Responding to a popular request, we are now sharing transcripts of our investor podcast interviews in this new series. The following interview with Jason Cahill was recorded in January 2019.
Jason Cahill is Managing Partner at McCune Capital, a NY-based firm. He talks about the pros and cons of chasing Unicorns, as well as his firm’s investment philosophy.
Sramana Mitra: Let’s get acquainted. Tell us a bit about yourself. Tell us about the fund and your investing focus.
Jason Cahill: I started out within the military, working in Army Special Forces. I spent seven years doing that pre and post 9/11. I left that and joined a consultancy in the tech space. I left that to start my own company. Along that path of starting my own company, I met a lot of interesting founders and decided that investing in interesting founders is a lot easier than building your own company.
The fund was born out of that where while I was operating the last company, I did some angel investments. I realized that it was rewarding to be able to meet powerful, interesting, determined founders and help them on their journey.
Sramana Mitra: You’re based in New York?
Jason Cahill: Yes.
Sramana Mitra: How big a fund is McCune Capital?
Jason Cahill: Fund one was a proof of concept. It was $2 million. I had three criteria. Can I find interesting deals? Can I be beneficial to these founders after I’ve written the check? Are these good companies? Fund two was when I took on a partner. We’re about a third into the fund raise. It will be a $50 million fund. It’s more of a typical seed stage fund.
Sramana Mitra: What sized checks are you trying to write? What stage do you like to invest in?
Jason Cahill: Typical checks will be somewhere in the $300,000 to $500,000 range for the first check in a perfect world if you’re raising a million dollars or less at a $5 million or less valuation. I know people chuckle when I talk about $5 million valuations. There aren’t that many companies in that space.
Sramana Mitra: Be aware of the fact that One Million by One Million is a global platform and we see lots of companies in the $5 million valuation range. We work with very early stage companies. We are very supportive of companies that raise small amounts of money and even look for early exits. There’s a LinkedIn article that is trending that I just wrote, “Bootstrapping to Exit”. All of those are configurations that I find perfectly exciting, interesting, and meaningful. Please be completely at ease to discuss $5 million valuation.
Jason Cahill: There was a New York Times article written the last couple of days by Erin Griffith.
Sramana Mitra: I know. I don’t agree with a lot of what she said. She did not talk to me. She should have because I’m probably the biggest authority on this subject. She doesn’t understand. I don’t think VCs should get lost. VCs have a role. Bootstrapping has a role.
We have a big philosophy of bootstrap first, raise money later. Some companies are just not venture fundable and those have to bootstrap all the way, but there is an enormous number of companies that bootstrap first and raise money later. She didn’t get any of these points. It was a very naïve article.
Jason Cahill: To discredit the entire industry because of one set of bad actors is a bit naïve. I’ve been on a couple of discussions where people say, “My job is to value your company as cheaply as possible.” I tend to say, “As a former entrepreneur, I need both sides to be happy.” There is always that tension. In a perfect world, we want to own 10% at the first check and preserve that capital through two additional rounds. That’s a fluid number.