Building Local Legacies with Mindful Money Movements - Part 2

Unlock the potential of your community through the eyes of Drew Tulchin from New Mexico Angels, as he reveals the rich opportunities in local impact investing akin to the shop-local movement. Imagine your financial contributions thriving right in your backyard. The conversation with Drew is an exploration of how triple-bottom-line companies and B Corps are embedding community values into their business models, creating a ripple effect for a sustainable future. We're not just talking money here; we're talking about a financial revolution that has the power to transform local economies and foster deep connections within our communities.

Witness the power of trust and local reputation as we recount the success of Meow Wolf, catalyzed by support from none other than George RR Martin. In shedding light on the stories that define New Mexico's unique business landscape, the episode uncovers what angel investors are truly seeking in startups. It's about pattern recognition and experience, but also about the human touch—values that resonate in the community and foster growth from within. Join us on this journey as we share the secret ingredients that could make or break your venture in today's interconnected world.

Finally, we delve into the philosophical side of business with thoughts on long-term investing and impactful philanthropy. Drawing wisdom from cultural traditions and thought leaders like Jed Emerson and Jim Collins, we challenge you to think beyond the quarterly report. This episode presents a narrative where aligning investments with personal beliefs isn't just a nice thought—it's a strategy for building legacies. The New Mexico Angels and the New Mexico Vintage Fund stand as testaments to the enduring power of community, and we invite you to be part of this impactful dialogue. Join us as we dissect, discuss, and discover the true value of people in business and the immense potential of community-driven investment.

https://nmangels.com/
http://meowwolf.com

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Arc Integrated

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Transcript

Joel: 0:33

What if investing in each other could change the world? I'm Joel Skeen with bizradious and this is the Mindful Marketplace. Welcome back. Welcome back to part two of this excellent conversation we're getting to have here today with Drew Tulchin from New Mexico Angels. He is enlightening us on all things impact investing, local investing, social enterprise. If you're new with us here, this is the show where we talk to entrepreneurs, investors, industry leaders, economic experts, advisors, who are all questioning that assumption that there's just one bottom line in business. It's where we learn to connect our community and our values to our businesses. So very grateful to get to have drew back with us here today. If you missed part one, please go back and take a listen to that. Drew kind of lays out the basics of what is triple line bottom, triple bottom line business mean. What's a b corp, what is impact investing, what are some of these basics, and so drew thanks for for coming back in.

Joel: 1:39

I wanted to kind of start with the headline of an article that you recently wrote on y'all's website that was titled. I think it was something to the effect of I've got it here. It was expanding, local investing growing. Who are the local investors? I guess we know a lot about shopping local. It's great on Black Friday when people leave the box stores behind and they go somewhere local. That's great, but a lot of people haven't even really heard or know that there's an opportunity for local investing out there. So, yeah, what was it that made you decide to write this article here?

Drew: 2:21

Yeah, thanks very much and, Joel, thanks also for the work you do and for the opportunity for us to share today, really pleased. Well, just to give you the worldview of kind of where we are and where we fit in the universe, so I am fortunate to live in Santa Fe, new Mexico. I've been here 16 years and I lead what's called New Mexico Angels. You can find us at nmangelscom. We're an angel network and we're supporting investing, we're supporting startup and high growth companies and we're supporting an ecosystem of the people and the thing the web that interconnects so that companies can be successful here in our community. In addition, I lead what's called Managing Partner of the New Mexico Vintage Fund. A vintage fund is like a wine, so it's a fund that specifically looks at high growth entities, but we're looking at smaller amounts of capital for the venture space or the VC space and we're taking people to centralize this capital, to have an analyst to be able to do centralized due diligence and look at this together and then make investment decisions to help our local companies, our companies that have a connection to New Mexico, be able to grow faster, and so those two elements together. In addition, I do what's called fractional executive work where I will help a startup or high growth company with a capital need and help them on a specific capital raise. And so that puzzle of how can we do the veritable barn raising right.

Drew: 3:47

Barn raising was a thing you couldn't build a barn by yourself.

Drew: 3:52

We had horses, we had hammers, we had nails, we didn't have cranes, we didn't have electrical equipment. We had hammers, we had nails, we didn't have cranes, we didn't have electrical equipment, and you needed the whole village to put these walls up, and so you needed to rely on each other and then if you did it for somebody, then they would be able to do it for you. There's a reciprocity to it all, and you did mention shop local. I think that's something that a lot of our communities, our towns of Asheville, chapel Hill, our progressive communities, who are thinking about neighborhoods that's not new anymore. Sometimes it can be difficult the things you really like maybe they come from Chile, they come from other parts of the world, or you don't want to even look at that label to see where it is made, right, but can we also take our investing activities just as our purchasing activities and just think of investment as another consumption and look at what we're doing with that side of the balance sheet, so to speak, or that side of decision making.

Joel: 4:43

Yeah, it's kind of like your dollar is your vote in a lot of ways. You know, like you know, we don't think oftentimes a lot about you know the way we spend in that way, but it's true, like the kind of businesses that we both spend at and invest in, that's going to impact the future. That's going to have an impact on what the future looks like. I also know that, when it comes to things like you mentioned vintage investing and high growth investing, silicon Valley style, vc investing or startups incubators there's a lot of these different ways that investing has changed really over the last 30 years or so. What do you see as the strengths of traditional venture capital and what do you see as maybe a weakness or a way that it could improve?

Drew: 5:33

Yeah. So I would put AngelDum a little different than venture right, and the reason why that is because in AngelDum certainly here in New Mexico, bearing in mind, I've only done this for the last three years there's still a lot more communities. You have individuals who are choosing to cohere, come together in affiliation, and that there's a group effort towards something. A venture capital fund, stereotypically, is a single entity it's managed, it's got professional management and it's making decisions on behalf of its LPs, its investors, its limited partners, but it's a private entity, while a group of angels is a group of individuals and often the entity itself can be for profit or nonprofit. So the behavior is a little different. Stereotypically, an angel is earlier than a VC fund is. That's changing with technology, with COVID and other means, but the stereotype still holds true to the average listener.

Drew: 6:36

Here. I want you to make sure that you can be a part of local investing, right, because angel dumb. If you're an accredited investor, which is a legal term set up by the SEC as a regulatory means to protect people, basically you have enough money that you can lose this investment. Right? That? Those of us who are not accredited, how do we find these deals? How do we participate in these things and technology. Towards your point about the last 30 years, what's changed? To access information through crowdfunding is a great means, and so all of us can invest a hundred dollars, a thousand dollars at a time in things that motivate us, whether it's a donation through crowdfunding or an investment through crowdfunding. So those of us who are credited, then there's this whole world of venture that's available to us to find deals.

Joel: 7:35

Right, because traditionally, if you are, you know in the the accredited laws that you're talking about, if you are already essentially wealthy enough that you can afford to lose your investment, you can't. It's been, you know. There's really no, there's not a lot of guidelines as far as what you can and can't invest in, whether it's locally or if, basically, you don't need an advisor, you can put you know you can. You can do whatever you want to in whatever business. But for those of us, like you said, that are not accredited and don't have a vast amount of wealth to begin with, we typically have to go through a financial advisor if we want to make any investments in, you know, the stock market or the bond market or anything like that.

Joel: 8:13

But yeah, there's been all of these changes where now people can use crowdfunding, which traditionally, you know, when I first heard about crowdfunding, it was just donations, it was just hey, you can donate money to a startup and you know maybe they'll give you a t-shirt or that you know some kind of premium VIP treatment when they open, right. But now there's actually a return on investment component where, if you put your money into a startup, you can start participating in either revenue share or some kind of return on investment there. I guess, taking that angel mindset from you're working with people who have been able to do local investing for a long time and now you're seeing this transition where more and more people are being able to access that and that barrier to entry is kind of lowering. I'm curious what stands out to you most as this is happening. I'm sure there's things that are you're exciting about and I'm sure there's things that you know you would, you know, be cautious about or that you see need to improve in order for things to truly function optimally.

Drew: 9:20

Let me answer that in two ways, joel. So let me do the first one and pause, and you can redirect if needed. So just on the micro scale, meaning New Mexico, where I live, I'd be any of your listeners who are fellow Zia folks shout out to you Check us out at NMAngelscom and be in touch. You know New Mexico, we like to think of ourselves as a unique place and statistically I think we often are. With Oklahoma, we have the highest percentage of indigenous people, majority, minority state. We're officially bilingual, things like that, and so when I think about local, for us it's a large state with not very many people in it.

Drew: 9:56

So we're trying to think of the things that can help each other and so some of the things you're talking about how do you use technology, how to use our 21st century, our modernism? But a lot of ways it still goes back to connecting to traditionalism, meaning you still have to rely on your neighbor. The more you know your neighbor and trust your neighbor, the more it's easy to do business with him or they. The more you know your neighbor and trust your neighbor, the more it's easy to do business with him or they. The more you know where things are in your community, the more you can access them, whether that's a nonprofit, a food bank or where do you get good bread, where's the best lumber? And so just expand that out to invest in. How do I know who to trust? Where are the restaurants that would actually want to invest in? Where is then the startup company, the guy or the gal, the person who's done it? Before you buy a ticket, you go in, you explore this world. There's a bar, there's a restaurant, there's concerts.

Joel: 11:03

And they're making money at it right.

Drew: 11:05

When we first started doing that because I was the first CFO people thought we were crazy. We're trying to raise $3 million and we found people who are true believers, either because they like the arts or they knew some of the people involved, and so we got early adopters and a lot of the folks talked to me and they said, hey, you know, we basically looked upon this as a donation. We thought it was a good thing, it leads some job creation and could be good for Santa Fe. We weren't expecting to see anything back, but it got successful. We opened our doors in the first year. We had seven million dollars, we had 500,000 visitors, and so this idea of a local business that could draw upon a local reputation to then get the capital it needs to do this business thing and employ 100 artists is a beautiful thing.

Drew: 11:50

Now, it helped that we got George RR Martin. It helped that we got some name brand people locally who could write checks and they were willing to tell other people they'd written a check and host a dinner and said I wrote a check, it's time for you to write a check too. So I mean, we had a lot of good fortune with Meow Wolf, but I think every community has its version of Meow Wolf or has its beloved pizza place or Chinese restaurant or, you know hamburger place, and so how do we take these things that have been successful and try to replicate them?

Joel: 12:19

Yeah, yeah, and I mean obviously that's the main question when you guys are looking at, when angel investors in general, I guess, but also angel investors that are, like you said, more locally minded, more consciously or impact minded, whatever more than one bottom line, where they're focusing on more than one bottom line what are the key things that these investors are looking for when they're looking to fund a startup? What are they looking for from that startup business?

Drew: 12:51

Yeah, so I'm not smarter than a lot of people. There's a lot of smarter people out there and so it's really just the fact that I did the MBA. I've been doing this every day, and when you do something a lot, you have a tendency to get good at it, or at least you see the patterns right. So if you haven't done this before and you're an entrepreneur and you're trying to figure out the pathway for capital, it's really, I think I'm an extrovert, so I talk to other people or you read online or you go to YouTube or you go to Harvard or University. But there's lots of ways that this has been done and you don't necessarily need to do it differently. You just need to understand the terminology, which can be exclusive. You need to understand parts of it and the steps and do it in sequence, and then you need. The more you look like something else that's been successful, the easier it is for people who have written checks to write checks before.

Drew: 13:42

So, to specifically answer your question, joel, in MBA class, what we talked about in entrepreneurship is what are the most important components of a business, and the question was what are the first three most important points?

Drew: 13:55

And it's people, people, people. A business, a product is still the human beings who make it, who have to sell it, who create the brand, who interact with the customer, who make it, who have to sell it, who create the brand, who interact with the customer. And so I would much rather take an A team with a B product than an A product and have a B team handling. And that goes back to something we talked about in the first segment about iconic brands right, patagonia, ben Jerry's, I think, just because that in premature, that logo is on something you trust it. And the same is true in investing is getting people to trust you, getting people to know you and understand what this opportunity is, and so they're really basic things. They're really unsexy, but the data is that it's 1,000%, 1,000% easier to get investment from people who know you than from people who don't know you.

Joel: 14:46

Yeah, and what's coming to me as you're saying, all this is I think about. I feel like in my mind and in the culture at large, there's been this tension between the idea of doing good with doing good, whether that's with business or with nonprofit, and then is over here on one side, then is over here on one side, and then the idea of having, you know, a successful business is on the other side, in a way, almost like you have to like that they're at odds and you have to compromise. If you want to make more money, well, you're going to have to compromise on your values, and if you want to stick with your values, well then you're going to have to compromise on maybe not making as much money, and that may be true in the short term. But I don't know, as I think about the types of businesses that you're talking about, whether they are community-oriented businesses like Meow Wolf, whether they are other types of B Corps that have a focus on sustainability in either the environment or in their own personal, in their own neighborhoods and in their own communities, and the businesses that invest into their people rather than just into their products and their marketing and everything, but really treat their people well and make sure that their people are living full lives.

Joel: 15:54

It seems like it's not so much a question of like, it's a dichotomy between that and making more money in the long run, but it does seem like it is in the short run, like if you treat your community better, you're going to have like when I think about Patagonia, that trust is there because, man, that stuff lasts and if it doesn't last, they'll replace it. And there's this um, this long-term thinking by that company that we're going to be here for the long run and we're going to be your, your, we're going to be the brand you trust for the long run. So I'm curious if you have just any thoughts on that sort of dichotomy of using values, investing, using local investing, using social enterprise as a recipe for long-term success.

Drew: 16:41

Yeah, so a couple of things come to mind. One is a couple of resources that people like reading or looking stuff up. One of my mentors is a guy named Jed Emerson and he had something called the blended value proposition. He's written a number of books. They're all great reads, very accessible. He writes very well. So I would check those out, jed Emerson, and then you might have to help me with this one, joel. There's one called the Cathedral Within. It was written by a business guy. He's got a couple other books. Good to Great is one of his other books. Oh, jim.

Joel: 17:13

Collins.

Drew: 17:14

Jim Collins, thank you. So Jim Collins makes a number of really good points around longevity that you're talking about Again, easy reads you can do it by the chapter, you don't have to get sucked into a whole book. But the cathedral within this is the idea back in Europe in the Middle Ages or the Reformation, where if you were an architect, you knew you weren't going to finish the cathedral that you were building during your lifetime. And so how do you take the vision of what you're trying to do and extend it past your own life? Right, and I think that that's important for the things we're choosing to buy in this world now, the things we're making and the things we're investing in. Just as you value your house, which for most people, is probably going to be the largest asset that they ever have, unless you're very, very fortunate your investments, whether it's the small amount you might have for retirement or, if you're an angel investor, what you're able to do and start with a high growth company. And it's the same choices, right? Why do you like a house? What do you like about it? What are its values? What's going to make it good for the long term? And you're right, the Wall Street, the concept of Wall Street as a stereotype. Right is short-term gains and short-term thinking to maximize return. Good companies actually don't follow that. The best companies have a longitudinal aspect to what they're doing. They're not trying to just make the fast buck. They also make a fast buck. But even the Jeff Bezos of the world and the Apples, and even our wonderful, crazy Tesla owner, they're thinking of the future. They're thinking about the generations.

Drew: 18:49

And so, for those of us who care about this whether it's faith-based, whether it's community-based, whatever moniker you want to use is the things that you believe in. It's okay to have beliefs and to seek out purchases, to seek out lifestyle and then to seek out investments that reflect the things that you believe in. And, joel, I firmly believe, like you stated, you don't have to give up anything for that right. That's an old adage. If I got organic clothes, they were going to suck and they were going to fall apart and they're going to be more expensive. That's not true anymore. Walmart has organic clothes. Now it's here. So vote with your feet, think with your purchasing and try to align your investment activities uh, regardless of whether you're an angel or not, uh, with things that really matter to you.

Joel: 19:33

Yeah, yeah, absolutely. It reminds me you mentioned, you know, New Mexico being the home of so many, um, indigenous folks that are the ones that are still here, um, that are here in America. And, um, it reminds me what you're saying of an indigenous saying and I don't know which, which group it was, but it's the idea that when you make a decision, when you um, when you're living your life, you shouldn't be thinking just about yourself, obviously, but it's not even just thinking about the next generation, as we so often do. It's actually thinking about seven generations from now, and I just imagine the difference in what our world could be like if the main motivator of these big institutions, like Wall Street or whatever it is, if their mindset was less about what's my ROI, what's my return this quarter and what's my profits this quarter, but what kind of world and what kind of business are we creating for seven generations from now?

Drew: 20:33

Yeah, it's an awesome point. In New Mexico, we get the chance to think about that With the New Mexico Angels. Startups take a while and the VC or venture capital adage that you're going to get an exit immediately is not what the actual national data says. Most startup companies are looking at five to seven years, if they are successful, towards some sort of exit. And, of course, statistically, as you can imagine, most companies fail, just as most restaurants fail.

Drew: 21:03

So there's a lot of risk in this and in New Mexico, where every company that's adding 10 jobs is helping, is valuable, is numerable, right, is countable, that's valuable and that's helpful. We want to support that and we want to support that more than just do the check. We also want to uh, we call it time treasure talent right. We want to get the people who have business expertise we have people with rolodexes and networks and might help with sales or help with customers, helping to find talent, so you get the right people in there, the right employees, the right relationships.

Drew: 21:35

All of those things are things that we can do locally through an angel network or through any other community network, and then, through the New Mexico Angels, we then created this thing called the New Mexico Vintage Fund, which was an effort to create an institution around angeldom, and so we went from individual activity angeldom to this venture world, this institutional world, so that we had a shingle, we could be found a little bit easier. We had a brand and 35 people jumped in with us the first time we did this. We've now done two funds, we're about to do a third, and New Mexico Vintage Fund is an example of collective people coming together, each with their small part of the puzzle right the veritable stone soup and creating a real solution that can move things forward in a quantifiable way.

Joel: 22:21

Yeah, I love it and I'm really excited to get to next time. I know we didn't get a chance to talk about it much yesterday, but we're going to be talking with one of those efforts that you all have funded called New Way Homes, which is doing some really incredible and innovative and fascinating stuff in this space some really incredible and innovative and fascinating stuff in this space. So I'm excited to get to talk with your colleague next week about that. And before we head out here, where can people find you? I know you've mentioned before it's NMAngels, is that right?

Drew: 22:48

NMAngelscom, for the New Mexico Angels New Mexico Vintage Fund. You can find our consulting firm, upspring Associates. And then, yeah, we mentioned New Way Homes, which is a housing effort in California, something I believe in, something I've invested in, support, and I'm excited to have Sibley Simon, the CEO, share with you guys next week what he's trying to do to make California a better place.

Joel: 23:08

Yeah, All right. Well, make sure to subscribe on YouTube, iTunes, iHeartRadio, Spotify, anywhere, Stitcher, wherever you get your podcasts, wherever you listen in. Um, and check out Drew's work. Um, and until next time, take care of each other and remember, uh, we are each other.