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“The 4 Things I Look For Before I Make a VC Investment” With Donald Reed McGowan

Our program is completely changing the way venture capital is done and every deal we do has a positive social impact. We have a more…


Our program is completely changing the way venture capital is done and every deal we do has a positive social impact. We have a more diverse, gender irrelevant portfolio. This is outlined in detail in the marketing materials.We also have a program called 2BL Natural Resource Acceleration Program in which we teach Indigenous Peoples and Third World Countries how to innovate and harness their natural resources. This educates traditionally down-trodden people while increasing the tax base, reducing the need for foreign aid.


I had the pleasure to interview Donald Reed McGowan. Donald is a quantitatively-trained finance and operations professional, who uses his technical background to select seed stage companies for investment of his time and capital. He merged the passion he has for the creation, launch, and scaling of companies with his deep background in finance to create a career of successful fundraising and entrepreneur education. He thrives in high-stress, fast-paced environments where positive results are crucial and necessary for company survival, and has secured funds for launch, creation, and purchase transactions in access of $2.5BN from banks, private equity firms, and super-accredited individuals.

Thank you so much for joining us! Can you share a story of your most successful Angel or VC investment? What was its lesson?

I worked with HURDL’s founder Betsy McHugh to complete her seed stage round. By partnering her with intelligent investor who understand her industry, we were able to not only get her the capital she needed to launch, but also put her in a position to accelerate growth by pairing her with investors who were also her champion in the music and entertainment industries.

While this was important, because it showed us the power of “smart money” and its effect on the startup, we also saw how much HURDL did for the companies that invested with her. The game-changing insight I had was that corporate venture investors not only bring resources and relationships that are arguably more important to the startup than the money, but in doing so, the corporation sees it own business lines take off where ever they touch the startup they funded. This insight is the basis of the Undiscovered Ventures VASI Program.

How have you used your success to bring goodness to the world?

Our new, innovative program is completely changing the way venture capital is done and every deal we do has a positive social impact. We have a more diverse, gender irrelevant portfolio. This is outlined in detail in the marketing materials.

We also have a program called 2BL Natural Resource Acceleration Program in which we teach Indigenous Peoples and Third World Countries how to innovate and harness their natural resources. This educates traditionally down-trodden people while increasing the tax base, reducing the need for foreign aid.

Can you share a story of an Angel or VC funding failure of yours? What was its lesson?

My relationship with Baby Plus is not a failure in the traditional sense because Baby Plus is an amazing company that is thriving and I have a great relationship with the founders, but the failure of the transaction led to my quest to change the way venture capital operates.

At my old firm, Pantheon we had a retainer structure that was the norm of the investment banking world, namely a retainer and a success fee that involved an equity stake. Our pricing structure was an insurmountable amount for startups, and the one that was the catalyst was Baby Plus.

BabyPlus provides age-appropriate auditory stimulation designed to spark cognitive development and a unique bonding experience between mom and baby during pregnancy. At the time, of all the mothers that had used this amazing product, we were not able to find any deliveries in which the child was later put on the Autism Spectrum. The fact that we could not help these mazing people with the product that is addressing one of the most serious developmental issues was crushing to me. I have friends with children who struggle with this issue, and Lisa and Julie (the founders) sent me a unit when my wife was pregnant with our second child. The difference in the alertness and strength of my two children when they were just delivered is staggering. My second child was so much stronger and more alert that the first child. Even the nurses recognized his vitality was so much more than other newborns. How can we as an industry say that we are about innovation when we price our help out of the realm or reality for early stage companies? The answer is that we cannot; it is generally all about the money.

Is there a company that you turned down, but now regret? Can you share the story? What lesson did you learn?

No. I make the best decision I can with the information I have at the time. You cannot think about what could have been…it will drive you nuts. You have to work with what you have, not what you wished you had. The same goes for decisions, you generally make the best decision you can at the time and have to move on. The time horizon is too short to call anything a mistake until you see everything play out.

Which person or which company do you most admire and why?

Chef Thomas Keller amazes me. He is a classically trained French chef whose obsession with order, precision, and technique is the stuff of legends, but somehow, he uses that as the foundation for true innovation, art, and calm. The man is a walking pile of contradictions. I read one of his cookbooks in which Chef Keller describes his pastry chef who is so rigidly precise that he even stands at a 90-degree angle to the food he is working on. Chef Keller explains that to be a success in life you have to be this clean and orderly. Creativity comes out of rigor and process, not from free-formed chaos. This completely changed how I operate my own business, but what I teach my startups.

What are your “5 things I need to see before making a VC investment” and why. Please share a story or example for each.

Our approach is completely different than that of all other Venture Capitalists. We do not do due diligence on the portfolio companies like others; we basically verify a checklist and invest, making the due diligence process extremely quick and easy so that we can invest large pools of institutional money.

We work with the top-tier startup accelerators around the world. Our intensive due diligence is performed on the staff of these organizations. We get comfortable with the way they operate and so we can invest with the elite graduates of these programs.

Our unique 4 part due diligence process is summarized in the chart below:


Some of the biggest names in Business, VC funding, Sports, and Entertainment read this column. Is there a person in the world, or in the US whom you would love to have a private breakfast or lunch with, and why? He or she might see this. 🙂

Yes! CEOs of Fortune 1000 Companies, Women and Minority Investors, and Family Offices that invest or innovate.

Originally published at medium.com

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