Alex Baluta on Flow Capital's founder-friendly venture debt options

Alex Baluta of Flow Capital - Podcast Transcript

Scott:	Hey, it’s Scott Orn at Kruze Consulting, and welcome to another episode of Founders and Friends. And before we start the podcast, let’s give a quick shout out to Rippling. Rippling is the new, cool payroll tool that we see a lot of startups using. Rippling is great for your traditional HR and payroll. They integrate very nicely, but guess what? They did another thing. They integrate into your IT infrastructure. They make it really easy for when you hire someone to spin up all the web services and their computer, which sounds kind of like not a huge deal, but actually we did this study of Kruze, we spent $420 on average just getting a new employee’s computer up and running and their web servers up and running. It’s actually a really big deal. Saves a lot of money. And the dogs are eating the dogs. Like we see a lot of startups coming in to Kruze now using Rippling. So please check out Rippling. Great service. We love it. I think we have a podcast with Parker Conrad. You can hear it from his own words, but we’re seeing them take market share. So, shout to Rippling. And now to another awesome podcast at Kruze Consulting’s Founders and Friends. Thanks.
Singer:	(Singing) So when your troubles are mounting in tax or accounting, you go to Kruze and Founders and Friends. It’s Kruze Consulting, Founder and Friends with your host, Scottie Orn.
Scott:	Welcome to Founders and Friends podcast with Scott Orn at Kruze Consulting. And today my very special guest is Alex Baluta of Flow Capital. Welcome Alex.
Alex:	Thanks Scott. Really glad to be here. Thank you.
Scott:	No worries. And by the way, people can’t see us, but it turns out Alex and I have like the same hairstyle, the same facial hair and the same sweater even. So, this is like are twins today. We’re going to be in a movie soon then together. But Alex runs Flow Capital, which is a really strong venture lending firm in Canada that does deals all across North America. So, I wanted to have him on the podcast. Maybe you can tell everyone how you had the idea to start Flow Capital and then maybe segue into what you guys do.
Alex:	Just to go back about 25 years, I was actually a software developer way back in the day. It was a long time ago actually. I worked with Anderson Consulting on a project with Pac Bell in California, actually. And then [crosstalk 00:02:09].
Scott:	The ballpark in San Francisco.
Alex:	Yep.
Scott:	I love Pac Bell.
Alex:	Yep. Actually, it was in the San Ramon office, not in the San Francisco-
Scott:	I grew up in San Ramon in Danville.
Alex:	Really? I was a developer and then I decided to go back for my MBA. And post MBA had this desire to combine finance and business. And instead of going the venture capital route, I went the Wall Street route. And so, I had a long career as a technology software analyst with companies like Merrill Lynch, Robertson Stephens. I worked out of the San Francisco office for many years. Post that, as an analyst, you’re a bit of the reporter, not the story. And I wanted to be the story. So, I tried several entrepreneurial ventures, including spending four years as a VP of Corp Dev at a growing software company. And then ultimately started a lending firm doing similar things to what we’re doing at Flow, but it was called Temperance Capital. A little bit left on the risk scale. So not as risky as we’re doing now, not that we’re doing particularly risky deals now, but it was a very low risk lender. And ultimately was attracted to Flow. I was not a founder of Flow, but I joined about 18 months ago because I was very impressed with the board in particular. Some very, very strong board members here at the company. And to be frank, it was a bit of a turnaround, but we’ve got a very unique positioning and a very unique product offering in what is a commodity field. That being everybody’s money is green. And how do you compete? So, we try to offer slightly different twists on the value proposition with minimally dilutive capital, and very much founder friendly capital. So, we can get into them more later on.
Scott:	Yeah, you have a great background. We actually live kind of parallel lives because I worked at Hambrecht & Quist.
Alex:	Oh yeah?
Scott:	For folks that don’t know, Hambrecht & Quist and Robbie Stephens and Alex Brown and I’m forgetting, Montgomery Securities, were the four horsemen of IPOs and M&A for tech.
Alex:	Yeah.
Scott:	[crosstalk 00:00:04:14].
Alex:	And post 2001, all of them, I think H & Q is still around, but they all pretty much disappeared.
Scott:	Yeah. H & Q, thank God Dan Kay sold H & Q to Chase. He sold it, I think one month before the market peaked in 2000. So, he saved a lot of jobs by selling the company then.
Alex:	For the younger folks in the audience that was internet 1.0.
Scott:	Yeah, yeah. That was crazy. Also, for folks that don’t know, research analysts were like the rock stars. Poor M&A people, we weren’t really allowed to talk to the research analyst. So, we’d be trying to like figure out what they liked and how it could combine companies and things like that. So, I was like the guy probably reading all your research reports trying to figure out what you really thought.
Alex:	You weren’t on the banking side, were you?
Scott:	Yeah, I was on M&A. I did M&A.
Alex:	And those days rules have changed, too. It was a lot easier back then. Now there’s very high confidentiality between the divisions in investment banks. And yeah, we used to work together with the bankers a lot post getting approval, but now I don’t even think that happens.
Scott:	Yeah. I think you’re right. It’s the whole new world.
Alex:	Yes.
Scott:	And I’m kind of with you. I totally sympathize with the not being the reporter, but being the story. And that’s why I ended up joining Vanessa at Kruze, but I have a lot of respect for operators. And having now running my own company, it’s like I realize how hard it is.
Alex:	It’s hard.
Scott:	Were there any things that jumped out at you when you became an operator instead of a research analyst? Any crazy moments or crazy lessons?
Alex:	Well, a couple of things. One being an entrepreneur is incredibly hard and I have the world’s most patient wife who has been incredibly supportive and it’s not an easy road, so that’s one thing. But I went into to a company as a senior officer thinking that there was going to be all these aha moments. And actually, the only real aha moment was I learned who I didn’t want to be as opposed to who I wanted to be. And it was really about how to treat people and where incentive, where motivation comes from and how internally driven that is and how you don’t need to be a, for lack of a better word, a hard ass to get the best out of people.
Scott:	Yeah.
Alex:	So, that was my big, not that I was that kind of a person, but I just made sure I didn’t want to be that kind of a person. You can attract more flies with sugar, I suppose, than you can with vinegar type thing.
Scott:	Also, if you’re a real hard ass, the corporate culture can get screwed up and then it becomes a self-reinforcing thing. And so, I totally agree with you. The people side of it was what was the big aha moment for me was like, oh, wow, this is very different. We’re not just pushing numbers around on a page anymore. We’re actually dealing with personalities, both our client personalities, your lender personalities-
Alex:	Yep.
Scott:	And our team members. And so, it just was a whole different ball of wax. But I find it super rewarding. I can kind of tell just by talking to you, you’re an outgoing person. So, you probably really like it, too.
Alex:	Yeah. And sometimes somebody can have a bad day and it’s not you. Right? So, don’t take it [crosstalk] It’s really there’s just something going on in their life that’s not working that day. And you got to give them some space. So-
Scott:	Yeah.
Alex:	It was really, I think I got here and everything that I did, while it might not have been as financially rewarding as you might’ve expected going into it, it’s been very rewarding from an understanding of how business works and how people work. And I’ve ended up here trying to put that all together and ultimately make good investments and help grow shareholder value for our shareholders.
Scott:	Well, you guys have a great reputation. So maybe talk about there’s something that makes you guys really interesting in the venture debt space. I love the kind of talk about your profile of borrower and how you go about finding them.
Alex:	That’s a tough one. Not that it’s a tough one to describe, but that is the one superpower that if we work on every day is the one superpower we want is to find good deals. We want to be a lender to great companies. And there’s really, in the venture debt space, there’s two ways to do it. One is you can just piggyback off venture capitalists. You could be a traditional venture debt lender. You’re piggybacking on the backs of the VC business model, which is to invest in growth companies and then eventually take an accent. And what you’re really doing is you’re just helping them bridge to the next round or to cashflow and really your client is as much the company as it is the venture capitalist with whom you are co-investing.
Scott:	Mention by the way, just if I take a second, it’s like game theory and you’re playing a repeating game with the VCs and a one-off game with entrepreneurs. And both matter, and there’s positives and negatives of that, but you’re totally right. A lot of times your real customers like Sequoia Capital or Cosla or Kleiner or whoever, right? That’s kind of your customer-
Alex:	Yeah.
Scott:	As a venture lender that does sponsor deals.
Alex:	They tolerate you and allow you to make a high [inaudible] IRR in the anticipation that you will be a flexible partner when the time comes. So, if you think that in the venture debt space you can just foreclose and runaway with the assets and leave your venture partners hanging, you will never get another deal with them. And quite frankly, with other venture lenders, or I should say venture capitalists.
Scott:	Yeah. You’re totally right.
Alex:	No, it’s a great space. You get your deal flow coming to you from partners, your terms are very well boxed in. But to me, that’s very much the commodity space. Where we try to play is, and look, we do some venture sponsored deals. It’s a very small percentage of our portfolio, sub 25%. I expect it’ll stay there. Where we try to be different is we try to focus on the non-sponsored deals, the bootstrapped companies, or those companies that had some venture sponsorship years ago that maybe didn’t turn out and they’re looking to grow their business. There is a huge universe of companies out there of management teams that don’t want venture capital for various reasons. Either they had a bad experience or they don’t need it, or they didn’t want the overhead that comes with it, which is a forced timeline to liquidity and growth expectations among other things like intrusive boards. And look, those aren’t necessarily bad things. One of the good things that comes out of having a venture partner is governance. And for us as an investor, when we do unsponsored deals, we find governance is one of the biggest risk factors in terms of just management sometimes doesn’t understand the concept of good governance when that individual owns a hundred percent of the company.
Scott:	Yeah.
Alex:	So, we try to focus on unsponsored deals. We’re a growth investor. And really the value proposition that we give to the company is, look, if you’re growing your business at 30, 25, 30, 40% per year, your equity value is probably growing at least that quickly. And I say at least because at a minimum it’ll grow that big or that quickly, but also the bigger you get the more you’re worth because you get certain scale. And so, our proposition is maybe we’re certainly not as cheap as bank debt, but had you sold some equity to raise some money, the effective cost of that equity is 35, 45, 50% per year. For us, it might be high teens.
Scott:	Yeah.
Alex:	You’re keeping your equity, but you’re paying us a reasonable IRR, but you as that individual, all of that value and that equity that you’re growing stays in your pocket.
Scott:	Yeah. It also compounds. Like when you compound it, if say the delta is 35 minus 18, when you compound at 17% a year, that’s extra. That’s just like the capitol compounding. It gets really, really powerful.
Alex:	That 17 that you’re paying us or somebody else, that’s only for three or four years. And then after to 35% on everything else.
Scott:	Yeah. I totally, totally agree. So, you’ve talked about governance, like there’s kind of two challenges with the unsponsored, which is maybe three, governance, which we should talk about just a little bit. Then how do you find them? And three, there’s no real safety net. One of the reasons that sponsored deals are more popular is because, or maybe not more popular, but there’s an industry around it, is that there is a safety net in that a lot of VCs will write that extra check. That last check just to see the one more card kind of thing.
Alex:	Yep.
Scott:	So that’s something you guys are kind of finding, because there’s no one really around the table to write that last check, right?
Alex:	Yeah. That’s the challenge. And look, they’re all related. So that is a big challenge for us and I think what you’ll see is that we have a higher default rate and we’re not talking dramatically higher, but we have to roll up our sleeves more. We will eventually have a slightly higher default rate than probably traditional venture debt, which just translates into we need to take a slightly bigger return on our investment to make up for the losses. Look, we’ve had plenty of situations where we’ve had to be patient, where we’ve had to add value to management, where we’ve had to step up and put some more money in. It is a more challenging, more creative, but it could also be more lucrative.
Scott:	Yeah.
Alex:	And so, we do view our relationships with our investee companies as a real partnership because there is nobody to take us out after two years. And again, this comes back to the beginning of the conversation. It comes back to people. It’s about the individual. It’s about what is their ethical code base and how do they treat people in the past? And when things get rough, and they almost always do, even if it’s for a short period of time, how are they going to behave? And so, picking the right partners, whether it’s them picking us as a partner or us picking them as a partner, really, really makes a big difference. So, the safety net, that’s a big deal. How do we find them? As I said earlier, that’s the superpower we try to build. It is hard. We do digital marketing, we do conferences, we do networks, or I should say networking, amongst the various partners and board members that are here. And then we do word of mouth. So, there’s no real secret to it. It’s just harder work.
Scott:	Yeah. Probably also, I would think you got a pretty good client or borrower referring each other. Even at [inaudible] like sponsored deals, that was pretty powerful. But like you guys are such an interesting super, like you use the word superpower, but you really are like charging up these companies and giving them a lot more runway and the ability to grow. So, when it’s working well, I’m sure the founders are like, “Oh my gosh, Alex has changed my life with this loan. Here’s some other founders that you should be talking to, Alex.”
Alex:	We’ve got some testimonials on our website and others that we just haven’t had an opportunity to put up there yet. But we’ve had a management team saying, “You’re the best capital we’ve ever taken.”
Scott:	Yeah.
Alex:	We’re not the cheapest, but it’s worked for them in terms of giving them the additional capital to achieve their objectives, grow their business. It can be very rewarding to see them succeed and us succeed alongside with them.
Scott:	You also used the word when you’re describing it, the word investment, which I 100% agree with, because I think sometimes people think if you’re doing a loan it’s just like a loan and you’re automatically going to get that money back. But really, I think the way you look at it sounds like is like it’s almost like it’s your blood, sweat, and tears and your capital going into this company, too. And you’re a partner and you’re along for the ride for better or worse. And I think that’s actually a really healthy mentality. So, if you’re a startup or a company, you want your lender to be thinking that way, not just as someone who’s just a source of capital. You want someone who’s really invested in the company’s growth in the long-term.
Alex:	100%. You can look at us two ways. We’re either expensive debt and certainly relative to a bank we’re very expensive debt, or we’re cheap equity. And we don’t often use that positioning, but in many ways, we are very much cheap equity in terms of the value proposition that the company gets out of partnering with us. But yeah, it’s a partnership.
Scott:	Yeah.
Alex:	Look, we only succeed if they succeed. There is very rarely, we’ve done over 50 deals, almost a hundred million in investments. There’s just very rarely the case where you can liquidate a company for asset value and get ourselves full. It just [inaudible] happen.
Scott:	That’s a great misconception to dive into where sometimes at Lighthouse, people would say that to me like, “Oh, you’re going to get your money back no matter what.” And I’d be like, “No, no, no.” Especially if the entrepreneur isn’t onboard and helping in a sale and helping make something happen, then you’re really not going to get your money back. But like the salvage value of a company or the selling it at the bottom is almost nothing. That’s why I think the investor mentality is so important from a lender. You have to be able to work with the companies and preserve the enterprise value so that there’s something there to get by. And a lot of times what we used to do was incentivize the management team to come along for the ride and give them a pretty big percent of the proceeds, if it was a downside situation. [crosstalk] Invested.
Alex:	You’re 100% right. When management has nothing left, they have zero incentive to cooperate with any kind of a salvage operation. And so, haircuts, restructuring and cap tables, finding good partners to help them out of a difficult situation. Those are all things that we have to be really good at.
Scott:	Yeah.
Alex:	We can’t just say to our equity partner, “Hey, look, it’s time for you to take us out. We’re going to go onto the next deal.” That’s not how it works. So, it very much is a partnership. It’s a long-term. We want to make sure we’re getting into a relationship with good solid people. And we also look at the fundamentals of the business. It’s got to have a [crosstalk] profile, it’s got to have a pathway to cashflow positive, or at least cash flow visibility. We’re not afraid of investing in companies that are losing money at the current time, especially if we could see the trajectory. So, we do very deep due diligence, just like a venture capital investor would. It’s just that we take most of our return. The fundamental difference is equity will wait till some exit many years down the road. We take some of our return on an ongoing basis. So, there is that you have to be able to pay real cashflow along the way. And look, if we’re making a 15% interest rate, for example, three years in, we’ve returned 45% of our capital. That’s a different value proposition and risk profile than equity investor, who is waiting for a 10X in five years.
Scott:	Yeah, yeah. Do you guys do warrants? What’s your compensation structure, like your return profile? How do you generate return?
Alex:	Look, we’ll do three types of loans or investments. One is kind of squarely in a traditional venture debt space, which is a modest interest rate and small warrant coverage, but it starts amortizing pretty much month one, maybe month five, maybe month six. And it’s a two- or three-year terminal. That’s the simplest type of structure and also the cheapest for our investee companies or partners. Then a little bit further the right in terms of our risk, but in terms of flexibility for the company is a bullet loan, and that’ll be three, four- or five-year bullet, it’ll be interest only. There might be a small amount of pick. So maybe it’s 15 in cash pay and 2% pick or 14 and three or whatever the number is. Then a slightly higher sliver of warrants. And you got to remember the warrants are, you pay for them, right? So, it’s like an embedded equity investment down the road. So, it’s not really free equity. And then a little further to the right again is a concept of a true royalty where we are probably the only one that I know that actually does a real royalty, which is a perpetual piece of equity capital that is repayable at the company’s option. So hypothetically we give a company a million dollars, they’ll pay us a minimum interest rate or a royalty rate, whichever is greater. So, it’ll be, let’s say it’s the equivalent of 15% interest or one and a half percent of sales, whichever is greater in that particular month. And we’ll take some warrants and we will take a buyout premium, meaning that instead of having a four-year bullet or a three-year amortizing loan, you keep that money for as long as you want it. So, you never have to worry about a pending due date on the loan and-
Scott:	That’s incredible.
Alex:	You pay it out. And if you want to pay it out in two years or three years or five years or six years, it’s up to you. Now, that flexibility costs you a little bit more, but not having to manage to a bullet takes a lot of pressure off [crosstalk 00:20:57].
Scott:	Yeah.
Alex:	But really that’s the value prop. So, it’s any one of those three structures. Amortizing, short-term loan, non-amortizing bullet loan, or a pure royalty, not as sort of five-year terminal of masquerading as a royalty, but an actual pure royalty. And each of them represents slightly different risk and return profiles. And each of them has different flexibility components in terms of for the investee partner making the investment.
Scott:	For folks, just for background, first of all, a four- or five-year bullet loan is incredibly friendly to entrepreneurs. Kind of that’s as good as it gets. And then the royalty-based financing is even better in terms of flexibility. I mean, that’s really incredible that you guys do that. I’m sure it’s hard and I’m sure it’s challenging.
Alex:	Yeah.
Scott:	But to the entrepreneur, that’s like incredibly valuable. For just having worked in the business, that flexibility is incredibly valuable. You kind of went over the amortizing loan very quickly, but like amortizing loan basically means you’re paying back principal immediately or very quickly, kind of like a mortgage. So, your cash outflow is pretty big. The way I used to model it, I think at Lighthouse we would hit like all of our cash would be returned like at month 24 or 28 or something like that.
Alex:	Yep.
Scott:	[inaudible] You don’t really get to use the money that long. So, you can only make investments that have a really short payback period. Whereas with the bullet loan, a four- or five-year bullet, you can make long-term investments and really grow the business and you don’t have to be as freaked out that you need to get paid back on that investment in a year. So, I really like what you guys are doing.
Alex:	Yeah. We’re kind of a bespoke investor that uses a debt type structure, but we can tailor it to their needs. So, we can [crosstalk] companies that they’d had heavy cashflow requirements the first 12 months, and so we’ll tone down the amount that we take in those first 12 months and then tone it up in the latter months. But like when it works, we’ve had companies that have generated $50 million in equity value over a three-and-a-half-year period. Now, in a royalty, we take a little bit more where we’re a little bit more like equity, but we don’t take the 10x upside. We may take a 3X upside.
Scott:	Yeah, yeah, yeah.
Alex:	Right? But we’ve had entrepreneurs who have generated a tremendous amount of equity value for themselves using this flexible structure [crosstalk] participated to a much lesser degree than equity, but we participate a little bit.
Scott:	Yeah. That’s great. And it’s great for your investors, too. What kind of industries do you go after? Is it tech? What’s your target markets?
Alex:	Yeah. Great question. We love ARR, recurring revenue as most venture investors do these days. So, I think 60% of our portfolio today, maybe 70, is technology-based. As I said at the beginning of the call, I have a technology background. Many of the members of my board have a technology background. Many of my partners here have technology backgrounds. So, we’re very comfortable in tech, but we’ve done food services. We’ve done pure services, engineering consulting companies. We’re open-minded because good entrepreneurs don’t just exist in technology. They’re all over the place.
Scott:	Yeah.
Alex:	Key criteria that we look for is a bit of a track record and growth. Our money becomes too expensive, and it doesn’t matter the industry, we’re just too expensive if you’re growing at 5%. It doesn’t make sense.
Scott:	Yeah, yeah, yeah.
Alex:	We’re not afraid of asset light businesses as most technology companies are, but you have to have a growth profile in order for everybody, both us and you, to win when we make an investment of our-
Scott:	Yeah. That makes total sense. And then, Alex, where does your capital come from? Who are your investors?
Alex:	Sure. Well, we’re unique in that we’re a public company actually.
Scott:	Oh, okay.
Alex:	We started as a pure royalty investor. We’ve now broadened that to, as I described earlier, amortizing and non-amortizing, but we still really focus on that royalty piece. The challenge if you want to be a real royalty investor is you have an unlimited duration in your investments. [crosstalk] Now match your capital with your investments. Biggest problem in our industry is a mismatch between the liquidity in your investments and the duration of the money that you received from investors.
Scott:	Yep.
Alex:	You get that mismatch, you’re dead.
Scott:	You have to give a debt back like your investors or your lenders back before your customers are paying you back. That’s the duration mismatch that we’re talking about.
Alex:	Exactly, exactly. If the people who have given you money want their money back in five years, but you’re not going to get liquidity for seven, you’re in trouble.
Scott:	Yeah.
Alex:	Big problem with our companies, frankly. The company started as a public entity. And so if you think of equity, the investors in our company who invested equity, they’re permanent capital. So that’s giving us a capital base that we can make permanent investments with. Now it turns out that most of our investments are bought out within four years, anyways, four to five years. But we then leverage that equity that we have. We’ve had the ventures that we’ve always made our payments and fully repaid. We’ve got some creative LP structures that we’re using. But the fundamental base of our capital basis is public equity.
Scott:	Wow, that’s really good. Do you pay a dividend or how do you compensate those investors?
Alex:	No. And part of that is, again, the uncertainty of cashflow is related, too. We have certainty of cashflow, but there can still be some uncertainty. So, we may pay a dividend in the future when we have more scale. We did in the past. Right now, we don’t. And to be honest, if I can invest and get a high teen return on a regular basis, you’ll get more appreciation in the capital growth, the equity growth in my company than you would by me paying you a 4% dividend.
Scott:	Yeah. And I asked that question because it’s a real trade off, because like a lot of the publicly traded BDCs that do lending do pay a dividend, but you’re right. They’re kind of like robbing Peter to pay Paul. They could be reinvesting that money at a much higher interest rate-
Alex:	Right.
Scott:	And compounding faster. It’s an interesting question because some investors, like my dad likes to invest in high dividend stocks. So, he’s the kind of person, he’s old so he wants that. I like to invest in growth companies. So, I would be more interested in your company than like a traditional BDC.
Alex:	Yeah.
Scott:	You know what I mean?
Alex:	We’re not quite, but you could look at us as sort of a quasi-public VC vehicle. We’re not, but you can see where it’s about capital appreciation.
Scott:	I love it. And then in terms of your spread in where you do investments, you guys are headquartered I think in Canada, but you do a lot of stuff in the US too, right?
Alex:	Yeah. In fact, we’ve got 60% of our portfolio is US-based across all states, not all states, but East to West, North to South. We do a lot of companies in Canada obviously, but again, good entrepreneurs will come from, in fact, we’ve got a fantastic investment in the UK. A couple of our deals right now are from the UK. We’ve seen deals from Europe. [inaudible] three things. We’re doing American, Canada, which is really the identical market. I’ve worked there. There’s no difference between our economies or what drives our companies. We’ve gone to the UK. We’re very comfortable there. We will consider a deal on the mainland in Europe, but for now I think we’re good with those three geographies.
Scott:	Yeah. Well, also the Canadian, especially in the tech world, has just accelerated so much. It used to be a pocket of entrepreneurs doing tech startups there, but now it’s like running a hundred miles an hour. It’s pretty exciting with [crosstalk] and other companies up there. The ecosystem is being built very quickly,
Alex:	Yeah. Back to our history, if you remember 1.0, it was Nortel. Remember-
Scott:	Yeah, yeah. I remember Nortel, yeah. We also worked with the Canadian, this is going to make you laugh, but the Canadian telecom company spun off like a internet infrastructure company that we worked with at H & Q. I think it was like BEA. I don’t know. I can’t remember what it was.
Alex:	There was [inaudible] internet. Look, it’s just like anything. It was a-
Scott:	Yeah, it was like 1.0 and there was only like two tech companies you could invest in and that was 20 years ago. Now it’s totally changed.
Alex:	Yeah. Look, we’ve got a fantastic infrastructure up here. University of Waterloo is one of the, I think it was a couple of years ago, the single largest university from which Microsoft would hire. Same with Amazon. So, we have some really great education system. I mean, look, almost all internet eats all businesses. We’re seeing that all the time. We have a great entrepreneurial spirit. We have some really great incentives in terms of some research, R&D tax credits that can be put to good use. So, the one thing maybe that’s the difference between Canadian and American entrepreneurs is Canadian entrepreneurs are a little bit more conservative. That would be the one. The fail fast mentality makes sense in certain instances, but hey, we’ll get there. Just give me a bit of extra time is also a good way to grow a company.
Scott:	Yeah, yeah. [crosstalk]
Alex:	Not a hundred, but we’ll get there.
Scott:	Yeah, that’s kind of how, I mean, that’s how we run Kruze Consulting. So, yeah, I totally get that. Well, this has been amazing. You have a great value prop. You know what you’re doing. Maybe you can tell everyone how to find you and Flow Capital and how to reach out.
Alex:	Yeah, sure. Thanks very much. Alex@FlowCap.com. Love to hear from anybody, any entrepreneurs out there who are looking for founder friendly, minimally diluted capital. Partners on the deal flow side, if you have a friend or a client and you’re a lawyer, an accountant that has a company that could benefit from our type of capital, FlowCap.com is our website. We actually have a Twitter account. We’re on LinkedIn. There’s a lot of resources that are available on our website for entrepreneurs to help understand the difference between cost of capital or some of the bugaboos that you shouldn’t, and in fact, I think you’re great at this about highlighting things that you should look at in term sheets and what some of the big important things are and aren’t. So, the standard places.
Scott:	That’s awesome. Well, Alex, thanks so much for coming on. Really appreciate it, and look forward to working with you. And also, people should definitely check you out.
Alex:	Scott, you’re doing a great service by having this podcast. We really appreciate the opportunity.
Scott:	Thanks, man. I appreciate it.
Singer:	(Singing) So when your troubles are mounting in tax or accounting, you go to Kruze and Founders and Friends. It’s Kruze Consulting, Founder and Friends with your host, Scottie Orn.

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