Distress, Discipline and Gasoline - Season 5: Episode # 97

Not every great company is a venture company. And not every great venture investment looks like the kind of deal everyone else is chasing.Brad Kotansky, Venture Partner at Copper Sky Capital, has built an investing philosophy around looking where the market isn't. With venture dollars increasingly concentrated among a handful of companies and fewer startups making it from Series A to Series B, Brad sees opportunity in places that don't always fit the traditional VC mold. That includes recapitalizations, distressed businesses, overlooked industries, and companies with broken capital structures that can be reset for their next stage of growth.That perspective requires a different definition of a good investment. A company doesn't need to become a thousand-times return to create an exceptional outcome, and raising more capital isn't always the answer. Brad shares why investors need to understand the business beneath the valuation, why founders should resist the pressure to "incinerate money," and why the best time to pour gasoline on a company is only after you've found the fire.Chapters00:00 Introduction and Guest Introduction00:24 Market shifts and venture focus02:11 Justin Gray's background and office tour04:02 Justin Gray's discussion on venture themes05:26 Introduction of Brad and his background07:20 Why B2B SaaS dominates venture capital08:08 Emerging sectors and opportunities in venture11:14 Venture investment criteria and valuation insights13:12 Market cycles and venture strategies16:08 Current trends in venture funding and exit strategies18:28 Cannabis industry insights and distressed opportunities23:03 Recapitalization and restructuring in distressed assets27:25 AI's impact on enterprise and vertical solutions34:01 Data security, privacy, and AI challenges40:41 Opportunities in cannabis and distressed assets44:43 Market cycles and strategic investing46:44 Advice for founders and investors in volatile markets47:57 Closing remarks and next stepsReferences in the Show:https://www.gsb.stanford.edu/insights/search-funds-keep-offering-proven-path-ownership https://news.crunchbase.com/venture/logic-behind-vc-bets-uninvestable-sectors-cuvelier-rtp-global/ Quote of the Show:“There's so much sexiness and hype around ‘I got venture money’... ignore the hype. Your goal here is to build a strong business that has really strong growth that ultimately is cash flowing and paying everyone large dividends or is acquired for a good multiple. You don't need to incinerate money to do that.” - Brad KotanskyWays to Tune In:Spotify: https://open.spotify.com/show/5GpM8myxsUinc5bfLIbjJz?si=0af576adfb8e49f8 Apple Podcasts: https://podcasts.apple.com/us/podcast/the-cheat-code/id1692445190 Amazon Music: https://music.amazon.com/podcasts/cb0b3afa-063f-4f3b-96be-b98214c74912 YouTube: https://www.youtube.com/@CheatCodePodcast