SaaS Interviews with CEOs, Startups, Founders
1356 Early Employee Who Wants to Sell A Few Shares? Plaza Ventures New Model Is What You Need.
11 Apr 2019
Chapter 1: What is the new book by Nathan Latka about?
My new book is out, How to Be a Capitalist Without Any Capital. It hit the Wall Street Journal bestsellers list, and I just wanted to say thank you. I hope you get it at capitalistbook.com. Here's what user Jay Eggleston said in an Amazon review. Warning, this book is addicting, is Nathan the New Tim Ferriss. He said... I met Nathan during my college days when he was still CEO of Hale.
I knew he was inspiration since the day I met him. The book is totally a Nathan Latka original and this is the new 4-Hour Workweek. Warning though, it is addicting. I'm not sure how long I've been reading it now and the only thing that is making me from put it down is the dreaded workday tomorrow. Six people found that helpful. Get the book today at capitalistbook.com.
raising, call it 50 million bucks every, you know, six, 12, 18 months, something like that, doing five to seven deals really. And also then recently created Canada's first secondary market fund. So angel investors and employees and Canadian late stage tech companies could sell their shares and earn some liquidity.
And then hopefully within 18 to 36 months, get some other form of liquidity, whether that's an IPO or a secondary or all the other forms to get liquidity. That's what they're modeling. First time it's been done in Canada. This is the Top Entrepreneurs Podcast, where founders share how they started their companies and got filthy rich or crash and burn.
Each episode features revenue numbers, customer counts, and other insider information that creates business news headlines. We went from a couple of hundred thousand dollars to 2.7 million. I had no money when I started the company. It was $160 million, which is the size of many IPOs. We're a bit strapped. We have like 22,000 customers.
With over 5 million downloads in a very short amount of time, major outlets like Inc. are calling us the fastest growing business show on iTunes. I'm your host, Nathan Latka, and here's today's episode. Hello, everyone. My guest today is Matthew Leibowitz.
He is part of Plaza Ventures, a growth stage and secondary technology investing company, having originated, managed, and completed dozens of transactions. As GP at Plaza Ventures, he specializes in deal flow, investment transaction processing, ecosystem development, and investor relations. He sits on the board of numerous companies as well as various accelerators and charities.
Matthew, are you ready to take us to the top? Absolutely. All right. So give us an overview first, kind of Plaza Ventures. You know, there's a ton of VCs out there. How are you guys different? What are you focused on? We started as a family office here in Toronto, Canada. We are an offshoot of Plaza Corp, which is one of Canada's largest private real estate developers.
We've been investing in tech companies for 25 years and we came up with a model that really started off as direct principal investors versus trying to raise a VC fund for the sake of raising a VC fund. And so we really approach it. We do very differently than most VCs. We raise a fund or two funds every single solitary year.
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Chapter 2: How does Plaza Ventures differ from traditional VC firms?
That's correct. Interesting. Okay. So most, some people might avoid that because they don't want that kind of 36 month pressure. Yep, absolutely.
And so part of what we do upfront is we like to have those conversations with management teams to say, Hey, and we're very upfront, very direct, very honest with them and say, Hey, our timeframe for ourselves and for our LPs is in the 18 to 36 month timeframe. Is that something that you think would work for you and your company? And it doesn't have to be an IPO. It doesn't have to be an M&A.
It could be a private equity, uh, Secondary. It could be another secondary, but likely there will be another capital markets and or corporate finance event happening in the next, again, call it 12 to 36 months, at which time we would likely look to sell.
It's not etched in stone that we have to sell, but according to what we have effectively budgeted for, we would like to sell our positions within those times. If I'm a founder with 60% equity in a company, right? And I've raised, I'm going to make this up 10 million bucks and the company's doing 40 million bucks in ARR.
And I know in about 18 to 24 months, we're going to go do another round or we're already talking to the PE firm. I'm going to do a big secondary. I mean, why would I shortcut that and say, okay, yeah, you know, I want a little capital now instead of waiting 18 months, I'm going to go ahead and do a deal with, with you guys first.
Why wouldn't they just wait if they can have that horizon to 18 to 36 months? We're doing typically off-balance sheet investments. These are secondaries. The board typically doesn't have to convene on these deals. They're much smaller in nature.
They're typically $3 or $4 or $5 million in nature, whereas a big US private equity firm is going to likely want to write a $40 to $200 million check into the company.
What we're able to do is really effectively help out the CEO clean up his or her cap table and really do, for lack of a better term, do a bit of a solid on their behalf because what they're really seeking to do is provide that liquidity for some of the early backers that were in the proverbial garage with them back in the early days. Think of the first four or five or ten years.
employees, and or think about the first person that wrote a cheque into your company eight or nine years ago. On paper, they've done phenomenally well because the company's performing. But frankly, that person hasn't made a nickel yet. On paper, they're doing great. And so that's where we like to come in and say, hey, we would provide liquidity to those early backers of yours.
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Chapter 3: How does Plaza Ventures ensure alignment with its investors?
So we're not going around the CEO. We're doing it in lockstep with them, in parallel with them. In fact, in every deal we've done thus far, in every transaction we're looking at thus far, frankly, the CEO is our number one champion. And they've actually been the one quarterbacking the process on our behalf, which is a very welcoming thing. And I guess it may be a very Canadian thing.
That's great. That's good. I love that. So is there some, I mean, can I literally go to some website and see a marketplace of all the companies where like I could go through you and buy a couple shares or a couple options here or there? I mean, is that how it works? Unfortunately, no, there's no, dare I say, Bloomberg terminal for private shares of later stage private tech companies.
I wish there was. That would certainly perhaps make my life a little bit easier. But having said that, I think that would be a great opportunity. So we've got to be an LP in your fund to get those deals. That's correct. Yeah. Yeah. Yeah. Interesting. And so like last round that you guys raised, I mean, how much did you raise? It's a $50 million fund. Okay.
So you're typically raising two $50 million funds each year or something like that? Yeah. We also have a series A and series B fund. That's about a $20, $25 million fund annually. Interesting. Very good. Well, listen, we're running out of time here. Anything else I missed about this model? I would just say that we're very proud of it.
And again, we took the plunge to dive right into the deep end headfirst in Canada. And I'm very proud of my colleagues and my team and my partners that we were able to launch it. And it really only came together in a couple of months, all things considered. I'm very proud of that and I'm really excited to be in business. And I think it's a great addition to our platform.
And I think this could be a very exciting thing for us over the next five, 10 years as the Canadian ecosystem continues to mature and evolve, which is really exciting for us. Sweet IQ or Keeker, which one of these exits made you the most money? Well, we're technically not supposed to disclose these kinds of things. I am under NDA. Let me ask differently. Which deal was your favorite?
I'll put it this way. Everyone that gives me liquidity is my favorite. Smart guy. This is why he's successful. All right, Matthew, let's wrap up with the famous five. Number one, what's your favorite business book? The Decoded Company. Number two, is there a CEO you're following or studying right now? Bruce Flatt and Mark Benioff.
Number three, what's your favorite online tool for building the business? Actually, hold on. I'm going to change this question for you. Do you use any software technology to manage your LPs? We use Navitar. Navitar, interesting. Which is built off the Salesforce platform. Yep, yep. All right, number four, how many hours of sleep do you get every night? Four to five. That's not healthy.
How do you sleep so little? I go to the gym every morning at six 15. I play hockey three, four times a week. Uh, I've got two little kids at home. So, you know, uh, wow. And Mary Matthew, very married, married two kids. And, uh, how old are you?
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Chapter 4: What unique investment model does Plaza Ventures utilize?
How old am I? I'm 39. Last question. What do you wish your 20 year old self knew? Uh, Keep on going. I was talking about this, I was asking, wondering how I would answer this. And I would just say, things have turned out better than I ever anticipated when I was 20 years old. So I'm elated to be in the position that I am. So if I was 20 years ago, to go back to myself, just say,
Keep on going, buddy. You'll be all right. Guys, keep on going. Matthew Leibovitz with Plaza Ventures. Again, raising, call it, $50 million every 6, 12, 18 months, something like that, doing 5 to 7 deals.
Really, and also then recently created Canada's first secondary market fund so angel investors and employees and Canadian late-stage tech companies could sell their shares and earn some liquidity and then hopefully within 18 to 36 months get some other form of liquidity, whether that's an IPO or a secondary or all the other forms to get liquidity. That's what they're modeling.
First time it's been done in Canada. Matthew, thanks for taking us to the top. Thank you so much for having me.