047 - Mike Jarmuz: Lightning Ventures

In this episode, we explore the evolving landscape of Bitcoin startups and investment opportunities with Mike Jarmuz, founder of Lightning Ventures and Thunder Funder. The conversation delves into the democratization of investing in Bitcoin startups and the challenges posed by regulations in private markets.

Mike shares his personal journey into Bitcoin, his transition to angel investing, and the innovative approaches his platforms are taking to support founders and investors alike. The discussion highlights the potential for Bitcoin startups to thrive in a more favorable environment and the exciting trends shaping the future of this space.
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Chapters
00:00 Introduction to Bitcoin and Mike's Journey
08:05 Transitioning to Angel Investing
14:47 The Rise of Bitcoin Startups
19:07 Understanding Lightning Ventures and Thunder Funder
26:13 Democratizing Investment in Bitcoin Companies
33:30 The Importance of Private Companies in the Bitcoin Ecosystem
36:09 Funding Strategies for Founders
43:56 Navigating Regulatory Challenges in Crowdfunding
50:16 The Role of Community in Investment Success
58:39 Trends in Bitcoin Technology and Investment Opportunities

References
https://ltng.ventures/
https://thunderfunder.com/

https://www.buildwithbitcoin.xyz/
https://x.com/BuildwBitcoin
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❗ DISCLAIMER: This show is for entertainment purposes only. Before making any decisions, consult a professional.

Transcript

Mike: 0:00

We've invested in probably maybe 44 or so Bitcoin startups or Bitcoin only companies in the group, and there is a new form of fundraising that is called equity crowdfunding. You

Israel: 0:23

Mike, how can the barriers of entry to investing in Bitcoin startups be lowered? That's the conversation that we explored today with Mike jarmuss, founder of lightning ventures and thunderfunder. We hope you enjoy and as a reminder, this podcast is for educational purposes only. None of what is covered should be construed as investment advice. Lynne and Israel are partners at Basel air advisors, where they employ their strong network of Venture Capital Partners and startups to connect investors with unique opportunities within the Bitcoin innovation space. Alongside this, they support founders with their strategic growth and fundraising goals. Visit our website's advisory section to learn more. Welcome to build with Bitcoin. I'm co host Israel. Munoz joined with co host Lynne Bairstow. Today we are happy to have this conversation with Muz founder of thunderfunder and lightning ventures. Maz, thanks for coming on.

Mike: 1:12

Hey, thanks for having me. It's long overdue. I remember when we had our first conversation, I stumbled on your channel, and I'm like, This is so cool. And you guys were talking about a lot of other stuff, right? It wasn't just about bips and, you know, op cat. It was also about what it's like to be a founder and going through their journey, and lots of, lots of really cool topics that I resonated with and thought it was awesome. And then I was just bugging the heck out of you guys, right? I got to get on there. I got to get on there. And then finally, I guess you let me on. So thanks.

Lynne Bairstow: 1:48

You've been on our list for a while, Mike, and so, you know, it's like, I know we've always looked at what you're doing is the podcast features both the founders and the investors, but you're really bringing a democratization to the ability to invest in Bitcoin startups. And so we're really excited to talk to you today, because rather than being the super high minimums and institutional size investments that a venture fund has, or even angel investors, which you are, and we want to talk about that kind of bringing the angel investment level to a larger group of people who want to participate in the Bitcoin ecosystem beyond just holding the asset itself. So I mean, to get started, we always like to get as a starting point. Why? You know how somebody was introduced to Bitcoin? I know you've talked about this in the past, but most importantly, it's like, Why? Why is Bitcoin important to you? And from the time that you were introduced to it, what was it about it that kind of clicked with you? That said, Hey, I got to spend more of my time and energy here.

Mike: 2:49

Well, you know, coming out of the 2008 crisis at least. I mean, I'm, you know, I'm 42 but you know, going through that as an adult, and kind of reevaluating money, and what is hard money and falling into the gold and silver, sort of the metals route, I think, is the natural way that people go. And then it's all of those podcasts, right with the the gold and silver bugs, and really sort of embraced that after 2008 and then, you know, somehow, if you're a conspiracy theory or theorist or a nut job, like I was and still am, you end up in some message forums and on some websites, and, You know, someone mentions Bitcoin, and you do what everyone does the first time somebody tells you about Bitcoin, and that is, you dismiss it as a scam or a Ponzi scheme or something that is just really not going to work. And then it's that amount of time that's passed between when you first dismiss it to when you buy some that is, like the most important period. So I think it showed up on a website, and I did just that. Didn't really pay much attention to it, but I was really into the hard money and starting to learn as much as I could for my own personal finances. And then somebody said, Hey, you got to check this guy out. His name is Max Kaiser. This is really cool. He's got this show and, and that's where, you know, I heard it mentioned again, and it wasn't very expensive then. And I took another look at it, and it was like, holy cow. This is cool, not even just calculating how much it was before, but how much it was then. And there was this New York Bitcoin Center that was down around the Wall Street area where they had like this open outcry sort of pit or whatever, down there in Nick. Spanos. That was his, his thing then. And they were very welcoming people, where you could kind of walk in the door and they would give you enough information to basically make you obsessed, you know, and that that's what it is. You just give somebody just enough knowledge, kind of like it is right now with AI, right if you're discovering AI, you you just need enough to where you stay up till three, four o'clock in the morning and your wife is screaming, what are you doing in there? You have to come to bed. But you just have to get that much. So I got that much, and then I really just embraced it as much as I could. And you know how it is you read mastering Bitcoin, the Antonopoulos book. I'm not an engineer or very technical, but you do as as best as you can, going through that and learning as much as you can. And I also owned a bar in New York at that time, and we put a Bitcoin ATM in it was the second one in Manhattan at the time. And it was a homemade thing. This is pre BitLicense and all of that. And there were some characters that were coming in to use that Bitcoin ATM because, you know, they put you on a website. And people were coming in with hundreds of dollars of bills just stacked just hundreds to where the bill acceptor was actually full all the time. So I think it was a little bit of a different Bitcoin crowd than we have right now. But that was certainly fun to watch, and we accepted Bitcoin at the bar. We even had a price ticker on one of the screens. I think the only website back then, really, where you could watch it was, was Bitcoin wisdom. I don't even know if that's still a site anymore, but that was the real website where you could track it. And, you know, kind of like now, not many people pay or use Bitcoin. Some do, I guess, at a conference. You know, more, so even as a novelty, maybe in El Salvador, but not a lot of people used it, but we certainly did accept it at the time. And that was really that first sort of, you know, 2013 2014 kind of area that was, was a lot of fun. And bitcoin is kind of like, you know, you can't unknow it, right? Has there ever been somebody who gets into Bitcoin and then it's like, yeah, you know, I really researched Bitcoin and like, I'm done with it. I'm going back to fiat. So you never really are the same once, once that happens. So I wasn't really angel investing. Then I didn't start till a few years later, I was working doing other things. I was kind of always employed for myself. I mean, I was in the music business for a good 10 or so years. I managed to band on Elektra Records. I was a concert promoter. I did a lot of interesting things in life and and, yeah, and then I wish that was my biggest regret, is I wish that I got into full time Bitcoin a lot, a lot sooner than I did. But that's a little bit about my bitcoin journey

Lynne Bairstow: 8:19

then and then the angel investing, because that ties so much into what you're doing today and the companies that you're leading. How did you get into angel investing? And were the early investments just traditional tech companies? And then how did that kind of segue into Bitcoin companies?

Mike: 8:36

Well, I don't know if you can tell, but you know, my MBA is from Brown. Okay, so, yeah, no pedigree here in any way, just self taught. And I was convinced that really all the real money was made in the private markets. And I just wanted to find out as much as I could about the private markets. How do they work? How do I participate from somebody that really knew nothing about it? And then you start to learn about all these hurdles and the accredited investor sort of thing, and then getting access and deal flow. And there was that Jason Calacanis book, and I love him or hate him. Okay, he is what he is, but he if you read the angel book that he wrote, if you read that book, it's a very easy read. It's probably only maybe 200 pages. If you're not excited about investing in early stage companies. After reading that book, there's something wrong with you, because when you start to see sort of the returns on something like an Uber or a Facebook. Yeah, these are outliers, but just really kind of the founder experience and everything that you go through, I just thought it was great, and I was hooked, but I didn't want to invest in early stage companies, because I was more scared about losing all my money. Yeah, and that's what happens when you invest in in early stage. So I focused on later stage, kind of pre IPO, sort of startups with, you know, maybe the minimums were 10,000 but you know, you could invest in an Uber or an Airbnb, Spotify, Pinterest, Slack, all of these companies that have now, since ipoed, you could invest then at the later stage, because, you know, a company that's worth $600 million probably isn't going to zero, probably, although it does happen. You might not have like, you know, you know, the best exit ever, but you certainly get some experience, right? I remember getting your first IPO, getting those shares, seeing them show up in your account, you know? And then you start learning all the things that you have to learn, as far as lockup periods, direct listings and SPACs, traditional IPOs, all of this stuff, right? So I focused really on the later stage stuff. And we had a pretty robust IPO market at that time where your money wasn't tied up for that long. It wasn't like you have to wait a seven to 10 years, and then you have the big exit. I mean, some of these, it was like 10 to 20 months, and you were able to ring the register with an IPO, and that's usually what I always did. My default rule was the minute that I could sell I did and I just redeployed it into into new stuff. And I did that for a while, and it was going great until, of course, everything melted down and the world ended, but it was great for a little while there.

Israel: 11:43

Well, you know, it's funny you mentioned a little bit ago, one of your only regrets is, is not getting into bitcoin earlier, right? And I feel like even just a few years from now, we'll be hearing some more stories and and people still, you know, are not necessarily waking up to the fact that we are still, despite, you know, very understandable your regret, we are still extremely early, especially in this private company space that you're, of course, focused on at thunderfunder and lightning ventures. So from, from your experience of first getting to know private markets, Maz learning a little bit about, you know, kind of that risk curve in a company's growth. At what point did you decide there's a gap here with early stage Bitcoin companies that you know, that I need to fill? Or why? Why these two investment vehicles?

Mike: 12:35

So most of the first investments that I made during a lot of the learning and obsession period early on was in all those later stage companies, and I did no early stage deals, and I met someone at a conference, and I was showing them, you know, kind of what I was doing, and my portfolio, and some of the exits. And that's when they said, Listen, if you want to do this, you got to get into the early stage stuff. You just need to get over kind of the fears, and that's really where you're going to get the best returns, you know. So I didn't have an angel list account. I didn't I didn't know anything about it, and I didn't really have these type of syndicates where I was investing, where sort of later stage, secondary platforms, and, you know, a few other syndicates, but not like what angel list does with, you know, hundreds, and the ability to run a group on there. So then I really joined them, and that's when it was like, Oh my gosh, you know, I mean, everything is, it's, it's the Klarna of Latin America, you know, it's, it's the Uber of of XYZ country. And that's when just the deals really started coming in. And the good thing is, is the check sizes go down because you just wanted to, I mean, I had, like, a hyper diversified thesis of, I joked it's called a piker, you know, is a person who makes small bets, is what that word? So my friends would call me the piker King, because you can invest such a small amount into literally 2000 companies and just see what happens. And then you get updates from the founders. You kind of learn as much as you can. You read everything that you can, and you know, you archive that, and you save it, and you can even go back and read even something that didn't work out right. If you invested 2000 bucks in a company, and maybe you got five updates from them and then it dissolved, or maybe you got half your money back. You can, like, watch the story of what happened. You know, it's the best thing. It just came out of yc. It's oversubscribed. It's this and that. And, you know, you have that, and then you have the, well, we had a little delay. We had a little trouble hiring. There was a extra regulation. We didn't account for this, and then it was, oh my god, covid. And, like, you know, and you get to kind of go back and do a post mortem on all of these things and see what didn't work. And there's definitely a lot of learnings that come from that. So I was in that land, and, you know, there's not, like, a ton of value that I can add for, you know, drone deliveries in Dubai. But, you know, you try to be as helpful as you can, and that is something also that you notice with early stage that's cool is the founders will respond to you, if it's a $10 million kind of pre seed or Seed Company, and you have anything from a bug fix on their website or like, Hey, have you ever, like, seen this company? They're doing something kind of similar, and maybe there's some symmetry there. Always you get a response, and they're they're thankful, and you know, in the public or later stage markets, nobody's going to respond. Nobody cares what you think. And that was pretty cool going through that. And some friends that I had after the first Bitcoin Conference, I think here in Miami, in 2021 you know, they said, Listen, why don't you're in 400 syndicates? You know, you love this. It's all you do. Why don't you start your own little shop? You know, why don't you kind of do your own thing? And, you know, maybe you can raise a small fund, and, you know, syndicate some extra allocations. And why don't you do what these guys do? Because you get to see it from the other side, what people are doing well, what they don't do, well, information updates. Are they helpful? Just everything that they're doing, or how they choose to to run, to run their group. So that's what I did. I raised a small fund. It was friends and family, and started cutting small checks into bitcoin startups, Bitcoin only, and at the same time, started syndicating extra allocations, and it was a pretty good market then, where you could raise a few $100,000 fairly easily. My focus was to get a bunch of really great people into the group. It's not necessarily about, you know, if Lynne is in our group, and she's seen 13 deals and she hasn't invested in any, I mean, personally, I don't care, it's just having really great people that are able to support the companies, and a lot of good comes from it, right? Maybe ex founders are in there, or other operators, or just having great people kind of see the deals that you're doing, it leads to sometimes them getting advisor shares, or me connecting them with the founders directly. It's just like having that community sort of network and like fostering that so we started syndicating those deals, building up the Syndicate, and then we were still deploying from that fund and that, that was it. As far as my own personal investing into other startups, I didn't do any other investments, very rarely, maybe a couple little follow ons, but I didn't even open the emails for anything else. As far as other stuff goes, I was just focused on Bitcoin, and that's still where I'm at now, and and I love it. It's the most important thing on the planet. And I'm not really thinking about, you know, some medical device breakthrough for something, you

Lynne Bairstow: 18:38

know, yeah, I think it's so interesting, because you really identified the opportunity that Bitcoin is more than an asset or a token, but it's also technology, and the companies building on it are important to increasing its use and adoption, and they need support too. So translating that experience you had as an angel investor and other tech to seeing what could possibly happen with these companies that are creating the infrastructure for Bitcoin today is, I mean, you were just very early to doing that and doing it in a way that really brought along the ability to create community around it too. So maybe you can just talk a little bit about, I mean, we've been talking broadly, but, you know, you have lightning ventures, and thunderfunder. And thunderfunder is your newer offering. Can you describe what the two platforms are and who are they accessible to? And, you know, maybe the differentiators between the two of them,

Mike: 19:38

sure and and also, you know, when you think about the like, sort of internet boom and the PC and kind of what we went through from, like, I don't know, Windows 95 to those early the first Netscape browser that whole world, there was a number of things that you could invest in, right, if the internet was. A token. You know you did. It wasn't just about the internet. You had so many hardware manufacturers and ISPs and software and just a million different things that did really well in that boom. And that's kind of the thesis for where we're at with Bitcoin right now, is that, if you know, Uber or Airbnb are going to accept Bitcoin? What are they going to do? We've probably invested in all the companies they could choose to do that, but that's that's kind of the play. It's everything happening on around or with Bitcoin in every way. So lightning Ventures is for accredited investors, which I am vehemently against, and I think is probably the biggest scam ever, just a gatekeeper to keep people out. It is absolutely terrible. It makes no logical sense, compared to all the things that you can do very legally without any sort of sophistication or hurdle, like losing your life savings on a hand of blackjack. That is fine, but if you wanted to invest$1,000 in start nine, no, no, no, we must protect you. It makes no sense. It's terrible, and it's probably because, like, the government hates you, and there's a tremendous amount of wealth that can be made in this area when it does what it's supposed to do, and when you're right. And that is, I hope it changes. There's all this talk about Trump potentially doing some sort of test or changing the rules. There's other ways you can qualify for an accredited investor right now. You could have a series seven, I think, or a 65 if you happen to have that, if you have some sort of experience working with an investing company, it's not even very specific what that question, what that experience is, of course, if you have a million dollars, or if you've made 200 I think it's $200,000 in the past year, and you have the expectation of making it in the current year, and it's a self certification process where you just click the button, and that's pretty much it, and that's the way it is by design, actually. So lightning ventures and REG D offerings, these are 506 B's and 506 C's are these type of offerings are for accredited investors, and there are certain rules that you can't advertise them. 506 B's, you can't advertise. You can only have a certain amount of investors in every deal. You can only raise a certain amount of money for every deal. And these are what people refer to as SPVs, or special purpose vehicles that are created for the sole purpose of investing in that one company, that won that one fundraise. So that is what we do at lightning ventures. And I think we've deployed maybe around $10 million or slightly over through the fund and our syndicates there, we've invested in probably maybe 44 or so Bitcoin startups or Bitcoin only companies in the group, and there is a new form of fundraising that is called equity crowdfunding. Okay, crowdfunding is a messy word because people think of crowdfunding and it's GoFundMe or, you know, Patreon or Kickstarter or geyser, also a portfolio company. And crowdfunding, equity crowdfunding is actually raising real, real investments. These are real equity with similar, okay, type of instruments that you would have on the private side. Okay, they they work almost the same, but where the retail investor can actually participate on maybe not quite the same terms, but very close terms that the VCs or other people would. So this came about in the Jobs Act, which was like, jumpstart our small business, something like that. And Obama in, I think 2012, or 13, and the first company was actually we funder. They kind of led the charge and came out and said, we're going to do this. So this was important, because up until then, as a founder, you could not raise from unaccredited investors. So it helps the founders too, because you can leverage your fans and people who love your company. And you know through this bureaucratic sort of tool that I am now navigating myself firsthand, let me tell you, not easy, but if you go through this route, you can raise money. Money from retail investors for maybe even as low as $100 or a few $100 so there's been some famous companies that did some pretty big reg CF rounds like, like, what is that big mailer company? It's a publishing No, it's a publishing platform where you put your blog out, but yeah, that, there you go. I'm sorry, but they did a pretty big reg CF round where you can, you know, send out one email to everyone who uses your company and say, Do you want to invest in us? And it's just a really cool way to leverage your the people who love your company, right? And then you've created a new bond with your customers, and they are now your investors, and they are just that much more your biggest fan and your cheerleader. So that was the reg CF that came about, not easy, lot of red tape, not fun, and there's been a few changes to that law over the years too, as far as how much you can invest, but, but basically, it allows nearly anyone to invest in these companies and participate. So the goal, well, always my goal and passion is to democratize this and to bring it to everyone, right with lightning ventures, the minimum is always$1,000 for those accredited investors. So if you wanted to kind of get your feet wet investing in a few of these companies, you could for not much money. You can read updates from founders, see how you can be helpful, all that good stuff. But thunderfunder is kind of like the next iteration of the the next step further where we can really open it up to almost anyone globally, even to allow them to participate in this funding. So that's what we announced in July of last year at Bitcoin 24 in Nashville, and we're still babies. We're in our first year. We had two live deals on the platform right now, and we're just figuring it out.

Israel: 27:09

Build with Bitcoin is a proud affiliate partner of river. River is a financial services company that allows you to purchase, sell and transfer your Bitcoin, all through a great suite of products high security standards, and as of recent even allowing you to earn a Bitcoin yield on your US dollar cash deposits for a personalized onboarding experience. Go to partner.river.com/build, with Bitcoin. Remember when you were speaking to all of that, I got to spend a summer in 2015 mazetta. Are you familiar with our crowd?

Mike: 27:38

They're basically, oh yes, that's the Israeli company. Yeah, you know, they don't let us investors invest.

Israel: 27:45

That must have changed. I know a few years ago they did. But back to your point this, this can be a bit of a regulatory, you know, confusing environment, yeah, I'm not sure what they do or don't do now, as far as US investors. But I mean, I did see the power of of you know, a lot of these things that you mentioned, just the accessibility having people who don't maybe have that massive check size, but still want to participate in these private markets, be able to go along for the ride. The community building aspect that you mentioned is just so powerful. I also saw how, how that they can be just, you know, the the promoters of that product or service, naturally, because once they're even, if it's just $1,000 that you've invested in a private company, now it's, you know, that that's small slice is yours. And the kind of ripple effects can can be actually pretty profound and and quite successful actually, as well, by the way, but you know, to to to all of this mission that you're speaking to, Mike, as far as kind of democratizing this accessibility to private markets, maybe if we it'd be great if we can just step back a little bit and Help, you know, help get your perspective for listeners on, you know, why private companies as especially with, you know, we were just kind of talking a little bit about this before we started recording the episode. There's so much going on right now with all these, you know, meme coins and tokens. And, you know, it's, it's not an easy economic environment right now. So, of course, people want to participate in the growth of the economy. You know, everyone's looking to get ahead. And unfortunately, a lot of these other things can be full of scams and false utility, etc. Why? Why for you, is it important to to distinguish this private company sector?

Mike: 29:40

I definitely want to come back to the carried interest on the on the accredited side, versus the reg CF side, on the crowdfunding side, and just the plethora of things that you can invest in, versus the smaller amount, okay, and kind of how that works. Because when you go on some of these platforms. Forms, and you see hundreds of potential investments to be made, versus, if you're enlightening ventures, and we have maybe one or two live deals, kind of how that works, as far as what a numbers game is and what isn't. But why private companies? Well, if you thought that Airbnb was a cool idea and invested 25 grand into their first round. I mean, at the IPO, I think that that was worth, like, a billion dollars. I had, like the slide in a presentation, and a lot of these things, there aren't many places, or even, like a Coinbase, right, as much as everybody hates them, if it was, you know, 2013 and they just got out of YC, and you liked Bitcoin, and you had your deal flow up, and somebody sends you a deal for Coinbase, and you invested, like, $1,000 there was probably, like 4 million bucks at their IPO, certainly, certainly seven figures for sure, right? Because there's dilution, and there's all these things that are also kind of unknown. So there really aren't many places where you can get those sort of outsized returns. Yes, you could get you could get them with Bitcoin over certain time periods. And there are Bitcoin startups that have outperformed the price of Bitcoin over certain time periods. Everyone's really excited because fold just went public, and I got lucky. It was one of my it was an early angel investment. Had nothing to do with lightning ventures. It was before lightning ventures. But, you know, I sold a Bitcoin to at 10,000 in October of 2020, to invest in fold. And what happened since then? Well, the bitcoin price ripped up, and then it crashed again, and then it sat around for a while, and kind of all of these things that happened, no decisions. And now fold this public right? And you know, it hasn't all shaken out yet, because there's a lock up period and there's everything else right. Still couldn't sell it if I wanted to, but as of right now, that investment 100% probably 2520 is much larger of a return than just having Bitcoin. And that goes the other way too, right? That goes the other way. That's just, that's a good example. It's nice to have a good example. There's plenty of not so good examples as well. But you know, over a certain time period, and that is one of the most important parts about it, is the timing okay? Because, you know, somebody wants to say, right now, why should I invest in one of these Bitcoin startups when I can just buy bitcoin, and if bitcoin has a great week and is up 10% you know, these investments are never going to outperform the short term. In fact, it's, you can't even really track it, you know, until much later, okay, but over a long enough time period, and through different cycles and at different times, and a lot of that depends on the overall breadth of the market and how the major indexes are holding up, and what the IPO market is like, and everything else it can certainly outperform. So I like to think about it as you save in Bitcoin and you invest into bitcoin startups, or even early save startups like these are two different buckets. It's not one or the other. If somebody doesn't have Bitcoin, I would never even feel comfortable with them joining and investing, they need to buy bitcoin first, of course, and then maybe later, start to think about allocating some percentage of their money into some of these early stage startups. So I think it's super fun. I think that by having your deal flow kind of dialed in, you're always on the tip of the sphere for everything that's going on in the world. Okay, even if you're not investing. But if you're in some really, really smart, good, awesome VC syndicates, you're seeing, you know, you're seeing everything that happened in restaurant tech, you had the first look at it right before sort of DoorDash and all these things were like normal you saw when they started, when they all sort of started, or, you know, the buy now, pay later, or the robotic lawn mowers, or, you know, everything that's happening in the world. You get a front row seat at technology, whether it's sort of, you know, rare earth mining from satellites in space or or even space exploration. You know, there's a lot of SpaceX competitors out there that are doing other things too. So if you like technology and you like seeing really cool stuff that people all over the world are building and have the opportunity to make. Maybe invest small amounts in these companies, knowing all the risks and all that jazz. I just think it's a really fun hobby. I just think it's one of the most exciting, coolest things that you can spend your time doing.

Lynne Bairstow: 35:12

Glad that you brought up fold, because that is the first true Bitcoin company to go public, to have an IPO. And then there's also a number that have been acquired too, but I mean the other the other side of the coin, that I love about what you're doing is it also provides founders with the ability to raise capital to create their companies. So venture capital is hard at the early stage, and I think it's especially hard for Bitcoin companies not not because I think a lot of the venture capitalists don't understand the technology promise of Bitcoin, just like many did not understand the technology promise of AI, or it was just hard to understand at first. And now, of course, everybody's on that bandwagon. But there is also the trend toward tokenization for anything involved with digital assets and quote, unquote web three. And so they thought, Well, why don't you issue a token for your company? And most pure Bitcoin companies won't go that route because they're based on the fundamentals of Bitcoin versus other cryptos, but it you are providing a really important service and great service for the companies to be able to raise funding to take it to the next level. So can you talk about how, how the founders approach you, and how they become one of the deals that you that are featured in lightning ventures or thunderfunder Like, how, how does that relationship come about? And and so for founders that are out there listening, how do you, how do they reach you to get on, to get vetted and listed.

Mike: 36:51

So both crowdfunding and raising from a syndicate, and there are many different types of investor groups. Okay, there might be the Miami tech investors, or, you know, maybe the the Tel Aviv investors, that maybe they focus on a certain geography or certain area. And you can just picture it as a group of, say, 50 people who get together on the third Friday of the month, and maybe you bring in a deal, and you're like, Hey, I just did three calls with this founder, he's building the best widget in the world. Okay, this is, this is awesome, and you present that deal to that group of 50 or so people, and maybe, if you get enough interest, you'll start to pool the capital from that group together to make maybe $150,000 investment, right? If there are 50 people in that group and they all invest three grand, then you collectively as a group have made that investment. So that's kind of like how they work. Maybe the person who brings in the deal gets a little bit a little bit of a bonus, or however kind of they're structured, so it's a super powerful way for a founder to access some of that early capital when they need it, maybe to make their first one or two big hires, or to get that MVP out the door, or to just get a little bit of cashola in the bank so that they can, you know, take the next step. So the syndicate model is great, but remember, it's all about how the overall market is so before, things were pretty loose, where maybe it's pre product, you know, they could raise a few 100,000 or even a million dollars fairly easily without actually having the work done. We haven't been in that market for quite a while, but it is definitely powerful to ship that money to the founder on the reg CF side of things. It's kind of the same way where it's an easy way to spin up a deal and maybe raise $100,000 and you can go back and start to build and you know, it's not, it's not a donation, right? These, these are investors. They're investing in you, not only because they they support you and all, but it's not like you're saving the manatees. You ultimately have to deal with them in one way or another. So it's definitely powerful for a founder to be able to raise from both sides of these networks. It's just kind of about what's a better fit and what makes more sense. For example, on the reg CF side, you have to file something that's called a Form C, which is depending on where your company's at, a 25 to 50 page document of your financials, whether that you know that, depending on how much you raise, doesn't need an audit. Does it not need an audit? Does it need a review? Did a CPA have to look it over? But you have to ultimately have your form C in a it's public, it's on, it's in the SEC website. You can you. Look up one of the companies that's doing a reg CF offering, and that's not a good fit for every company. Maybe there's some companies who don't want that information out there in the public space, and they don't really want balance sheets or anything out there. So, you know, the public side of things that is a trade off, and maybe that wouldn't be a good fit for them, so they want to stay on the private side. The other thing is, is, you know, kind of all your information is out there. There's a lot of information out there for your business. So that might not work, maybe an early stage company who doesn't really have much to think about, because maybe a lot of those numbers are zeros on their sort of on their income statement. They don't really have anything to lose, and they like the idea from raising from anyone. So, you know, I think all these websites, including ours, have a way that you can click on the pitch us sort of submit. And you know, it's the same few questions, a lot of places that you go. And those questions are good exercises. You know, we're doing them right now for something that we're working on, but you know, what problem are you solving? And all of this good stuff, and identifying competitors and kind of going through the motions, and then we would do a couple of calls with a founder, and then we would start to prepare the deal, and we would take as much information as we can, maybe they have a deal room. I mean, great tips for founders is to have a very well organized deal room, or at least have an easily shareable link that has kind of all your information and there may be a short executive summary, you know, maybe pitch deck, maybe there's some projections, maybe there's a certificate of incorporation, or a couple of other things. But at the earliest stages, companies don't really have too much to have in their deal room. And then we would produce, like, a Deal Memo, where we would write why we like this company and why we're investing our own money in this company, and then we would send that out to everyone and spin the Wheel of Fortune and see how we do. Sometimes we'll host an investor call. Sometimes it's a private call if the company's not really too comfortable with having something that's on YouTube or or whatever. Sometimes people in the group submit questions that we have answered by the founder and and that's pretty much how that goes with with thunder funder, it takes a little bit more. It's a little bit harder to get a deal up. There's a certain amount of days that you have to wait after you do something, after you submit the form c, via the Edgar tool to the SEC, you have to wait 21 days. And you know, there's a little bit and ironically, it's 21 it takes a little bit longer. But when the market's supportive with the syndicate model. I mean, we've had start to finish 10 days, like shipping a founder$250,000 and that was just, and that was done from the from the day we decided, hey, we're gonna, we're gonna invest and do this, to preparing the deal, to shipping it out, to our people, to the funds clearing, and to us wiring and being done so we were known for speed when the market supports it, and it can be very quick. You know, that's another difference between the sort of reg D, accredited investor side versus the crowdfunding side. We're just getting ready to close our first deal. March 31 is the deadline for jolts. We actually have not closed a successful deal on thunderfunder just yet, so we'll see how that goes.

Israel: 43:57

Well, it's shaping up to be an interesting first case study for you guys. Maz, I mean, jolts was, was in the spotlight recently, with that bit, with that big tether announcement, moving over to the lightning work. And I believe jolts is providing some of that infrastructure.

Lynne Bairstow: 44:13

We like we like jolts. We like Ian and jolts and the team there. They're we think they're great. They've been on the podcast,

Israel: 44:18

yeah, love what they're working on. And, you know, speaking to the infrastructure, and there can be so many, so many different sectors of the Bitcoin, you know, ecosystem, that are investable at for I know, with underfunder, you're just getting getting going, but lightning ventures, can you give us an idea of what you guys invest in? I mean, are you kind of sector agnostic, just as long as it's building on the Bitcoin protocol, you're open to anything, or are there certain areas of particular interest more than others?

Mike: 44:49

So definitely Bitcoin only, and Bitcoin is the focus. Now, after the fact, if a company decides to add Ethereum or something else. Emails to their wallet. You know, that's really out of our control, and we could just cheer them on, and I hope they do great. But what we found is, is that anyone who even entertains that idea, it's usually like less than 10% of their revenue when it really comes down to it. So, I mean, we found that most companies from being a Bitcoin only and embracing that actually get a lot more goodwill and mileage than they would by, you know, adding Solana or something like that, which is, you know, it's not really gonna, gonna make too much of a difference. So it's all things Bitcoin, you know, we haven't really done much with mining, the mining, mining just got decimated. We closed deals all through this bear market, which was kind of a miracle that we were able to, you know, hit our minimums and continually close deals. We had a few that didn't, because you do have to raise a certain amount of money or else, unfortunately, the deal can't close because there's SPV fees and all of these other things. But the few deals that we tried to do with mining, they just didn't really have a lot of they just didn't have the interest. So we don't have much. I mean, we co syndicated a deal in block stream. I invested in block stream personally. I guess you could call them a mining company. There's certainly a mining component there. We co syndicated ocean. It was called mum Lynne back then, but that's pretty much it on on the mining front. So love it. I mean, it's great, but we just haven't done much in that area. And then you also get to know what investors, what their flavor is, you know, somebody with, like, flared natural gas in the middle of the Nevada desert and like, a shipping container and filled with s nights. That's just not really my style. I just don't really know much about that. It's just like, not, not really for me, but maybe like a hash rate marketplace. I mean, I love that, you know, in the hosting business and lots of other parts of mining, so you get to know, like, what people, what people are really interested in? We did make one investment into an ordinals company. I managed to escape all of the death threats. At that point in time. The company is actually doing very well, but we put in the memo. Hey guys, listen, this is it. As far as ordinals go, I don't have any ordinals. I never had one, but this is like the pick and shovel play. So if you want exposure to this space. This is the one. And we actually did two very good syndicates for that company. So not really much of the whole like, you know, sort of tokens on Bitcoin and earn 20% APY on this other sort of Bitcoin. We don't have any of that. Maybe I'm just not smart enough to understand those projects. You know, that's very likely too. But as soon as we kind of hear token or any of that stuff, we really don't, don't do too much with it. But hey, that's just our you know that that's, that's just what we're doing, right? I know there's a lot of people that invest in all that stuff, and they're doing great, and God bless them, you know, but you probably just shouldn't invest in what you don't understand, and I certainly don't understand, how you can make 30% APY on some staked Bitcoin token. So that's kind of that. But look, I love the tradition, the stuff that bridges the traditional finance with Bitcoin, stuff like fold the rewards companies, the SATs back, type of deals. I love the lending stuff. I know we just came out of this whole terrible time, but lending is going to be big. It's going to be big with Bitcoin. So look, I love a lot of that traditional stuff, the exchanges, right? Boring, but we're in so many of them all over the world, right? Whether it's BIPA in Brazil or relay in Europe, you know, strike here in the US. I mean, Beaver, Bitcoin in Canada, Amber in Australia. I mean, we're just in so many of those. And they're all kind of having record months right now. So it's not really the most exciting sort of stuff, but I love those, those type of businesses, but we are all things Bitcoin. You know, it's not just about the Lightning Network. A lot of people get confused with lightning ventures. They think we're only investing in lightning projects. I mean, I think that lightning is the most important thing, because I think that's where it's going. But that's not just the only part of what we're focused on.

Lynne Bairstow: 49:49

It feels like you get a lot of feedback on your on your on your deals that you present to the community. And I want to just take a minute and talk about the importance of community on your platforms. How. Hmm, how active are they? Or do you see any kind of parallel between the active engagement of the community members toward a deal and the success of a deal? Does that kind of fuel the you know, the you know, the the increase in the investments for a particular deal? And how do founders engage with the community? Can they engage directly? Are they on the platform just talking to people or what? And how do you encourage more people kind of getting involved and sharing their opinion and their thoughts?

Mike: 50:31

It's something that would be nice if I could figure it out. And I think everyone struggles with community because it's really hard. And you know, there's etiquette with accredited investors in this world, and if somebody isn't, you know, I mean, there's zero tolerance for leaks of information and breaches. It's not that there's the most sensitive information out there, but certainly can't be shared. And you know, if somebody breaches that, which thankfully has not happened, none that I know of, then we would have to remove them. And you know, there's this kind of funny meme where it's like a guy looking out the window, and it says, you know, that angel investor who invested $1,000 in your company watching your every move, you know, and there's definitely information sort of rights and privileges based on how much that person wants to invest. So if somebody wanted to invest, you know, $25,000 or more into a company, they should absolutely do, whether that's through lightning ventures or not. They should absolutely do that, call with the founder, ask their own questions. And I would be very supportive of that. You know, it's hard because you have a telegram channel and you want everyone to be respectful. You don't want to bash a founder in there. You don't want to say a bunch of a bunch of things like that, and Lynne, I wouldn't put up with it either, but, you know, it's a private telegram channel. I mean, what else are you gonna do? We're actually looking for a CEO for thunderfunder, so I just put the job posting on Bitcoin or jobs today. I hope we find an all star who can really focus on just developing that community, because thunderfunder has, like, a messaging feature built in. Granted, it's still just a web app. We don't have a mobile app, but there's a lot that we could do with the community there, especially, right? And then it's, you know, do we get off of telegram? And now everyone hates that. Telegram is a disaster, too, by the way, you know, but a lot of people struggle with this, you know, they have abandoned slack, sort of groups that aren't very active, and community is really hard. And you know, it's when we can, we're just, we're just trying our best, and it's something that can be improved. And hopefully the new CEO of thunderfunder can really emphasize that community and maybe do weekly calls where anyone can kind of sit in and ask questions about investing, or maybe there's founders on there. Community is a whole specialized I don't, I don't know anyone who's like, got community, like, fully dialed in, you know, maybe you do,

Israel: 53:26

no, I mean, well, it's certainly, I think, one of the toughest challenges in this, in this overflow of information environment as well, right? I mean, I think we've all experienced the good and bad of technology as well in that regard, that, you know, it's hard. I mean, you got to kind of pick and choose which, which platforms or, you know, newsletters or online communities or in person communities you're a part of, because we're just, we're just inundated with with information every single day, right? So, I mean, I, I certainly see that that challenge in the community aspect, but you know, I'm very glad that you guys are doing your part with both of these investment vehicles. Maz, I mean, there's definitely a gap there between in private markets, between demand and availability of the private sector investments, and being able to lower those barriers. Yeah, there's other considerations, and you know, there's things to keep in mind, of course, and uncertainties. But it sounds like you guys are doing a very good job at being very transparent with with both sides, the founder and the investor community. And you know, we are definitely looking forward to seeing a lot more of the the companies that you're able to support and some of the results a little farther down the line, right? I mean, we're not there yet where we're seeing a lot of the success stories, exits IPOs, but I think they're going to creep up a lot quicker than people, than people think. Yeah.

Mike: 55:00

It'll be nice to see what happens once things enter that kind of harvest season, and maybe there's a lot of M and A activity that picks up. And will there be a lot of consolidation with some of these Bitcoin exchanges or in this space together? But mainly, you know, if you can manage expectations, which I really try to do, because, you know, if you talk to any founder, and I literally just experienced this putting together a small round for what I'm doing, we raised a little bit of capital and just VCs just telling you one thing, and then not doing it. And I think that it's almost impossible for that to never happen in in the VC land, I don't think it's possible for it to never happen. But, you know, just trying to manage expectations, if we're doing a syndicate deal of how the market is right now, and like you should expect this, right, let's, let's try to get here, and if we get here, that's great, you know what I mean. But just managing expectations, same with thunderfunder, you know, it's a new portal. You know, we don't the regulations are so absurd for what we have to deal with, as far as what we can say, can't say. I mean, I just hope Trump just cuts this whole thing and just gets this whole thing just, just rip it apart. Because, you know, we can't even share, like, the jolts news. You know, the jolts had the biggest company defining news in else, in El Salvador, where I first met Lynne in person. And we can't even share it with the network like we can't. And we did our like, check in call with FINRA, and they're like, tell us some of your struggles. It's like, Dude, you know, I can't even email everyone on our platform and just say, did you see this news? Here's 20 links from like Yahoo News on down. Not my editorial comment, not my opinion. No rocket ship emoji. Like, how do we even, like, how do we even, how help me, you know, and it's, it's very challenging. So we're just trying to figure out all the creative ways that we can do that.

Lynne Bairstow: 57:14

Yeah, I think you know, you're, you're the expression, the frustration you expressed at the very beginning is, is just so spot on? It's that, you know, government regulations are protecting people from investing, but not the, you know, not the wealthy investors, but just the individuals. Yet they can go to Vegas and do whatever they want. They can't mean, you know, it's just like, and there are people in the Bitcoin space who knows so much about this technology probably know certain no circles around you know a traditional VC investor isn't taking the time to understand Bitcoin so they could look at the company and really understand why this is going to be a benefit to advancing financial transparency, reducing fees in traditional finance and and just providing a better global financial experience. So yeah, it's, it's a shame that the regs exist, and thank you from the community for spending the time and money and effort to provide a platform that more people can can be a part of, both on the investing side, in the in the funding side. I know we're getting close to the to the hour, but I have one question I just wanted to ask you, as somebody who's been involved in Angel Investing, and you know, been a part of some of these super successful and an unsuccessful angel investments, and then now going into Bitcoin, what? What technologies? We won't ask you to pick favorites for in terms of company specifics, but any trends in technology, Bitcoin technology, or Bitcoin companies that you are you personally are especially excited about.

Mike: 58:52

Well before, there really wasn't too much that you could invest in, and now Bitcoin has kind of entered nearly everywhere, you know, whether it's ad tech or mobile or privacy, just kind of, or even, you know, crowd health, when they came out in the in the healthcare space, even that company daylight computer, they have the tablet there that's, you know, it has no blue light. You know, they're adding a Bitcoin component to what they're doing. So, you know, it's kind of creeping into every industry. And honestly, what I'm really excited about is finally our US. Bitcoin startups can start to operate in a non hostile environment. It was just so difficult to do anything, you know, if you wanted to mix sort of your basic, you know, routing an account number to something. That even has anything to do with Bitcoin. It was like nearly impossible. I mean, some companies couldn't even get an operating account if they were a Bitcoin company for their perfectly legitimate company, they just could not operate in any way. And it's just like we're just starting to see it now, where a lot of our kind of starting us Bitcoin exchanges, wallets, sort of financial products, are just now able to, hey, we have three banks that are now finally interested. Two of them look great. You know, it's like those sort of partnerships were like impossible under Biden. It was just so brutal. And, you know, living through that for them and not dying, if you were a Bitcoin startup who got through that and didn't die, you're really in great shape. I like a lot of the boring stuff, I think nearly every one of our portfolio companies, we've had a few that have struggled, but, you know, they're all alive, which is the most important part. If you're in the business of buying and selling Bitcoin right now, you're probably having record months. If you're not, it can be very challenging, because right now, everyone just wants more Bitcoin. And this is kind of what we're going through as you know what? What I do with demand varying, okay, where people want more Bitcoin, I get it, I understand it, but they don't want to buy collectibles, right? I love scarcity. They're still doing tremendously. But just caught up the other day. For example, they don't want art as much, right? They're still doing auctions every week, and they're doing great and whatever, but when you put it on a chart with how they were doing during sort of peaks of bull markets, it's not the same. So something like geyser, you know? I mean, people love to donate, but do they really donate right now more at a time when everyone just wants more Bitcoin, you know? And that's sort of the challenge, is, if you're not selling, do people want to invest in Bitcoin startups right now, or do they want more Bitcoin? So we're still at that kind of period. There's, there's like a balance, and it's a lagging indicator to where. And it's not just like a certain number, oh, when it gets back above 100 it's going to change, you know, oh, when? Because, you know, it takes a while. The wealth effect, the IPO market opening up again. Interest rates may be coming down. A lot of things need to happen for people to really feel comfortable and to really start investing. And there was a point in time where it was the opposite way, where people were borrowing against their Bitcoin to invest in Bitcoin startups and all of these other things like it goes the other way as well. And if we weren't focused on Bitcoin, it would probably be a lot easier, because every person in our group is benchmarking everything that they do against Bitcoin. You know, if we were just in AI or something else, people wouldn't really be thinking, well, do I want to invest in this really cool new AI startup, or do I want to buy five grand of Bitcoin, you know, because that's not in their face all day, but that's like what we specialize in. That's what we do. So it even makes it a little bit a little bit more challenging. The other thing is, is to see markups in your portfolio takes a long time. So maybe something like relay, for example, in Europe, you know, we've probably 5x or 6x their valuation based on where we first invested. And it takes a while to get that into the LPS head, you know, when they're seeing it in the account like it's still on paper. You know, it's not necessarily real. Anything can happen. So we have some portfolio companies with true, real markups that are doing phenomenal, but it's hard to feel it. You know, it takes, it takes a while for that. So just waiting for that to to catch up.

Israel: 1:04:22

Well, you know, thanks for your focus on, on the sector, and democratizing that access, that that we, you know, we're able to cover in this hour, we didn't get into some other interesting talking points that we would have loved to cover, you know, right now that you were just kind of mentioning the blessing and curse of having Bitcoin as a kind of hurdle rate, and that mentality just creates so many new dynamics, right, both from a founder's perspective on how you build company and how you deploy resources to an investor's perspective as well, because. They're kind of benchmarking around that. And there's so many interesting themes that, you know, Lynne and I have been covering with, you know, how do you incorporate Bitcoin as a treasury as it and there's just, there's many aspects to this conversation that we would have loved to, you know, expand more on Mike, but maybe we can. We can do that in a further episode, we'd love to get you back on

Lynne Bairstow: 1:05:23

gonna say is, I knew when we started the conversation that we had so much to talk about. But you know, there, there are an increasing number of Bitcoin companies, but there are very few funds and and vehicles like like your platforms that focus on Bitcoin only companies. So we want to make this a regular talk, and have you back on regularly to kind of check in, see how things are doing, see how the platform's evolving, see what deals you're seeing that are exciting. So this will just be the first of many future conversations that we look forward to.

Mike: 1:05:59

Mike great, and I would love to talk about that Bitcoin corporate treasury, both for Bitcoin startups in general, and even my own personal experience with that now that people might be able to learn from and and how we've degenned Our corporate treasury into bitcoin only. So yeah, there's definitely a lot of fun things to unpack. I hope you all have me back. And if you guys, or anyone that you know is interested in that thunderfunder CEO position, because I think both of you guys would be fantastic, but you probably got more important things to do. Please keep that in mind. We want

Lynne Bairstow: 1:06:41

to give a shout out. Well, we'll have links in the show notes, so if there's a link to the position, we can add that in. And then also, I know that, you know, we're not actually, I mean, you had mentioned that you're doing a fundraise, so I'm just going to put this out there, if somebody is interested in and learning more about that opportunity to contact you, so we'll have your contact information in there too.

Mike: 1:07:04

Yeah, I hope that I can send you all the links, and you can put a few below. But if you're a founder, or if you're building something and you're looking for ways to raise money, please fill out the forms. At least. We'll get it in the queue and in our database and on our radar. And you know, even if it doesn't lead to funding, it might lead to intros to portfolio companies or something that's really good for what you're building right now, if you're an investor and you thought thinking, hey, you know, I'd like to learn a little bit more, or, you know, maybe even just get in the flow of what is going on, you Know, I hope you sign up and take a look at what we're doing and, you know, invest or not invest, and you might find your next career jump, you know, just by, just by being in there. So that's the best thing, is to just join the network and see where it goes.

Israel: 1:07:56

Well, we appreciate the time Mike, and you know, where can people find you personally, where's the best place to reach out? Are there any maybe speaking engagements that you'll be at any conferences coming up?

Mike: 1:08:07

So I'm trying to dial it back on the conferences. I think that you know, Vegas is going to be great in May, so certainly there, and we're going to do a killer Satoshi rakamoto. I'm working out the details right now, but the Vegas rockamoto, I'm hoping, is going to be epic. Usually every year, at least. The past two years, we went to BTC Prague, which was a phenomenally run event. It was awesome. Baltic honey badger, I've been twice, is an amazing event in Riga. That's killer every year. Riga is an amazing city. That's one of the best parts about Bitcoin, right? It brings you to places that you never even think of. I can, I can almost promise you I'd never make it to Riga in this life if it wasn't for that conference. And and my wife actually works for Bitcoin magazine, so I know that they have the Hong Kong conference coming up in August, so maybe I can tag along and be a plus one over there. So nothing in the immediate like next two months, though probably not until until May, and I guess ltng dot ventures or thunderfunder.com and you click one of those buttons and you find me on there somewhere, and look forward to hearing from y'all.

Lynne Bairstow: 1:09:24

Thanks again so much. We really appreciate your time and all that you do for the ecosystem.

Mike: 1:09:29

Thank you, Lynne, and Israel is great chatting with you, and I have a feeling that we could have chatted for a long time and bored the hell out of everybody, but maybe we'll save some of

Israel: 1:09:39

that. We'll bookmark it for next time. Thanks, Mike,

Lynne Bairstow: 1:09:49

thanks for listening to the build with Bitcoin podcast. If you found benefit in what you heard in this episode, we'd truly appreciate it. If you would like share or leave a comment on whichever platform you're listening. Lynne as this helps others find us, which is especially important for a new podcast. And as a reminder, our content is intended for educational and entertainment purposes only, and is not to be considered investment advice or recommendation to invest in any company or asset mentioned in the podcast. Build with Bitcoin is a proud affiliate partner of river, a full service 100% reserve custody, Bitcoin only financial services company for your next Bitcoin purchase, use our exclusive link partner.river.com/build, with Bitcoin. Thank you sincerely for being a part of the build with Bitcoin community.