Brian Bell · Sep 1, 2026 · 12 min read

Ignite VC: The Startup Metrics VCs Actually Care About with Frank Mastronuzzi & Laurel Mintz | Ep293

Fabric VC’s Laurel Mintz and Frank Mastronuzzi explain why $40K MRR matters, which startup metrics actually de-risk an investment, and why chasing inflated AI valuations may be the wrong bet.

Venture capital is supposed to be about finding what everyone else has missed. Yet when an entire industry rushes toward the same theme, the bigger opportunity may be somewhere else.

That is part of the thinking behind Fabric VC, led by Laurel Mintz and Frank Mastronuzzi.

On the Ignite Podcast, Laurel and Frank joined Brian Bell to discuss their evolution from operators and service providers into venture investors, why they are deliberately looking beyond the most crowded areas of AI, what makes a startup an “easy yes,” and why fundraising as an emerging fund manager is far harder than it appears from the outside.

Their approach comes down to a simple advantage: they often know companies long before they invest in them.

From Operators to Venture Investors

Laurel Mintz did not begin her career in venture capital.

She started as a corporate M&A attorney before stepping away from a large San Francisco law firm when her father became ill. At 26, she took over his interest in Bassett Furniture as interim CEO and eventually sold it.

She later launched Elevate, a marketing agency that has worked with more than 500 brands. Through that work, Elevate began serving private equity and venture firms, and one of Laurel's GP clients eventually suggested that she launch her own venture fund.

That became Fabric VC.

Frank Mastronuzzi brings a different but complementary perspective.

He founded Punch Financial, an outsourced accounting, CFO, startup accounting, and fund administration business. Through Punch, Frank has spent years working directly with startups and investment funds while also making investments himself.

After selling Punch to Capita, he could no longer continue investing directly from the company's balance sheet. That created an opportunity to join forces with Laurel.

The result is an investment partnership combining two disciplines that founders often struggle with most: finance and marketing.

Instead of evaluating startups purely from the outside, Laurel and Frank can often see how the companies actually operate.

Fabric VC's Investment Thesis

Fabric's first fund focused primarily on pre-seed and seed companies.

For Fund II, the firm is moving slightly later, targeting seed and Series A businesses across three primary sectors:

Consumer technology
Health technology
Fintech

The fund is primarily focused on companies in the United States.

But Fabric is not avoiding AI.

Instead, Frank describes the firm's preference as looking for the equivalent of AI's “picks and shovels” and vertical applications rather than trying to compete for the most obvious foundational AI opportunities.

One example he referenced is Relativity Networks, which is working on data infrastructure designed to help move data faster between data centers.

The broader thesis is that investors do not necessarily need to chase the largest AI models or infrastructure platforms to benefit from the AI transition.

There may be more attractive opportunities in specialized businesses where AI improves an existing workflow, industry, or operational problem.

Why Fabric VC Is Looking Beyond the AI Feeding Frenzy

AI is consuming enormous amounts of investor attention.

That creates a problem.

When everyone wants exposure to the same companies, valuations can rise much faster than the underlying economics.

Laurel believes this dynamic may ultimately compress investor returns in some AI categories because investors are entering companies at extremely high valuations.

Meanwhile, companies in less fashionable categories can potentially offer much more attractive entry points.

Her focus is on businesses capable of becoming profitable, growing toward significant scale, and ultimately becoming attractive acquisition targets.

The lesson is not that AI is a bad investment category.

It is that price still matters.

A phenomenal company can become a mediocre investment if an investor pays too much for it.

What Makes a Startup an “Easy Yes”?

When Brian asked what an easy investment decision looks like, Frank emphasized financial fundamentals.

Fabric wants to see businesses where the core economic engine is already working.

That means understanding things such as:

Gross margins
Cost of goods sold
Customer acquisition economics
Revenue quality
Subscription renewals
Product-market fit
The path toward profitability

The ideal company is not raising money to discover whether the business works.

It has already demonstrated that something works and needs additional capital to accelerate it.

The founders may be expanding internationally, entering additional verticals, increasing sales capacity, or otherwise stepping on the gas.

That distinction matters.

Capital should accelerate a functioning engine rather than compensate for the absence of one.

Why $40K MRR Matters

As Fabric moves toward seed and Series A investing, Laurel said the team increasingly wants to see approximately $40,000 in monthly recurring revenue or clear progress toward that level.

The number is not arbitrary.

Frank explained that the earliest customers often come through a founder's existing relationships.

A founder might close friends, former colleagues, industry contacts, or companies already familiar with them.

That does not necessarily prove repeatable sales.

The more meaningful signal comes when founders demonstrate that they can sell to people outside their immediate network.

Frank wants founders to prove that they can “sell to a perfect stranger.”

By the time a company reaches roughly $40,000 MRR, Fabric believes it has often cleared at least part of that first commercialization hurdle.

The company has begun learning how to sell, how its revenue model works, and which levers drive the business.

That does not eliminate startup risk.

But it can materially reduce one of the biggest early-stage questions: whether anyone outside the founder's immediate network actually wants the product.

An Easy No: AI for the Sake of AI

Fabric is equally opinionated about what it does not want.

One immediate warning sign is a startup describing itself as AI-native when there is no compelling reason to build the underlying technology from scratch.

Many companies would be better served by integrating existing AI capabilities into a strong product instead of spending enormous amounts of time and capital reinventing the foundation.

On the consumer side, Laurel also pays close attention to brand.

A direct-to-consumer startup that cannot articulate why its brand matters or how it differentiates itself is immediately less compelling.

One Fabric portfolio company stood out because it used Reddit as a core marketing channel and achieved strong traction there.

The specific tactic is less important than the underlying principle.

Fabric wants founders who understand how their product will actually reach customers.

The Best Founders Know Their Numbers

Another recurring theme from Frank was financial literacy.

Founders do not need to be accountants.

But they do need to understand the levers controlling their business.

A founder should know what drives revenue, what affects margins, how acquisition costs behave, what churn looks like, and what actions can materially improve those metrics.

If founders do not understand those numbers, they cannot reliably influence them.

The era of “growth at all costs” has also changed.

Investors increasingly want evidence that founders understand the path toward profitability, even if the business is not profitable today.

That makes operational discipline much more important than it was during periods when capital was abundant and growth alone could drive another financing round.

The Most Underrated Founder Skill: EQ

Strong metrics alone are not enough.

When asked about underrated founder skills, Frank pointed to empathy and emotional intelligence.

Founders ultimately need to recruit employees, retain talented people, sell customers, persuade investors, and convince exceptional people to join their mission.

That requires more than intelligence.

It requires the ability to communicate a vision and build trust.

Frank pointed to Vapi as an example of a company capable of attracting talented AI engineers who could potentially have launched businesses themselves but instead decided to join the company.

That ability to attract people is a powerful founder signal.

As companies scale, founders also need the self-awareness to recognize where they are weak and bring in people who are better than they are in those areas.

Frank's preferred position is simple: be the dumbest person in the room.

Coachability Matters More Than Having Every Answer

Fabric also looks closely at how founders respond to advice.

The strongest founders do not pretend to know everything.

They seek feedback before important decisions rather than after something has already gone wrong.

Frank argued that many founders mistakenly believe they need to keep problems hidden from investors.

His recommendation is the opposite: “go ugly early.”

But there is an important distinction.

Going to investors and saying, “We have a problem. Fix it,” is not particularly useful.

A stronger approach is:

Here is the problem.

Here is what we discovered.

Here are the potential solutions.

Here is what we currently believe we should do.

Does anyone around the table have relevant experience that could improve the decision?

Investors understand that startups will encounter problems.

What frustrates them is discovering that a problem existed months earlier and that they could have helped solve it.

Why Hiring Determines Whether Hypergrowth Works

Rapid growth creates its own problems.

A company that suddenly gains customers, capital, and employees can easily break under the pressure if the team is not prepared.

Frank believes one of the biggest differentiators is hiring people who are ahead of the company's current needs.

Founders sometimes surround themselves with people from the same networks, schools, backgrounds, or ways of thinking.

That feels comfortable.

But it can create blind spots.

Instead, growing companies often need experienced operators who have already seen the problems the business is about to encounter.

The goal should not simply be to delegate responsibilities.

It should be to add capabilities that the founders themselves do not have.

Fabric VC's Biggest Structural Advantage: Continuous Due Diligence

Most venture investors meet a startup during a fundraising process.

They review a deck, analyze metrics, meet the founders, conduct references, and try to determine what the company will become.

Fabric can sometimes approach the process differently.

Because companies may already work with Punch Financial or Elevate, Frank and Laurel can see aspects of their operations long before investing.

Frank calls this “continuous due diligence.”

From the finance side, Punch can see what is actually happening inside a business: hiring, firing, expenses, growth, financial controls, and operational changes.

The relationship may already exist before Fabric writes a check.

That creates two advantages.

First, Fabric can potentially evaluate the company with better information.

Second, the founders may already view Laurel and Frank as trusted advisors.

Instead of trying to manufacture “value add” after investing, the relationship frequently predates the investment itself.

Why Founders Make Room for Operator-Investors

Frank described situations where other VCs have asked why startups were willing to leave allocation for him.

His answer is essentially that Punch was there before the company became attractive to everyone else.

The team helped founders when others were still saying no.

That relationship can become extremely valuable once a company raises institutional capital.

Many funds claim proprietary deal flow.

Fabric's argument is different.

Its operating businesses can create relationships with startups before those companies formally enter the venture fundraising ecosystem.

That can give the fund both access and information.

Emerging Manager Fundraising Is Brutal

Perhaps the most revealing part of the conversation was not about startup fundraising.

It was about VC fundraising.

After years of working with emerging fund managers, Frank thought raising a fund would be relatively straightforward.

It was not.

He joked that he imagined fundraising would resemble Oprah handing out checks.

The reality was much harder.

Brian provided his own numbers from Team Ignite to illustrate the scale of the challenge.

Each of his funds has roughly 50 LPs.

But behind those 50 investors are thousands of rejections.

He estimated that emerging managers may need approximately 100 conversations or opportunities/leads to generate a single LP commitment.

That makes venture fundraising fundamentally different from many forms of B2B sales.

A startup with a strong product and qualified demo pipeline might close a meaningful percentage of prospects.

An emerging fund manager can face dramatically lower conversion rates.

For Frank, the biggest surprise about becoming a VC was straightforward:

Fundraising is much harder than it looks.

Why Family Offices Are Interested in Fabric's Model

Frank believes Fabric has found particular resonance with some family offices.

The dynamic often involves generational transitions.

The first generation may have created wealth through real estate or another traditional industry and naturally prefers to continue investing in what it knows.

Later generations may want exposure to technology.

But the family may not have deep expertise evaluating startups.

Fabric's operator-led approach can help bridge that gap.

Instead of approaching technology investing purely through narratives and projections, Laurel and Frank apply traditional operating, financial, and marketing disciplines.

For families interested in technology but uncomfortable underwriting it themselves, that can make the model easier to understand.

The Danger of Following the Venture Crowd

When Brian asked for a popular venture idea that might be wrong, Frank returned to AI.

His concern is not AI itself.

It is over-indexing.

Venture markets repeatedly move through periods where investors pile into the same category.

Eventually, the market separates the genuine category leaders from businesses that were primarily benefiting from enthusiasm.

AI is unlikely to be different.

There will be extraordinary companies.

There will also be consolidation, failures, and businesses whose economics never justify the valuations investors paid.

That is why Fabric is attempting to remain disciplined while still participating in AI-related opportunities.

The Bigger Lesson

Fabric VC's model reflects an increasingly important shift in early-stage investing.

Capital alone is becoming commoditized.

Founders have more choices about where money comes from, while investors have more competition for the strongest companies.

That makes genuine operational capability more important.

For Laurel and Frank, venture investing is an extension of work they were already doing.

Marketing gives them insight into customer acquisition, positioning, brand, and distribution.

Finance gives them insight into margins, revenue quality, hiring, costs, and operating discipline.

The investment decision sits at the intersection.

And their underlying philosophy is remarkably traditional despite investing in technology companies:

Understand your numbers.

Know how to sell.

Hire people better than you.

Ask for help early.

Build something customers repeatedly pay for.

And do not confuse investor enthusiasm with business quality.

In a venture market obsessed with the newest technology, those fundamentals may ultimately prove more durable than whatever happens to be fashionable this quarter.

Chapters:

00:01Frank Mastronuzzi and Laurel Mintz on Fabric VC
00:45Laurel Mintz’s operator-to-investor journey
01:46Frank Mastronuzzi, Punch Financial, and the move into VC
03:24Fabric VC’s seed and Series A investment thesis
05:16AI picks-and-shovels and vertical opportunities
07:41Investing beyond inflated AI valuations
08:17The financial profile of an “easy yes”
09:25$40K MRR, brand strength, and easy no’s
13:11Operator-led venture capital and post-investment value
16:54Hiring for hypergrowth
20:02Over-indexing on AI in venture capital
23:02Founder empathy, EQ, and storytelling
24:59Coachability and asking for help early
26:08Fabric VC’s investment decision process
28:14Why $40K MRR matters
30:44Finance versus marketing investment instincts
33:46Lessons from Fund I
35:45Hungry founders and early-stage resilience

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Brian Bell (00:00.912) Everyone, welcome back to the Ignite podcast. Today we are delighted to have two guests, not just one guest, two guests on the program and and a repeat guest whose birthday it is. So we're gonna give crap for that, Frank, Buster Newsie and Laurel Mince. Thank thanks for coming on the program, guys.

Laurel Mintz | Fabric VC (00:15.522) Thanks for having us and thanks for calling Frank out. We love that. Happy birthday, babe.

Frank Mastronuzzi (00:18.998) Yeah.

Brian Bell (00:19.14) Yeah, so it's literally Frank's birthday as we record this sometime in late July. And Frank was actually on episode one thirty way back in the day, a couple of years ago. So he's a glutton for punishment, wants to come back and just likes he just likes the way my face looks. So

Frank Mastronuzzi (00:33.172) Yes, that and I love what you guys are doing. So that's cool. Yep. Glutton for punishment.

Brian Bell (00:39.066) Yeah, so I'd love to start with Laurel. What's your background? What's your origin story? Because we don't know you yet.

Laurel Mintz | Fabric VC (00:45.196) Yes, I'm the newbie. started my career as a corporate MA attorney. Don't hold that against me. I have an MBA in digital marketing. I was practicing at a big firm in San Francisco. My dad got sick. He's healthy now, but ended up having to step down to take over his interest in a company called Bassett Furniture, which is a big national chain, most people know. so took over his interim CEO there at 26, sold that 2009. Launched the marketing agency Elevate. That's now been around almost twenty years, five hundred plus brands later. and because of my legal and business background, a lot of private equity and venture firms have been coming to us to market them. And one of my GP clients said, I think you should go launch a venture fund. And much much like Frank back on the podcast, I'm a glutton for punishment, so I did it. Everybody's so easy. No big deal. Yeah.

Brian Bell (01:25.712) Everybody's doing it. Everybody's doing it. Assume we'll have like it'll be like real estate agents. You'll be at a party and it'll be like it'll be like you'll be dodging the VCs and the real estate agents, you know? but Frank, maybe you can remind the audience who you are and w why would you possi why would you wanna come back on this podcast? That's crazy.

Laurel Mintz | Fabric VC (01:40.13) Mm.

Frank Mastronuzzi (01:46.802) Yeah, sure. Sure thing, Brian. like like we discussed, I'm Frank Mashnusi. I am founding and managing partner of Punch Financial, which is an outsourced accounting CFO services firm. We do fund admin and startup accounting. and as you know, I've been in the space and making Individual investments and investments from Punch directly. but recently a year ago, which you probably didn't know, Brian, I sold the firm to Capita, which is the Carta competitor out of Singapore. And as part of that process, they said no more investing, no more, no more balance sheet investing. And so I knew that I needed act two. and Laurel and I had been friends and and and colleagues for a while. And I said, She said, Hey, why not? Instead of starting a new fund, why don't we we join forces? And so we did that crazy thing. and I again love that what Laurel's doing is the same approach that we're doing, right? She's in the boat rowing with the clients and the investments. So we're not just putting in money, we're in the boat and we're helping them. And so Laurel's coming from a marketing perspective, we're coming from a finance perspective, and we feel like that adds a lot more value. One plus one equals three.

Brian Bell (03:04.56) That's great. well, congrats on taking the plunge. It's a it's always a big step, walking away from what you've been doing that's been successful and getting into this industry, which is a little crazy. walk us through the the the the thesis, what are you guys investing in, all that stuff.

Laurel Mintz | Fabric VC (03:24.398) Can we take this one, Frankie? Awesome. so fund one was much earlier. So we did seed and pre-seed. Fund two, which we'll be launching in September, we're going a bit more upmarket. So seed and series A in consumer tech, health tech, and fintech. And to Frank's earlier point. we have these two rubrics that we look at these deals through. One is the finance lens and one is the marketing lens. And that really helps us understand you know, which kind of companies to invest in. But at its base, consumer tech, health tech, fintech focused, our deal flow from both sides of our operating companies is really like our big differentiation aside from the layer of operational expertise that we then layer on top. And that piece is what we believe will help these companies be most successful.

Brian Bell (04:11.62) Yeah, I mean the thesis is already differentiated, right? I mean, consumer tech and health tech are not the hottest must invest, you know, AI, whatever, blah blah blah, billion dollar valuation stuff, right? so you guys are gonna have, I think, a differentiated ability to get in front of the best deals in those spaces and and and see some value, right? Like we have we have this in in fund two. we invested in credit, credit with a K fintech company, just killing it, right? Just raising a series B. Huge ARR, like, you know, and you know, but it's a fintech company, right? So like if if they were if they were at this ARR valuation, their valuation would be something like eight billion if they were an AI company. But since they're a fintech company, it's like an order of magnitude less than that. So how do you so how do guys think about that as you go out and and and find these deals? I'm guessing it's it's mostly US. Are you guys geographically agnostic as well?

Laurel Mintz | Fabric VC (04:55.886) Mm.

Laurel Mintz | Fabric VC (05:11.02) Yeah, we're US focused and then and Frank, you can address the the other side of that question, I think.

Frank Mastronuzzi (05:16.38) Yeah. So Brian, we, you know, while you know we have a a focus since since we're using punches clients and and elevates clients, we we have some folks that are outside that. So we do have some some SAS and some AI companies and so forth that we're we're looking at. You know, you're right. The the oxygen is always taken is out of the room when there's AI and people are adding AI to their name just to change their valuation. It's crazy, right? but we're starting to see as even if you see CNBC and so forth, there's a little bit of a pendulum swing that's already starting to happen, even on the public companies with the CapEx spend on on, you know, on AI and data, right? we're we're loving the again back to use all the different analogies, we're loving the companies that are AI H. I had the picks and shovels. So we invested in a in relativity networks, which is a patent patent producing. data cable that helps the data move faster from data centers, which is a big issue since they're using, you know, distributed data centers and so forth. So we may not be, while we are still exploring some AI companies, we're not, we're looking at the verticals. Like, you know, Vappi Punches Client, you know, we could, you know, had the fun been around and me being part of it, we would have invested in Vapi. we were there when they completely YC shifted and changed their company from Superpower Labs to Vapi, right? And so we helped them make Decision, and it would have been super easy to get involved. and so that's the stuff that we're looking at is the verticals and not the big LLMs, right? And the big infrastructure plays. Those those macros are the Titans are all fighting, right? Meta's raising billions of dollars externally. So, what we're doing is focusing on on stuff that's a you know that's specialized that touches the areas like you know, we're looking at law, a law vertical AI product, not a Harvey competitor, but some.

Frank Mastronuzzi (07:15.222) something that helps efficient operational efficiencies. So again, while we're not focused like everyone down the lane on just an AI, we're talking, we're not avoiding it. We're just not focused extremely on it. And as you see, you know, they have to have an AI component, right? If you don't have an AI strategy, even if you're these other businesses, then the investors are gonna get a little concerned.

Laurel Mintz | Fabric VC (07:41.048) But your point, Brian, like we're seeing valuations normalize across those other industries as well, which is a great time to come in and invest. When everyone's got their eyes on the ball over here, the shiny object, we're really focused on the companies where we can see really strong exits on the other side. I think the multiples on those AI companies are going to be minimal because their valuations are so explosive right now. So I think everyone's got that shiny object syndrome, and we're really focused on companies that can be profitable, grow to that hundred million. million run rate and be successful for some or sexy for some sort of MA activity.

Brian Bell (08:17.21) So this industry is made up of, I like to say, easy yeses and easy no's. let's talk about the first one. What's an easy yes look like for you guys right now?

Frank Mastronuzzi (08:27.046) An easy yes for us is a like you said, a very solid financial record, right? Regardless to pull the label off. We like for us, you know, healthy margin businesses that are, you know, really understand cogs. So we we like the the model being profitable. They just need to step on the gas pedal, right? So Unit economics are working, CAC is working, all that's working. And it's easy just to step on the gas pedal and they just need more runway to, you know, expand internationally or different verticals or whatever that is. I think that's an easy yes. but again, we want them to have a proven track record, you know, some the the the business needs to be de-risked from a revenue recognition, kind of show us that they're there there's product market fit and that customers are re-upping on the subscription, you know, on the on the contracts. So that's an easy yes. On an easy no, I'll let Laurel give the easy no's.

Laurel Mintz | Fabric VC (09:25.388) The easy knows now that we're going a bit more upmarket to Frank's point, we need to be able to see 40K MRR minimum or clear traction towards that. We don't like to see these. I mean, I can't tell you how many companies we see pitch us that are pitching AI native and should have no business pitching AI native. And they're like basically wasting, they're trying to waste our money and their time building from foundation when they should should be to Frank's point integrating AI into the existing platform or product. So that's always an easy no for me when someone's pitching AI that has no business doing that. an easy no for me also is a brand that has no idea what brand is. That's not always important on the B2B side, but on the direct-to-consumer side, which we do a lot in, we really need to see that these companies understand brand, understand how to be differentiated going to market. We did one deal on fund one where they were using Reddit as their native marketing platform and they were explosive on that platform. And that was something we hadn't seen in a fintech company as a launch a launch technique, which was I thought fascinating. So I wouldn't say there's perfect yeses and perfect no's, but we kind of know the secret sauce now.

Brian Bell (10:38.01) What did you guys getting into the nuts and bolts? 'Cause I'm thinking about this as well. Like w who were you guys using as a fund ad admin? How did you guys go about selecting the one you're using and stuff?

Frank Mastronuzzi (10:49.268) Brian, they're we're using ourselves. We're using Punch Financial to do the fund admin.

Brian Bell (10:57.293) amazing. Okay.

Frank Mastronuzzi (10:58.652) Yeah, with Punch being a fund admin and the Capita Acquisition, which is a fund admin platform. we just migrated the fund one over to Capita and Punch. and fund two will be also on the Capita Fund Punch platform.

Brian Bell (11:13.464) That makes sense. I didn't realize that. Yeah.

Frank Mastronuzzi (11:18.024) Yeah, Brian. Brian, are you in the market? Are you in the market for a five album?

Brian Bell (11:21.924) Are you in the market? Yeah, exactly. No, I'm pretty I'm on decile. I'm pretty happy with those guys. you know, I've I've been through a lot with those guys over the last, you know, three or four years. So

Frank Mastronuzzi (11:32.122) We we used to do the accounting for V C Labs if I know a Dale and Mike, yep.

Brian Bell (11:35.748) Yeah, that's right. That's how we got connected, right? Yeah.

Brian Bell (11:43.182) Yeah. Yeah. So what you know, as let's put our LP hat on first tech. So what are objections you hear from LPs? And you know, maybe you could, you know, there are LPs that listen to this. what kind of objections are you getting and handle those objections? Yes, beef. Just writing ten million dollar checks left and right into your fund. It's easy, right? It's so easy to fundraise.

Frank Mastronuzzi (12:04.912) Not looking at anything. Yeah, yeah. Laurel has that ma la Laurel has that magic.

Brian Bell (13:11.408) Yeah, it makes sense. so another vector that LPs will evaluate us VCs on is value add. Maybe you guys can you talked a little bit about it in your intros, but maybe you talk a little bit about how you guys add value post-check.

Frank Mastronuzzi (13:25.5) Yeah, Brian, I think yeah. I think that's where we're getting a lot of not objections, but praises. they like the fact that we're, like I mentioned, in the boat rowing with them. and that we know the founders and and there are trusted advisors in some capacity before we're adding in ca capital. So a good example. one of the investments from Fund One was Pineapple Academy, again, a punch client. They had existing investors are out of they're out of Kansas City. as CFO and and as a punch client, I was like, hey, you guys are at 150 and 150K in MRR. I'd love to get over the 200,000 threshold before we go up for the A. back to your point, right? We got ahead of have a perfect strike. you know, before AI, a 200 know 100k an MRR would have gotten you a series eight with at with without even looking. but now we're trying to get them to 100. And so we went back to the board and said, hey, Fabric wants to put in a check. We think everyone should give us a little more runway to give us some time to go b to go break that 200k barrier. And so the value add, you know, us being on As part of the team and a trusted advisor and helping craft some of the strategy is really big value add. so we're not just, you know, we're not just putting in money and checking in from time to time. We're, you know, I call it continuous due diligence because we know, you know, with specific other clients, we know when they're hiring, when they're firing, when, you know, we know ever we know what's going on because everything goes through accounting and finance at some point. and so that's where I think the value add. is. The other value add on the punch side at least on Capita is because we have VCs and fund admin clients and now international, we can make introductions to related parties and other folks. Because we always get asked who do we like and before they go out for their next round, we like to connect them. So there's there's a lot that we can do value add. I'll let Laurel add in on the marketing side and on the legal side.

Brian Bell (16:54.734) Nice. So you guys have worked with some pretty fast growing companies. I mean, we we mentioned VAPI already. What separates a company that can absorb that kind of growth and one that just gets crushed by it?

Frank Mastronuzzi (17:09.67) It is a great question. to me, Brian, this is my perspective. I think hiring well is super critical in those in that growth phase. at and hiring folks that are that are not they're more advanced than what they need so that they're growing in so that they've let they can lead them. So like with that be, they did a good job of you know, the founders wanted to get back to just focusing on the product piece, which was their differentiation. And they brought in and we helped them interview and so forth, you know, the right people to help run the day to day operational stuff, right? So to me, most founders make the mistake where they end up hiring within their circle of friends and and so more of the same tends to be a bad formula for growth. Meaning if you're bringing all the folks that are from the same mindset, you need to have, you know, some folks that have some seniority, some experience that have done this before. I look at Facebook, right? Like back in the day, you know, Shell came in to be the adult in the room. I think that that's, you know, having someone that's seen, you know, cradle to grave and experience that have done these things before and not not super smart, not just super smart trying to figure it out, which can happen. But we tend to find that the ones that bring in, you know, the expertise in the areas that they're not particularly strong in, right? So if they're not good at some of these guys are not great at you know, employee relations and HR. So chief of staff is super important. I see a chief of staff all the time that's someone that they went to school with, right? And I'm like, The whole purpose of a chief of staff is to have a different perspective and something that you're not seeing. If it's more the same, then you you're just ab abdicating some of the responsibilities. I think bringing in some gray hairs and some experience w in the right roles is super important.

Brian Bell (20:02.096) what is a popular idea and venture right now that you think is wrong?

Frank Mastronuzzi (20:52.084) Brian, do you mean more of what's wrong with venture or what's wrong with

Brian Bell (20:55.696) Yeah, it could it could be startups or venture generally. Like what's an idea that's maybe popular that is is wrong.

Frank Mastronuzzi (21:01.62) Well Yeah, no, I I I think you I we've seen this before, right? In two thousand and there's different bubbles that have burst, right? And er all the all the lemmings go over the cliff with it, right? And so there's been a challenge on some of those. I think, you know, I think betting wisely on if they're late to the game on you know, on AI, I I think betting wisely makes sense. But you know I think maybe there some of these firms are over indexing on on AI and and there's gonna be, you know, talk about there's always macroeconomics, right? There's always big three with a bunch of smaller folks. There's gonna be a consolidation. Is there an actually gonna be an ROI on those? Who knows? Because these valuations are are are you know in the stratosphere. Even Vappi, who had real numbers with real data, you know, the the the level of scrutiny that they went through on Cogs, CHURN, it's been unparalleled from what I've seen in in my in my career.

Brian Bell (22:05.688) Thanks for sending that one to me, Frank.

Frank Mastronuzzi (22:14.644) Well, we need to talk more frequently than two years, Brian. you wanna do an S P

Brian Bell (22:16.084) no. Yeah, yeah. No.

Brian Bell (22:25.424) That's it, that's it.

Frank Mastronuzzi (22:25.992) There's others. the I love Dialogica, the the AI Geologica AI, which is the the legal AI vertical that helps operational efficiency. They're have some big contracts that that have been signed. and that hasn't happened yet. So I'll put that out there. get in early because I love what they're doing and and I think they've really solve the pain point not just through AI at something. They it it comes from big log folks that have built the product, which is huge.

Brian Bell (23:02.042) Yep. What do you guys think is a underrated founder skill that you guys screen for?

Brian Bell (23:11.866) Talked about hiring, but is there anything else?

Frank Mastronuzzi (23:14.3) Empathies. I I think founders who are tone deaf and don't know how to develop folks and manage and and it's happening more and more. I think having an founder with good EQ that can If they if they if they can do it themselves, that it's easy to convince people to join. Like Vapi's founders, there's so many amazing AI engineers that left their own ideas to join the team, right? And that always that makes my head spin because they could have just these guys could have easily just built the their own pro you know, own startup, their own product, but they've were convinced to join the vision of that they set, right? I think that's huge. so storytelling and closing the deal is huge because they're the ambassadors. At some point I think founders become ambassadors for their own company in sale and hiring and all the And you need to hire, you know, Carnegie, you need to hire, you know, win friends and influence people and and hire smarter than you used always used to say, I wanna be the dumbest person in the room. and I think that skill set is is unique. That's my opinion, Laurel.

Brian Bell (24:58.862) Yeah. So

Frank Mastronuzzi (24:59.22) And Brian Laurel Laurel just hit a nail on head. I the number one question we get asked when we introduce our portcodes to our our clients at Punch is do they ask for help? Do they ask for feedback before they make a decision, not after? Right? Can you influence? are they coachable, right? Do they take do they take feedback? So I agree. I think They don't they the f most founders think that they gotta be a jack of all trades and be right and know everything. And I think, you know, the best the best founders know what they aren't comfortable with and then hire or surround themselves by by whether it's an advisor or or a service provider or something that fills out that gap.

Brian Bell (26:08.784) How do you guys make decisions in in the firm? I mean, 'cause there's you guys are fifty fifty partners, I assume, and

Frank Mastronuzzi (26:15.218) Yeah.

Brian Bell (26:19.696) There's not like a third person to sort of be the tiebreaker. So you guys have to, is it consensus? Like you both have to like a hundred percent this is yes, or do you get like a little gimme once a year, once a quarter, like, hey, I know you don't want like this one, Frank, but I'm really like leaning in here? Like, how do you guys reconcile those?

Frank Mastronuzzi (26:34.14) We have an invest we have an investment committee, right? So that's from our advisory board. So they're they're giving input. but yeah, there there has been instances where I'm like, trust me on these. And so yeah, we do have give me's. but we don't have too many of those. We don't we don't wanna I don't wanna force her to, you know, take deals that she's not a hundred percent behind just because again, it's good to have she has a different unique perspective. So if if they c want marketing and and and advice, but it's a it's a deal that I jammed down her throat, then she's not gonna be so thrilled to be helping them, right? I want her to be excited about the companies that we're both invested in.

Brian Bell (28:14.894) And Frank, where does that forty K number come from? Is that sort of the observed startup mortality goes precipitously down? I I've noticed in my portfolio it's about twenty or thirty K is where that mortality rate just goes down a lot.

Frank Mastronuzzi (28:28.518) I yeah. so the inertia what I've seen is the inertia of getting that first one or two contracts or clients works. but then and that's usually because it's within their network, right? So it's someone that they know. I always like this I always tell our founders, show me you can sell and show the investors that you can sell to a perfect stranger and in different regions of the country and the world. and that then shows them that that that you're solving for a larger you know, pain point or problem. So you're right. we we we like the we use the forty forty plus because you know usually once they hit forty they've solved at least for that first plateau, right? There's a there's a always, you know, for my match days and every other startup that I had explosive honey. There's huge growth and then there's a plateau and then you gotta solve for those problems and then you grow again and then you solve for a whole new set of problems. but that forty K to us is de-risking it a bit and showing that they've learned how to sell and and advocate for the product and the and the and the service. and and it just it shows that there's some, you know. They've thought about and starting to understand revenue cogs, the whole equation and not just the old mentality was grow at all costs, that's not that's not happening as much, right? People are are are definitely the pendulum has swung. They want to see the path to profitability. They want to know that you understand the path to profitability. And and that's what I find interesting. and when you're delving into those, talking to the founders that really truly understand their metrics and their numbers is usually a differentiation because they wanna they want to stick to what they know. And then like you can't, you're a founder, you need to know your metrics, you need to know

Frank Mastronuzzi (30:18.366) your levers of your business. And it's clear if you don't understand those, you can't affect the business, right? So I want to know that they can pull a lever, they can close a deal, they they're on the front line doing those things.

Brian Bell (30:44.592) Yeah, makes sense. So what makes you guys interesting as a co-G peak pair is you have a lot of complementary skill sets. Where do your instincts disagree most often? Cause you guys are coming to these decisions from different angles.

Frank Mastronuzzi (31:01.138) When she when she's wearing her legal when she's wearing her legal filter. No. Yeah. Yeah.

Frank Mastronuzzi (31:24.168) Yeah, and transactional sometimes and and I get that. we're you know, we all have been there, Brian, right? Potential L Ps or drag us through the mud forever. And I'm like, just just tell us yes or no. Like that's all right. At some point it's just Yeah, yeah, exactly. and that's

Brian Bell (31:37.904) Stop wasting my time. Yeah. That's what I that's I don't take second meetings. I tell LPs like I'm not taking a second meeting, just make a decision. Like you're in or out.

Frank Mastronuzzi (31:45.704) Yeah, exactly. Yeah.

Brian Bell (31:49.477) You're in or out, you have all the data. Let me know if you have any questions. I don't wanna take like I'll take a second meeting, but I'm not gonna take a third and fourth meeting. It's like unless you're writing like a huge check, maybe. But at at some point it's like, guys, like make a decision here.

Frank Mastronuzzi (31:53.577) Yeah.

Frank Mastronuzzi (31:58.898) Yeah. Yeah, we're we agree, right? Like we've been doing this long enough. Make a decision. If if it's not for you, it's not for you. I think that is one area. I I think there's finesse, right? Because as the as the CFO and accountant, I've seen enough people change their mind over time, right? They say, I absolutely won't do X, Y, Z, and then six months later they're doing exactly that, right? So I tend to be a little more. Forgiving in the sense of I I've talked, you know, we we're we're not only service providers, we're we're therapists, right? I've talked enough founders off the ledge to know that again, at some point, you know, they'll ch they may change their mind. I had one client that was like, we We don't need to pay for your service. I just give my buddy, you know, pizza gift cards and and that's fine. And I was like, you know, we're not gonna convince you that we're gonna add value, but at the same time, right, you know, we wanna make sure that you've you know, there's a mutual respect and and appreciation for what we're doing. and so that's I think kind of how we we differ. I think not bad cop, good cop, but different approaches, right? So then I think Laura and I have already figured out like hey I need them to just get off the pot and so I'm like Laurel you you bring down the hammer and then I'll I'll you know if there's sometimes where we need some finesse Laurel will be like you follow up you try to get out whatever you can from them right

Brian Bell (33:46.201) Hmm. That's good. That's nice. what if something you guys changed your mind on as you became VCs after, say, fund one and and and to extend that question, what did you change your mind on or learn as you became multi multifund managers in fund two?

Brian Bell (34:34.96) You have something, Frank?

Frank Mastronuzzi (34:35.228) Yeah. Yeah, no, I think Brian, I mean, coming in, you know, I have the benefit of working with emerging fund managers on the fund admin side all day long. So what I like to say is, you know, all the things that we saw Laurel do aren't uncommon for for first time fund managers, right? so I have that benefit. I have watched other people make all those mistakes, right? and so coming in Well, I think that's the strength, right? Coming in and getting the fund admin accounting services up and running and in and and on you know on track of, you know, what I say to you know, our level of of of of fund admin. but that's been great because again, I think Laurel's done a really good job of branding people know what fabric and the fund stands for and what we're focused on. We like investing in hungry, you know, hungry founders that won't take no for an answer. I like to always say, I like founders that go under, around through, or or over, right? the problem. So then meaning they're not taking no. If they get a no, they're gonna go under, they're gonna go over, right? They're gonna go around or or bust right through. I I we like those founders that don't take no for an answer and we like to see that. on display. So I think coming into this, we've learned that from Fund One. The founders that are dis exhibiting that skill set are the ones that already raise their, you know, the the 30% that have already raised their Series A, right? And on track and they're crushing it. and they're the same all they they exhibit the other the other characteristics we we mentioned, right? They're they're hard working, they ask for help, they bring stuff to us before, right? because I always tell my founders, you know, there's still this misnomer where they gotta keep their cards closed.

Frank Mastronuzzi (36:27.264) to their chest and their you know investors are their frenemies right they're friends but I'm worried I'm always like go ugly early, but what you can't do is the new, you know, fill in the blank, throw up your hands and just say, I have a problem, help me fix it, versus here's the problem, here's the two solutions we're exploring. We're going with A, what do you think? Right. And and helping founders frame that, going to the board and their investors is well way better received, where it's like, we this is the problem we're running into. Here's here's what we discovered, here's what we learned, here's what we're planning. on doing, yeah, does anyone have any expertise or experience in this and and bring back maybe something that they found in other port codes and investments that they've made? and I we love the founders love the response they get because it's like, okay, we know you're gonna run into problems. They, you know, they're not stupid, right? VCs know that every startup's gonna run into problems. It's just that they always get upset every time I've seen it, they're not upset that there's a problem. They're upset that they waited so long to tell them, right? And then the VC is like, I could have helped you a long time ago or could have avoided this problem had you come to us first. So I think teaching them that finesse is what we've got I've learned from fun, at least talking to the founders of fund one and in fund two and our client base is that's kind of what we've seen that works.

Brian Bell (38:11.344) Wait until you have three funds, then you really you start back at the beginning and you feel like a toddler again.

Frank Mastronuzzi (38:16.008) Yeah.

Brian Bell (38:22.756) Frank, I'm really interested because you worked with so many emerging managers, like what you found surprising or as you as you change sides of the table. I know we kind of covered that in the previous question, but like as you kind of transition to the other side of the table, what did what looked easy that turned out to be hard, or what looked hard that turned out to be easy, or what was surprising for you as you kind of changed sides of the table?

Frank Mastronuzzi (38:47.064) no, I I think fundraising, right? I'll be honest with you. I'm like, how why could it be so hard, right? I think fundraising Yeah. And because we've done such a good job, why wouldn't you just give me money, right? The check. you know, I I kind of envisioned it being Oprah right on Sant Hel Road. You get a check and you get a check and you get a check, right? but yeah, you gotta build you gotta build a relationship.

Brian Bell (38:56.782) Hey, just ask people for money. It's easy, right? Wanna invest in my fund? Easy.

Brian Bell (39:10.98) Yeah, just checks are just flying in from all over the place. You're like so many checks, you know. Yeah.

Frank Mastronuzzi (39:16.614) end of the day, right? They want invest in and make sure that you that we see things the same way. And I think a lot of the family offices, what I find is a lot of family offices are drawn to our model and specifically because of the punch involvement, in the sense of, hey, we don't we built we made our money in real estate, or we made our money in whatever. And and G2 or G three wants us to start investing in tech. We don't know tech. And so we're uncomfortable. But when we show them that we still take a traditional business approach with finance, regardless of you know, we have a space company, we have numerous AI companies, we have all over the gamut on clients and they're always scratching their head. And it's like we we can learn the business, we get started with them, we you know, we have access to other resources. and I think that's what has helped us, you know, I think attract folks because we're in bat to So what Laurel just said in operational mode. And so we know, you know, we know the ins and outs of what's happening in the business. and we've seen things before and patterns before. And we, you know, I think one of the most valuable things that Laurel and I both offer outside of of you know investing is we've seen patterns, we have resources. Like I I think all of our clients will tell us that the referrals we make for other resources. It's it's a no-brainer because they know that we've stress test them, we have a high standard. We're not just referring for a referral fee. We want our our referrals are because we want them to be successful and not have a problem down the road. And we've seen numerous startups choose the wrong service provider and go down a rabbit hole and waste time and money and energy. and so picking right vendors, like it is picking the right staff in the early stage of the business is super critical.

Brian Bell (41:12.15) On the on the fundraising front, I mean, you know, I've been doing this for a long time. almost a long a little longer than you guys, I guess, because I'm on fund three. I closed fund three in June to give you some numbers. Each of my fund has about 50 LPs, you know, plus or minus five. but behind those fifty yeses, there's thousands and thousands of no's. Thousands and thousands of no's. Like literally Team Ignite's 16,000 people, right? That's how big Team Ignite is now. 50 of those are LPs. 50. So that gives you an idea of how many, like the scale of nose, like the scale of, you know, to, you know, pun intended to punch in the face, punch financial, that I that that we we GPs take when we fundraise. It's it's enormous. It's an enormous amount of no's. Way easier to sell a B2B product, you know, like you you close, you got you got a demo and you like ask for the sale and you got a 10,000 ACB and probably closing 10 to 20% of those.

Frank Mastronuzzi (42:01.064) Well and

Brian Bell (42:11.386) You're a founder, you're probably getting to yes, you know, one out of twenty, one out of thirty times. We are getting to yes one out of a hundred as GPs, one out of a hundred, if we're lucky. So especially as emerging managers. I think it's different when you're established and you're A16Z or whatever. But I think for us and in the first few funds, it's pretty hard.

Frank Mastronuzzi (42:32.552) Yeah, I think I think that's a reasonable it's not a glamorous one, but it's good. That's that means that not every it's not all

Brian Bell (42:33.998) Not glamorous.

Frank Mastronuzzi (42:42.172) used to getting rejection, you're not gonna fare well. But two, I think founders need to re realize that. I always tell them, you know, fun venture guys are raising money all the time too and they're getting rejection. They're being told no and they may not they might not be responsive because they might be in their phrase, right? So find out what's happening on that other side of the fence because that but to me there's a lot of you know there's a lot of looky loos that I see, Brian. Like there's like I said, there's people that are interested in venture. It always is attractive because of the press and everything going on. But they're a lot they're afraid.

Frank Mastronuzzi (43:35.092) Yeah, no, I yeah, no, I think I think there's a lot of looky los, right? Risk, risk adverse, right? And they made their money. Again, I see this all the time. They the the G one tends to wanna stick with what they know because that's where they made all their money. and so the G2 is always like, hey, or G three, like we should be investing in tech. Let's start now diversifying generations, right? Generation one.

Brian Bell (43:59.633) What's a G one, G two? What is that? okay. like in a family office. Like I'm okay, I'm a generation one. I made my money in real estate. So that's what we're investing in. You know, that's where I that's what I know how to invest in. G two goes to blockchain and G three goes to like energy drinks or something like that. Yeah, and they lose it all and the cycle repeats again, you know.

Frank Mastronuzzi (44:05.308) In family office, yeah.

Frank Mastronuzzi (44:09.97) Yeah. Now the kids are like Yeah. And the kids are like, Yeah, we Yeah. Exactly, exactly. but

Frank Mastronuzzi (44:26.036) Yeah.

Brian Bell (45:13.614) Yeah, maybe I'll start qualifying all of my meetings. I'll I'll say fill out this form. look at the deck. You know. Yeah, fill out the form. Tell me your interest level and your check size. and then I will decide if I want to take the LP meeting, you know? Yeah. Yeah.

Brian Bell (45:37.518) Yeah, yeah. Yeah.

Frank Mastronuzzi (45:40.208) And and again, Brian, I think you know, us being in the industry for so long, doing what we do, our other services. I think we've built a lot of of rapport and reputation with folks, right? So it's easy for them to be like, you're now formally making investments instead of off the balance sheet. So like anyone that was worked with me knows the success stories and the companies we've been with and and have not had a big enough piece of those pies, right? Because and because we're in the boat rowing, you know, they're making room for us, right? They want us on the cap table. I've had numerous VC funds call and say, why the hell are you, you know, why the hell are they leaving room for you? I'm like, you're asking the wrong person, right? and the response they usually get, Brian, is these guys were in the room helping us when no one when everyone else was telling us no, right? And didn't believe in us. and so I think that adds, you know, adds some perspective and investors that are trying to dip the toe in their water like that. Right. Because then the day a lot of funds, Brian, are are selling that they have access to deal flow. Like I hear that all the time. And I'm like, if everyone has access, the same access to all the deal flow that everyone's mentioning, then how are the decisions being made of whose money to take? Right. Whereas with us, you know, we have rapport with a lot of the companies. We've built rapport with a lot of the companies that we're then putting up for investment. So it's a it's a a natural extension, right? Like we've dated, we've helped each other. They're out, we see how what they look like without makeup in the morning, right? So we're not gonna get scared when the makeup comes off later. That's the analogy I use. because we've seen it. Whereas most whereas most she woke up like that. She woke up like that. No, but Brian, it's the opposite. Think about it.

Brian Bell (47:24.408) Ouch. Mm.

Brian Bell (47:34.426) Yeah.

Frank Mastronuzzi (47:37.832) The VCs invest at the hot girl at the bar, right, after a couple of drinks. And then, you know, six months in, a month later, they'd finally then see them without makeup and we're like, shit, what did I do? Right. we do the opposite. We start with the the ugly, right? And then we put the makeup on, help put the makeup on, and then tout them around and we know what they look like and we we know what they've operated with. That's that's I think that's a unique perspective.

Brian Bell (48:05.648) That clip is gonna make the rounds, Frank. I predict that that's gonna be the clip that gets like a million views on YouTube from this episode.

Brian Bell (48:19.256) Love it. Well, I I really enjoyed the conversation, guys. where can folks find you guys online?

Frank Mastronuzzi (48:41.894) It Brian, did that break up? I think Laurel say that again with the fabricvc dot com 'cause it it broke up for me. Is it me or

Brian Bell (48:48.514) Actually no it records locally, Frank, so I it it'll come through. Yeah. Yeah, Frank, anything to add on where to find you online?

Frank Mastronuzzi (48:57.426) Yeah, punchfinancial dot com is is the best place to find me and at at Twitter it's Master New Z and Instagram. so it's either Punch Financial or Master Newsie. no one wanted that handle anywhere else, Brian, surprisingly. So I have it everywhere. but those are the two places you can find me.

Brian Bell (49:17.744) All right. Thank you guys.

Brian Bell (49:22.402) awesome. All right. Thank you so much.

Frank Mastronuzzi (49:25.16) Thanks, Brian. Take care.

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