In the world of venture capital, startups often compete for capital with little more than a pitch deck and projections. But what if investors could de-risk those bets by delivering something far more valuable than money—customers?
That’s exactly the model Collin Groves and his team at BDev Ventures have pioneered. Backed by software development powerhouse BairesDev, BDev Ventures operates with a single LP structure, helping founders not only access cash but also unlock real growth by bringing customers through the same outbound engine that scaled BairesDev itself.
In a recent conversation on the Ignite Podcast, Collin shared his journey from small-town Oklahoma to Georgetown MBA, through years in consulting and corporate venture capital, and into building one of the most innovative investment approaches in the Americas. Here are the key takeaways.
From Energy to Venture Capital
Collin didn’t grow up knowing what venture capital was. His early career started in energy at Phillips 66 before moving into consulting at Ernst & Young Parthenon, where he worked on $5 billion of M&A deals and digital transformations.
It was there he saw how corporations approached innovation: build, buy, or partner. But he added a fourth dimension—invest. That insight led him to co-found multiple corporate venture capital arms, helping Fortune 500 companies unlock innovation and partner with startups.
Enter BDev Ventures: Customers as Diligence
When Collin joined BairesDev three years ago, they had only made four investments. Today, BDev Ventures has invested in 60+ B2B SaaS startups across the Americas.
The secret? A 90-day pilot model. Instead of just writing checks, BDev plugs startups into its outbound lead generation platform, testing whether they can convert real customers before investing. If revenue doubles in a quarter, or conversion rates prove strong, it’s a powerful signal that the company has product-market fit.
This model not only de-risks investments but also gives founders confidence that BDev isn’t just another VC—it’s a growth partner.
A Hybrid VC Model
BDev Ventures is not a typical venture fund. It blends elements of:
Corporate VC: Strategic tools and customer introductions that drive 3–45% of portfolio revenues.
Family Office: Backed by a single LP (BairesDev founders), allowing flexibility and speed.
Traditional VC: Discipline around fund structures, terms, and performance metrics.
This unique position allows Collin’s team to move fast once they see conviction, but also to wait and prove value before committing capital.
Red Flags and Green Flags in Startups
After 50+ deals, Collin has seen patterns.
Red Flags: Founders misreporting contracted vs. actual revenue, co-founders splitting within months, or stalled revenue pipelines.
Green Flags: Teams where every hire adds true leverage—doing tasks better than the CEO, freeing them to focus on superpowers.
Trust, transparency, and resilience during the pilot process are often the deciding factors.
Latin America vs. U.S. Startups
BDev invests across the Americas, giving Collin a unique perspective. He notes that:
LatAm startups often want to expand to the U.S. too quickly. Instead, he advises them to own their market first and let U.S. customers pull them in.
Valuations differ: LatAm companies typically see a 20–40% discount versus U.S. peers, due to fewer exits above $250M.
Legal structures can be barriers: Countries like Brazil lack SAFE notes, often requiring Cayman entities to attract U.S. capital.
The Future of Venture Capital
Looking ahead, Collin predicts:
AI-native products will flood the market, but many won’t be enterprise-ready. Startups that build durable companies around AI will win.
Vertical SaaS resurgence: Instead of every company branding itself as “AI,” more founders will return to solving real, vertical-specific problems.
Unlocking untapped value: Startups like Pinata (rent reporting for credit) and Yendo (car equity lending) are examples of how overlooked assets can become massive opportunities.
Beyond Venture: Leadership and Resets
A surprising favorite book Collin recommends to founders is Phil Jackson’s “Eleven Rings.” Jackson’s individualized leadership—like giving each player a custom book—resonates with how VCs can empower founders.
And when he needs a mental reset? Collin turns to pickup basketball. Unlike venture, which takes years for feedback, a game gives clarity in minutes.
Final Thoughts
Collin Groves is reshaping what venture capital can look like: not just money, but customers, trust, and a data-driven approach to growth. For founders, that means a partner who brings traction before capital—and for the venture industry, it’s a glimpse of what the future might hold.
👂🎧 Watch, listen, and follow on your favorite platform: https://tr.ee/S2ayrbx_fL
🙏 Join the conversation on your favorite social network: https://linktr.ee/theignitepodcast
Chapters:
00:01 Collin Groves’ Oklahoma roots and early career
03:07 Breaking into venture through corporate VC at EY
06:57 What BairesDev is and how it powers BDev Ventures
08:50 Why BairesDev launched a venture arm
10:13 Blending corporate VC, family office, and traditional VC models
11:53 Evergreen fund structure and GP/LP setup
12:48 Incentives, carry, and the evolution of CVC compensation
16:27 Liquidity timing: DPI vs. TVPI in venture capital
19:19 Exiting too early vs. holding for fund-returners
21:27 Scar tissue and lessons from corporate VC
22:44 Importance of speed in diligence and value articulation
24:27 Lead investor vs. co-investor strategies
25:54 Evaluating churn, NRR, and GRR in early-stage SaaS
26:31 Four key areas of diligence: value add, market, financials, and team
28:58 The 90-day pilot model for testing startups
30:56 Metrics that signal conviction during pilots
32:56 Check sizes, co-investing approach, and capital efficiency
34:44 Red flags, trust, and founder/investor alignment
38:18 Latin America vs. US market dynamics and valuations
41:21 AI-native go-to-market tools and enterprise readiness
43:39 The limits of corporate VC-as-a-service
46:31 Counterintuitive diligence metrics: why spam rate matters
Transcript
Brian Bell (00:01:00): Hey, everyone. Welcome back to the Ignite Podcast. Today, we're delighted to have Colin Groves on the program. He traded small-town Oklahoma roots for a Georgetown MBA, launched five corporate VC arms while at Ernst & Young Parthenon, and now sears a single LP fund backed by Latin American dev giant, Steph. On his remit, wire founders both cash and customers through the same outbound engine that scaled BDev's 4,000 engineer rocket. He's led investments in 50 plus B2B SaaS deals across the Americas and loves de-risking growth with hard data. Think of him as a venture capitalist who shows up with a box of warm leads instead of swag. That's awesome. Thanks for coming on.
Collin Groves (00:01:36): It's a pleasure. Thanks for having me.
Brian Bell (00:01:38): So yeah, maybe give us your origin story. I mean, I kind of breezed through it there, but I'd love to hear like kind of the roots of Colin.
Collin Groves (00:01:44): Absolutely. So you mentioned Oklahoma and I can start there. I grew up, and this is a similar story to a lot of VCs. The more that I meet is we didn't really know what venture capital was or startups were. I grew up where... The cities ran with oil, and that was the backbone. Then it was backed by real estate booms like that. If you look up the history of Oklahoma, though, and Sam Anderson's book is fantastic about this, but Oklahoma as a state was built on the boom and bust of not just oil, but as a city. They were one of the last states, but Oklahoma, one of the first to test out what sonic booms did to the entire population. And that was just because the state needed more funding. And all of a sudden you saw a boom in the economy after that. So I grew up in a cycle where there was a lot of boom and bust, but there was no label for it in terms of early stage companies. And I kicked off my career then obviously going into energy. I was at Phillips 66 at the time. And then I went and got my MBA and then I went into consulting and consulting. I had an idea that I wanted to be in venture, but I wasn't entirely sure how to navigate that. And so I did about $5 billion of M&A work and then worked on some digital transformations and the digital transformations were very eye-opening. And we would plot these use cases on pain points across B2B, B2C or supply chains. And usually what we would do is to plot those use cases, you would find a company or partnership, a startup that could fulfill them because they can build it and adapt to the market a lot quicker than these billion dollar corporations could at the time. But there was a lot of red tape. And so what we came up with was, this framework of build by partner. And then we came up with a fourth element of that, which was invest. And so what we found is corporations do the first three really well. They're great at building. They're great at buying. They're fairly good at partnering. They don't always have a great connotation when it comes to investing. And I think when we hear CBCs, even as VCs today, it's not always the best, but there are some incredible examples out there of corporates.
Collin Groves (00:03:56): And so a partner and I were the founding members of this corporate venture capital as a service offering where we would go to corporations and help them set up their venture investing arms. Sometimes that would be traditional standalone VC funds. Sometimes that would be off the balance sheet investing. Other times that would be through a CFO's discretionary funds. But the entire premise was unlocking innovation at the corporate level, getting access to incredible talent. And oftentimes we were augmenting their entire M&A strategy. And so we would come in and we would set up these funds and help them get established and start making their investments. And that ultimately brought me into the venture landscape where I was brought over to BuyersDev and BDev Ventures now to set up and professionalize the investing. And so when I was here, I think they'd done, when I first came three years ago, we'd done maybe four investments and now we're up to 60. So we've ramped up really quickly and we're really active in the B2B SaaS market.
Brian Bell (00:04:54): I just realized I said BuyersDev the wrong way. I'm sure that happens a lot.
Collin Groves (00:04:58): It happens quite a bit. I'm sure that there are days when I pronounce it incorrectly. Yeah.
Brian Bell (00:05:01): So what is Buyer's Dev for folks that don't know?
Collin Groves (00:05:04): Yeah. Buyer's Dev is the largest bootstrapped IT offshore development company. They hire Latin American talent and then partner with US companies to develop or augment a lot of their software development. And so they've scaled to a couple hundred million in revenue each year, a fully bootstrapped company. The founders of BuyersDev are the single LP that backs BDev Ventures. And so as BDev Ventures, we leverage some of the tools that BuyersDev has helped organically create to scale up their operations. And so we've got a few tools that we test out before we invest. As a form of diligence, we consider it sort of the best in class diligence because we will bring companies leads before we invest. We want to show our value so that founders are actually fighting for us to be on the cap table instead of just competing with cash like a lot of traditional VCs do. It gives us, we think, a little bit of an edge there from a financial standpoint. If we can drive a lot of leads to the company, I can underwrite a lower beta and higher alpha on these companies and exits as well. And so that's where it really becomes attractive for us as a fund. And where we lean in is where we can add a lot of value too. We'll start to invest capital. And then over time, we invest a lot more because as we drive more value, we bring in and receive even more conviction.
Brian Bell (00:06:29): That's a really interesting model. Yeah. Bring customers, have them kick the tires, use it a little bit, give you feedback. What's in it for BuyersDev to have a venture capital arm?
Collin Groves (00:06:38): Like what was the kind of the... Well, to be honest, they work in software, startups are even growing in that space. They were starting to receive a lot of interesting companies headed their way. And the idea was, you know, we could potentially partner with them as customers or we could get equity in some of these companies and start to grow that way and diversify, but also have a greater influence over what we think are tools that work really well. And if we can help them scale, the return should be great as well.
Brian Bell (00:07:05): Yeah, it's an interesting network play here, right? And I remember when I was at Microsoft, they went through this transformation where for a while they only did balance sheet investing. They didn't really care about the strategic fit. And they're investing in all kinds of stuff like electric helicopters and stuff like that, which had no really strategic fit to Microsoft. And then they hired a new managing director. You probably know about this. And they kind of reoriented everything to, you know, what does Microsoft care about? You know, security and, you know, et cetera, et cetera. And so they kind of reoriented the venture capital arm to be more strategic. So it sounds like at BDEV, you guys are much more of the latter, much more of a, hey, how does this fit with what we do at BuyersDev? How does it help us help our companies? help our customers, help our developers, and how does this fit into the whole ecosystem of what we're trying to accomplish as a company?
Collin Groves (00:07:54): That's right. If you think about the three investing vehicles, there are corporate venture capital funds, there are family offices, and there are traditional VC funds. I like to say we sit right in the middle of them because we have elements of all three. From the corporate standpoint, we have value-add tools where we can help you scale. And we'll drive anywhere from 3% to 45% of our portfolio company's revenues. That is a lot more like a corporate venture capital fund. Family office, though, we have a single LP. At the end of the day, we report to one person who makes decisions for us and we can scale up or scale down appropriately. And then on the VC side, we hold ourselves accountable to traditional VC standard terms, methodologies, and metrics. Now, we move really quick once we have conviction, but we also want to take our time and understand that if we can be somebody on the cap table that can actually help this company grow. We're willing to wait a month or two so that we can prove that value because it also for us is giving us a lot of data and insights into the company as well. Extra touch points, which I think in today's world are sort of undervalued is we get to work with these companies hand in hand in helping them grow. We learn about the founders, our go-to-market strategy a lot deeper than most VCs do.
Brian Bell (00:09:14): That's really interesting. Let's talk about the mechanics of the fund because it's a single LP. Are you guys actually forming an LP kind of GP entity or is it just sort of like off balance sheet and there's some entity that invests?
Collin Groves (00:09:25): That's right. So we do have a traditional GP LP set up, but it's more of an evergreen fund structure, but all the same metrics that would go into a regular fund. We have two funds now that we've set up and we leverage both of those going forward.
Brian Bell (00:09:38): Why two funds?
Collin Groves (00:09:39): Our first fund was sort of more of the strategic element where if we could drive significant value, then we would invest a little bit. Now with our second fund, we'll invest more money, more capital, and we're willing to double down out of that second fund as well. So it's more of this opportunity fund that's also all of our new investments. We consider it our main fund.
Brian Bell (00:09:59): Got it. Got it. And then are you incentivized as a GP of this fund on carry? So there's actually, you have skin in the game, so to speak.
Collin Groves (00:10:08): Yes, we do.
Brian Bell (00:10:09): Interesting.
Collin Groves (00:10:10): I think that's actually a great question when you talk about the history of CVCs as well, which was a world that I came from. An allegory that has gone around. And to the validity of it, I don't know, but I can tell you it resonates. And it was at a healthcare CBC, call it 10 years ago, where one of the associates made a larger bonus than the CEO of the company did. And as you can imagine, that ruffled some feathers. And so all of a sudden, these corporate venture capital funds stopped giving out carry and they pivoted to phantom stock or phantom carry, larger bonus, second bonus pool structures, or just act like a traditional employee. Well, as with most things in our industry, they're cyclical. And all of a sudden, we're starting to see those CBC funds today operate more like VC funds and restructure themselves. Some spinning out into their own venture capital funds like Hitachi is their own two and 20 fund VC model. But we're starting to see that because the importance of talent. And talent, of course, is important with startups, but it's also important with your VCs and your investors. You want really talented investors that can do, I think now, three things in venture. The baseline is you have to be able to source great companies. The second is you have to be able to add value to those companies. And then the third is you have to optimize exits, especially in a world in which private companies are staying private longer. Those ultimately, it's making venture harder to be quite frank. And so you want to retain the talent that can do all three of those levels or operate on all three of those levels. And so you're starting to see CVCs who have bled talent at times flip to a model where they can incentivize and people to stay. And they can then incentivize and bring that down to the startups that they invest in because they can say we have people that are here for the long run that are going to help you.
Brian Bell (00:11:59): You know it's funny you mentioned timing liquidity it's something I'm struggling with right now because you know as we discussed I was just talking to this multifamily office right before we started recording it's like oh yeah great so your 2022 vintage fund one we're on fund three now and we're about to raise one four at some point not offer for securities disclaimer um so hey on your fund one do you have any dpi I'm like well no I don't but you know we have a massive amount of markups and we could generate dpi if we wanted how important is that to you and you know here is the trade-off right okay i generate some dpi like i have a 20x return so 20x return on one of my investments will probably you know return oh this is on fund two actually um this will turn 10 or 15 of the fund because we do a high volume of investments you know 100 150. so i could sell off that position or sell most of it and generate some dpi but what if that company that's worth $100 million goes to a billion or 10 billion. And I missed out, right? So I turned to 20. Yeah, I got a 20Xer, but I missed out on a 200Xer or 2,000 of multiple. That's really painful. That's actually, for me as a GP, way more painful than not being able to raise money because I don't have DPI. So I don't know how you guys think about that as a single LP. How do you time liquidity? When do you know to exit or trim positions and stuff like that?
Collin Groves (00:13:14): It's a really challenging problem, but a very interesting problem from a mathematical standpoint. And so when I kicked my career off, it was as a commodities trainer. And so we were constantly flipping in and out of positions and having to optimize on what we had and didn't have. And venture is a little bit like that as well, especially when it comes to the exits, because could you redeploy that capital if you were recycling fees, let's say, into something that could generate another 4X with that capital versus...
Brian Bell (00:13:43): I don't have recycling, so that's one thing.
Collin Groves (00:13:44): You don't have recycling, which makes that decision a little bit easier. But I think about it in the sense of when you do your model portfolio, a 20x will most likely get you between a 2 and 3x TVPI. A 40x, all of a sudden, you're in top quartile, top decile. And so to me, that ultimately becomes a lot of the decision maker, which is when you look back at this fund, what's going to help you fundraise next time? Is it that you're top 50% or that you're top 10%? And so that's from a macro scale. From a micro scale, we evaluate every investment and every follow-on as its own individual investment. I'll pull up a portfolio company today. It's Pinata, which does, it's a competitor to the built credit card, but they access the entire credit of individuals rather than just 720 credit scores or above. So the TAM is significantly larger. They have got incredible partnerships and they're doing some incredible things on the fundraising side. And so our first investment was underwriting to, they had 600,000 renters using the platform, but revenue was, I think under a million at that time. Today, they're north of 10 million in revenue. It's a completely different business. And so to reinvest, we create a brand new due diligence. We go through diligence all the same way as before. And luckily for us and partnering with incredible founders and incredible companies, we've reinvested again in Pinata and we'll probably continue to. But each time we do that, we're going to evaluate it because the cap tables change, the terms change, everything changes when you get into those later rounds. And so it's tough to say from a micro scale, hold on. But from a macro scale, it almost always seems like the right answer.
Brian Bell (00:15:28): Which is, what's the right answer?
Collin Groves (00:15:29): Hold on. Yeah. Turn the fund and get to a top test.
Brian Bell (00:15:32): Right. Yeah. Or trim when, when things get ahead of their skis, maybe trim a little bit. Oh, they just raised a 200 X Ford revenue and there's some hot AI company, you know, maybe trim.
Collin Groves (00:15:43): All of a sudden you see talent here in the public markets trading at what 200 X PE right now. And so there are ways for partners to back into saying yes. And you can justify it afterwards. It's harder to justify it in the moment.
Brian Bell (00:15:58): It's a challenge. Yeah, a little DPI would help me fundraise, but more TVPI and DPI in the long run helps me in the long run. So this is something that GPs struggle with. Problem to have. Good problem to have, right?
Collin Groves (00:16:12): And as long as there is a path to exit too, I think right now in the world of AI, what we're seeing is a lot of really interesting projects with unclear outcomes. And that ultimately becomes a challenge when we're looking at somebody and evaluating some of the newer deals that we're seeing in newer startups is, you're interesting how are you going to generate dpi because we have a fiduciary duty to our lp other investors do too angels don't have that necessarily and so they may underwrite things differently but are you able to actually create not just a product not just a business but are you able to create a company out of this that can be purchased i think what a lot of what we're seeing right now in the market especially at the earlier stage exits is you're seeing a lot of aqua hires or buying somebody's book for a discount. And so I think that there is DPI that can be created on that. And it's really easy to underwrite TVPI on that. But are you going to actually return the fund on some of those ideas? Maybe.
Brian Bell (00:17:18): And for anybody listening that doesn't know what we're talking about, TVPI is total value to paid in capital. That's kind of like all your markups versus like how much has been paid into the fund.
Collin Groves (00:17:26): I think of it as paper money versus real money.
Brian Bell (00:17:29): Yeah, and DPI is real money. Like you've actually distributed money back and it's the ratio between money paid in and money paid out. So you probably have, I mean, you spun up some corporate VC funds. What scar tissue or superpowers did that give you?
Collin Groves (00:17:42): It's a great question. Reflecting on... that there's really three things that come to mind. The first is if you're going to add value to startups, you need a tangible, repeatable path to do so. Corporates struggle with this because there's so much of the corporate that you can work with. And let's say you want to work with a healthcare company. Well, are you going to team up with the scientists? Are you going to team up with the supply chain? Are you going to team up with the product development team? Are you going to team up with the finances? So we always talk about having a liaison. There needs to be a liaison that can help startups extract value. And you'll see this at large firms like A16Z. They have 150 people on the portfolio side that are helping scale companies, but it's smaller VC funds like ours.
Brian Bell (00:18:31): They have 100 partners as well that make them on the investment team.
Collin Groves (00:18:34): That all have incredible experience.
Brian Bell (00:18:35): It's massive.
Collin Groves (00:18:36): But how do you tap into that? It's so difficult for a startup to say, we've got 50, you know, tell them we have 50 ways to add value. Well, you need to create, you need to have a position or somebody that can help them navigate that. And so the liaison role is really critical. The second thing from the corporate days we figured out was your time to diligence is critical. In the energy space, a lot of the corporates, they take a very long time to do diligence, call it 18 months on average. It opens eyes a lot of the time when I say that, but it's true.
Brian Bell (00:19:06): Sometimes I diligence for 18 minutes.
Collin Groves (00:19:08): Exactly. And so your time to diligence, you have to understand very clearly and be able to articulate it to a startup, how long you expect to do diligence. And then you have to know what the value of that diligence is for you. Don't just do diligence to do diligence. There has to be an end point.
Brian Bell (00:19:25): There has to be- This is a really important distinction for, I think, GPs, especially listening out there, if there are any actually listening to us blabber on about venture capital. You have to learn when to really dive into diligence and when you have to move really quickly that's something i've learned after doing 230 plus investments now over you know five or six years of other people's money that is because i did angel investing before that sometimes you got to move really really quickly to not lose the deal and you have to you have to kind of have a hunch for that how full is the round who's leading like how far along are you and when you're a lead versus...
Collin Groves (00:19:57): Co-investor it's two different strategies too.
Brian Bell (00:19:59): Right. Yeah, we're writing small checks later in the round. So we kind of know where we sit. Oh, yeah, I've gone first check-in with MFN all the time. Go in without MFN because I want to protect the downside.
Collin Groves (00:20:10): And that makes sense.
Brian Bell (00:20:11): It also depends on the runway and kind of why they're raising, right? You know, the best companies... they've raised 500k, we've gotten to 3 million of ARR and now they're kind of like yeah we're gonna raise to go after the market I'm like wow this is this is great you know the capital efficiency you got product market fit you're growing 30 a month you know with without burning money those are the no-brainers move quickly get the get the mfn side letter be first check in they have a business right the hard ones are like okay we burned 3 million we have 500k it's like the inverse we have 500k of revenue but we think we're there now we think we have the, you know, we're starting to see some market pull. Okay, great. Now that's, that's a slow due diligence process to me. I want to dive in a little bit more.
Collin Groves (00:20:52): When you look at startups now that are coming in and they're scaling revenue really quickly, how are you thinking about churn? Because traditional methodology would say that as you scale revenue, there could be less defensibility modes, et cetera. So you're more likely to have churn, which can quite frankly destroy a business at least.
Brian Bell (00:21:13): Yeah, leaky buckets are bad. Yeah, leaky boats are bad and leaky buckets are bad. I think you have to look at logo and revenue. For B2B software, if you're anywhere north of 90% for the year, you're in top 10% territory. And then anything over 100% net revenue retention is really great. So if you see like 130% net revenue retention, that's amazing. And anything single digit, a logo churn is amazing. I don't know. How do you guys evaluate that?
Collin Groves (00:21:41): Tough to use NRR and GRR. We like to, but it's kind of like using CAC and LTV at a really early stage. You know, at Series A, it'll influence something more. But at seed stage companies, it's difficult. I mean, what we anchor on pretty heavily are four areas. The first is, can we add value to a startup? Obviously, given our methodology and investing thesis. The second is the market. We can get a good grasp of the market, size of it, what it's growing, white space, et cetera, competition. The third are the metrics, the financial metrics of the company, which we usually look at kind of high level financials, growth rate, burn, cash on hand. We'll dig deeper into a financial model, but if a company sends me projections, it's usually getting put deeper into the Google Drive.
Brian Bell (00:22:30): I don't even look at projections.
Collin Groves (00:22:32): Yeah. And then the fourth area that we look at and we anchor on more heavily now than we used to is the team. And Ben Horowitz actually talked about this back in the day, but not just the founders, I'm talking about the team. Having a great founder that has multiple exits is fantastic and it's an easy decision. And they likely will attract a higher multiple for call it just valuation, depending on what revenue is or the business model. But we look at team. So not just that founder, but are they able to build a team that can help the founder get leverage? And by leverage, I mean, can they take out a task and do it better than the CEO can do? That way the CEO can focus on their superpowers. So if you're going to hire a CFO, you want to hire somebody that is building financial models, building out the FP&A, probably handling HR, usually handing out projections, the data room fundraising, take all of that away and do it better than the CEO could. If not, if they're not doing it as well as the CEO could, the CEO is going to look over them and they're not going to be able to leverage their time and skills. And so we look at the team. Are you bringing leverage?
Brian Bell (00:23:38): Yeah I love that speaking of that I'd like I'd love to kind of revisit the 90-day pilot thing um tell us more about that how that works and kind of what milestones you're looking for.
Collin Groves (00:23:46): Yeah so background on this is we'll source companies and you know the traditional methodologies and ways and we'll bring them in to test out one of our tools and so we let them test out our platform called WinDifferent it's a cold outbound platform and we'll let them test that out until up to 90 days or until we get a lot of either the fund around is being raised or we get early signals that we want to move quick. The reason we do this is, I mentioned this before, but we want to show that we can add value. We think of it as a great form of diligence, but we also get insights. And so we get clear indicators on what the open rate is, what the human response rate is. Are the companies able to actually sell on the leads that we send them? What's their true sales cycle? They may tell you it's 30 days, but is it much closer to 120 days? Because that also changes how we think about businesses. And then it gives us a little bit more insight into more qualitative factors as well, meaning do they know their ICP well? Not just the people, but do they know the copy and the messaging that's going to land with their customers? Are they able to build a landing page that actually gets people interested in clicking through? That isn't just driven through word of mouth, but they can build something that either is visually appealing or from the language on the page attacks a problem that a customer has. And then the last thing is we just get a lot of touch points with the team. So we learn a little bit more about them, how they work. And because Venture is a long-term partnership, some call it a marriage, it helps us understand is this a team that we want to work with for a long...
Brian Bell (00:25:23): What kind of metrics lead to like, oh yeah, we got to lean in and probably invest in this company. And what kind of metrics like that's not working? I just don't think they have product market fit.
Collin Groves (00:25:33): At a high level, you've got revenue. So if revenue is going up, doubling in those 90 days, it's a clear indicator we want to move on really quickly.
Brian Bell (00:25:41): If you're able to double revenue in a quarter, it's like, okay, yeah, let's definitely dig in here.
Collin Groves (00:25:45): And we've seen some of those happen. But they stall out afterwards. And what we can tell is they just had a massive pipeline before and that pipeline has stalled out. So revenue pipeline, because we always look at and we plug in directly into their CRM. So we send them the actual leads and get it scheduled for them. And so then we get insights a little bit more into the pipeline. So revenue pipeline. We look at a lot of the conversion rates as well. And we've grouped them into quartiles. So are you a top quartile in terms of conversion rate? And we'll also factor that out horizontally by the different industries that you're in. So within prop tech, are you more responsive than the historicals? Within manufacturing, more responsive? Or... You may get less leads comparative to your audience size, but are you closing those leads a lot more efficiently as well? There are instances where we've sent a company hundreds of leads and they've closed zero. There's instances when we've sent 30 leads and they've closed 18 of them. Just because there's a lot of metrics doesn't necessarily mean it's the best company or best decision to make. And so it also depends. Unfortunately, I wish I had a golden number. I wish there was a rule of 40 for leveraging this, but there's not. There's a lot of other factors that get built into it, which is why we still conduct diligence afterwards. But once we conduct diligence, once we run a pilot, we write a term sheet and we go pretty quickly. So our diligence afterwards could be two weeks.
Brian Bell (00:27:09): Are you guys leading rounds or what's your check size? Are you taking board seats, all that stuff?
Collin Groves (00:27:13): We're co-investors, so smaller checks like yourself. First check is anywhere between 100 and 500,000. Second check is up to 3 million. And the reason we do that is... we like to think of it as a flywheel. So we invest, we show our value at first, invest a little, ramp up our value add, because we can't give everything to pilot, right? We have to keep some stuff for the portfolio companies. And then as the company grows and scales, then we'll invest even more. Now, that doesn't mean we will just automatically put a lot of money into companies. We really do look for capitally efficient businesses. And so some of our best investments are companies where we own 10% because we've gradually invested more, but they're capital efficient, not very dilutive on the cap table. And now their revenues are north of 10 million and they've probably raised $3 million. And we're a good portion of that. So all that to say, it's important for us to just know that we can fit in really well and we know what the future of the company is. And because if a company is going to raise $25 million, they're going to need our value add. They'll hire teams and they'll outsource it and they'll outgrow us, which is also why we focus on really seed to series B with most of our investments being seed to series A. That's when there's a sweet spot of product market fit, traction. Now let's put pedal to the metal and we help drive that.
Brian Bell (00:28:37): I love that. So after 50 deals, which red flags still trigger an instant pass? And I'll take the opposite of that too. Which are some non-obvious green flags that convince you to preempt rounds?
Collin Groves (00:28:46): It's a lot of the same ones that you would initially think of, but exacerbated. So we will hear stories about founders and partners or board members where they've fallen out of luck or fallen out of favor in the three months we've worked together. It's really hard to find conviction in teams that can't even stay together for three months.
Brian Bell (00:29:05): Yeah, one of the co-founders leaves. Yeah, that's...
Collin Groves (00:29:09): We'll talk to other investors and they'll say that something happened in the last couple of months that they're not going to come back in and invest. That's a good signal for us. And with our model, what we found is a lot of our co-investors, they want to bring us more of their portfolio companies so that they can test it out, see if we can drive some leads. Because at the end of the day, if that doesn't work out, then you've at least walked away with a few leads if we don't invest. And so we meet with other VCs quite a bit and other investors and angels. But yeah, the team, how that's working out or with your other investor sets. The other thing that we will see as well is how revenue is stalled out over time because we look and talk to them for three months. We'll start to see what does revenue actually fluctuate or grow or decrease over time. The really interesting metric that we've honed in on recently is, and I think it's really important for founders to know this, what is your actual revenue versus your contracted revenue? Very often founders will report on contracted revenue. We've signed this agreement. It's great. However, it's a staged deal where eventually it'll ramp up to a million dollars in this contract, this example. However, the actual revenue is $50,000 for phase one. Those are drastically different things that we have to take into account. And so because of that, because of our system, we'll get insights and be able to double click on, okay, so you are reporting that this is doing a million. However, in your CRM, it's only listed as $50,000. Can we double click there? Give us a little bit more of an example. So that helps us bleed into the third factor here, which is trust. We're working with them for three months. We have to be able to trust that. If you can't deliver on promises in those three months, I'm not sure you're going to in the next seven years. If you can't keep up with reporting for three months, reporting and accuracy over the next seven years is going to be a challenge for you as well. I mean, you can hire for that and augment that, but there's a level of partnership that... And so we anchor on that pretty heavily as well over those pilot periods. And so we have account managers that will manage the campaigns. And I always ask them, how was it working with this team? Did you enjoy it? Do they value you? Do you value them? Are there additional insights that they brought you? Is there something that you learned from them that can make us better and vice versa?
Brian Bell (00:31:28): That's awesome. So let's talk about LATAM, US. What US market assumptions trip up Latin American founders most often and vice versa? You know, as you kind of look at the Latin American market, what kind of trips you up most often?
Collin Groves (00:31:39): Yeah, the Latin American market is really interesting right now, and it's changed a lot in the last three years. The Latin American market, if you generalize it from a software investing standpoint, it looks very similar to the U.S. market five, 10 years ago. And there are certain instances when you can just follow that trajectory. You can say that legal tech will follow the same scale. FinTech specifically will follow the same scale. Manufacturing or supply chain tech will also follow along a similar path. But there were nuances to it internally as well. And I think what we found and seen is it's very difficult for U.S. companies to enter into the Latin American market. It's also challenging for Latin American companies to enter into the U.S. market, specifically on the latter. A lot of American companies want to enter into the U.S. market as quickly as possible. It's the white whale. There are a lot of attractive things about the U.S. market and specifically the customers that we can bring. However, it's not always the best decision. And so what we'll see is go own a country, go own a vertical and a subset of countries, and then eventually let that pull you into the U.S. market. And so we've actually used this as part of our thesis. I'll use logistics as an example. We're looking at two logistics investments right now. One of them wants to move into the US immediately. The other is ramping up all of their customers in Mexico. Their first or their last two customers are actually US-based companies and they've gotten their Mexican subsidiaries. Well, it's a pretty easy decision for me at that point. Your subsidiaries are gonna bring you into the parent company versus going into the US market and having to set up everything there, make sure you're compliant in the US. Let your customers pull you in, focus own that area and then there's a really good chance that you can grow as a Latin American company into the US. And you know the last thing that I'll say about US and Latin American companies is you know we see this again for us versus Europe too but the valuation that you choose is quite significant quite different and so there's probably a 20 to 40 discount on valuation for you for Latin American companies versus US companies doing the exact same thing. There is a good reason for that, though. For Latin American companies that are going to remain in Latin America, there are significantly fewer number of exits that are north of the $250 million mark. So there's not as many fund returners. So you have to base valuation at a lower number just so you can reach the multiples that you need to be a fund returner.
Brian Bell (00:34:15): Yeah, that's really good insights. Let's talk a little bit about, just touch on AI native go-to-market. You guys seem to be doing a little bit of this. What are you guys kind of seeing in that space that you're excited about and anything keeping you awake at night in that area?
Collin Groves (00:34:30): Well, we're in the day and age where we democratize creating products. I mean, a non-technical founder can go create and spin up a tool in two days. We have non-technical individuals on our team building out our complete database for our portfolio companies that's fully automated. And that wouldn't be possible without a true software engineer. So more products with lower barriers to entry, and you're starting to see that they're going after very similar problem sets. And it's usually the horizontal problem sets like RevOps, bringing top of funnel, or how do you convert customers? There are hundreds, if not thousands of companies out there now trying to do this. The problem with a lot of those being created today is they are not built for the enterprise. That is where, and I get asked this question quite often which is well isn't AI going to disrupt your value add? To an extent sure, but a lot of the new tools are not enterprise ready and they're not going to be enterprise ready unless you can actually build a company around it. And we have at BuyersDev 100 engineers working on our tools to build them out to make them enterprise ready to make them scale. And if you're scared about AI creating new products, you should also be scared about how amazing your engineers are going to be since they're all going to be five, 10 X engineers with the AI tools on an enterprise grade software.
Brian Bell (00:35:50): Yeah. I love that. Let's talk a bit about the, you know, corporate venture capital as a service. You know, if every services behemoth clones BDev's model, what do you think happens to venture generally? Is there just more of everything done or what's the impact there?
Collin Groves (00:36:04): So it's a very interesting question. The tough part about corporate venture, which there's a pendulum when it comes to corporate venture, you're either, and you talked about it earlier, are you more financially focused or strategically focused? The corporate should be leveraging as much as they can to drive value because that strategic element should bring more financial returns in a perfect world. The challenge is not everybody wants to do it, and specifically VC funds too. It's hard. It is. It's hard to found a startup. It's hard to found a VC fund. It's hard to add value to startups because if the 80-20 rule is in play, it's really difficult to focus your time on the 20% of companies that are going to return all of your capital versus the 80% that won't.
Brian Bell (00:36:49): Well, it's actually the inverse. It's, you know, the 20% of the companies driving 80, 90% of the value don't need your help.
Collin Groves (00:36:57): Exactly.
Brian Bell (00:36:58): So that's interesting.
Collin Groves (00:36:59): So then are you adding value to the bottom half?
Brian Bell (00:37:02): Right. That's basically it. You're just blocking and tackling the zeros basically in your portfolio.
Collin Groves (00:37:07): And how are you going to allocate resources toward that? How do you underwrite the value of that next to impossible? So this is where I say that it's just really hard. I don't think a lot of people will do it. I think some will try and they'll fall out of favor because ultimately it's a lot easier to write a $10 million check and be done with it and take a board seat, say yes, say no than getting your hands dirty. And then for us, you know, we expect lead investors to do call it one of 10, 15 different things can go about this deep in each. And we go really deep in just one area, which is that go-to-market top of funnel. And so we can allocate and focus resources a little bit more. But if you're going to be a true value-add investor, it's going to be really difficult. And I think in the next phase of AI, it's going to be even more challenging because there's going to be so many options out there to choose from, to stay up to date with. And so you're going to have to allocate more to that. And if you're a traditional VC fund, 2 in 20 model, your management fees, are they going to cover that? I don't know. We'll see. I think that it's a lot easier to say, let's just try and choose better companies.
Brian Bell (00:38:15): Yeah, capital allocation is the term for that. Let's wrap up with some quickish, rapidish fire questions. We talked a little bit about this, but what's the most counterintuitive metric you're tracking during these WinDifferent pilots?
Collin Groves (00:38:27): The most counterintuitive metric, I would say, is actually spam rate. The reason is that a lot of companies in today's day and age want to be .ai.io. What those companies don't realize is Google, Microsoft, everybody are still blocking those domains. So if you want to get the highest response rate possible via .com.
Brian Bell (00:38:47): No idea. A recent portfolio company that upended your view on vertical SaaS.
Collin Groves (00:38:51): Tally legal. This is a legal tech startup out of Mexico. Lean team just signed an incredible deal with Amazon, which is going to eight to nine X their revenues. And the original thesis was that they were going to be the Zen business of Latin America. What we're finding out is that we have so many U.S. companies wanting to be in Latin America these days that they can just anchor on being the gateway for that and setting up those companies. And then you can see a lot of the network effects after we're helping them, let's say, Amazon third-party sellers. Let's find them warehouses. Let's find them logistics partners, et cetera. We had to change the thesis because I thought it was all going to be Mexican companies coming through, but it ends up being U.S. companies.
Brian Bell (00:39:32): What's a book or essay you hand founders for advice?
Collin Groves (00:39:35): Book or essay that I hand founders? Great question. It's Phil Jackson's 11 Rings. And I'm a big sports fan, but there is something to how unique Phil led the Bulls and Lakers. And we always talk about how zen Phil was, but it was how he treated his players. That is the most interesting thing. And I'll give one example, which was, you know, towards the end of the season, Phil used to hand out books to each one of his players, and it would be an individualized book. That's 15 books that he would have had to have read each year to hand out based off a player, and he'd have all of them read it. And they would, a lot of the times, resonate really well with the players and maybe open up a door or two. And it was, I would call it vocal leadership, but that soft leadership that it's hard to argue with the results Phil Jackson brought to those teams.
Brian Bell (00:40:23): Oh, that's awesome. I'm a huge basketball fan, so I'm going to go read that book.
Collin Groves (00:40:27): Shoe Dog is obviously, I think, the baseline, but 11 Rings.
Brian Bell (00:40:32): Okay, 11 Rings. Yeah, I'll check that out.
Brian Bell (00:40:34): What's a policy change either in the US or LATAM that would unlock a flood of quality startups?
Collin Groves (00:40:40): I'll talk about Latin America because there are a couple countries there that have challenging legal guidance around founding startups, leaving companies. Brazil is an example. There's no safe instrument. Not that a safe is the best instrument there is, but there is no safe instrument there. It's very challenging to make an investment because you have to set up an entity in Brazil to get it done. There's a reason not a lot of U.S. capital on the venture side and sometimes even the private equity side have gone in. And so the workaround is right now is called the Cayman sandwich where Brazilian companies will set up entities into the Cayman Islands because that structure is a lot more familiar to U.S. investors. Brazil could come a long way in terms of being more investor-friendly from the outside if they do want U.S. investors. Now, they may not want as many U.S. investors. It's a massive population. We have one investment there, EcoHealth invested alongside Thrive, and they're doing absolutely incredible, but they've already figured out the legal side, which is great, but they're one of only a handful of companies that have it.
Brian Bell (00:41:48): What's your favorite use of gen AI in prospecting you've seen so far?
Collin Groves (00:41:52): This is a fantastic question. I think the auto response that you can get in terms of quickly following up. So I'll give you an example. If we meet with a company, we now can have completely customized responses and automatically create follow ups if we haven't received a data room or anything like that. And it's not a massive leap in general intelligence, but it's how quickly it was for us to be able to build that solution. And we use WorkAuto on the backend for all of the plumbing. And now being able to automate a lot of that can just reduce the amount of hours we spend on following up or customizing a message and call that four hours a week. Well, when you multiply that over however many weeks you want to, you're talking about weeks, months of savings.
Brian Bell (00:42:34): It's WorkAuto.
Collin Groves (00:42:35): WorkAuto is just plumbing on the back end. Think of it like maker.com where you're just connecting LLMs to whatever databases or whatever tools you have on your side. It's fantastic.
Brian Bell (00:42:46): What's your bold prediction for venture capital or B2B SaaS funding in 2026?
Collin Groves (00:42:52): My bold prediction is that I actually think that AI starts to fall a little bit out of favor. Now, when I say AI, I'm not talking about the AI tech stack. MLMs and Eugentic AI is still going to drive a lot of venture capital dollars, probably north of 50% of venture capital dollars. But I think we start to see a resurgence on the vertical side. And I'm sure you've received pitch decks like this where everybody's somehow in an AI company. And instead, I think we start to build back towards, no, this is a problem in the market and we're going to solve it. There's one thesis area that I'm really leaning in on. And if any listeners have anything like this, my plug is reach out, but—
Brian Bell (00:43:34): Call for a startup.
Collin Groves (00:43:35): Yeah. Is if you are able to unlock, call it untapped resources or value, then I think that there's going to be a wave of those in the next two, three years. Here's an example, Pinata Rent, which is leveraging the rent that you're paying, which you weren't getting value for for a long time. And another one, look at Yendo, which built the HELOC for the car. So you have equity in your car. Well, there wasn't a way to access that before. There's another couple of companies out of Austin right now that are building this on the mortgage side, where if you don't want to refinance your mortgage, how do you actually access that equity without giving up that interest rate that was on your refinance, because what if it is 2.9% from the 2022 days? There are examples of companies that are leveraging your network and helping you monetize your network where you weren't able to before. There's going to be, I think, a lot of those companies solving and creating actual problems and solutions where today it's hard to figure out what that value is. I can't just come up with a solution or else I'd have a startup on the side doing it. But whenever you really double click into what is not being monetized or what is not yet being valued, that's a very interesting thesis standpoint for me.
Brian Bell (00:44:46): How do you stress test a founder and their founder market fit in the first meeting, say under 30 minutes?
Collin Groves (00:44:51): It depends if you're vertical or horizontal. So if you're vertical, then tell me the story about why, how this problem exists and exactly how you solved it or exactly how you witnessed it or experienced it. Very easy to get an answer out of them in 30 seconds. The horizontal side is a little bit more tricky, especially if you're building a DevOps tool. Most likely you're an engineer, but not always. And so for me, when I talk to them about founder market fit, the next thing that I'll ask them is who your competition is. Because I want to know that you have at least seen what other solutions are out there and you are building something that's better or different.
Brian Bell (00:45:30): So when you need a mental reset, what do you do?
Collin Groves (00:45:32): Workout in sports. So I'll go play pickup basketball for an hour or two.
Brian Bell (00:45:37): Do you guys play the lifetime there? Is there a lifetime fitness?
Collin Groves (00:45:39): Lifetime fitness. There are just open gyms as well, church leagues, all those things. I'm a part of a basketball league where we play on Wednesday nights too.
Brian Bell (00:45:48): Yeah, I played a night actually in my old man league.
Collin Groves (00:45:52): Love that.
Brian Bell (00:45:52): Yeah.
Collin Groves (00:45:54): It's great because there's no phones.
Brian Bell (00:45:56): It's where I get to reconnect with my inner child, I think, and just kind of just be in the flow of running around and passing and shooting the ball. It's amazing.
Collin Groves (00:46:05): I will say the other thing that's great is the complete inverse of venture is how quickly you get feedback. In venture, it's five years before you get feedback. You can go win a basketball game in 10 minutes, feel good about yourself.
Brian Bell (00:46:19): Yeah, yeah. It's a make or miss game for sure. Well, this has been a fun conversation. Where can folks find you online, especially startups?
Collin Groves (00:46:27): Yeah. LinkedIn is the best right now and reach out. I'm happy to connect. We've got a team of associates too that you can reach out to, but you'll find us there.
Brian Bell (00:46:37): Well, thanks so much, Colin. Really appreciate it.
Collin Groves (00:46:39): It was a pleasure, Brian. Thanks so much. Have a good day.
