Vision, Grit, and Empathy - How to Build Companies that Thrive in Challenging Times with Next Frontier Capital

In January, Next Frontier Capital announced that in 2019 alone, for the first time ever, venture capital investment in Montana exceeded $150m dollars. In this free webinar, partners from NFC will explain why they are optimistic about the future for Montana and the Rocky Mountain West.Speakers:

Full Transcript:

Christina: Hello, everyone. I'm Christina Henderson, Executive Director of the Montana High Tech Business Alliance. Welcome to our webinar: Vision, Grit and Empathy: How to Build Companies that Thrive in Challenging Times with Next Frontier Capital. This event is part of a series of free webinars the Alliance is hosting in April in May, you can find the full schedule online at mthightech.org/webinars. We would like to thank the board of the Alliance and our members for making this series possible. In January, Next Frontier Capital announced that in 2019 alone, for the first time ever, venture capital investment in Montana exceeded $150 million dollars. Today, we are pleased to welcome two partners from Next Frontier Capital, Les Craig and Julie Penner, to tell us why they are optimistic about the future for Montana and the Rocky Mountain West. We'll be conducting this webinar in Q&A format, I will serve as moderator. So for those of you who are listening in, if you have questions, you can type them in the chat box or the Q&A tool. And I also have a few questions that we assembled in advance. So to kick things off, I'm first going to have Les, then Julie introduce themselves and take a few minutes to tell us about Next Frontier Capital. And then we'll go into the Q&A. So with that, I'm going to turn the floor over to the two of you.

Les: Thanks, Christina. Before we begin, I just wanted to say thank you more broadly to Montana High Tech Business Alliance and the entire Montana tech community. I mean, obviously, we're in strange times, but I think, especially what Montana High Tech has done to put on this webinar series, all the folks that have participated, I think I've sat through every one live so far, and really have enjoyed the content. So hopefully, we'll deliver today as well. So I'll begin with my  quick introduction, I moved to Montana and once again, Les Craig. I moved to Montana in 2015. I joined Next Frontier Capital in the fall of 2017, when we were kind of in the midst of raising our second fund. In that fund, I've led investments in five of the 15 portfolio companies from fund two. I'm a mentor with Early Stage Montana 406 Labs, the C2M Beta Programming and the Catalyst Seed Fund, so that's some of the stuff I do across the state. And I'm a two-time founder, I raised venture capital on one of those journeys with a company called Red Owl Analytics. And then I also bootstrapped another data science services company called The 20. I did those two things before I moved to Montana. So that's me. Julie?

Julie: Yeah. Thanks, Les. And thanks, Christina for the invite, as well. It's lovely to be tied into this unique community. So I'm originally from Montana. I grew up in Helena, my family still lives there. In fact, my grandmother lived about 10 blocks from where Les is right now. So I have deep family ties back to Montana, but I live now in Boulder, Colorado. And in between those two places, I went back east and I did school on the East Coast and it was really there that I got my start in startups, I worked for a consumer product that monitored your sleep called Xeo. And I was when I was still in college, so very young and didn't know anything. And then really got the bug for startups. But I missed the mountains. So I moved back West and I ended up in Colorado and did graduate school here. And it was really--I landed in Boulder at such a unique time, right? It was right when TechStars was starting, right when all these sort of ecosystem partners were really starting to blossom and I've got to be part of that community. I was at the very first startup weekend that was here in Boulder and really got to see all that stuff develop over time, and really kept my love of startups growing, and ended up about six years ago at TechStars Boulder. So, a pretty well known accelerator, and I was with that group for five years. So I worked with more than 60 early stage startup companies and just loved the intensity and the kind of innovation that I got to be part of there. And then, you know, in the last couple months, I have joined Next Frontier Capital as the newest partner, which is thrilling for me to be tied back to Montana in this really special way but also to continue to be able to invest in Colorado and in the West in general. So that's a little bit about me. And I think Les you had some information to share about the fund kind of overall.

Les: Yes, I am sharing my screen now real quick here. All right, hopefully everybody can see that. Alright, so what I'm going to do is just a quick overview on the fund for those of you that aren't familiar with our firm or what we do. So this is who we are. You've got 50% of the partners on this on this webinar today. Those that aren't here are our co-founders, that would be Will Price and Richard Harjes are the other 50% of our team. We also have two amazing associates I want to give a shout out to, Jared and Katie, both unbelievable, talented young people that are really helping our firm grow and and develop some amazing process. So who we are, we've got 20 active portfolio companies that's across two funds that we that we've raised, the first fund was raised in 2015 as a $21 billion fund, 10 portfolio companies in that from that fund, and then the second fund was a $38 million fund raised in 2017, and we have another 15 portfolio companies in that fund to date. Across both funds, we have 15 active portfolio companies that have some sort of headquarters or presence or employees of some sort in Montana. And you know, one of the stats we're most proud about is just the annual increase in Montana in terms of access to early stage venture capital, in fact, almost almost 1,000% annual increase in venture dollar since our funds' inception. I'll talk a little bit more about that on the next slide. You know, really excited to say that, you know, we've we've brought over $274 million dollars into our portfolio names to date, and that spans both investments in Montana as well as Colorado and one in Utah. As you know, our headquarters is in in Bozeman, we have kind of a satellite hot desk in Missoula in MonTec, hopefully we'll get back to that once we can start traveling again. And Julie, our newest partner, newest member of the team is holding down the boulder office. All right. So one thing we're really excited about is how our firm is really working with local entrepreneurs across the state to drive early stage investment in Montana. And it's pretty unbelievable. If you look at the previous 20 years from '95 to 2015, a total of 144 million in total venture dollars came into the state and the source of this is Pitch Book Data. If you look, there was a single event during that time frame as well, that was about $70 million. So if you take that outlier out, I mean, essentially that 20 year period, the amount of venture dollars that were coming into the state was pretty much negligible it put Montana kind of at number 49 or 48 in the nation, typically annually. Since NFC's inception in 2015, we've seen over $342 million come into the state, and that's both in our portfolio and out of our portfolio. So, you know, there was always part of, you know, Will and Richard's underlying thesis for the firm was that if you could put a boots on the ground firm in Montana, you know, could you start to source deals could you start to find amazing founders and high growth potential companies and fund those companies and get them to follow on and what we're seeing is really exciting. If you notice here, it's about $200 million is what we've seen to date that has been invested in NFC's Montana portfolio alone. And what that means is, that's leveraging every dollar we've paid into a Montana company that we've invested in, we've seen that attract about $6 and 87 cents of outside capital. It's probably one of the stats we're most proud of as a firm, just because of our ability to help Montana's best founders raise capital. Our investment strategy focus is really this Bullseye, you know, we really want to find hardened leaders that are really forged by challenging experiences professionally. We leverage our national network to help bring syndicates together. I mean, we've had, we'll talk later on maybe about that, but we've had investors from both coasts, as well as regional funds participate across our portfolio. And our real focus in terms of bull's eye, we're a regional fund so we don't have vertical specificity in the investments we make. We focus regionally in what we call the Intermountain West: Colorado, Utah, Montana, and sort of loosely, Idaho and Wyoming. And the last thing I want to talk about as we kind of go around the clock in reverse order here. Don't know why I did that. But unique strike zone is one thing I want to talk a little bit about, because I think it's important, you know, the message to Montana's founders. This is really what we talk about when we talk about that unique NFC strike zone. And a lot of it gets back to paying capital into companies when it has the greatest potential to help them grow into a series A fundable company. And so typically, with our investment, we're looking for companies that are in the kind of 500 million to 1.5 million in annual recurring revenue, so call it you know, kind of 50 to 100k in monthly recurring revenue, typically firms that are raising two to $4 million, we see that the amount of paid in capital that typically takes to get, the resources that it takes to get to those coastal series A is typically somewhere between 2 to 4 million. So we typically are topping off some of these companies with the last money they need for growth, to get to those milestones where they can raise a coastal series A, and then we typically target 15% NFC ownership from a portfolio perspective. So, you know, in other words, we're leading deals, and that's where we'd like to be in a leading position. And we really see a great opportunity for founders at this stage to get sort of a two to three X in terms of their growth multiple when they leave this stage and get into that kind of the next the next stage of growth for coastal A. So that's kind of in a nutshell, that's our firm, and I'm gonna go back to not sharing screen. Christina?

Christina: All right. Thank you so much for that excellent introduction. A few weeks ago, Next Frontier Capital and some of your portfolio companies in Montana were featured in a New York Times story, it was called 'Seeking new business and better lives, investors on the coasts move inland.’ Of course, you've already mentioned earlier in 2015, when Next Frontier Capital started, our venture capital position in the state was low, one of the lowest in the country. What changes have you seen? You know, Les, you've been on the ground for most of those five years. Julie, as a native you have been watching closely and attending a lot of events in Montana and seeing what's happening. What changes have you seen in Montana's entrepreneurial ecosystem in those five years and how is our place in the bigger picture of trends nationally, also changing?

Les: Great, great question. You know, I'll say from when I landed here in 2015 the change has been unbelievable, I mean to say the least. When you think about, I was I was kind of going through my head this morning and just reflecting on some of this, it's almost like you could write a parody of We Didn't Start the Fire with the Montana tech ecosystem, I mean, you know, Blackstone Launchpad C2M Beta, everything Liz Marquis had built with the Frontier Angels with Pat LePointe, Early Stage Montana, 406 Labs, Catalyst Seed Fund, PFL receiving a growth equity financing from Goldman Sachs, Proficient acquiring Elicitor, Next Frontier Capital, Two Bear, Aurora acquiring a Bozeman company I mean, the list is--LumenAd, Submittable, Quick, OnX raising Montana's largest series A ever, I mean the list is unbelievable and I feel bad because I'm like leaving people out. These are all things that happened in the last five years. So it's significant. I mean, I would be, I would challenge someone else to find a more significant, rapid growing tech scene anywhere in the country. And so and then I'll hand it over to Julie in a second here, but what I'd say is VC in Montana venture capital investment and tech, the tech scene in Montana is growing significantly. That's not changing anytime soon, but more generally, it's actually growing in the Intermountain West. If you compare the decade of the 2000s to the 2010s in terms of number of deals, size, and total number of dollars invested in the Intermountain West, it's about a 400% increase, so not quite Montana's 900% increase, but it's still significant. And in addition to that, you generally see deals in the Intermountain West have outpaced national national seed stage deals per capita on average over the past decade. So there's more opportunities. There's more dollars. And all trends in this entire kind of intermountain west corridor are pointing towards the ecosystem continuing to grow.

Julie: Yeah, I'll build on that. And I moved to Boulder in 2006, so like the mid 2000s. And it was really kind of in that time period from 2005 call it to 2015, right, the 10 years prior to what Les is talking about, you saw the emergence of places like Boulder, Denver, like Austin, like Seattle, that were outside of the valley, really come into their own as entrepreneurial ecosystems. In other words, they are viable places for founders to operate and grow their business, and they don't have to eventually move them to the coast in order to be successful. And you're seeing now right what Les is talking about, or at least in my opinion, the next wave of those regional hubs, so you're seeing places like Phoenix, like Kansas City, like Minneapolis, and Bozeman is on that list. They have become next wave regional hubs where great founders can build a great business. And there are some real advantages to growing your business in a place like Bozeman, not the least of which is the cost of living, the cost of hiring an engineer, right? You know, when I look at coastal investments in early stage companies, I think what they have to pay an engineer in the Bay Area is crazy, but I'm sure somebody who's growing a company in Montana would say the same thing about paying an engineer in Colorado. Right. So I think we're seeing that advantage play out now that there's capital that will come to places that are outside of the coasts, because there are opportunities. The other thing that really shifts with that in addition to cost of living, is valuations, right? Deals are, I think, much more competitive outside of the Bay Area and New York, where there's just so much capital already there, it's inflating prices. So you're seeing investors want to get back into their target zones. And that has helped get more funding to places that are the Intermountain West and the rest of the places between New York and San Francisco. So it makes me incredibly excited because I think those trends will continue. And now that there is a basis for those ecosystems, it will continue to develop. What we found from ecosystem development is that there's a pretty outlined course about how it goes. So there is a map of what Bozeman would look like in 5 or 10 or 20 years. And, you know, same thing for Boulder, it's just like where are you on that timeline? And so all things are positive because we kind of know that this will work long term.

Les: I think it's also worth highlighting, you know, although these growth trends are indicating that this regional push is real and it's significant, there still are gaps and especially, you know, for the ecosystem. I mean, even, I just heard recently that Denver is finally at sort of a critical mass of tech talent that you know, the flywheel is spinning. I'm like, Denver? Wow, it's got to get that big? And that may be a little extreme, but I think there's certain gaps that are obvious like that, but one obvious gap. I want to point out what's relevant to this conversation is the gap that exists in funding. You know, there is unbelievable national overhang, but, you know, 130 plus billion dollars of VC overhang to fund companies. However, what's sad is that even though the per capita rate of deals in places like Montana and in the Intermountain West are outpacing the national average, national firms are not investing outside. At the seed stage, or they're only investing outside the seed stage. And there's a lot of reasons why that's true, and we could go into that. But I think the more important point to make is that with all of these fewer seed stage rounds, and more later, there's also more later stage rounds. So that's where the capital is moved towards those later stages. And so what that means is it creates this tremendous gap in funding for that kind of chasm between first money in and getting to what I keep referring to as the coastal series and this is exactly what we do at NFC has helped bridge that gap to accessing this national dry powder at the later stage.

Christina: So, we came roaring out of 2019 with a 1,000% increase in venture capital investment, maybe walk us through, from your vantage point as investment partners working with startups for many years, what have you seen happen during this COVID-19 so far? How have things changed for your portfolio companies and have things also changed for you all at Next Frontier Capital?

Julie: Yeah, it's been, I have to say, maybe the most fascinating time to watch startups. And I think, for me, one of the things is, I couldn't have predicted even if you had told me it was going to be a pandemic, I couldn't have predicted which companies would be winners, like I got to pick some of them, right. But um, you know, I have a personal care product that does kind of sustainable soap and conditioner and shampoo and their soap sales have been through the roof, right? So there are definite winners, right? Anything from remote work to personal care, but also, you know, I don't have a trampoline company, but we're sold out of trampolines. You know, now, there's a run on flour, like it's just not predictable what industries are going to have this real take off. There's a local puzzle company here, right? They're not even taking orders anymore. And so I think across my portfolio which sort of spans industries, it's just bizarre to watch. A human is totally unpredictable. You know, about a third of them have had this these huge windfalls, about a third a flat rate--they haven't been down, but they haven't been up. And and then a third of them are just devastated. Right, they touch travel or something in-person. And those businesses are really like, those are the three camps that I've seen, and their responses are just wildly different. Everybody has to adjust. But whether you're [saying] well, I'm going to take advantage of this windfall, but then, you know, I try to sock them away from maybe an impending recession that I have to whether whether the storm or whether, you know, I need to think about whether my business will continue to be flat if there's a contraction, or whether on the on the downside, like, how do I pivot this? Right, I've got to figure out something that works right now and go into crisis management, wartime CEO mode. And so they're very different. The coaching is across the map, when I think about the conversations that I've had with different founders that I've worked with,  so that's one thing, right? Is that the advice is like, so wildly different and spans quite a set of experiences. And the other thing is, from the investment perspective, what shifted is, you know, like you said, right, we came out of 2019, and we'd had this long run of success. We sort of knew what a great seed stage deal looked like, and we knew what a great pre seed looked like and what a great series A looked like, right? We had assumptions about what would work in the world. And actually one of our partners, you know, very early on, was probably six weeks ago, is clearly the one who's been through the most number of these cycles, gave us a great analogy that I've gone back to many times since this crisis started. He said, "Pretend we were on a place called Earth and we were investing in companies. And we had certain assumptions about how things would play out. We are now on Mars. And there are some assumptions that were true on Earth, that are also true on Mars. But there are a lot that aren't. And we're not sure which ones are still true and which aren't. And until we have data about the assumptions we can make on Mars, it's gonna be much harder to invest." And so we're seeing investors are both taking stock of their current portfolio and doing that, again, that coaching across those three different buckets. But also thinking about what assumptions are true in a new world, right? Like what changes are temporary, what changes are permanent? And what does that mean for the business that I'm now evaluating freshly in this new world and with this new perspective, if that makes sense. And that's like a month old. Someone talked about this whole pandemic being if it was a baseball game, we'd be in the second inning. And I think that's accurate. And so, while we're in the second inning, investors are in the mindset of investing for the ninth inning and beyond, and trying to figure out what that looks like. So keeping in mind as founders, about how you can speak to investors about the future and what data you're collecting, and why you think those assumptions might be true, I think could be really beneficial if you are in a position where you have to raise in this wildly different time period.

Les: You know, I love what Julie said, it's spot on. The only thing I would add is, I think there's something unique about this time that it creates conditions that are almost the same types of conditions that really bring out the best in founders. The uncertainty, the challenges, the pivots, the failing quickly and pivoting off kind of mantra, that's what everyone is subjected to, during this time, which is hard, but it still has this function of promoting. It's like the Ben Horowitz quote, 'maximum discomfort for maximum growth' and I would say that one of the things that this is really doing to founders is helping them see the importance of building a sustainable business to get through these times. And in some cases, that's contrary to typical high growth tech, the tech mantra, and in some cases, it's about survival more than anything. Getting through this chasm in this time period, because, just as during the previous two recessions, the.com crisis or.com bust in the mortgage crisis, there are amazing winners that are going to emerge out on the other side of this. It reminds me, we had this saying in the army that was 'mission first, people always' and that's really, it's a tough one to swallow sometimes, but it gets back to making the right choices at companies so that you can get through and survive this time period and come out on the other end and everyone will, you know, will still be able to contribute and be part of something great. And so, I would say too, there's always hard times when you're a founder, and there's always challenging times, pandemic or not. One of the most significant challenges I had as a founder, I went out on Sand Hill Road, did the whole Sand Hill Road tour, you know, pitched all the tier one VCs got a term sheet, signed the term sheet and we're three months away from running out of cash and we were we raised our A, we were good to go. And then some stuff happened and the term sheet got pulled and we were three months away from the company driving off a cliff. I mean, that was my pandemic, personally, professional. I mean, it was stressful. It was hard. It was challenging times, for me personally and for the company, but it's to be expected of all founders. And so I think, you know, this time period is not a good thing, but there are good things that can come out of it. And I think one of those is really forging founders and getting them to make tough, hard decisions, but good decisions for their companies.

Christina: We have a question from our audience. If you had plans to use 2020 to get your financials, numbers, story, etc, ready for investment, yet now you're just in stay afloat mode, what do you recommend to founders for a recalibration of that timeline for seeking investment?

Julie: I had a conversation with one of my friends who's a CEO. And he's one of those companies that has actually seen a bit of an up uptick but he's also got a premium product, so in a recession it could dive back down. So we talked about strategy. And I think, almost across the board, I think this would be true. So I will put them in this order. Because this is what we're kind of seeing in terms of sales cycles, especially on the B2B side. The first is to keep your customers happy, right? The ones that you've already sold, prevent churn, keep them happy, make sure you're meeting their needs now, working with them on finance, whatever you need to do to keep the current customer base that you have as healthy and as strong as possible. That's your strategy. So that's maybe the pivot in the mindset, right there. Thing two is finding the customers for whom your service or product is in their strategic roadmap. Because those people are the ones that are going to come back first to your product, once they have come shored up their company, and they're like, okay, we figured out work from home and we figured out our own customer base. Now we have to go back to what is still on our strategic roadmap for the year. So finding the customers for whom you are on their roadmap. That's the best place to look for people who are still willing to spend money on your service or your product. And then thirdly, thinking about people who have a pain that may be new, that you can solve. So that may be the same as it was before, but it may be something different, or it may be a new product or offering or a service that you create, to meet a pain that didn't exist before. So that's the innovation and the strategic pivot to say what might be different in my industry or different in my product offering that I could offer. If I'm a restaurant, now I can do take out, or I can offer curbside. I'm not being very creative here but I've seen entrepreneurs who are incredibly creative in terms of meeting a new need, or a new pain within the capacity that they have in their company. But I would do it in that order. There are some people who will jump straight to the third one, and maybe they need to to get revenue. But I would say that's where I would go. I'm curious what Les' reaction is to that set of priorities.

Les: You know, the only thing I would add is, I just think its recognition that there's a change, maybe it's good, maybe it's bad, but being aware of, of the elephant in the room. And that's something that's important, I think, as investors, I mean, you should expect that you're going to get asked that question by a potential investor. How is the business different or how are you thinking about the business differently? In a post-COVID world, if the answer is no change, you probably want to revisit the answer. So just recognizing there's change for good for bad, there's change.

Julie: Yeah. And on that point, I actually had a founder tell me that, right? So she was talking about, I hadn't talked to her in about two months. And I just asked her for an update on the business. And I said, Well, you know, what effects are you seeing from COVID? And she said, none. And that doesn't feel believable, right? And if it is the honest truth that there's been no impact on your business, you have to prove it to me. I just, it's hard for me to fathom something that has affected so many people and every industry of our economy in different ways, that you see no effect and no impact on your business. So I think that's a real trap now for founders who are raising money to say 'Oh, so, you know, COVID hasn't impacted my business.' It just feels like the wrong answer in so many ways. To Les' point. And actually, I would build on what Les said about recognizing the change, and as, you know, we have in the title here, one of the things is "vision." And I really think that gets to vision, being able to hold what the future could be, and how things will change and then being able to communicate that back clearly to your team. That to me is an essential capacity and an essential part of leadership. And if you're going to weather the storm, that's part of your job now. It always was, but now there's a spotlight on it.

Christina: We have a follow up audience question from Julie's framework. If you're working, one and two and have identified some threes, but you need cash to accomplish the threes, how do you get there? Bank loans, friends, family and pooled money, ask programmers for delayed payment schedule? Do you have recommendations there?

Julie: I mean, Les, if you have a clear answer, I would say any way you can get the money in the door is my answer in an economy like this, right? Like, if it's venture debt, it's venture debt, if it's family money, great. If it's a disaster relief loan, and you qualify and can put that to work appropriately, maybe that's appropriate. I think if you really see an opportunity in the market that you can take advantage of, it behooves you to take every reasonable step you can to get the money in the door to do it. Customer financing is a great option in times like this, if your customers can afford that. Maybe they can go on the journey with you right. This is the getting to the next point right, is the grit. Unless it's already kind of talked about, these moments, right, where things are tough. The grit is also the ability to take advantage. It's not just surviving, that's part of grit. But it's also doing the work to make that adaptation in the market, right. So I would say get gritty in however you come up with that financing, and if you have a really great idea, it might be investable. If the company kind of meets a lot of other criteria for what a venture bankable deal looks like, then maybe venture would be interested. I know I'd be interested in people who are taking advantage in a unique and interesting way in this kind of new market challenges. Les, anything to anything to add?

Les: Yeah, I would say, I think when you're seeking early stage funding, especially first money into the business, you have to get very creative and like Julie said, you've got to get scrappy. But there's also an important piece that I would call sort of awareness, you have to know what you are, what you want to be when you grow up, so to speak, and, I'll kind of use, there's a good analogy of the zookeeper analogy--I've been I've been moonlighting a little bit as a kindergarten teacher for my five year old lately--so I'll use the zookeeper analogy. The zookeeper knows what the different animals in the zoo eat. And so, if you throw a lion some bananas, he ain't gonna be happy, like, it's never going to happen, no matter how many bananas you throw the lion, the lion's not going to eat them, right. So you have to know what you're eligible for, what you could be, so that you can know what type of money you should be seeking so that you know if you're feeding the lion you can throw him a nice steak. So anyway, hopefully that made sense.

Julie: I would say I've been seeing a ton of resources out there. I know it can be overwhelming on one end and feel like there are so many questions to answer on the other end for founders. But there are so many webinars and resources out there. I've seen resources at the local and regional levels, the state levels and the national levels for entrepreneurs trying to figure out, you know, which kinds of funding they they might go after. So I would just say, like, use Google. And to Les' point, figure out what might fit. 

Les: And this state has all sorts of-- there's zookeepers all over the place. There's great programs that can help you figure out what sources of capital you should seek. Blackstone Launchpad, C2M Beta, 406 Labs, I mean, Early Stage Montana, there's all sorts of programs that can help you figure this stuff out. So start those relationships early, start them now. Even if you don't need funding now. You gotta focus on the relationships because it's like the sage advice of like, if you ask somebody for money, they give you advice. If you ask them for advice, they want to give you money. It's similar to the relationship with investors and potential investors, you have to start those relationships early. Build rapport with them. I mean, there's a founder that we will be announcing in a few weeks. I've known the founder for five years. And just last fall, the team came by and pitched NFC for the first time and we decided it was time to make an investment in this company. So it's a long process. I don't think you can get introduced to a source of seed stage capital tomorrow and then close a week later, it takes time, measured in years.

Christina: One form of capital that we've had a lot of questions and conversations about over the last few weeks is around the PPP money in the SBA grants, whether venture-backed companies are eligible or not was kind of up in the air for a while. What is your current assessment as to whether and when venture backed companies should leverage PPP money?

Julie: Yeah, I think that's a fair question in today's environment. And we feel strongly that the startups are both eligible and were intended within this legislation. It's not just our feelings, either, there have been some more out there on that. And at the same time, it doesn't mean that every startup it's appropriate. And I think the first place to start is around necessity. There are some companies, those third that are up and the third that are flat, you know, I find it hard to say that they have necessity for these kinds of loans. But for those companies that are highly impacted, where they're looking at layoffs, furlough, reduction in pay--absolutely, I think if you can make a credible argument around necessity, you should be looking at these facilities, it's what they were intended for. I also think that there will be a reckoning and I think there'll be two kinds. One will be a moral reckoning, when founders realize that the money they took did go to the pizza shop down the street, and that family business, right. So by taking money out of the pool, you didn't need it, you're taking it away from some entrepreneur that may be way less resourced and that will come back to all our communities. So I think that's the moral reckoning. Do you really need this money? Because it means that some other business operator is not going to get it. And the second is the kind of legal or accounting reckoning. I think venture-backed startups will be a target when it comes around to who got this money and how did they spend it. So that's why the necessity piece I think is so important. And as a startup, especially if you're venture-backed, thinking about great documentation, both documenting the necessity and every dollar you spend, whether it's creating a separate bank account for it, coding your accounting so that every dollar you spend is tracked. Those are conversations you should be having if you do decide to accept that money, so that when someone says, Hey, what did you spend this money on? Why did you think you need it? You have great answers for that. And if you have a Board, they were on the same page as you were. So best practice in my book is you're working with your attorney, and you and that attorney are drafting some kind of necessity memo. And that's shared with your board and your board agrees and you're working with your accountant to track the dollars you spend in that loan. The last note I'll make is that there is an overhead to these programs. I can't tell you how many hours operators in our businesses have spent managing just like trying to get a hold on what this means, how to administer them, in their companies, what they have to do, and that's just starting. So it's not a free lunch, there is going to be, you know, work that has to be done that does not add value to your business. But if it keeps the lights on, if it keeps your business going, if it keeps you from making layoffs in your companies, there are also a lot of companies in our portfolio where, you know, maybe the person who you can now pay or not lay off is the only breadwinner in that household. And there's a real impact to this money that I think is important to note. We have companies that we funded, that have PPP money that are Montana families that have benefited from those funds, and I feel great about that. Absolutely no reservations where there's necessity, and where things are documented and it's keeping people employed and food on tables.

Christina: We have one minute left. I want to give lLes the last minute, why do you see reason for optimism at this moment? From your point of view as a Montana VC?

Les: Yeah. Well, I think I'm kind of an eternal optimist when it comes to tech, but especially now because of something that I said earlier. And that is that difficult times and challenging circumstances in life are what make us great. It's what makes people great. Well, it's what makes life great. And so, you know, I actually celebrated a pretty significant day on Sunday, it was the 15th anniversary of the day that I got shot. And that was the hardest day of my life, I struggled with it for years and years to overcome a lot of what I felt as a result of that day. And as a result, I'm thankful for that day and I feel stronger every day because of it. And so I say, similar to this time for us, we're all gonna get through it together, but we need to be strong. And when we come out the other side, we're all going to be better. And that's why I'm very optimistic about the future.

Christina: That was a fantastic final word. Thank you. I would just like to add for everyone who is listening that we will have the recording of this webinar available on our website at that same page, as well as a transcript. And we'll also provide links to resources. So the High Tech Business Alliance has resource pages that we will point you to for all the programs mentioned and more. Les and Julie, thank you so much to both of you and to Next Frontier Capital for all you've done for Montana and for your time today, everybody have a great day.