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Passion First Then Capital (Denis Kalyshkin and Jamie Schneiderman) · Unstuck Pod

• Jamie Schneiderman: Hi everyone, welcome to the Unstuck Pod. ⁓ very excited today to have Dennis Kalishkin with us. And than me butcher his background and what he's done, I'm gonna pass it over to Dennis. So, Dennis, welcome. Thank you so much for coming. and please tell everybody about you, your background, your journey, and what you're doing now. Denis Kaly: Yeah, thank you. Thank you, Jimmy. ⁓ thanks for having me today. I'm principal at New York Venture Capital to be a global ventures and most of the foun founder of a couple of ⁓ projects for startup founders. One of is them is Ask VC. It's a solution which helps entrepreneurs to provide them added value as a service. and the other thing is I'm a Really passionate about space. So I have a media project called Space Ambition where I talk about how to invest in space tech and deep tech. So we'll cover it in a bit. But ⁓ long story short, I'm ⁓ an aerospace engineer myself. I have an aerospace master's degree and became a venture capitalist because I was I've been working in ⁓ I like before joining I2BF, I've I've seen so many smart people. Who couldn't make money on their technologies, and I become ⁓ decided to become someone who would help those people to to commercialize those technologies, ⁓ build business and earn money, and then reinvest those money into applied and fundamental researches, like you know, developing more more technologies, et cetera, et cetera. ⁓ And as said, I'm an aerospace engineer, I'm very passionate about space, and ⁓ this why I run run even a media project about it. and I hope that, you know, sooner or later people will be traveling in between the galaxies and I want to be part of ⁓ to to be a part of it. So yeah, that's pretty a short introduction. Yeah, and speaking of I2BF, ⁓ it's an early stage fund which has been on the market for twenty years now. we invest at three at early stage ⁓ founders which do several stuff. We have invested historically in a big chunk of ⁓ companies which transform so coral cold boring on sexy legacy industries like construction, manufacturing, logistics, you name it. ⁓ unusual thing I've seen so far was CRM for funeral agencies. yeah. yeah. yeah, I I I like it here helping helping, you know, applying to those Jamie Schneiderman: Okay. Denis Kaly: industries which ⁓ utterly need them but for whatever reason like don't have an opportunity to to have them, et cetera. Yeah. So that's that's a quick background on me. Jamie Schneiderman: Is that all? Wait, is that is that all? Because it doesn't sound like you're doing very much, then it's like sounds like you're just, you know, relaxing. There's not much happening, right? this and there's this. There's a lot happening. ⁓ okay, so so ⁓ let let me let let's let's so there's ⁓ so many questions and and you know you mentioned space. So so let's talk about it. ⁓ obviously aerospace engineer, you come from that background, but I think you have So you have that vision, that view of the world, which is interesting, and it and a love, a passion for space. But you also you said something else which was interesting to me around or just mentioned ⁓ around helping people with technology or ideas or things, actually money from them. So so let's talk about ⁓ ⁓ that sounds so when I apply that into the concept of space, it's spa every like space is cool, it's interesting, and whatever. How do you make money space? Is there a way to make money that way? Is there ⁓ and is that something that you think about as you're doing what you're doing? Denis Kaly: Yeah, ⁓ so first la ⁓ first of all, know, quick background. I'm a very pragmatic person. So when I say I want people traveling in between the galaxies, etc., I ask questions like where where the money are coming from. ⁓ this is why I'm not only working with deep tech and space tech companies. They ⁓ I see a lot of value here and I want ⁓ to help them, but I work like well with also with founders who are do doing very down to the ground things. and the the mo the most important thing for me is ⁓ one is they are passionate about what they're doing. And ⁓ two, I see that they could do build business ⁓ like of high high scale that ⁓ they could raise funding and provide good returns to investors if they want to. so when like but When we talk about tech sector in general, and for example, those ⁓ founders who are passionate about AI and applying AI to this and about about applying AI to that, the problem I see is that oftentimes people like so passionate about the technology, but they are not that passionate, not all we all of them understand pretty well like how to implement ⁓ it and ⁓ you know, too much focus on the product, so few focus on ⁓ sales. So I c I help try to help people to to change this balance. And it comes to like very sophisticated technologies like ⁓ tech or space tech, this disbalance is even bigger because ⁓ it's naturally done by people who are very involved in technology, they love building the technology, they hate sales, so I try to to do to do this balance. And ⁓ the other thing which ⁓ is not obvious to founders ⁓ is ⁓ for example for example ⁓ you want to build some technology and put it on ⁓ on the moon but you don't think that you could do something and start selling it on earth for various purposes and provide ⁓ to earn much more money and very few people like think that way ⁓ so example I'll g I'll give you an example you know we all wear sneakers right But this technology was ⁓ developed for the Apollo program and later commercialized by Nike and other ⁓ and other you know sports companies. So this is a good example how you can look ⁓ through the lens of you know real existing sectors ⁓ with real problems, and how you could implement some technology and this way make Because ⁓ when you look at in space sectors, like purely space sectors, there is like lower Earth orbit where you ⁓ a lot of satellites including like ⁓ Starlink ⁓ are flying. But ⁓ aside from that, the niches are pretty niches could be pretty small, even given like you know the potential growth, those those those niches ⁓ could be small. So what I try to do and help out people like ⁓ let's at the technology, let's Think about it if we can use it elsewhere, like you know, the markets which have billions of dollars ⁓ in annual revenue, and let's be pragmatic about it. Probably we will do one step, like very down to the ground before making the next step, which is like very like up in the sky. So that's ⁓ the the the line of thinking which I tr ⁓ try to bring to the people. ⁓ And ⁓ and ⁓ yeah, and ⁓ the other thing is like especially when it comes to deep tech, you oftentimes develop a solution which will be you know monetized years away away from from now. And there is a temptation to start building the technology without you know stressing the market. ⁓ And but I like push people, even given that now it's ⁓ you you you can't sell anything at the moment. Actually you can. so I I push people like to go test the ground, talk to people. For example, I talked to to quite a number of founders doing quantum technology, and quantum computers are not around the corner yet. And ⁓ b back then was even less ⁓ advanced. So what people did there were no you know quantum computers available, ⁓ like but which could solve problems. But they they started selling like quantum ⁓ sell selling consulting projects to help big companies to be quantum ready. So even if your technology is like is not around the corner, you can find the ways to you know to to to start earning money re ⁓ earlier ⁓ or to to test at least to test the market and ⁓ hear feedback, ⁓ even that the technology is like Is is still in development. Jamie Schneiderman: So so I'm curious so this is I mean that I love the way you describe that. I think it's fascinating. it interestingly, like when I work with companies, I'm so and the whole thing is about how do we grow? It's about to me, it's always focus, focus, focus, focus. And what you're describing is okay, yes, ⁓ but we to go. I don't wanna call it off because we're focused on the product or you're focused on. getting to an end place is just that your pathway is so much longer to getting there. How do you balance that near like How do you balance the view the near-term market need and driving some business and the attention and focus it takes to build a business around I know there's the product, but then there's the building the market and who's the customer and everything when you have a longer term view that is very different. Like how challenging is that? Denis Kaly: So ⁓ Like building deep tech is challenging because for the for the next couple of years you've build a you'll will be raising funding and selling like ⁓ bright future ⁓ investors without showing any revenue. But even at this point you could ⁓ go validate like signing of memorandum of understanding and talking and ⁓ or you know partnering with some organizations which have like you know budgets for experiments. like it was with quantum computers. There were big companies, I wouldn't name them, but still like very huge ⁓ like Five Fortune five hundred, ⁓ have some budget allocated and people allocated working with ⁓ know, experimenting with quantum computing or something like that. so you you still you still need to look who could who could be potential stakeholders, listening to like what they need and you know. brainstorming like how the product should be shaped, etc. ⁓ the good ex a good ⁓ sign that you're onto something is that you hear, yeah, we need this, we will buy it if only if you can ⁓ s build ⁓ So typically means ⁓ that ⁓ there is a need but ⁓ the problem is pretty sophisticated like technologically. yeah yeah so Jamie Schneiderman: Can build it, yeah. Denis Kaly: That that the that's that's something I would Jamie Schneiderman: ⁓ and and how do you so so I love it. The the so look in your world, you shift from, like you say, deep tech. So whether that's space ⁓ out somewhere something in space, or as you talked about quantum computing, or I'm and I'm sure there's many others, and then you move into like We have the non-sexy industries that you meant manufacturing or cons or construction, all n necessary critical industries just have that same call it excitement a around the tech. So how do you balance even the way you think about it and how do you shift your brain back and forth between those kinds of investments? Denis Kaly: Mm-hmm. So it happened naturally because I initially won ⁓ joined I2BF ⁓ because of their first investments in ⁓ in sp in SpaceTech company. ⁓ but ⁓ as I became ⁓ an an ⁓ a so ⁓ an analyst, I you know, they involved me in more projects ⁓ looking into those unsexy industries and ⁓ you know, construction, logistics, etcetera. So this is how I ⁓ kinda got accustomed to the field. And this is actually the the niche which brings you know returns at the like I I'm not saying that deep tech is not bringing the returns, ⁓ but this one is ⁓ bringing ha has historically been bringing returns to us because these are the big existing markets, they have problems, they have budgets to pay, ⁓ and you just to find like the angle where you could ⁓ you know who could grasp your your revenue. And I like actually, and I I know some entrepreneurs who also like it, when you're developing some IT solution like for Google and others, like yeah, this is all shiny, this is all sexy, all like ⁓ very advanced technologies. when for example you're doing something for construction, on one hand you see like your real impact on on the real world. On the on the other hand, you see how you know you actually have better returns because you know ⁓ there not many who could go after ⁓ that on one hand, and on the other hand, ⁓ there is the problem is ⁓ those people who deeply understand the market, deeply understand ⁓ the solution, typically don't understand in that. you know, that deeply in tech and probably even don't have a like CTO or potential CTO, and how those products are built. So if you have this combination of me understanding ⁓ the niche and me ⁓ understanding how to build technological businesses, you can ⁓ actually get ⁓ good ⁓ you know good barriers entry and pretty high Jamie Schneiderman: So so how ⁓ so let's talk a little bit because you just gave a you you how so how big a portfolio do you manage at any given time? Like you personally? Denis Kaly: Like n I I don't manage it alone, but ⁓ over twenty years the fund has backed like ⁓ has closed about two hundred deals. So it's ⁓ pretty big portfolio. Jamie Schneiderman: Okay, so fair number of a fair number. So how do you how do you find and I know you said you're not alone and like doing that, I get it, but how do you find the time, the both the mental and the physical time? Cause there's all those deals, there's the new ones that are come like there's a lot of stuff and everyone's at different stages. How do you find the time and how do you work with portfolio companies to help them get where they need to get to? Denis Kaly: So yeah, I I I I wouldn't ⁓ go into into deep details t to telling about how I2BF works on on the on on the portfolio companies. ⁓ But ⁓ in in short, we have ⁓ this ⁓ of course we can't ⁓ be that involved in all the portfolio companies, but ⁓ on one hand this is like two hundred deals which were closed, like they were closed over the year of twenty like over the course of twenty years. So some of them are Too too like established, ⁓ some of them are ⁓ the so that they don't ⁓ need a lot of ⁓ our involvement, or some on the other hand, some of them are you know are already out of the market. So ⁓ the real ⁓ number of companies which you need to keep in mind ⁓ is of course smaller. ⁓ but we so called ⁓ craft approach, so we try to be stay close with the founders so. Jamie Schneiderman: Mm-hmm. Denis Kaly: Like if you need something, you could get in contact with us. But ⁓ typically investors are more, you know, more like financial people, spending ⁓ majority of their time of for for talking with new opportunities and closing the new deals. yeah, and ⁓ of course ⁓ like we as financial investors we don't ⁓ you know actively intervene and ⁓ don't manage for you. So we are more like this ⁓ friendly investor who is at you know by your side when when you you know want to to discuss something but we don't like intervene ⁓ and don't take over your operational your operational work. Jamie Schneiderman: Wait, did you say a you wait, sorry to interrupt you, do you say friendly investor? They there those things exist? I'm just joking. I'm just kidding. I'm just I'm just kidding, Dennis. I I'm I'm just having fun w ⁓ with you. But ⁓ Denis Kaly: So There is a spectrum actually. We so why what I ⁓ can say that we oftentimes back the founders even if like they fail. For example, if we invest in company like and for whatever reason it failed their previous business but we liked ⁓ how the founder performed, we back the other b ⁓ the other business. And ⁓ we can like if ⁓ if you have some problems or something to discuss, like we can pick up the phone and talk to you. And this is actually this this is what I try to do like with all other my activities. Of course we're limited in time and we can't ⁓ you know afford to talk to all people on the planet. but ⁓ yeah, whenever the time ⁓ we have time and the capability we try to to do that because it pays out in the long run. Jamie Schneiderman: Well, you're very you're very mission oriented in terms of your focus, right? So Denis Kaly: Yeah, ⁓ and ⁓ yeah, I I told I told you, pr so don't don't remember if I told you, the the the reason I became a venture capitalist was like the mission because I wanted to help those people. And still ⁓ I ⁓ you know, I keep it in mind whenever I take a call, you know, take an investment, etc. Because you know, ⁓ I had a very hard time in my life. So my mom died of out of cancer ⁓ died of cancer and ⁓ back then I was like I spent a lot of time in the intense care therapy room ⁓ and ⁓ I understood back then I was twenty eight that ⁓ like sometime I also will d be dying and you know returns on is not the only thing I is the least the last thing I will be thinking at that moment. So I try to do meaningful things when I do something and this is like do this podcast or do some webinars or do those initiatives I was talking about because I really mean it like because you know it's ⁓ after all it's not only about money. ⁓ the money will come if you're doing something meaningful and ⁓ you know useful. So that's that's how I look look at ⁓ at this world. Jamie Schneiderman: Mm-hmm. No, I agree. I agree. I love it. It's a great philosophy. It is a really good philosophy. And I think ⁓ there's a there's a ton of people out there who would love to hear more investors talk like that. So I think it's a really good thing. If you were gonna give ⁓ some advice to who are building something, they have a vision, they have some ideas. you know, ⁓ of it may be near term, some of it may be longer term. What kind of advice would you give them ⁓ any of that? Denis Kaly: ⁓ so first of all, ⁓ like do what you really care about. Because I ⁓ I see many founders which you know come across some idea randomly and focus their attention on it. And I I was such a founder, so when I was twenty five I launched a startup and it w it was a door like a solution for outdoor advertising and I d didn't really care about it. And I was I just wanted to do a startup and ⁓ yeah but it didn't ⁓ work out just because like if you don't you know if you're not committed enough, it's if it's okay ish for you, you can't ⁓ sacrify your life and many other stuff to you know to build it. and back then I had an idea, okay, I will build some business, earn some money, and then I Jamie Schneiderman: Mm. Denis Kaly: open my open up my own VC and will be investing. So it doesn't work that way. So you need to pick something which you are really interested in in or you really like you really feel it. other thing which I also urge you to do is ⁓ you know double check like if you're so other th the other thing which I advise you to do is answer to the question are you really ready for this game, venture Of raising like hundreds of millions of dollars, building a company for billions of dollars, and ⁓ you know, working day day and night ⁓ for 10 years in a row. It's a really tough journey, and I see many founders ⁓ they believe that ⁓ you know, doing startups is sexy, so I will be doing a startup. So it was my story. I watched ⁓ this ⁓ movie Social Network, the social network, yeah, and Back then I was thinking, okay, e now or never, right? And you you need to be honest with yourself, you need to understand like what you sign up for, ⁓ you know, raising venture capital money. ⁓ and if you do, if you really believe that you want to play in this game, r raising money, building big companies, sacrificing a lot of things, then ⁓ answer to another question like is your business really eligible for raising funding? Jamie Schneiderman: Mm-hmm. Denis Kaly: Because I've seen many people saying, Okay, I have this brilliant idea. And but the idea is too small, like the market is too small, I can make five, ten million dollars annually. but VCs don't want you to make ten million dollars annually. They they want you to make like hundred million dollars, ⁓ like billion dollars annually. And ⁓ are many ideas which doesn't pass the the the first test of the market sizing and and some other tests like either they are too early for the market or too late for the market and stuff like that. So before you if if you really want to play in this VC game before starting your business, like make sure that it's for for such funding, even if ⁓ this question will arise like in a year or in half a year. And ⁓ what I really see ⁓ happening ⁓ oftentimes people say okay I want like I I start my business I invest my own money and time and it will be running it for a while. And then at some point I ran out of I ran out of money. And I say, Wow, this is a there is a brilliant idea. Let's go and raise money from investors. yeah, so so yeah, I understand like you need money to bridge the gap in your ⁓ PL, but ⁓ we as investors we want to ⁓ want earn money and we will be asking all those sorts of questions, you know. about your future in the in a decade and ⁓ po potential for building a business just because like we're in the business of making money not ⁓ you know granting those money to those who who are in need. So that's ⁓ and surprisingly ⁓ this happens ⁓ lot. So is why I'm I'm talk I'm talking about this. Jamie Schneiderman: Sure. Sure. Yeah, doesn't surprise me. ⁓ and ever I know a lot of people need to raise money 'cause they just need it as opposed to I want to use it to build and it's about aligning your interests with investor interests. I thought you wait. Denis Kaly: No no no. I I I'm pretty sure they need those money. I and that's okay. You like it. Yeah, yeah. Well what what I'm saying is that ⁓ like we as investors we have a s different need. Like we need to Jamie Schneiderman: ⁓ yeah. Yeah, of course. ⁓ no, no, no. I'm I'm with you. Sorry. I'm f ⁓ let me be clear. I totally follow you. And I I actually think that you're making a really, really great point, which is you have to be I I thought you made a several very good points there around are you ready for the journey and what and the difficulty and the challenge and what it's gonna take to get to that. and in that aligning what where you're at with what the in where investors are at. Because if you're not, oof, it's gonna be someone once said to me, you know, it's ⁓ once you get involved with investors, it's worse than ⁓ it's harder than marriage because you can't get divorced. It's not it's not it's more complicated than that. Denis Kaly: If you you can, but it could be like it's tilty. Jamie Schneiderman: Yeah, yeah. all So so can you please tell ⁓ t tell people who are listening, watching how they can find you, ⁓ reach you. ⁓ Denis Kaly: Yeah, sure. best ⁓ way to find me is to reach out ⁓ me on LinkedIn. yeah, I can also provide my my ⁓ email. Like you you can add it to the you can add it to to to to the description of this pol ⁓ episode. And I also like on why why I'm saying about LinkedIn because I do a lot of a lot of various activities, for example Just this week we start ⁓ preparing for Y Combinator and those who are apply to Y Combinator, I help them out to prepare their applications. So there are things which could which I do regularly and ⁓ before involving me you can ⁓ to what I do, like you can ⁓ with what I do and ⁓ you know ⁓ some value and of course we can expand ⁓ our collaboration later. Jamie Schneiderman: Sounds good. Well, listen, Dennis, thanks so much for the time. This is great. Really appreciate it. and for everybody who is listening and watching, until time. Thanks. Denis Kaly: Thank you. Thank you. Thanks for having me.