Episode 16: The 3 T’s of Early Stage Investing | Larry Warnock

Larry Warnock is the Founding Partner of Ring Ventures (part of the Alumni Ventures Group), a Venture Capital Fund that deploys investment capital into tech and tech-enabled early-stage businesses. He continues consulting with the fund as a Partner Emeritus. He has made over 70 investments in his tenure as a VC.

Larry is a seasoned venture-backed tech executive with multiple exits via acquisition or IPO. Prior to founding Ring Ventures he was the President and CEO of Olono, an AI platform for sales effectiveness (acquired by InsightSquared). Previously he was the
CEO of Gazzang, a provider of big data security software (acquired by Cloudera), and
Phurnace, a provider of DevOps software (acquired by BMC Software). Earlier in his career he was a VP of Marketing for a company in California that went public on the NASDAQ exchange.

After moving back to Texas from Silicon Valley, Larry was a Venture Partner at AVLabs, the incubator fund of Austin Ventures. His career has allowed him to work with numerous VCs and companies across California, Colorado, and Texas.

Lake LBJ in central Texas is now his home with his wife of 40 years. He has two adult children and 2 grandchildren. Larry graduated from Texas A&M in 1983 with a Degree in Marketing. He is a frequent speaker at Texas A&M’s Mays School of Business and sits on the Advisory Board of the McFerrin Center for Entrepreneurship at A&M.

During our conversation, he discusses:

• His 'Three T's' framework: TAM, Tech, and Team for evaluating investment opportunities

• The importance of the team in the success of a venture

• The stories of missed investment opportunities and lessons learned

• Advises on the pitfalls of complicated cap tables and emphasizes the benefits of SAFE notes for angel investments

• The conversation highlights the importance of building relationships with founders early

• Current VC investment trends including the resurgence of hardware and AI applications

• His insights on how angels can add value beyond financing

• His advise for angel investors on leveraging research and trends to make informed investment decisions

• The recounts of the more unusual pitches he's encountered, including one for recreating the woolly mammoth.

Listen now on Spotify, Apple Podcasts, and YouTube.

What We Cover:

• 01:47 Larry Warnock's Three T's Framework

• 04:49 The Importance of the Team

• 07:48 Evaluating Market and Technology

• 13:01 Building Relationships as an Angel Investor

• 16:44 Navigating Cap Tables and Investment Strategies

• 27:02 Missed Opportunities and Lessons Learned

• 28:55 Persistence Pays Off: The Starfish Space Story

• 31:25 HomeAway: A Game-Changing Investment

• 33:42 Gazzang: Navigating Market Shifts

• 39:47 The Craziest Pitch: Woolly Mammoth Revival

• 42:37 Current VC Investment Trends

• 44:04 The Resurgence of Hardware Investments

• 47:26 Advanced Manufacturing for Defense and Aerospace

• 48:41 Researching Hot Investment Categories

• 49:07 Final Thoughts on Angel and VC Investing

Connect with Larry

• LinkedIn: https://www.linkedin.com/in/larrywarnock/

Connect with Andrew

• Newsletter: https://thediligentobserver.substack.com

• X: https://twitter.com/AKazlow

• LinkedIn: https://www.linkedin.com/in/andrewkazlow/

• Book: https://angelops.pitchfact.com/

• Website: https://pitchfact.com/

Stuff We Reference

• Apple: https://www.apple.com/

• Microsoft: https://www.microsoft.com/

• Slack: https://slack.com/

• Salesforce: https://www.salesforce.com/ap/?ir=1

• Zoom: https://www.zoom.com/

• Proxi: https://www.proxi.co/

• Austin Ventures: https://austinventures.com/

• Wells Fargo: https://www.wellsfargo.com/

• Elon Musk: https://www.tesla.com/elon-musk

• Starlink: https://www.starlink.com/

• ICON: https://www.iconbuild.com/

• Stacklet: https://stacklet.io/

• Travis Stanfield: https://www.linkedin.com/in/travis-stanfield-32944/

• Starfish Space: https://www.starfishspace.com/

• Texas A&M University: https://www.tamu.edu/

• Stanford University: https://www.stanford.edu/

• VRBO: https://www.vrbo.com/

• HomeAway acquired by Expedia: https://techcrunch.com/2015/11/04/expedia-acquires-airbnb-rival-homeaway-for-3-9b/

• MySQL: https://www.mysql.com/

• Cassandra: https://cassandra.apache.org/_/index.html

• Hadoop: https://hadoop.apache.org/

• CRISPR: https://crisprtx.com/

• Disney World: https://disneyworld.disney.go.com/

• Wayne Gretzky: https://www.gretzky.com/

• Google: https://www.google.com/

• OpenAI: https://openai.com/

• NVIDIA: https://www.nvidia.com/en-us/

• Venus Aerospace: https://www.venusaero.com/

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All opinions expressed are personal and may not reflect the views of the individual’s organization or of The Diligent Observer. Not investment advice.