0:00:00.0 Kurtis Baker: Welcome to Master Your Finances. Interested in the thought process of students finding their paths in the business world. Discover how they embarked on a journey to create their own venture capital fund. Meet Abhijay Edavalapati a senior at Bridgewater Raritan High School, who serves as a venture analyst at 1435 Capital Management, Evaluing growth stage companies and aiding seed stage startups in due diligence. Also serving as a regional vice president of Future Business Leaders of America, the largest business, career and technical student organization in the world, Abhijay is a dedicated leader shaping the future of entrepreneurship. Joining is Rithanya Senthilvel, a junior at West Windsor Plainsboro High School South, also in New Jersey. Fascinated by descriptive statistics and private equity, she serves as the president of her school’s future problem solving program, international chapter, and works as a venture analyst at 1435 capital involved in due diligence and report writing.
0:01:03.5 Kurtis Baker: Today, they will share their journey in establishing the homeroom fund, a venture capital fund co-founded with Andrew and Akash. Together, they encourage investing in today’s youth and expanding opportunities for students eager to explore their respective industries. Don’t miss this inspiring conversation where students embrace their venture capital vision, igniting hope for future business leaders. Now, you guys are just a little bit younger than the average venture capitalists, so do you wanna talk about… You’re both actually still in high school, right? So you wanna tell us like how old you… Where are you at?
0:01:37.4 Abhijay Edavalapati: Just a little bit. Well, I’m actually 17.
0:01:39.7 Kurtis Baker: Okay.
0:01:39.7 Abhijay Edavalapati: And so, I’m a senior at Bridgewater Raritan high school.
0:01:42.1 Kurtis Baker: Cool.
0:01:42.6 Abhijay Edavalapati: And I guess, we both had the amazing opportunity to be part of this internship, which actually allows high schoolers to be able to get a step foot into venture capital. And so, what that’s allowed us to do is, it’s allowed us to see different people who’ve had tons of experience and actually learn from them and really evolve and absorb their knowledge.
0:02:01.9 Rithanya Senthilvel: Yeah. I’m 16 and I go to West Windsor South and I definitely would think this is like, an opportunity, not like any other, meeting all these people with these crazy ideas and you think like, how did they come about these ideas? And like, going about the actual product and just hearing their business plan and everything, it’s like, wow! It’s truly eye-opening. And we’re super grateful to Ben for providing this opportunity for high schoolers.
0:02:27.4 Kurtis Baker: Well, that’s just awesome. So like, what made you… When did you guys first get in Venture… I mean, you guys are still in high school. Most people don’t know how to write a check in high school, frankly. [chuckle] And you guys are already kind of moving onto the high end of the investment world, which is the ventures capital world. Those are kind of the guys, the gals behind the scenes that nobody really knows about that just makes things happen, right? They supply the funding for a lot of these things that everybody’s like, “wow, they’re changing the world.” That comes from these VC companies, right? At some level. So at this age, what was your… What got you interested in this initially? Why are you here? I mean, this is fascinating.
0:03:02.1 Abhijay Edavalapati: Yeah, of course. So I can start us off. So, I think that for me, when I first saw this internship opportunity with Ben Jen, who actually leads the internship with 1435 Capital Management, I think that something that brought me together is really the mentorship that he would bring with tons of experience in both creating its own startups, as well as working in venture capital and private equity. I realized that I wanted someone that I could look up to and someone who I can absorb from their experiences in the past, so that I would be able to do the same things or maybe emulate something like that. And so, that was my main step foot in. And each day that I’m in the office or even like, writing a report, it’s just shown me more and more that I really am interested in this field and I really wanna expand my horizons, especially after college or maybe even like, next summer.
0:03:48.5 Kurtis Baker: No, that’s awesome. But I mean, how did you like think to look for a venture capital internship?
0:03:54.0 Rithanya Senthilvel: I think I kind of heard a little bit about Metro Capital through Shark Tank and…
0:03:58.1 Kurtis Baker: Oh, Shark Tank? Oh, there we go.
0:04:00.0 Rithanya Senthilvel: Yeah. And…
0:04:00.4 Kurtis Baker: Give Shark Tank credit for this one. Okay, good. Okay.
0:04:02.9 Rithanya Senthilvel: Yep. And I know my dad has always been really fascinated in finance and he’s always been the first person to show me what it’s all about and what it really means to work in private equity and venture capital, even though he doesn’t work in that himself. So…
0:04:16.9 Kurtis Baker: Okay.
0:04:16.9 Rithanya Senthilvel: When I saw this opportunity, I was like, “wait, this is like, not something I’ve ever seen before, you know, especially for high schoolers.” And I think it all really came back to my dad and like, he’s the one who got me [0:04:26.5] ____.
0:04:26.6 Kurtis Baker: Oh, that’s awesome. So your father exposed you to this initially, right?
0:04:29.6 Rithanya Senthilvel: Yeah.
0:04:29.8 Abhijay Edavalapati: Yes. So my step foot in was actually pretty interesting. We mentioned in the beginning that I’m part of Future Business Leaders of America.
0:04:36.5 Kurtis Baker: Right.
0:04:37.2 Abhijay Edavalapati: And so, actually when we were initially marketing… Like, when they were initially marketing the internship, my FBLA advisor or Future Business Leaders of America. Got a flyer with the actual opportunity and he showed it to everyone. ‘Cause we’re all immersed in business. And really it was future business leaders of America, the club that allowed me to really explore this field of business. And so, with that flyer, I was able to get more and more knowledge about venture capital and that’s really what struck my interest and made me come here.
0:05:02.9 Kurtis Baker: So you guys… Well, you’re definitely interested in business, ’cause you belong to the venture… And so, you’re more interested from the business perspective and how it gets funded or are you’re more interested from the funding aspect and as an investor, right? So which… Or both, I mean, tell me like, what you’re… What really gets you excited about getting up and… ‘Cause there’s a lot happening here.
0:05:18.9 Abhijay Edavalapati: Yeah, of course.
0:05:19.5 Kurtis Baker: What kinda gets you excited about coming in?
0:05:21.1 Abhijay Edavalapati: Yeah, I think it’s a mix of both. First on the one side, the fact that you can see these great people with all… Like, different innovations that you would never even think of in your wildest mind, but it’s also, you get to see investors and their perspective. Like, how do they go about in investing in a fund or an investing in a product? What are the ideas or the due diligence process that comes with that? And it’s just, when you see things like, or at shows like Shark Tank, you only see like the outside perspective, but it really jumps you in into like, what is the thought process? What is each and every individual thing that’s going on in their mind to be able to make a deal.
0:05:54.3 Kurtis Baker: Cool.
0:05:54.7 Rithanya Senthilvel: Beyond these companies… These are like the Apple and the big tech of tomorrow. And seeing that we can be a part of the process to aid these companies to expanding, growing further and even assisting them in their day-to-day things and just, they want some feedback on their product and that due diligence aspect we get to be a part of helping create the companies of tomorrow. So that’s just like a super… Once again, I think I’ve said this a couple times, it’s an eye-opening experience, especially at our age to get that type of opportunity and see like, what goes into making a product, pitching it, getting people behind your team, you know?
0:06:29.0 Kurtis Baker: No, it’s awesome. I mean, that’s one of the things that differentiates, I think the United States. I mean, we’re big on startups and really maximizing and causing impact, right? So this is what you’re talking about is, how do these creative people, inventors and things like that, how do you get them from that like, great idea, all the way to the point where it’s actually out in the public domain and it is a usable product and everybody’s actually benefiting from, like you mentioned, I mean, iPhones, I mean, whatever, 10, 15 years ago, nobody knew what the darn thing was. Right? Who wants to put a brick in their pocket and talk on it, right? [laughter] Well, now we’re like, oh, we can’t… Nobody can get rid of it. We rely on it every single day. So now that… So once you got the news that you’re gonna be there, I assume you were a little excited, right?
0:07:08.1 Abhijay Edavalapati: Of course I was. Yeah.
0:07:10.6 Rithanya Senthilvel: I actually…
0:07:10.7 Kurtis Baker: So then… Go ahead.
0:07:11.6 Rithanya Senthilvel: I actually got the offer on my birthday, so.
0:07:13.4 Kurtis Baker: Oh, that’s awesome. Happy birthday, right? So once you got the offer, so what kind of happened next? And what was your experience at that point?
0:07:20.5 Abhijay Edavalapati: Yeah. So immediately after what happened is that we started with an initial demo. So, this is more of like a summer internship. So when the school ended, we really got an informational session on first how to write reports and then an introductory lesson into the idea of venture capital as a whole. ‘Cause the nice thing about this internship is it allowed us to go from like, I guess, someone who isn’t that experienced in the actual industry to someone who has the nitty gritty details. So, we went through information lessons, learning about things like the J-curve, which allowed us to understand what goes on so that in the future, like right now when we’re starting our own fund, we know what needs to happen in order to invest in a company.
0:08:00.8 Kurtis Baker: Okay. So tell us what the J-curve is.
0:08:02.5 Abhijay Edavalapati: Yeah, so the J-curve is actually something that is in venture capital. And it’s essentially what that means is that in the initial years when you’re actually focusing on investing in a company, you’re gonna see some downturn or some… Like, I guess, returns aren’t gonna be as ideal, but as time goes on, it maximizes over time. So you could think of it like as a nice J, ’cause it goes down at first, but then it rises up exponentially near the end.
0:08:26.2 Kurtis Baker: Okay. As opposed to a U, which you’re not gonna make any money.
0:08:29.2 Abhijay Edavalapati: Yeah, exactly.
0:08:29.9 Rithanya Senthilvel: Especially with early stage since, 1435 focuses on like a seed in like, early stage companies. You see most of the revenue and even the profits are going into investing back into the company and how can we grow this further so that, client acquisition, you see that that’s where the money’s going towards. But once they become profitable in like the later years, you see like higher returns and always high risk, high rewards. So with the earlier stage companies, you can definitely see bigger X returns as opposed to investing in growth stage, which is also what our fund specializes in.
0:09:02.6 Kurtis Baker: Right. So you guys have the earlier stage ones, right? And then you have the growth stage ones, right? So you split between the both of them. So yeah, so you guys were definitely… So when you get involved in the investing, so you talked a little bit about how you do the analysis. So when they first came in, they took you through kind of a demo you said, and then…
0:09:20.4 Abhijay Edavalapati: Right.
0:09:21.3 Kurtis Baker: So talk to a little bit about what they taught you during the demo and what you learned in that, during that process, as far as what you’re looking at and what you’re gonna do next?
0:09:29.1 Abhijay Edavalapati: Yeah, of course. So I think that’s something that we first realized is like, one of the initial lessons is that it’s kind of like a game of ones and zeros, right? You need to think of an entire company as just ones and zeros rather than thinking about the money that goes into it. Really focusing on what the company has to offer and to make sure that each company, first, they have a viable product, something that makes them unique in terms of differentiates them from their competition. And third, a really big emphasis on team as a whole. ‘Cause those three things, those like, three pillars come together to create a good company that is gonna go through the J-curve and make high returns. And so, when you think about investing money, I think the important thing is to not really think of it as money, but to understand is this something that can actually have high reward or high risk? And then go into that with that sense of mind before going into like, a money-oriented mindset.
0:10:17.7 Kurtis Baker: Okay.
0:10:17.7 Rithanya Senthilvel: Yeah. And adding onto that, when you’re investing in a company, you’re investing in the people behind it. You’re investing in their ability to… Especially like, open-mindedness. I think that’s the biggest thing that we’re looking for when we get on those founder calls. And also, looking at the company beyond its quantitative aspects. Like, do they have… Is there a market for this? ‘Cause a lot of people have these great ideas, and even if it’s like, “oh, there might be a niche market and they might be interested in getting acquired,” looking at them as a whole and as opposed to just like, how much revenue are they making? How profitable are they looking at product and revenue streams, like, how they’re getting their money? The technology behind it? Where their competition is? Even like, where they’re located out of? Who their niche market is? So looking at them as a whole is, I feel like the key part of analyzing a company.
0:11:01.3 Kurtis Baker: Yeah. So you have a lot going on here. So, we’re definitely gonna get more into this. We’re gonna take a quick break. You’re listening to Master Your Finances, we’ll be right back. Welcome back, you’re listening to Master Your Finances. I’m here with Abhijay and Rithanya and we’re talking venture capital and we’re talking ones and zeros, which is interesting to me. So, I guess, one, you wanna explain a little bit about what the ones and zeros… I mean, I know what a computer is and… But you kind of… How did you mean that? Do you wanna extrapolate on that a little bit?
0:11:28.6 Abhijay Edavalapati: Yeah, of course. So I guess the idea between this ones and zeros is, it’s kind of like you can take it back to like, gambling. In a way that when you gamble, you don’t think about the actual… Like the money that goes behind it, but rather the technique and the strategy that goes in front of it. So if you really think of like, whenever you’re investing into a company as ones and zeros, first of all, you take out the… Like, the whole emotional part of it out of it. And that’s so important when you’re investing in a company. ‘Cause as Rithanya mentioned, you really wanna look at the overall company as a whole rather than bringing your emotions in. And especially, we talked about the J-curve, right? You’re gonna lose money in the beginning. You don’t want that to really cause you to leave the actual company before it gets massive returns.
0:12:09.7 Kurtis Baker: Understood. And then you mentioned after that, the three different areas that you look at, right? Is it viable, right? Correct me if I’m wrong here. Viable, unique and looking at the team as a whole. So, let’s talk about each one of those a little bit. So how do you guys go in and determine whether or not this particular company happens to be viable?
0:12:30.1 Rithanya Senthilvel: So kind of getting… Like, seeing once again, what’s the market that they’re targeting and is there really a need for this? The big thing that a lot of companies are doing, is market research seeing, “hey, what is like a need that is currently in the market? How can I address the need?” So sometimes creating a product without a certain need in mind, or without targeting a specific need, that kind of… It’s just like an excess product. There’s not a lot of people that’d be willing to buy into it. And the biggest thing is like, are they scalable? Are we able to make it bigger, attract other audiences and then grow out from there. And if we don’t really see that potential, that’s either something that we wanna like, talk to them about and see like, where their thinking comes behind it. Because of course, we might not… We’re not inside their brains. Are they effectively also able to communicate to us why would we need this product? Or why would their target market need this product?
0:13:18.4 Abhijay Edavalapati: Yeah. And so, I guess going more onto that, it’s also thinking about whenever you’re starting a company, you really wanna do as much feedback and research as early on as possible. Especially, because you really don’t wanna get to a stage where you’re pouring money into a company that’s basically useless. And so, what that means is, by doing all of that viability test early, you’re essentially… If you’re an entrepreneur or starting something new, you can ensure that you’re thinking of making a change early on, so that in the end of the day you see rapid prosperity and rapid success in your company.
0:13:50.5 Rithanya Senthilvel: And the due diligence process is more not just for the investor, but also for the team behind it, you know? How are other people… Sorry. How are other people able to use the product? Is there technical issues on there? And we can provide feedback in that way too. We’re more than just people that are like, give you money. We can also be part of the process of creating the product.
0:14:11.0 Kurtis Baker: Well, that’s an important thing, that venture capitalists tend to bring expertise…
0:14:14.7 Abhijay Edavalapati: Exactly.
0:14:15.2 Kurtis Baker: Because they tend to be investing in entities that they’re very familiar with, right? And which is very helpful, right?
0:14:21.2 Rithanya Senthilvel: Yeah.
0:14:22.0 Kurtis Baker: So, once you determine it’s viable… So you’re talking about the actual product and the research. So obviously, you’re running some numbers. You both had statistics in there somewhere, right?
0:14:31.2 Abhijay Edavalapati: Yeah. Yeah.
0:14:31.4 Rithanya Senthilvel: Yeah.
0:14:31.7 Kurtis Baker: So tell us a little bit about the numbers that you’re running to make sure that it’s viable. What are you looking for as far as the numbers go when you start seeing… ‘Cause you mentioned the J-curve. So when they’re coming to you, what do you look… What are some good and bad things you might see in the numbers that maybe concern you or things that make you feel a little better?
0:14:46.4 Abhijay Edavalapati: Yeah, so usually for context, so what happens is when a company invest… Or like a company’s pitching, they usually bring on a slide deck or a deck with all of the information of the company. So within that slide deck is something called financials. And the main things that we like to see, or we think is the emphasis is first like, revenue, right? Do they have a unique proposition that’s making them, allowing them to beat their competitors and making money, but also, how much money have they already poured into the company? ‘Cause look, if they’re putting like a lot of money into a company and not seeing proper returns, that’s an immediate red flag from an investor’s point of view. And third, also thinking about where is that money going to and which channels it’s going to to see that, is the CEO doing something right? ‘Cause we already mentioned like, how important the team is and if the team is doing something that’s, I guess, putting them or are they willing to learn from their mistakes and how they’ve made a change accordingly.
0:15:37.4 Rithanya Senthilvel: Yeah. We also look at like, previous funding rounds and once again, like as Abhijay mentioned, what channels are they investing their money into? Are there ways that they can cut back expenses? And how long have they been in business? For an earlier company and like, seeing how much experience they have, are they willing to learn and like, take feedback on like, “hey, maybe we’re putting a lot of money in here that we don’t need to, maybe we don’t need to hire this extensive of a team this early on.” And seeing where that capital’s being allocated, because essentially in the end, it’ll be… Our capital will be allocated. We wanna make sure it’s going to the right places with the right people.
0:16:10.5 Kurtis Baker: Okay. So it’s important to run the numbers and make sure they’re like, being good fiduciaries on what’s going on so far, and actually analyzing it well. No, it’s all very important. Yeah. People underestimate the value of the financial side.
0:16:21.3 Abhijay Edavalapati: Exactly.
0:16:21.4 Kurtis Baker: ‘Cause it does make a huge difference long term. So we get into the financial, so okay, let’s assume I’m a company that looks like I’m doing all right. So far I’ve been investing okay. And you’re getting the expected returns or maybe the expected losses. ‘Cause as you mentioned, there might be some losses, because you have invest in the sides going in and you’re still developing and things like that. So what about the unique side? So how do you determine whether or not it’s unique enough? ‘Cause every… I mean, I can come to you and say, “well, this is unique. I painted it purple,” [chuckle] Right? I mean, then you go, “it looks the same thing. It’s just purple.” [laughter] So what do you do to kind of figure out whether you think it’s unique enough to make sense?
0:16:56.6 Rithanya Senthilvel: We also try to look at like how many goods have already been sold, which channels they’re selling it through. And…
0:17:06.5 Abhijay Edavalapati: Yeah, I think that the number one thing when you think about uniqueness is like, sales, sales, sales, right?
0:17:11.3 Kurtis Baker: Okay.
0:17:12.0 Abhijay Edavalapati: Because when it comes to sales, you have to realize that the only way, as you said, you can see if something’s unique, is really, if it’s been tested in the market and if the people want it. ‘Cause if you’re giving something that the people don’t want, then there’s, I guess, no point of the company as a whole. And so, another thing along with sales that we look at is technology. Do they have a unique sort of technology like a battery or something like that, that makes them different from every other competitor? And also, when you think about the technology, you really want to think about efficiency. We’re in a rapidly growing like, innovation market right now. And so, you’re gonna see multiple innovations, but the ones that really set the others apart or the ones that really shine a bright light are the ones that are efficient in their own way. And that can make a change to a problem that’s already in the market.
0:17:55.9 Rithanya Senthilvel: And a big buzzword right now is AI, right? But we wanna see how are you leveraging AI? What are you doing with artificial intelligence that’s different than other companies? And maybe it’s not that you’re so unique, but it’s maybe how are you doing… Like, how are you providing your product or service better than your competition? Is there something that your competition isn’t addressing that you want to address through your product or service? So yeah, once again, it’s either unique or how better… How efficiently are you addressing the need in the market?
0:18:21.4 Kurtis Baker: And that has to be challenging. You just mentioned two things that are really, to me, hard to research in a timely manner. ‘Cause when you’re dealing with uniqueness, I mean, you have to research the market, which is constantly changing. So how do you make sure you’re getting the most current information on the “competitor,” right? ‘Cause everybody’s trying to innovate at the same time, right? We’re all out there trying to do stuff. So you might say, well, we’ve researched these 10 companies, and then all of a sudden, maybe missed one, and maybe they’re doing something similar. So how do you kinda make sure you’re capturing their market? And so, where do you go to find these sources to see where their competitors might be based on what they currently do?
0:18:54.1 Abhijay Edavalapati: Yeah, so one of our responsibilities as an intern is actually writing due diligence reports. And so, in those reports, we go from everything from market overview to financials. So we look at a variety of websites and sources as a group and as a team with all the interns together. And so what that allows for is that when we provide different sources like CrunchBase, it make sure that we’re having a diversity of sources, which allows for credibility. And as you mentioned, if we forget something, one of those sources is gonna bring it up so that we can make sure that we get a comprehensive overview over the market or the product as a whole.
0:19:26.4 Rithanya Senthilvel: And usually in a good company, they’ll also address like, oh, these are our competitors, but this is how we’re doing better than them, you know? And if they’re able to address that, we already know that they’re not scared like, oh, we shouldn’t put this in or we’ll put the idea in their mind. We know that they’re aware of their market and they’re aware of the market they’re entering into, which is like a huge green flag for us when we’re looking.
0:19:45.6 Kurtis Baker: Right. So obviously you hope that the company’s already done some of this, but you all, you wanna check their work, so to speak, right?
0:19:49.9 Rithanya Senthilvel: Yeah.
0:19:50.1 Kurtis Baker: Is what you’re kind of doing.
0:19:51.2 Rithanya Senthilvel: And since we stay in the spaces that we’re really familiar with, we also hear these names and a lot of our portfolio companies, they stay within specific sectors. That’s why investors try to stay in markets that they’re familiar with.
0:20:04.1 Abhijay Edavalapati: And also, part of it comes down to experience. ‘Cause as we’ve been venture capital interns, I know from the beginning of the summer to now I can have a much more understanding of the actual company in the first 20 or 30 seconds by looking at what is the problem, what is their solution to it?
0:20:21.5 Kurtis Baker: Right.
0:20:21.6 Abhijay Edavalapati: And I think that’s the nice thing with this internship, right? Is we’re getting as much exposure as possible, so that we’re able to make those decisions in a timely and quick fashion, which would really help us with our own venture capital fund, Homeroom Fund.
0:20:34.4 Kurtis Baker: Yeah, that sounds great. So you got a couple things going on here. So the analysis… So what do you think you’ve learned that helped you to really figure that out quickly, basically experience on seeing many, many different scenarios and you start to amass that knowledge? So of all these you’re looking at, I assume you have quite a few companies you looked at so far, how many of those kind of filter through, you say, yeah, this is something we’re interested in? And can you describe that process a little bit, like, when you see these different companies?
0:21:03.4 Rithanya Senthilvel: So usually we have a funnel that we go through. So of course as interns, we’re also attending all these pitch events, right?
0:21:09.1 Kurtis Baker: Okay.
0:21:09.3 Rithanya Senthilvel: And after seeing hundreds of people pitch all the time, we kind of have a good indicator of like, oh, this is someone we’re interested in. This is someone that we may be, but we may have to schedule another call and follow up.
0:21:20.8 Kurtis Baker: Right.
0:21:20.8 Rithanya Senthilvel: So first, we view them at these pitch channels, right?
0:21:23.3 Kurtis Baker: Right.
0:21:23.9 Rithanya Senthilvel: And then after that, we might reach out and be like, Hey, we’d love to have a further call just to learn a little bit more, if you could provide us any sample financials. Okay. And also with that one-on-one call, you get to hear a lot about the team and the character of the team. Are they open-minded? How has their history been with? Their financials and the money, the capital that they’ve raised? And that’s also really big indicator. Once again, those founder calls are more than just looking at your pitch deck, we’re looking at you as a team.
0:21:49.3 Kurtis Baker: Right.
0:21:49.7 Abhijay Edavalapati: And yeah. And so to go back to answering your question as well, I think that most of the companies that we actually look at are gonna get shifted out in the first stages when we actually look at the pitch events. And so, what we do is after all of these pitch events, we all come together as a team and we talk about the companies that we thought were interesting or that had something unique, fill those first two boxes. And based on those two, the companies that we see, which are a very few amount actually, we are able to go onto one-on-one calls with their founders and really ask them questions and really nail it down to see, are there any problems with the thing or are there any competitors that might be doing the exact same thing?
0:22:26.7 Kurtis Baker: That’s just awesome. We’re gonna take a quick break. You’re listening to Master Your Finances, we’ll be right back. Welcome back. You’re listening to Master Your Finances. I’m here with Abhijay and Rithanya, and we’re talking about the different areas that they look at, the three areas, whether the company is viable, when you’re analyzing a company for venture capital investing, whether it’s unique, which we talked a little bit about, and how you research, they’ll provide you some of their competitors and how they think they’re gonna address things that maybe the competitors aren’t addressing, how it’s gonna be better and things like that. And then, the last part we talked about was the team. And I kept hearing that come up even when we were talking about the other two aspects, so I’m gonna take a leap of faith here and say the team is huge, right?
0:23:09.5 Abhijay Edavalapati: You hit it right on the dot. Yeah.
0:23:10.8 Rithanya Senthilvel: Yeah.
0:23:10.8 Kurtis Baker: That’s been my personal experience too.
0:23:12.2 Abhijay Edavalapati: Yeah.
0:23:12.4 Kurtis Baker: It’s the people, right?
0:23:13.6 Abhijay Edavalapati: The people, it all comes down to the people.
0:23:15.5 Kurtis Baker: Yeah.
0:23:16.1 Abhijay Edavalapati: And I think that in terms of the team, when you’re talking about the team, we all make mistakes, right? The whole part of entrepreneurship and making a startup as a whole is realizing that, okay, there’s gonna be problems to make mistake. But I think the number one thing that we look for in a team is, are you willing to learn? Because at the end of the day, again, we all make mistakes, but it’s those people who are ready to take the changes and they’re ready to adapt from their company, even if it might be a complete shift, are the ones who are gonna be the most profitable. Because as you mentioned before, these… All these people who are investors have years of experience and they’ve seen what’s worked and what’s not worked. And so, if a someone in a startup is just not willing to learn or not willing to take that information, that’s an indicator that it’s not gonna grow, and it’s not someone who you really wanna work with and who someone… Who would really, I guess, get the most out of the experience.
0:24:06.2 Kurtis Baker: Right.
0:24:06.3 Rithanya Senthilvel: Yeah. We’ve met teams with like decades of experience, but they’re really set on their ways and they aren’t willing to hear other perspectives. And especially, the economy’s been crazy last couple of years and not being able to adapt to that or understand that, oh, well now we’re in a different time, so now we need to adapt to what’s coming towards us. And if we’re not ready for that, then your business is gonna take a hit. So that’s another thing.
0:24:30.0 Kurtis Baker: Right. You better adapt or you’re not gonna survive.
0:24:32.0 Rithanya Senthilvel: Exactly. Survival of the fittest.
0:24:34.9 Kurtis Baker: Companies like Sears and… Sears versus Amazon, right? Sears should have never let Amazon take over.
0:24:40.3 Rithanya Senthilvel: Exactly.
0:24:40.8 Kurtis Baker: And they own the segment, right? So what do you… Yeah, so you mentioned another thing which came… The AI is to me is very interesting with a couple perspectives because one, it’s a technical thing, but it’s also something that’s changing extremely quickly. So how do you… ‘Cause there’s like, almost no lag time happening here. It’s like, it’s kind of crazy how quick this is happening. And I know this is an area you guys, you’re tech, so what do you guys look in… ‘Cause everybody now, everything’s AI now. Right?
0:25:08.2 Abhijay Edavalapati: Right.
0:25:08.8 Kurtis Baker: No matter whether it is or it isn’t. Right? You buy an ice cream cone, you got AI in ice cream cone. [laughter] You’ve just seen how we made this thing, so.
0:25:16.8 Rithanya Senthilvel: Yeah.
0:25:16.9 Abhijay Edavalapati: Yeah.
0:25:16.6 Kurtis Baker: Right. So what are your thoughts about how that’s headed, since you’re gonna… You guys are gonna be living this, you’re young, so you’re gonna see this whole thing play out.
0:25:24.2 Rithanya Senthilvel: Yeah.
0:25:24.3 Abhijay Edavalapati: Right.
0:25:23.4 Kurtis Baker: So what are your thoughts about it now and how do people invest in it now?
0:25:26.7 Abhijay Edavalapati: I think that the important thing to understand first with AI is that AI is really being thrown out there, like space in the past, how it was big on all space, but now it’s AI. So something important to understand is that not everything that is AI is actually AI. And just like, they just throw the buzzword, as you mentioned, just to do it. But I think that, again, going into the ones that are actually AI, I think that’s really important to understand with the technology, because when you invest in a company, you really wanna make sure that you understand the company as a whole. And even if you don’t understand something as small as the technology behind it, that can be really detrimental in the future. And I think that once we find a company that has a unique thing with AI and is something to learn, I think that would be a great investment opportunity for us, as well as the entire world ’cause of how automatable it is and how it’s able to be expanded to different horizons and different, I guess, fields so that it can provide relevant like changes.
0:26:22.3 Rithanya Senthilvel: It’s definitely been integrated in like many sectors, but I know another concern a lot of people have is like the privacy that comes with it. So does this company just by saying, “Hey, we’re leveraging AI,” are you able to address like the privacy concerns that might come with this? Especially in technology. Are you like, “Where’s this data going?” ‘Cause that’s a lot of the things that customers are wondering. And while AI is a big thing right now, in the industry overall, there are people that do have those concerns. So how are you addressing those concerns also and what really… Is your AI really a competitive advantage? Is it really setting you apart or are we just using it as a buzzword? That’s also a big thing that we see.
0:26:57.5 Kurtis Baker: Right. I mean, that has to be pretty challenging to analyze. I mean, just from my perspective. And it sounds like it’s very challenging, because they’re gonna… People talk in technobabble all the time and it’s kind of like, oh yeah, it does this, it does that, it does that. But how do you really know? I mean, would they demo it or they show you like how it’s actually working and what it’s doing? I’ve been on ChatGPT and all that stuff. [laughter] It’s an interesting place to go. But when these other companies say, well here’s the things that we’re developing. It’s gonna have such a quick runway, right? I mean some of this stuff.
0:27:27.2 Rithanya Senthilvel: Yeah. Especially… Yeah, sometimes we do product testing, so just trying out the platform, and then once again, since we are based in tech, we are not based, but it’s one of our main primary sectors, we have seen other companies use AI. So then we’ll see like, how we compare companies? While it may not be apples to apples, we have a relative metric to compare them against. And also… Yeah.
0:27:52.8 Abhijay Edavalapati: So, in summary, experience is the name of the game. When thinking about things like AI or technology-based, you really need expertise in the field. And that expertise comes from A, not only like an education in the field, but also B, having past opportunities or experiences looking at what an AI company has done and how, if they’re following the same framework as a past successful one, ’cause if there hasn’t been a success in the past, then that shows it’s not efficient in the current realm or just it’s not applicable to this current field.
0:28:21.7 Rithanya Senthilvel: By overwhelming your investors with technical jargon, that’s not really going to come off as impressive. So understanding your investor’s background and seeing how much do they know and trying to get on that level and explain to them, because if they’re overwhelmed with information, they’re not likely to invest in you, ’cause they don’t know what they’re investing in.
0:28:40.9 Kurtis Baker: Right. Yeah, don’t confuse. A confused mind says no.
0:28:42.4 Abhijay Edavalapati: Yeah.
0:28:42.7 Rithanya Senthilvel: Yeah.
0:28:44.3 Kurtis Baker: Right? So you don’t wanna confuse somebody. So yeah, so once you go through this whole process, so what are some of the interesting dynamics you’ve seen with like, some of these different investors that you are… The companies you’ve been talking to?
0:28:55.4 Abhijay Edavalapati: I think the funny thing is that we see like, everything from one spectrum to the other. We’ve seen people who have had great products, but just have had a team that’s not willing to learn and not willing to be able to take our expertise or knowledge in the field. But we’ve also had seen great founders who definitely have a passion and who have a passion in the field, but their product isn’t just up to standard. And so, the thing about this is that that’s kind of like you want to meet that perfect medium or like equilibrium, when actually investing in a company. ‘Cause it’s the companies that are having a great team, as well as a great product and not a great product as like, I think this is the best product in the world, but something that again is unique and also it’s relevant to the market as a whole.
0:29:39.4 Rithanya Senthilvel: Especially with early stage companies, they tend… Well, not they tend to, but sometimes they don’t have as much experience. So do they want our help in that like, kind of consulting aspect? Do they want to hear a little bit more about how do you expand their product, scalability, client act… Like, do they want to hear that input from us or are they just looking for capital?
0:29:57.5 Kurtis Baker: So how does that part of it work? You’re talking about how the… Because we talked about VC people tend to have experience, they bring the experience, not just the cash, right?
0:30:05.1 Abhijay Edavalapati: Right.
0:30:05.1 Kurtis Baker: So, you wanna talk a little bit about how that interaction goes with the founders and things like that?
0:30:10.1 Abhijay Edavalapati: Yeah, so usually I guess it would be more relevant to talk about it on one-on-one call with an investor. And so, what happens is that they usually provide a brief overview, again, just like, summarizing what they were talking about in their pitch. But then we really go into the details. Like, if for example, Rithanya was talking about AI and the safety concerns. So we would ask questions like those to spark a discussion with hopes of like, seeing what problems we can find with the company. ‘Cause again, our hope is that there’s no problems. So we really need to immerse ourselves into the product as a whole to get a proper understanding, is this viable or not? Or does this have problems or not?
0:30:44.7 Kurtis Baker: Okay.
0:30:45.6 Rithanya Senthilvel: It’s also a big part of risk analysis.
0:30:46.9 Kurtis Baker: Sure.
0:30:48.3 Rithanya Senthilvel: That’s definitely something we need to… While it might not be a problem, we need to see are we willing to hedge that much risk? Is there any way we can mitigate the risk a little bit and help them in that way? So, yeah.
0:31:00.2 Abhijay Edavalapati: And that’s something we’re especially noticing, ’cause we’re starting our own fund now, which is essentially high schoolers being able to get into venture capital and we’re trying to bridge that gap. And so, one thing that we have is, look, we have experience but we really need to see without someone I guess, overseeing every single aspect of it, how are we approaching the nitty-gritty details and looking at each company and how they’re like, interacting with a high schooler rather than a regular venture capital investor.
0:31:26.7 Kurtis Baker: Right. So let’s talk about that for a minute. So how is it to have these co-founders and then they call you up and they go, well, yeah, I’m a sophomore in high school, and I’m gonna tell you how to run your business. So, how does that conversation go?
0:31:37.1 Abhijay Edavalapati: Yeah, It’s definitely like, hard in the beginning, ’cause you don’t have that credibility. But the nice thing that we think that we provide new to the entire venture capital space as a whole is first we provide the high school aspect with experienced oversight. So that means high schoolers are more willing to take risks, they’re more willing to take changes. So if you see that next Apple or the next future company, a high schooler is more willing to take that risk rather than I would say an experienced investor. But at the same time, we have someone like Ben Jen who is our managing partner, looking over every deal that we make so that we… If we are planning on making a deal and it might not be as applicable with his experience, he can stop that from happening. And so that we get that perfect balance between both.
0:32:20.1 Rithanya Senthilvel: Yeah. Ben has also assisted us a lot in the legal process, so we know all the agreements that need to be made and there’s always like… There’s kind of like a spectrum, people that are definitely… Like, the nice middlest people that are definitely willing to pitch to us and take us seriously. But there’s always people that are like, “Oh, what do high schoolers know, they probably don’t have too much experience.” And then there’s another end of the spectrum that’s like, “Oh, they’re high schoolers. They’ll probably give money to… “
0:32:44.7 Kurtis Baker: Anybody.
0:32:45.0 Rithanya Senthilvel: “Anyone that pitches.” Exactly. [laughter] So trying to be like, well that’s not actually true. We have like a due diligence checklist. We have a process that we go through before deploying our capital, ’cause essentially all these investors, they’re counting on us and our management team to create returns and so, we can’t just give our money to anyone that pitches.
0:33:02.4 Kurtis Baker: Right. That’s awesome. So…
0:33:04.0 Abhijay Edavalapati: Yeah, and I think part of it is that some people find it crazy that high schoolers are in the industry as a whole. So it’s just like, they haven’t even wrapped their mind around it, which has caused them to, I guess, take away from what we’re actually doing.
0:33:16.2 Kurtis Baker: No, that’s fantastic. I think what you guys are doing great. We’re gonna take another quick break. You’re listening to Master Your Finances. Welcome back. You’re listening to Master Your Finance. I’m with Abhijay and Rithanya and we’re talking about venture capital and the fact that now high schoolers have their own fund, which I think is awesome. Obviously, there’s some oversight there with Ben Jen of 1435 Capital. So, you guys are really being trained on how to do a lot of the preliminary due diligence and do a lot of the screening. And in some ways I think it’s interesting, because your age segment is actually has some advantages, right? And people may think, go right to the disadvantage. You wanna talk about maybe what you’re hearing as far as I know… Tell about your advantages and what are people thinking of objections that are coming up that you’re hearing.
0:34:00.1 Abhijay Edavalapati: Yeah, of course. So I would argue that in a way that we’re probably like a safer option in terms of our fund, because again, back to the high schooler thing is that first we are more likely to take risks on, I guess, products that other investors might see as non-viable. And along with that you have to also realize that we’ve had a lot of experience as actually venture analysts at 1435 Capital Management. So, everything that we’re doing with this fund, we’ve already done. And again, something that we really wanna emphasize is that we have Ben behind us, who is also making sure that we are making the proper decisions and doing the proper outlines, ’cause again, we don’t know everything to venture capital. We’re always learning and we’re always trying to absorb as much into the process. So having Ben behind us has that credibility along with that risk taker aspect.
0:34:47.1 Rithanya Senthilvel: Yeah. And especially since we’re newer to this space, I definitely think our relationship with these founders are definitely mutually beneficial. As much as we’re helping them in their product development and raising funding, we’re also learning from them, like what their industry is, and what their experience is and we’re both helping each other out and getting this industry knowledge from each other. So that’s I think, definitely more emphasized in a younger fund, a younger people run fund.
0:35:11.8 Kurtis Baker: So what do you think might be a slightly different focus maybe in a fund run by younger people as opposed to maybe some of the bigger entities that Ben is running as well?
0:35:21.0 Abhijay Edavalapati: Yeah, so I think that a main thing is that we’re actually open to high schooler startups as well. And that’s really big ’cause I think a problem with like, pitching something as a high schooler or being a high school investor is the fact that no one really takes you seriously at times. And so, having the opportunity to help out other high schoolers as well as of course the startups that Ben works with and everyone works with, allows us to really shine a light on maybe individuals that haven’t gotten as much support, but have a great product. And I think that openness that we have to explore into different career paths or different ideas is really gonna set us apart from everyone else.
0:36:00.3 Rithanya Senthilvel: And being born in this technology era, we’re also able to kinda see like, hey, these are some problems that we see that are coming up. Just because of our youth and our age and what demographics we’re in, which is unlike most investors, how many investors are you finding that are literal teenagers?
0:36:13.1 Kurtis Baker: Right.
0:36:13.4 Rithanya Senthilvel: So we also kind of have that perspective as well.
0:36:16.2 Kurtis Baker: You see a wider scope on what’s going on for the younger people. So I think that’s awesome, yeah. So if you’re gonna sell to a niche, you wanna have somebody that’s in the niche to help you…
0:36:25.3 Abhijay Edavalapati: Exactly.
0:36:25.7 Kurtis Baker: Advise you on what’s actually happening on the ground, right? So have you got… This is getting ready to start up, right? It hasn’t actually launched yet, right? So where are you at? Have you started reviewing companies or what are you at or how’s it gonna roll out from here?
0:36:38.5 Rithanya Senthilvel: Currently, we are raising funding. We’re currently raising our first seed round so that we can hopefully deploy by 2024. And we’re going to various pitch channels and events to pitch to other investors, talking to them one-on-one, kind of just getting our idea and also getting feedback from them. Like, how can we bring our comparative advantage? Like, what sets us apart from other funds, especially leveraging that age aspect?
0:37:02.2 Abhijay Edavalapati: But a little more into the future of things, after we have raised the money that we want to raise with this product, we’re gonna start deploying capital. And that means doing exactly what we’ve been doing for this past summer, reaching out to different companies, looking at different pitch events and seeing who’s viable and who is someone we can invest in, so that we get higher returns. So again, like we’ve mentioned time and time again, it’s the fact that we’ve already done this and we’re replicating this. And I think a quick thing is that if you really wanna hear more updates or are really interested in this, we actually have an Instagram, which you can probably follow to see more updates and to see new opportunities that we are trying to explore in.
0:37:38.1 Rithanya Senthilvel: All the Fortune 500 companies, they also started at a young age. They started… Those founders started when they were like in their 20s. And I think the biggest thing for getting them to kickstart their companies, is having a team behind them. So we really hope to be that for a lot of the companies for tomorrow.
0:37:52.9 Kurtis Baker: That’s cool. And what was the Instagram thing? You didn’t tell us.
0:37:55.5 Rithanya Senthilvel: @Homeroom Fund.
0:37:55.7 Kurtis Baker: @Homeroom Fund. There you are. You help us out there.
0:37:57.3 Rithanya Senthilvel: It’s really simple.
0:37:57.7 Abhijay Edavalapati: Yeah. We definitely want you to follow, ’cause there’s like… Even if you’re maybe someone who wants to start a startup, we will be definitely ready to listen to you. And we also have a website, homeroomfund.com.
0:38:08.9 Kurtis Baker: Okay.
0:38:09.3 Rithanya Senthilvel: We centralize our deal flow there, so you can also apply if you’re interested in having conversation with us.
0:38:14.6 Abhijay Edavalapati: Exactly.
0:38:16.2 Kurtis Baker: So is this the first in the nation as far as… I’ve never heard of this before. Are you guys first or are you just one of the few?
0:38:22.3 Abhijay Edavalapati: So, we don’t know if we’re the exact first, but we are like, really early on. And that’s, I guess that’s really… We’re taking a risk with this, which is again, back to what we’re doing and we’re trying to maybe make a change, ’cause our goal here is not only to make money, but to really bridge that gap between high schoolers and the venture capital industry as a whole. And to make sure that that kind of opportunity in this industry is more accessible to as many people as possible.
0:38:48.1 Rithanya Senthilvel: Yeah. And we’re learning so much every step of the way. So we’re really excited to get into this project.
0:38:52.2 Kurtis Baker: So are there any… ‘Cause you guys are high schoolers, but you’re not gonna be high schoolers forever. So what about five years from now? What happens then when you’re no longer high schoolers? Are you bringing in other… How do you keep the youth in this decision making… ‘Cause that’s your advantage, right?
0:39:05.6 Abhijay Edavalapati: Right.
0:39:06.4 Kurtis Baker: But 10 years from now you’re not going to be the same age, most likely.
0:39:10.6 Rithanya Senthilvel: Yeah. So there are vintage funds. [laughter] So we do… Every year we do hope on like bringing more people onto the team. And expanding and having people in different locations also, ’cause the more people, it’s the more eyes we have on this and more different perspectives that we get in on the team. And we really do hope to scale that way.
0:39:28.1 Abhijay Edavalapati: We actually hope to have maybe like a full circle moment in actually hiring our own interns. We’ve had the opportunity to start this fund, because we’ve been interns with 1435 Capital Management. But really taking that opportunity that we’ve gotten in and maybe expanding it to as many more people as possible. ‘Cause again, this internship experience has given us so much valuable knowledge and opportunities. And if we can give that to even one more person, that would just be one more person helped and maybe just a chain reaction to as many people as possible.
0:39:56.0 Kurtis Baker: See, I’m viewing this as some of these big colleges, like the MITs of the world that do research and they… You’re just starting now four years younger is what it sounds like to me.
0:40:05.1 Abhijay Edavalapati: Exactly.
0:40:05.2 Rithanya Senthilvel: Yeah.
0:40:05.7 Kurtis Baker: I mean, it’s the same concepts that have been around forever. In fact, some of the most desirable colleges in the country are known for their research aspect of what they do, whether it’s medical or technical or whatever it is, right? So you guys are really just bringing the age down a couple years, right?
0:40:19.7 Abhijay Edavalapati: Right.
0:40:20.2 Rithanya Senthilvel: Yeah.
0:40:20.4 Kurtis Baker: With a similar model. What’s already been proven out just a different age gap group.
0:40:23.7 Abhijay Edavalapati: Yeah. And I think we’re pioneering this idea as a whole in the terms of an opportunity. And who knows, maybe in like, 10 years the new normal would be like high schoolers owning their own venture capital fund. [chuckle] And it’s like, we just hope to show that this is a viable thing to do so that we can maybe have the, I guess the idea expand as a whole.
0:40:41.1 Rithanya Senthilvel: Also it expands opportunities for high schoolers. Like a lot of students who are interested in going to finance, there’s so much to finance, there’s VC, private equity, investment banking. And just showing them that there’s more opportunities like that, because internships for high schoolers have definitely increased a lot. In the last decade you see a lot of high school interns interning at marketing places and in research health sciences. But you don’t see that many opportunities for finance, because there’s a lot of risk that comes with taking on younger people. So, hoping to set this as the norm, the social norm that having high schoolers on behind that process.
0:41:14.1 Kurtis Baker: Yeah. ‘Cause I mean the other part we didn’t really talk about much is you’re not 18, right?
0:41:17.8 Rithanya Senthilvel: Nope.
0:41:18.1 Abhijay Edavalapati: Yeah, I know.
0:41:18.7 Kurtis Baker: So I mean, you’re not… You’re minors so that has a whole different aspect. So somebody else that’s an “adult,” quote, unquote, from the technical standpoint has to be making the final decision, correct?
0:41:29.4 Abhijay Edavalapati: Exactly.
0:41:29.5 Rithanya Senthilvel: Mm-hmm.
0:41:29.7 Kurtis Baker: I mean, you can’t as minors, ’cause everything has to be held in trust for you.
0:41:32.5 Abhijay Edavalapati: Correct.
0:41:32.6 Kurtis Baker: I mean, no matter what you’re doing, right? Somehow it’s got to be held for you at this point. So that’s part of the structure that’s being set up, I’m assuming, right?
0:41:40.6 Abhijay Edavalapati: Right. So I guess the structure that we’re going for is really for the actual fund to be managed by high schoolers, but again, have that experience to oversight and we along with Ben, we also have another venture partner who’s there to help us out and to I guess, make sure that every process or every decision we make is justifiable or is something based on their experience.
0:42:01.3 Kurtis Baker: So of some of the companies you’ve seen already, what are some of that you think you might have been interested in that maybe the bigger companies were like, well, that’s not necessarily for our… Is there anything like that you’re seeing out there? You’re like, well that might be something we want to take a look at, ’cause you’ve already been out there looking around, right? So what are your thoughts about that?
0:42:19.2 Rithanya Senthilvel: Yeah, so overall industry aspect, we’re kind of focused on technology, Fintech, CPG retail and yeah, we kind of stray away from health sciences, life sciences, because that’s not necessarily our area of expertise. But we’ve definitely been looking around at different pitch channels. We’re focusing on raising funding, but definitely keeping an eye out for those up and coming companies.
0:42:39.4 Abhijay Edavalapati: Also, a little more into the nitty-gritty I guess, to specify that. I think something that we as high schoolers or as the youth probably have more of an advantages in things like social media, having new platforms. ‘Cause again, we are talking about maybe some experienced investors might not have as many opportunities or as much knowledge about the field, but as high schoolers, we’re the ones to actually use social media. And to see what works, what doesn’t work and what do we wanna see in it.
0:43:04.9 Kurtis Baker: Yeah, I heard Facebook’s for old people now.
0:43:07.0 Abhijay Edavalapati: Not that old. I still have Facebook.
0:43:09.9 Kurtis Baker: No, it’s funny that you hear young people don’t go on Facebook, only their parents.
0:43:12.6 Rithanya Senthilvel: Yeah. And we see the youth definitely get influenced by influencer marketing and social media marketing, that is… In this technology era, that is how brands are reaching out to us. And it’s definitely more of a psychology aspect more now than ever.
0:43:25.0 Abhijay Edavalapati: And that’s definitely something that we can contribute, right? Because we have experience in marketing and social media and what works and what doesn’t work for the youth. And we can make those applicable changes to ensure that the company sees the profits and the returns they want to see.
0:43:37.7 Kurtis Baker: Well, that’s just awesome. You guys have been fantastic. So any other final thoughts before we sign off here? It’s been amazing.
0:43:43.8 Abhijay Edavalapati: I think that something that for maybe like, high schoolers or youth out there is to don’t be afraid to seize the opportunity. ‘Cause at times, the world might be telling you to, this is only for adults or past high schoolers. But make sure to seize every opportunity and to really absorb as much knowledge as possible. ‘Cause you don’t know who you’re going to meet.
0:44:02.3 Rithanya Senthilvel: And yeah, it’s definitely scary entering into a space with a lot of adults, but we’re young and that’s like a risk we can take on right now. So, especially like, don’t look at your age as a disadvantage, but something that you can leverage to make yourself unique. And yeah, I definitely agree with everything Abhijay just added on.
0:44:17.1 Kurtis Baker: That’s so great. You’ve been listening to Master Finances. You can go to masteryourfinances.us and subscribe and like, thank you very much.