazacu: I think it's really worthwhile to dig just a little bit deeper in that entrepreneurial phase of you starting a number of companies, having one successful exit, learning a lot, and then getting to angel investing and initially through, you know, sweat equity. So I'm curious, some of the highlights of the entrepreneurial journey that really shaped the way you're viewing investing now from being on the other side of the table.
Vlad Cazacu: And you alluded to a little bit earlier, but we just want to get some concrete examples of some of these
Jahn Karsybaev: moments. Yeah, there's a ton that comes to mind and really the, the early days, some of the earliest startups is I think biggest lessons learned is the kind of that the self awareness aspect and really trying to also respect the fact some of the things that I personally didn't know as a founder, as a CEO, as the, as a leader of the company.
Jahn Karsybaev: And at the end of the day, really also focusing on what's really the most important, especially in those early days is not only growing the company, but also, you know, hiring aspect is, you know, the number one [00:05:00] task for any CEO. And those are some of the lessons learned just to also being able to delegate effectively.
Jahn Karsybaev: Those are some of the leadership capabilities that I was lacking at a time and really invested a lot of resources into developing myself as a leader. And with every journey that I've had that really, you know, that helped level up in, in essence, building a rockstar team around me and execute on the strategy that we all had, the other component was also being able to essentially transition effectively from the three distinct stages that every founder goes through from an idea to building a product and then actually to executing, because we, some of the lessons learned through the successful failures is also the too much emphasis and focus on building a very perfect product because you can build it and build it and build it and just not knowing when to stop, that was the biggest disadvantage. And instead, you know, taking what's essentially is that even maybe a greater version of an [00:06:00] MVP and being able to go out there and focusing on the customer feedback, customer traction, some type of a validation in the market before investing even further into perfecting the product.
Jahn Karsybaev: So those were some of the lessons learned through some of those very early stages as a, as a founder myself.
Vlad Cazacu: And are you finding yourself coaching a lot of founders and peeling back on some of these, you know, initial learnings and bringing that back into conversation with them? I'm wondering, how are you seeing your true value as an investor, having been a founder several times with, as you mentioned, the successful failures as well?
Jahn Karsybaev: Yeah, that's the, I mean, I love that question because we spend a great deal of time these days answering that question ourselves as we partner with founders and it's the part of the investment thesis is also really focusing on kind of that. Underrepresented overlooked, you know, diverse group of founders, um, you know, folks like ourselves, you and I coming from nothing [00:07:00] and just not having access to capital and essentially understanding how the whole world works, uh, that resonates very well with the founders that we partner with, with the founders that decide to take our investment.
Jahn Karsybaev: So I see a lot of value there. I see a lot of opportunity there myself. And then also before every investment that we make is the, the question that we ask ourselves is can we actually help this company? And if we can, then we definitely see potential synergies and moving that further. Um, but with money being such a, such a commodity, the writing a check just only goes a certain way.
Jahn Karsybaev: And that being a long term relationship, really focusing on just the dynamics of the energy dynamics of how well we work together. That takes a lot of discipline that I would imagine that's only going to continue to evolve.
Vlad Cazacu: There's a lot of parts of your answer I think are worth exploring further, but it would start probably with the thesis of the fund.
Vlad Cazacu: Can you explain a little bit to the audience the thesis of Big Sky Capital and [00:08:00] really the process of formation of that? Was that something that was with you for a long time before you started or is it something that developed organically after you started, made the decision that we're going to start a venture capital firm?
Jahn Karsybaev: I think we've been lucky enough to experience that and test the hypothesis on our own on a much smaller scale. And that really helped us shape the investment thesis that we have right now with Big Sky Capital, at least at the moment and the focus is on three components.
Jahn Karsybaev: I've mentioned the overlooked underrepresented founder. Those are the relentless ones. Those that will never take no for an answer. And that will come up with a creative solution to any problem without losing the drive. That's the most important one. The other piece is the emerging markets. We have offices in South Florida, Kazakhstan, and Southeast Asia.
Jahn Karsybaev: That really gives us a very global perspective and view into emerging markets. And also it allows the teams that we back to prove out their product, prove out their solution, that there is a market fit, at least dominate the [00:09:00] local niche and then expand and grow further into much larger markets like United States, for example.
Jahn Karsybaev: And then the other, the last component to the investment thesis is the enterprise SaaS. And it may sound like as a cliche that, you know, it feels like every other fund is enterprise SaaS, at least in my own little bubble. But the reason we, we really focused on that is because of the type of founder that's actually building a solution for enterprise, for B2B.
Jahn Karsybaev: We've discovered that it's not a type of founder who is just fresh out of college or high school that's building some type of a D2C product. It's a very experienced executive who has spent a great deal of time at enterprise experiencing hands on a particular problem and being able to also recruit a rockstar team and motivate them to believe in that vision and then go out and build a solution for that particular problem.
Jahn Karsybaev: We see a lot of opportunity there. We see a lot of characteristics of very successful founder from that standpoint, and it [00:10:00] takes a special skill set. It takes a special experience to be able to. Not only build, but sell to enterprise. So those are the three components that we see as kind of that unfair advantage from a standpoint of us just distinguishing ourselves from many other funds.
Vlad Cazacu: I'm hearing experienced founder coming from an enterprise background with significant experience in that particular organization. But at the same time, your whole thesis around being very early stage cutting, even small checks very, very early on. So I'm curious your process around discovering. Those up and coming entrepreneurs who are probably about to leave their enterprise roles and start the next big thing.
Vlad Cazacu: And how early do you really get involved with those organizations?
Jahn Karsybaev: Great question. And it's a, it's an ecosystem that we continue to develop that really allows us to keep the hand on the pulse all across, not only in the startup ecosystem, but also at the enterprise level, because I spend a lot of my time talking to a lot of executives at even very large organizations.
Jahn Karsybaev: And at the end of the day, you [00:11:00] know, even you do the podcasting and you understand the value of how, how big of a and powerful tool that is to blow up your network, to expand just tremendously. And I really focused on that because through my own podcast, I've been able to connect with technology executives at every level from president of Microsoft to mid level management to add, you know, just a small technology companies.
Jahn Karsybaev: And that those conversations never stop those conversations are ongoing on daily basis, not even weekly these days, because it's the power of a network and referral, because one guest introduces to another. And, you know, I love those because I personally learned quite a bit through those conversations.
Jahn Karsybaev: The other component to that is also us being able to represent the Big Sky Capital at a lot of conferences. Just as an example, this summer we've been attending quite a few conferences in, in Central Asia, in Caucasus, and it's, you know, very unique markets, but it also provides a very interesting perspective into what [00:12:00] other Emerging markets are actually focusing on and what are some of the solutions that we can potentially bring to United States as an example.
Jahn Karsybaev: And also we, as Big Sky Capital, we host a lot of events of our own, real life events, no longer remote. We bring people together in all three markets. And essentially the format of that, of that is very straightforward. It's either a portfolio company or with some very interesting founder who has the experience and proven track record of building the company from zero to, to some type of successful metrics and being able to share that experience, not only on the success, but also what are the things that they've learned through that journey.
Jahn Karsybaev: I see those panels as very successful. I've been hosting events like this on a monthly basis, and we, we just, we pack the house every time because there's so many founders that can relate and the stories like that resonate on so many levels and it's a win win all across. It also gives me an exposure into potential other founders who are trying to operate in something like this.
Jahn Karsybaev: So [00:13:00] those are just some of the simple strategies that really help us continue grow the exposure into amazing founders.
Vlad Cazacu: I think it's a very interesting approach that you're taking to this because you're multi market, but with experience in emerging markets and a background there. But at the end of the day, still aiming towards bringing some of the businesses in United States.
Vlad Cazacu: So I'm curious your perspective around the investment opportunity on companies that are not yet focusing on the U S market and is everybody then poised to then come and do business in the United States, or do you think there's enough opportunity outside as well?
Jahn Karsybaev: It's definitely not a, it's not a must have element to be able to expand and grow into some massive market, but also there's gotta be a vision to go grow outside of just the boundaries of the, you know, the emerging market. First things first, being able to iterate and being able to focus on just at least a short term for now and dominate a particular niche and execute the strategy on that. That's the [00:14:00] focus number one.
Jahn Karsybaev: And if we see the founder or leadership team capabilities of doing that, and then being able to come in with our value add services as a fund and help them build a scalable solution that grows even outside of the boundaries of that specific market, we see a lot of value there. We see, you know, a lot of traction there. So it's, it's both ways, we definitely want to see the, the grand vision as well, because sometimes it's very hard to articulate that as well. I've actually found that a lot of founders struggle with that, that if everything was to go perfect.
Jahn Karsybaev: What is that, what is that big sky? What is that kind of the, the, the perfect case scenario? Where do you see that? And those that are able to clearly articulate without losing the focus of just a short term execution strategy, that's, I see a lot of potential there.
Vlad Cazacu: So I'm curious how you are articulating the big sky vision for big sky capital on the LP fundraising. I think we've talked a little bit [00:15:00] about the way you're investing money, but I think a lot of people are interested in understanding more on how you got the money in order to invest.
Vlad Cazacu: So let's get back to the very first decision to start Big Sky capital. And I would like to start a fundraising conversation around the whole idea of a partner, a co founder in a VC firm.
Vlad Cazacu: You started this with another person, Adil. Walk us a little bit through the process of making that decision together and why you choose to go with a duo GP rather than a solo GP format.
Jahn Karsybaev: Yeah, the, the fundraising is exactly almost identical to any startup fundraising from VCs. It's almost the same process.
Jahn Karsybaev: And at the end of the day, being such an early stage, not early stage, but, uh, first time. You know, fund manager, being the vintage year at the end of the day, you don't have necessarily a track record that you can sell. It's all about you. It's all about you as a person. It's all about your ability to execute.
Jahn Karsybaev: It's all about your ability to showcase that unique advantage. That's, you know, not many can offer to [00:16:00] potential LPs because LPs are very sophisticated investors as well. And they, they need to be able to understand what really makes us different and how we're able to execute on that. But building on that grand vision, that future for the fund in itself, me and Adil, we spent a great deal of time analyzing and discussing that because we're both at the stages of our career where we don't necessarily need to focus on, you know, just the career that we're building, but more of a legacy.
Jahn Karsybaev: And really it was very important for me to build that generational aspect of the fund. Where even, you know, my own children can be involved, hopefully, hopefully the, and that was really the vision that it's not going to be, you know, one fun one through five and we will exit and we're all going to be just nice, happy and rich.
Jahn Karsybaev: It's at the end of the day, building a something that's sustainable, something that's going to grow from generations because also the conversations we've been having with LPs is that, you know, a lot of them value that aspect because they want also their children involved in all of the aspects of the venture [00:17:00] capital from guild selection to be able also to understand what it takes to select a company and be a professional capital allocator.
Jahn Karsybaev: Those are some of the thoughts that we really played with early on before we even decided to go on that journey. Because at the end of the day, the three stages that you go in life is that you first, you learn, then you earn, then you return. And in those stages, we feel like we've gained enough of experience as founders ourselves, even though we're still founders, because at the end of the day, you know, building a fund is exactly the same as we have our own startup just playing in a different spectrum. So those are just some of the thoughts that really played into us, shaping up that vision, shaping up that overall strategy for the fund in itself.
Vlad Cazacu: Who was the first person who heard you say these things and say, "you know what, Jahn? I agree with you. Here's a check to make this a reality." At what point did the fund move from one idea to an actual fund and you were off to the races? Who [00:18:00] was that first "yes" and how do you come about?
Jahn Karsybaev: We've definitely started with our own direct personal network. I've went to my mentors. I've, I've, I've gone to my, you know, professors, I've gone through my direct network and I just wanted to not even pitch, but really be able to articulate clearly the vision that, that I personally have for the fund and what I'm trying to build here.
Jahn Karsybaev: And if that even resonates on, on, on any level and really get an honest feedback from that standpoint, even how do I sound when I, when I articulate that particular story, because at that stage is all about storytelling.
Jahn Karsybaev: And then even believing yourself in that you, your capabilities to execute. So we've, we focused on that and we've gone through a great deal of exercise is just. You know, it's a pitch after pitch after pitch after 99 pitch meetings, you may get one maybe, and that one maybe that actually leads to further the snowball effect that makes the further introductions.
Jahn Karsybaev: And it's really going after, you know, just shaking every tree that I [00:19:00] had and just asking for any referral, any other recommendation that I could possibly get in front of. That also really led us to, to, to really build that momentum and from Adil's side as well, he comes from institutional level investing as a venture capitalist and managing the sovereign wealth funds as well and he focused on some of the institutional level investors from his side, where I focused on more of a practitioner, the technology executives at different, you know, companies that also understood the importance and how to be an effective board member. And how to also be of a value add investor at the end of the day.
Jahn Karsybaev: And I already see some traction when it comes to just utilizing ULP network in being able to not only win deals, but also help the portfolio companies.
Vlad Cazacu: Absolutely. And what do you think resonated most with some of those earlier LPs, right? You say that you started with your initial network and at some point you had to go outside of that through referrals and through [00:20:00] introductions from existing and other GPs, etc.
Vlad Cazacu: What do you think resonated most with those people and why did they say yes?
Jahn Karsybaev: Yes, of course, multiplying your capital is, is very important for any investor, but at the end of the day is also the story of essentially us, me and Adil going through the journey as startup founders ourselves and what we have gone through and utilizing their experience to, to help their kind of the next wave of founders, uh, from that standpoint and being able to use that experience that we've had To help them maybe fast track, avoid those mistakes, streamline the process and actually build better, bigger, faster.
Jahn Karsybaev: Those are some of the things that I think resonated very well. The long term, long termness of the, or the longevity, I guess, I don't know what's the right term of the fund. I think that also resonates and I would imagine that resonates with me when I, when I talk to founders is when you have the very long term view [00:21:00] into things, because it's a not, it's, it's not a sprint. It's a, it's a marathon when it comes to building a company.
Jahn Karsybaev: And it's also, you know, it's a marathon from a standpoint of building that relationship as an investor and the founder, because if we can work well together. It's going to be very challenging for us to break up. So we take a very, very curated approach to really figuring things out, you know, first things, if we are great match for us to be able to work together, so those are some of the components that I think, you know, resonated very well with LPs when we go into the fundraiser.
Vlad Cazacu: So what ended up being the fund composition from an LP perspective is primarily high net worth individuals, family offices. Did you try to raise any institutional capital? How are they different throughout your fundraising journey in the way they, you know, approached investing in the way they made decisions about investing?
Jahn Karsybaev: Yeah, we've, we've dabbled into institutional level investors but also came to a quick discovery that we're too small, we're too early, but we also [00:22:00] focused on just keeping them informed, keeping them in the loop on what we're trying to build. And that's ongoing. That will never stop.
Jahn Karsybaev: But the, the great profile of a, of a LP that we've discovered is, you know, as an example, a technology executive and a fortune 100 organization. For an oil executive ads, you know, a major corporation who has built a certain level of net worth and now looking for ways to diversify their portfolio because of, you know, the investing real estate and, you know, public markets are, you know, those things are common sense.
Jahn Karsybaev: Going into something as high risk as venture also, you know, very successful investors have that representation in their portfolio. So we found a great match from that standpoint to focus on those individual investors, high net worth individuals, but also executives at organizations of various size who also understand the components of company team building.
Jahn Karsybaev: And what it takes to essentially scale and grow. So [00:23:00] those conversations we found a lot of synergies to be able to clearly articulate what we're trying to build and how those investors LPs can be of value beyond just the check to us as well.
Vlad Cazacu: What I'm hearing you saying is that there was a lot of expertise also on the other side of the table so I'm curious to learn how much time you actually spent teaching people about venture as an asset class and an opportunity for them to allocate to it, diversify, manage their broader risk as part of their portfolio versus convincing them to invest in your fund. Did you notice that most of those LPs already had a really great understanding of, uh, venture investing and fund
Jahn Karsybaev: investing?
Jahn Karsybaev: I love that question. And obviously, you know what you're talking about, because we, we, me and Adil, as we were going through the fundraise tour, uh, we quickly realized that, you know, not everyone knows what even, what venture capital is, and we made the wrong assumption through these conversations as we were going into the conversation, let's say with the [00:24:00] technology executive at major healthcare corporation, we assumed that that was a common sense that the, you know, with the level of sophistication that that was, that was common.
Jahn Karsybaev: And that was the mistake that we've made that we quickly realized that it is an educational process. Not everybody knows, not everybody is even interested, not everyone's the priority to know what that industry is even for, what it's all about. So we had to quickly adapt to that and really develop the kind of the story and the messaging when it comes to educating The person we were pitching to what the venture capital is all about.
Jahn Karsybaev: What's the value? Why, why does that even exist and what makes us different? Those were very, you know, uniquely discovered conversations where we realized that it's not for everybody. And it's not, you know, at the end of the day those individuals, they've been focusing on building their own careers, building their own companies, and not necessarily focused on being an investor and that continues, that educational aspect also continues even to this day, even after [00:25:00] some of the LPs invested because we meet regularly with a lot of our LPs and we share some of the things that we, we execute on a daily basis. And there's also a small portion of other LPs that very, were very transparent with their intentions.
Jahn Karsybaev: They said, look, it's our long term goal as well to build our own file and instead of learning from mistakes, we'd rather have a front row seat. To what you guys are doing to mistakes you're going to make hopefully not, but also and learn through that experience and then utilize that to build our own funds, which I thought that was genius.
Jahn Karsybaev: I thought it was very smart approach to certain things. And so those were some of the discoveries that we, we came to a realization as we started working with a lot of
Vlad Cazacu: LPs. The last one is really fascinating. I mean, pretty much a discovery check as an LP in order to, as you discussed, learn from the experience of others before building their own.
Vlad Cazacu: But I do have one quick follow up on what you were saying about educating others and that being actually a discovery too, because we're not really [00:26:00] expecting, um, Because of the level of sophistication of some of those LPs, are you seeing, or did you at any point see that lack of sophistication or understanding of the VC market as a disqualification for them to potentially be LPs or as an opportunity for you to educate and then convert a potentially previously, uh, non LP into now a fund LB?
Jahn Karsybaev: So it's, and it takes a lot of discipline to, to be able to do that. And we actually, We, you know, we still deal with that because I preach that to, to a lot of founders myself who are about to go on a fundraise tour also themselves is that pre qualifying investors is extremely important.
Jahn Karsybaev: But I know how hard that is. I know how difficult that is. And I know what kind of muscle that takes. I know what kind of discipline that takes, and I let that, and I continue investing into that myself because it's sometimes. It may feel like, you know, almost desperate that nobody would, [00:27:00] nobody would listen. Nobody would even take the meeting.
Jahn Karsybaev: But at the end of the day, it's better to continue and struggle through continuous pitches than taking the money from somebody who is not well qualified to be even on your cap table. Because I know firsthand what it is and what that leads to because the downstream effects of that relationship.
Jahn Karsybaev: It could be detrimental to the company's success overall in general, and those lessons learned through that conversation, through those experiences, I'm trying to bring that now to where I am, I am these days as a VC, because at the end of the day, it only takes one, rotten apple to ruin the whole batch, because the investors who don't share some of our principles, some of our values and the vision, the, the, the longterm vision view into that and instead looking for something much quicker, it takes a discipline, but it's something that we really have to focus on, on the longevity of this. And that's, that's, we try to keep each other honest from a standpoint of, [00:28:00] yeah, it's, it sounds easy to take that money now and go execute without focusing on the potential consequences of, you know, just being, just being that long term.
Vlad Cazacu: So how do you really assess LPGP fit over the course of a number of meetings, maybe in person, maybe online, with maybe some individuals who you know, didn't have a vast history of working together
Jahn Karsybaev: in the past?
Jahn Karsybaev: Yeah, great question and there's no, there's no single answer to be able to come up with some type of a formula for us to assess whether we're a great, great match for each other. Just like in any relationship, it takes, it takes a lot of effort. It takes a lot of time and commitment to really figure out, you know, if we are a good match.
Jahn Karsybaev: And we do that through a number of different, you know, activities such as just essentially relationship building. Even through just collaborating on maybe helping a particular startup together or if I make it, you know, an introduction for you, just also [00:29:00] observing how you actually run with that, how you follow up with that, do you take no for an answer?
Jahn Karsybaev: And just being able to continue that dialogue and also see that from both sides that you also have vested interests. And building that relationship and building that into a long term thing versus just that being very transactional. That's very important.
Jahn Karsybaev: I meet with all of the LPs on, you know, ongoing basis and it's more of a friends first type of mentality where I can share. I'm comfortable sharing not only successes, but also, you know, I'd rather start a conversation with here's where we struggle and here's the areas where it's going to be bad and I look for that as well in, in the relationships that I have with the founders as well.
Jahn Karsybaev: And if I'm able to have that dialogue, you know, with you, if I'm able to have that, you know, comfortable, transparent conversation that both of us are about to eat shit. Here's, here's a strategy how to fix that and let's work together. I see those as, as, as kind of [00:30:00] key ingredients into figuring out if this is a great match.
Vlad Cazacu: It almost feels like you're taking the LP for a test drive with that the conversation about working together on a particular support opportunity for a particular startup or anything else that you're working on. But also really like the leading with transparency and being able to build a honesty based relationship with them, because at the end of the day, it is a multi decade engagement, at least 10 for the first fund.
Vlad Cazacu: It's very hard if you're not getting on the road with the right people. We had someone on the podcast said, you're really going to war together. So you want to make sure you have the right soldiers around you. Cause they're going to have to have your back at some point and you do the same for them.
Jahn Karsybaev: Yeah, you nailed it on the head. There is a war out there, and at the end of the day, Am I the type of player you would hate to see on the opposite team? Am I the type of player where you'd rather have one on your side? That's the view that I take and that's the view that I, I love to, to keep it in [00:31:00] perspective when talking to other potential investors, because at the end of the day, it's like you said, multi decade engagement, and we rather have fun and enjoy working together rather than just you giving me your money and trying to, you know, asking me every other quarter has that multiplied or has that decreased? I don't want that.
Vlad Cazacu: Absolutely. And that's where the education on the asset class comes in real handy. I think we've all seen and interacted with, some of that persona of LPs but digressing, um, Curious to understand more about what didn't go well during the fundraising.
Vlad Cazacu: I feel we spent some time discussing about the wins, the first yeses, the point of resonance between the GP and the LP. One of the unique features of this podcast episodes that we're really peeling back the curtain of also the mistakes and what we learned from them, so I'm curious now looking back at fundraising for fund one, uh, will be some individual episodes that you would point to on things that really shape the way you're thinking about fundraising, that you're going to make sure that you're not [00:32:00] doing during the fund to
Jahn Karsybaev: fundraising. Yeah, great question. There's definitely, you know, a long list of mistakes or lessons learned that we've uncovered through the fundraising tour for FundOne.
Jahn Karsybaev: I've mentioned one of them, which is probably one of the most critical ones is making that assumption that The knowledge and understanding of venture capital is common. That was a very wrong assumption of us, and we've, we've lost quite a few, not lost, but have, you know, not the most effective conversations where we made that assumption that we actually went straight to the pitch, um, and that, that really, that didn't resonate on any level. That was very important lesson learned through, through that conversation.
Jahn Karsybaev: The other aspect of that is also the relationship aspect. I know it sounds, it sounds pretty ridiculous to also focus on building relationship first. But that, that's really important. Because I would hate just to show up out of the, you know, out [00:33:00] of nowhere, out of blue moon and say, Hey, I'd love to pitch you and tell you about what I'm building and just, why don't you give me some money?
Jahn Karsybaev: That's definitely not the best way to do this. And we, unfortunately we've had a few conversations like this where we just, we essentially just took the meeting for the sake of, you know, scheduling it.
Jahn Karsybaev: The other aspect is also, you've mentioned that the prequalifying elements of that, because we thought made that wrong assumption that even without prequalifying, even if we pitch and if it doesn't resonate, they will still make an introduction to somebody else from their network.
Jahn Karsybaev: That's total bullshit. And I actually utilize that even now that if, if I'm not going to invest. Don't ask me for a referral. Don't ask me for a further introduction. If I'm not investing, why would I make an introduction from somebody, you know, in my network to invest into you? That doesn't make any sense whatsoever.
Jahn Karsybaev: And that's the wrong assumption that we've made as well. Going into some of the meetings, thinking that if it doesn't fit them, if it's not the right time, They will still make introductions further. And we even asked for that [00:34:00] and kind of looking back on that, that, that just, you know, that sounds idiotic. It just, it didn't work well.
Jahn Karsybaev: The other piece is also appreciating the fact that such decision takes very, very long time to, to arrive at such decision. And Respecting that and valuing that aspect that it's not going to be an overnight decision and not pushing that hard and instead focusing on that communication, information and education aspect of, you know, I understand it's a big decision.
Jahn Karsybaev: I understand it's not something you're ready to pull the trigger now, but let's stay together. Let's stay close. Let's work together and let me showcase you the process that we go through. Let me show you all of the mistakes we make and let you know, observe that as well. So those are some of the things that I'm definitely taking to be very serious consideration through the next fundraising journey as well.
Jahn Karsybaev: And having, again, the focus on the long term view that if you [00:35:00] come in, if you're not coming in to fund one, you know, I still want to, it's not impacting our relationship. I, in fact, I actually respect that that you want to invest more time learning more about me learning more about my phone so that you can potentially maybe come in a lot bigger into the font to that's those are some of the highlights.
Jahn Karsybaev: Those are some of the things that I would highlight as well. And last but not least is also just, you know. Clearly focusing on, on me as a person first and in my fund partner on who we are as individuals, just the integrity, the character and the personality and what it takes, versus just jumping straight into here's the portfolio, here's the strategy, here's, you know, the DPI and all of the metrics that we've achieved. Those come secondary, especially for early stage funds like us.
Vlad Cazacu: Absolutely. I mean, like one of the defining features of an emerging manager is that the manager of the fund is really the fund and what you're really selling the first one is selling yourself.
Vlad Cazacu: Not really any track record or portfolio. Any diversification is your ability [00:36:00] to find and make the right decisions on the best entrepreneurs out there over the course of the next decade or so, but I would like to give a quick follow up on your second point, which was. Introductions from LPs who didn't invest, because I think there's, that's common knowledge on the fund side, right?
Vlad Cazacu: For startups who are then going to pitch investors and let's say they're, they're being passed. It doesn't really make any sense to ask for an introduction to another fund. But I'm curious. What's a great alternative for that in the LP fundraising realm? What's the best intro path? What's the best introduction or what's the best facilitator for an introduction that you can find to really warm up a potential lead as an LP?
Jahn Karsybaev: Yeah. And it's, um, you know, not to beat the dead horse, but it's all relationship driven. At the end of the day, it's also being able to focus [00:37:00] on not necessarily a rejection or, you know, I'm not ready to make this investment at this stage but also, you know, here's maybe, you know, just from personal interest standpoint, maybe, you know, I'm not necessarily interested in emerging markets, but also for me to be able to come back to the table and say, look.
Jahn Karsybaev: I understand that this is not the priority, or maybe this is not of interest or doesn't really fit your, your personal investment thesis, but also here's other funds. So here's other great managers that may be operating in your space. Just showing their humility and taking that not necessarily a loss, but you know, it's not a right fit for us, but maybe I'll help the other fund manager to, you know, maybe you guys are much more perfect fit because I know at the end of the day.
Jahn Karsybaev: That will come back in some other shape or form. So really also in any conversation, in any, in any relationship, one of the first things is really focusing on what value can I bring to the other person first, versus just [00:38:00] me opening up and doing the whole pitch deck presentation about the fund. That never works. That never worked well for me. That never worked well for me in any, in any sales or in any relationship that I've had. So really kind of the, the keeping that main focus on the value at what can, what type of value I can bring to you first as an investor or as an individual, as a professional, those are some of the things that really stand out.
Vlad Cazacu: Really appreciate your comprehensive answer there. And I agree on the relationship building. And also I find it very interesting, the differentiation that you made around the. type of rejection, right? Is rejection because of lack of fit, right? Or is it a rejection just because I don't believe in this whatsoever?
Vlad Cazacu: Because there may be a way for you to then spin that out and then be able to provide some value there to someone else who may be a good fit compared to just not believing in you whatsoever.
Vlad Cazacu: Before we go into the rapid fire, I would like to ask you to look a little bit forward to a Big Sky capital over the next, [00:39:00] five, 10 years. how are you thinking about firm building, even from the early stage around firm creation, brand creation, expanding the team, keeping a consistent thesis over multiple funds?
Vlad Cazacu: What are some of the things that are your feet about right now, the beginning of fund one, to take over the next of the journey, the multigenerational journey that you were describing earlier.
Jahn Karsybaev: Man it almost feels like you somehow have, have an insider look into the, the meetings that me and my partner have on a weekly basis, because those are the questions that we ask ourselves very frequently. And, you know, we try to keep each other honest from that standpoint, because right now being, you know, fund one, yes, sometimes it feels like it's a rat race and, you know, just invest as fast as possible, as much as possible and deploy, deploy, deploy. But also at the end of the day, the credibility and the reputation of the fund in itself of a brand, it's actually probably not a good idea to call ourselves a fund, uh, instead of a company or a [00:40:00] venture capital company, venture capital firm.
Jahn Karsybaev: It's not a fund. It's not, you know, it's not temporary. It's something here to stay. And that reputation, that credibility in the founder world. It takes, you know, just like with anything else, it takes forever to build. It just takes one, you know, one, one, one mistake to, to ruin everything.
Jahn Karsybaev: And it takes a special discipline to be able to also focus on just that value add aspect of portfolio management. I know it's, it sounds as cliche as, you know, every VC does that puts it all over the website that we all value add, value add, value add. Um, We're no different from that standpoint. We will continue saying that, but also, you know, actions always speak louder than words.
Jahn Karsybaev: And I, I really intentionally allocate good deal portion of my time on focusing on what type of value I can bring on daily basis to my portfolio companies. And we spend a great deal of time strategizing around that. And [00:41:00] it's a great referral tool as well, because some great deals come to us. Because the founders talk to each other.
Jahn Karsybaev: They talk to each other all the time. And they always, you know, share the good and the bad. Because if, you know, I'm able to succeed and make one successful introduction for you, that will go a very long way. I gotta hustle for that. But at the end of the day, it's greater than any PR, any marketing, or any... Any, any other thing that we could do ourselves as a brand.
Jahn Karsybaev: So really, as kind of to answer your question in terms of where do you see this going is really focusing on that credibility. And that's kind of just the brand in itself or what Big Sky Capital is all about. That's gotta be the focus. That's gotta be the main thing because if that's in place.
Jahn Karsybaev: Great deals will come to us. I know that for a fact. And great investors are going to come to us as well. Great LPs that are in the network that know what it's all about. That reputation is going to speak for itself and it's going to make my life as a fundraiser and a capital allocator much easier.
Vlad Cazacu: [00:42:00] Great answer. And very insightful to peek inside your thinking around the generation to come around Big Sky capital and the next funds. I do have some few rapid fire questions for you that may or may not be related to your work, and we'd love to end the episode on getting a chance to know more a little bit about Jahn himself.
Vlad Cazacu: And we always start with this one particular question, which is, what do a lot of people don't know about Jahn Karsybaev that they should know
Jahn Karsybaev: about you? Oh, damn, that's a, that's a loaded question. Man, that's a tough one. Besides my background and just essentially coming from, I think the growing up in the family of coaches, my dad is a boxing coach, my mom was a gymnastics coach and growing up in that environment, it really instilled a lot of discipline in a sense, uh, just not only from perseverance standpoint, but also, um, what it takes to be a great coach and [00:43:00] what it, you know, how rewarding that is. And some of the elements of just being able to help somebody become a better person, those are some of the things that I realized only later in my life as I matured as an individual.
Jahn Karsybaev: But I didn't realize that for a very long time and I just, I, I find that very rewarding also even now, you know, spending a great deal of time coaching a lot of my own kids sports teams. So those are some of the things that I don't spend a lot of time talking about, but I think that's something that's not a very common knowledge.
Vlad Cazacu: I really appreciate you sharing that with us, and I'm curious about the answer to your next two questions, which, uh, one of them is one person that you have consistently looked up to over the course of your career,
Jahn Karsybaev: and why?
Jahn Karsybaev: Consistently looked up to? I, I would, you know, there's definitely quite a few. Mentors and great leaders that I've had throughout my journey. And also a great deal of very incompetent leaders that also I appreciated as much because they [00:44:00] actually opened up my eyes and, and taught me of some of the things that I don't want to be as a leader.
Jahn Karsybaev: So even recently I was involved with a company where, you know, just an extremely inexperienced and ineffective leader and it taught a lot me about myself of what I value and what I don't value in mentors and leaders, coaches in general.
Jahn Karsybaev: But one, definitely one individual that comes to mind, his name is Dusty Lashberg is just, uh, we haven't been in touch for quite some time now, but he really he's a person that I've met on the plane when I was leaving, you know, my undergrad studies and we were just sitting on the airplane and just struck a conversation, and just for no particular reason, he just helped me launch my career. He helped help my sister get her 1st extremely lucrative, high paying job.
Jahn Karsybaev: Individuals like that sometimes they come into your life and they just open up a completely different world to you and just being able to pay that forward. Definitely something that you'll never forget.
Vlad Cazacu: Fantastic. And last but not least, I'd like to ask you, who is [00:45:00] one person you'd like to send the thank you to and who are you grateful for, but you'll only have to pick one person, unfortunately.
Jahn Karsybaev: Although that one person that's easy because I, you know, and I should do a better job of expressing my gratitude to those, those that will really help me.
Jahn Karsybaev: But I'd highlight my older sister, because she's the one who really paved the way, just came on her own at the age of 14, 15 to us out of, you know, Soviet Union and really. Just built a very successful career, built herself as a successful individual and then helped me come to come here as well and be able to grow myself and opened up a lot of doors.
Jahn Karsybaev: So, you know, just taught me a lot about just being a very decent human being. Um, there's just something that's I think on daily basis and that it's something that I can't, uh, I can't express enough of gratitude. I
Vlad Cazacu: really appreciate you sharing that, something that resonates with me, and I think with a lot of listeners to this podcast.
Vlad Cazacu: Jahn, this has been such a pleasure having you on [00:46:00] this episode and having this conversation. Thank you so much for taking the time and I do very much hope that we're going to get the chance to do this again when Big Sky capital announces Fund Two, and we'll be able to cover all the learnings from that journey
Jahn Karsybaev: as well. Yeah, Vlad, thank you actually for all the things that you're doing with, you know, exposing that world and being able to share the stories of the lessons learned through that journey is definitely much needed.
Jahn Karsybaev: It's definitely something that's not enough of. So, uh, you know, on behalf of everyone who is about to fundraise or actually fundraising right now, you know, I thank you for that because it's definitely very, very valuable, uh, content that you put out there. I
Vlad Cazacu: appreciate that, John. Thank you so
Jahn Karsybaev: much. Thank you.
Jahn Karsybaev: Take care.
Vlad Cazacu: What a great conversation. If you enjoyed it, make sure to like and subscribe to our podcast and be on the lookout for a new episode in two weeks featuring another amazing fund manager and their story.
Vlad Cazacu: This podcast was made possible by Flowlie. If you're a fund manager, angel investor, family office, or syndicate lead [00:47:00] who receives a lot of deals or simply wants help sorting through the noise, create a free account today on Flowlie at flowlie.com, that's FLOWLIE.com, and get access to an AI assisted deal screening engine and network manager that will dramatically improve how you work.
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