#130: Bill Manby (Interstate Fusion Ventures)

Bill Manby (Interstate Fusion Ventures) [00:00:00]:

We punch above our weight class land when you look at the philanthropic activity in this region compared to the social or the economic base, it's remarkable, right? One of the fundamental reasons we did what we did in 2008 because we just saw how passionate people are about supporting things that they love in this community. Why not do it and make a ton of money at the same time? But that's who we are. That should be our slogan, right? Punch above our weight class. Because we're always underestimated what we tend to deliver.

Jeffrey Stern [00:00:33]:

Let's discover what people are building in the Greater Cleveland community. We are telling the stories of Northeast Ohio's entrepreneurs, builders and those supporting them. Welcome to the Lay of the Land podcast, where we are exploring what people are building in Cleveland and throughout Northeast Ohio. I am your host Jeffrey Stern, and today I had the pleasure of speaking with Bill Manby, the founding partner at Interstate Fusion Ventures. An entrepreneur at heart, Bill grew up in Northeast Ohio and has always been passionate about working every day to make his home better through investments, philanthropy and whatever else it takes. In late 2016, this vision led to the creation of his first fund, Akron Fusion Ventures, which later rebranded as Interstate Fusion Ventures. While Bill knew the benefits of living in Northeast Ohio and the strong entrepreneurial spirit here, he felt he needed to build relationships with partners on the coast. So he set out on a cross country road trip to introduce this vision to Venture Capital Partners land investors in Silicon Valley. Along the way, this vision grew not only to seed opportunities for Northeast Ohio based startups, but also get on the cap table of some of the best coastal startups who might benefit from access to Northeast Ohio. It also allowed fund investors the ability to gain access to unique and otherwise inaccessible investment opportunities. Bill founded Interstate Fusion Ventures because for years he witnessed many local organizations chart escape routes from the Midwest, observing a pattern of businesses, talent, ideas and capital that leave for established coastal tech hubs under an impression that doing so was the only path to success. With the belief that success can be achieved here, interstate Fusion Ventures is the vehicle to prove it connecting the coast to Northeast Ohio by building an innovative two way street where capital, talent and knowledge can flow continuously, attracting more investment and focus on startups in Northeast Ohio. I really enjoyed learning more about Bill's unique perspective and approach to tackling some of the challenges land supporting the local ecosystem writ large. So please enjoy my conversation with Bill Manby after a brief message from our sponsor. Lay of the Land is brought to you by Impact Architects and by 90 as we share the stories of entrepreneurs building incredible organizations in Cleveland and throughout Northeast Ohio. Impact Architects has helped hundreds of those leaders, many of whom we have heard from as guests on this very podcast, realize their own visions and build these great organizations. I believe in Impact Architects and the people behind it so much that I have actually joined them personally in their mission to help leaders gain focus, align together, and thrive by doing what they love. If you two are trying to build great, impact Architects is offering to sit down with you for a free consultation or provide a free trial through 90, the software platform that helps teams build great companies. If you are interested in learning more about partnering with Impact Architects or by leveraging 90 to power your own business, please go to IA layoftheland FM. The link will also be in our show notes. Before we had hit record here, you had mentioned perception is reality and all in this context of entrepreneurship and what it is actually like to build a company here in the area. And I know we have kind of a kindred passion, I'll call it, for trying to champion entrepreneurship in this area. And so I'd love to just start there and understand how it is that you came to find yourself in that kind of situation with this kind of mentality.

Bill Manby (Interstate Fusion Ventures) [00:04:22]:

Yep. I mean, you want me to take it from like zero to today, right? How it it. So grew up in Akron, actually was in an entrepreneurial family. My dad ran a business. He actually owned a pretty good financial services securities business. So actually went to Indiana University. Main reason was I had one of the top undergrad business programs in the country. And I made my visits and there were two beautiful women walking up the street. My dad put his arm around me and he said, your decision is made, isn't it? And I said yes. Here's where I'm going. I can't get much better than this. I started. It's funny because someone asked me about when was your first entrepreneurial experience? And I kind of thought back because I never really assessed it right, I wasn't keeping score. But back when my dad had this building, he had me doing all the landscaping and the lawn mowing and everything. And I'll never forget I had a 21 inch lawn boy and a plug in weed whacker to cover like seven acres. So I negotiated my first negotiation, a larger mower and a gas powered weed whacker so I could kind of get the job done sooner. And then when I was 16 and I could drive, I got sick of mowing grass. So I proposed having me be able to hire some people to mow the grass. Right. And I wanted to come inside and learn the business. And this will date myself, but I remember the first program I learned was Lotus One Two Three. So that is not even something people know nowadays. So going into business school, I kind of had an idea of what I wanted to do. Ultimately, I wanted to come work with my father's company. Spent a couple of years in Cleveland when I graduated, met my wife there. She was a year younger. Dragged her kicking and screaming back to, you know, and now she loves it. We love everything about it, but it wasn't a place I don't think she thought she was going to be. So I worked with my father for a number of years. We had some great success, but it was tough working together. That business is really kind of measured on success, and when your success isn't always aligning, it can put some stressors on it. So I ended up starting my own firm, still worked with my dad, still to this day share a building and some staff with him, but ended up with another partner down in North Carolina. Land developed a strategy that we took all over the country. And I won't get into the details of the strategy, but a lot of my customers were banks, et cetera, and it was a really great learning experience. I was on the speaking circuit, I met a lot of people. But after time went on, I started getting further and further removed from the client, right? Like, I was involved in the deal, but now I was two or three degrees separated. It wasn't really what I enjoyed doing as much. I liked working with the people that I was helping. And then as luck would have it, 2008 hit, right? So the market crashed. The bank, everything I was doing was now basically going to be put on hold while people tried to figure out while the dust settled. I now had three kids. Traveling was not nearly as much fun as it used to be. I started getting pretty involved in some philanthropic opportunities, raising money for some local charities and stuff. And I was kind of looking at back to I think we discussed earlier, what are you assessing your life, right? Where do you want to go? And I said, Look, I'm out here making all this money for people not in Ohio, right? Like, that's what that was all built around. Yet what I really care about is my backyard, Land. I want my three kids to stay here, right? Like, my ultimate motivation was completely self serving, right? Like, I want to find a way to have my kids stay in Northeast Ohio. And I don't want it because I force it. I want it because this is a place they should be. And that was sort of the impetus for know, starting what I would know, really becoming this entrepreneur fundraiser, et cetera. So it started as us looking at projects. So I was fortunate enough to have two amazing partners that were great clients and friends of mine, mike Rademacher and Vicky TIFF, that joined board. We established a private investment group called Acquire. At that point, then we were going to go start facilitating local investments where we could do good and do well. But make an impact on top of making money. And then I also had an investment banking relationship with the group out in New York. So we started raising money for deals, or I started raising money for deals anywhere from taking an assisted living facility from dirt to sold to a third party that people invested in, to a medical device company who exited last year that I helped raise some money for. But the big turning point was a company called Segment who actually exited last year as well. So that was good. We had a good year from those two perspectives, but they were an Akron based fintech company who was right on the edge of the big growth turn, right? But all of the capital that they, all the money that they look to raise and all the investors and VCs who are willing to write checks, it came know that's fine, we're going to invest, but we want you to move to Boston, right, or we want you to move to San Francisco or Chicago. And they really wanted to stay here and that really became like suddenly overnight I'm raising money for a fintech company and it kind of got us into the startup space, right? And as it turns out, I was really good at it, right? We probably raised the too much money too fast and not with a whole lot of guideposts on it. But the biggest issue was I had a lot of my investors, some of them first time investors in this type of space involved and that we didn't really have any insight into the company. And the founder and I are still great friends to this day. We actually just invested in a deal that he's involved in and it ultimately ended up turning out well. But that's when I had some investors approach me and say, hey, what do you think about launching a fund, right, so that we could start doing this, but do it in a little bit more intentional manner, have a little bit more control, spread money around into different deals, and then pick and choose where they want to add on. And that was late 2016 actually, that we decided to do that and in fact, it was splash financial and waste bits. I know two people that those were the two investments that we did initially where we made our initial close and then again, as luck would have it, kind of literally all hell was breaking loose in Akron. So being an Akron based company, the ecosystem here was really important to what we were trying to do. Obviously. We're Northeast Ohio focused. But Akron was transitioning, right? Like Pasqualek had been mayor here for almost 40 years. The Bounce Innovation Hub, which is a fabulous facility now, was accelerator that wasn't being really attended to. So we actually pumped the brakes, went back to our LPs and said, hey look, we'd like to take some time and really figure this out. And then at that same time period, actually around 2000, land 18, there was the Comeback Cities tour that Congressman Ryan organized with his counterpart out of San Francisco. And that's what really kind of launched us into what has now come all the way into interstate fusion. So hope that wasn't too long of an answer, but I can get into the details of what's developed after that. But I think that answered the how the heck did you get here? Part.

Jeffrey Stern [00:11:43]:

Yeah, thank you for taking us through that. I think it sets the stage quite well for what we can talk about from there. I do have a lot of questions. I think maybe the best one to start with is because I think it's part land parcel of any fund is what is the thesis that you have? Right. And so as you kind of went through this whole journey and honed in on what is now interstate fusion venture, what was that vision? And how did it come to be that knowing that your motivations are how do we create the opportunity ?

Bill Manby (Interstate Fusion Ventures) [00:12:19]:

Right. What I will say is in 2018. So the city approached me to come represent kind of what was going on in the startup system here in Akron. So for those that don't know, the Comeback Cities tour, for lack of a better description, was Congressman Ryan. And he coordinated I think it was about 20 VCs that came out of Silicon Valley. They literally hopped on a bus. And I think they started in Youngstown, came to Akron, went up to Detroit. It was like a Rust Belt tour of what they did for a few days. So my role was to be part of the crowd to say, hey, here's what's going on in Akron. And there was a couple founders there. Some of the city was represented. But literally, I'll never forget on that night, they were interviewing CEOs for the bounce deal. So there wasn't really any representation from the accelerator or anybody because they were actually tied up in that. And without getting into detail, I really didn't like how that meeting went. When they're looking around the room saying, hey, where do you go for deal? You know, I got guys like Blake Squires and, you know, we talked to know some people think that feels pretty cool. But to me, I was like, I don't think that's a good answer. Right. So I really made it my goal to make relationships that night that I could then follow up with. So when they left town, there was a number of the VCs that you could kind of tell were sort of leading the room. Right. And one in particular was Nathan Pasheen, who runs on Shackled Ventures. And I reached out to him and said, hey, look, there's a lot more going on here than I think people realize, right? I don't know that it was presented the right lay, but here's what we see, right? And here's the vision of what we feel can be developed between what you guys are doing out there and what we're doing here. And then that for us, prompted a tour. Like, we went out to Silicon Valley, and I was lucky enough that know, he identified a number of VCs, a number of founders, a number of industry folks, pretty much all of which we still have really good relationships with today. In fact, one of them is part of our team now, and we just listened, right? And for our perspective, I was lucky. Vicki's Son, Matt Tift, was an ASCAR racer, so there was a race in Sonoma so we could host them. It's something that the probably didn't get asked to do a whole lot, a little unique experience. So we got a couple of days with a lot of them, and we really just listened. And what we listened, which is what we were talking about before the podcast, was they really had, like, two opinions of Northeast Ohio. I mean, the Midwest in general, actually, but Northeast Ohio in particular. And it was either no opinion, like they just didn't think about it, or it was negative. But there was really not at this point in 2018, there wasn't really anybody and I'm isolating Silicon Valley because that's where we were, right, unless they had had roots here, right, which some of them did, and they were saying, hey, no, you guys got to listen to these guys. So what we heard really loud and clear know, we got to change that perception. Right. But the other thing is, pretty much every VC that was approaching them back then had their thesis was built on, you should invest in the Midwest. We have great companies in the Midwest. We have founders, we have talent. But there was nobody coming to them saying, hey, we want to invest in your companies out here because of what we can bring to the table in the Midwest, right? And after we got done listening, when we did our chance to talk, right, and I said, look, I don't know if you guys are aware, but I can sit in my back patio in Akron, and if I had an hour wide blanket that I can throw, these are the companies that are there, right? Like, they knew, you know, around here, but they didn't know Sherwin Williams was in Cleveland. They didn't know Parker Hannifin was there. They didn't know Progressive was there. They didn't know know, even though we were all born know orville Ohio Smuckers, right. They didn't have really any fundamental idea of the corporate infrastructure that was here. They had some idea about healthcare, but it stopped and started with the clinic, right? So it was either the Cleveland Clinic or there was nothing else. So that was some perception we had to change. But then they had almost zero concept of the private industry that's here like the Gojos of the world, right like the billion dollar privately run organizations and then lots of hundred million dollar companies, right. So we actually I think shocked them by those statements. Right. So we sort of pivoted our model at that point to lay hey look we don't envision that we're ever going to be Silicon Valley in Northeast Ohio and I don't know if I'll ever on my watch rank myself as like one of the top venture capitalists on the planet, right. But I think there's things we can bring to each our role so we just fully redefine what our role as a venture fund was in the Midwest to being, yes we still want to find the best local deals, right. I want to find those and get those exposure to the Midwest or to the coast. But for us to build a portfolio and us to be successful we got to be able to get out into those investments in Silicon Valley, right. We got to develop those relationships with that ecosystem and the expanding ecosystems of Austin and Denver and other places that are going. So that's really where the model sort of switched know and we were the first in the region land probably the Midwest in general that pitched it that way right where we were. Hey, look, yes, we still feel like there are opportunities in the Midwest, and we're going to show the to you. But as important for, like, we'd like to see the deals that you have that you know what? Talking to Smuckers because they're a food tech would be a huge deal for the. And if we get an opportunity to get on your cap table, we will try to make those conversations happen. Right. And that's kind of what repositioned the whole thing. So we went from being an acquire growth fund one being a Northeast Ohio kind of driven thing to we went to Akron Fusion Ventures because we did want to keep that connectivity to Akron. We had a couple of corporations that were Akron based and then phase three is now taking us into the interstate fusion model because we just realized that that is much, much more indicative of what we're doing right trying to pull the coast into Northeast Ohio and also push back out.

Jeffrey Stern [00:19:04]:

So I want to expand upon this kind of mutual, two way street kind of framing of where the focus is now when you're thinking about how to connect the coast to northeast ohio. And I think it would be really interesting in light of that to talk about the historical precedent of just, like, regional investing, where maybe the midwest invests in the midwest and how that can right. And as part of this two way street how much of it know offering up those kinds of opportunities to the folks you're developing relationships with out on the coast while at the same time can we actually pull coastal resources into the region.

Bill Manby (Interstate Fusion Ventures) [00:19:53]:

Yeah. Again, I think well, first of all, where we are now compared to 2018 is vastly different. In a weird way, we're probably going to benefit from COVID because prior then, it wasn't just me trying to compete with people who didn't really want to be in the Midwest or Ohio. Like, they actually felt they had to be in certain places and now they know they don't have to be there and in fact, to some degree they don't want to be there. So that's a totally different dynamic that I don't think settled itself. So that that is a challenge. That's less of a challenge than before. Right. I think people are much, much more open to investing in the Midwest and that's from a lot of people's efforts right, of just educating them as to what's going on here. It's companies like intel making big bets in Columbus, right, that starts getting everybody's eyeballs focused a little bit differently. But I think from our perspective, the end of the day, what startups need is customers, right. That's what is going to drive everything. The badge of honor for raising capital is awesome, but it's execution. Right. It's product market fit, proving it and landing those customers. And I think if there's one thing the midwest has, we've got those have we we have huge manufacturing facilities, consumer products, goods, healthcare, right? Like we have huge healthcare arteries in the Midwest. So to us, that was always our pitch. Right. We still are not a big enough venture fund, that our investments making such a dramatic impact, right, that they're really making a live or die decision. But if we can help open avenues to them because we've got those boots on the ground and that's the thing that we explain, is that it's a great region. The midwest is humble, we're hardworking. But with that also comes we're a little guarded, right. So when the new guy comes trotting into town, sometimes we're not so open to that. So we emphasize that that's where we can help, right? Like we're here, we're the boots on the ground. We're the ones that have the relationships with these people. So that to me is, I think, the different way of looking at it. It's not just, hey, we're checks, but how do we get them? There's probably a dozen portfolio companies of VCs that I work with that they could end up with their exit just on customers within a couple of hours of our house, right. Like the right ones. And that's I think, where our biggest challenge still lies in front of us, is how do we get those companies to open up more to that too. Right. Understanding that there's a give and take, there's a risk, certainly, right. But there's a huge opportunity because as we're in this I'm not going to call it abyss of the venture world, right. But we're certainly in a weird spot. That's a huge advantage if we can structure stuff around it, right. Being able to say, hey, look, we can whether it's even just vetting the technology, right? Like, how do we get more and more startups in front of the corporate world that we live in here?

Jeffrey Stern [00:23:14]:

Yeah, I would love to chat a little bit more about that and how you think we can accomplish this. I mean, I've seen some things in practice and it's often this point of something that we do have to offer in the area. And I know in practice it gets tricky, but I think the opportunity for it really is there. And so I'm curious, how do we unlock again?

Bill Manby (Interstate Fusion Ventures) [00:23:41]:

We're jumping around a little bit, probably, but I can speak a little bit more to Akron just because I'm here than I can Cleveland, and we can speak in generalities, but I feel at least Akron in general a lot of efforts have been made, and there still are. There's lots of great people that are out supporting, and they have great passion and vision behind what's here. I just don't think we've had enough success to get people to believe that it's worth staying behind. I think what's worse than that, we've put a lot of money behind things that haven't worked. So I think a lot of people are skeptical still. We're certainly not wired to show failure in a startup as a badge of honor. Right. Or it's like a scarlet letter. But the statistical I don't have the actual numbers, but I know that they're there in favor of it. That even if they failed, a founder who's been there and done it before is much better of a bet than the first time founder. Right. And I feel like there's a lot of time around here, and this is regionally Midwest, probably focused. I mean, my partner Mike always teased. He said every Midwest state should be the show me state. Right? We're all about as soon as you show me land, we know that it's there, then I'll get behind it. And that's not how this world works. Right. And I'm not calling anybody out because I do think there's been a lot of investment made in here. But until they see those results, it's really tough to get them to restructure their thought process. Right. And I think that's one of our main goals is that we want to be thought of as a balance sheet transaction. An investment in our fund is not a donation. Right. It's not economic development, it's not a thank you. We fundamentally get measured on returns. Right? That's it. And so, yes, I think we can check a whole lot of other boxes at the same time, but it'd be great to have ten more of us around here doing it right. So that we could spread the wealth, so to speak. Right. But I think that's our biggest challenge land. I don't think it's because people don't believe in the region and I don't think we don't have great I just think they're tentative, right. Like everybody's tentative until they see that big home run again and then they're like, okay, I got it, but I can't emphasize enough and I'm preaching to the choir here, we can't wait for that. Right. There is an unprecedented opportunity, I think, right now in the venture space land for this region in particular. And it also could be an unprecedented fail if we don't take advantage of it because other regions will. Right. Like they're going to they're ahead of us, unfortunately in some places. So that's what motivates me every day and gets me excited, but it also keeps me up at night. Right. It's both. It's like a double edged sword. Yeah.

Jeffrey Stern [00:26:39]:

Well, we can tie it back for a SEC here to keep us on track and the work you're doing. But you had mentioned already some of the companies that you've invested in splash, Wastebits, Biome, Tundan, who we've been able to share their stories here as well. What are you looking for in companies and founders when you do invest locally?

Bill Manby (Interstate Fusion Ventures) [00:27:02]:

Yeah. So the first and foremost is they've got to benefit from our model that we've just discussed. Right. So I'm not going to beat a dead horse on what that model is. But they got to have industry defining technology. Right, that goes without saying. But strong leadership teams, land, investment partners, that's one of the things that I think we emphasize as much. We recognize that we can't do this alone. So we're not built to lead deals at this point. It wouldn't be an effective choice for a founder to choose us to lead a deal. So we're always co investing with either one or multiple partners. And we've done deals that Microsoft Ventures Arms have led. Right. So they're writing $10 million checks compared to our couple of hundred thousand. But those are critical factors for us. Not just that the team has good experience and people around them, but that they have investment partners that we can leverage with their resources as well. Now and I don't think we said this with as much emphasis prior this sort of economic struggle, but proven product market fit is almost a must. Right. The ideation, stage investment, those are going to be tough ones for people to do for a while. I think it's just a risk reward management and lack of capital. As far as stage type stuff, we call ourselves seedish. I actually thought I invented that term years ago, but I think it's an actual official term now. So we're typically seed investors but we don't want to be restricted to that. If there's something that we feel like we're very strategic or we can bring resources to the table that could really impact the outcome of this company, we want to be able to lean in a. Little bit earlier, but we also want to be able to lean in later. Right. When a company is sort of turning the corner land, it's derisk itself. We don't want to not be able to write checks at that stage if it still fits what we're trying to do, size check, like usually we're a couple of hundred to 500 in the first stage and that's largely dependent on how big our fund gets. Right. And then also we try to offer SPVs with every deal that we do and we've had a lot of participation in those. So typically our check size grows by about 50% on most deals that we do because of our participation with our LPs. But that one sometimes becomes hit or miss. But I think, yeah, really it's like fit the model, right. The first question we ask is why do you want our money? If there's not a super good answer to that question, we're probably not a right fit. And it doesn't mean that that isn't a good company. It just means we're probably not the right fit for that.

Jeffrey Stern [00:29:46]:

When you look at the companies in your portfolio now, I'd love to hear how the connecting to the coasts and connecting the coast to Northeast Ohio thesis kind of plays out in practice and where you've been able to leverage some of those connections for the companies that have bought into this idea that it is important.

Bill Manby (Interstate Fusion Ventures) [00:30:11]:

Yes, well, so I can't name specifically, probably, but I think some of this stuff, I mean, I know it was public, I think it was last year, it might have been late the year before, but I know Splash raised a very big round and led by City Ventures and groups like that. So that's nice. Sort of proof that, hey, we can get local companies that can get coastal right for what they're doing. One of our latest deals, Society Brands, you know, they raised one of the bigger rounds I think last year from a group that is not in Northeast Ohio as well. A number of the deals like Pod Foods, which is a company of ours that's in the food distribution space, two awesome founders. That was a deal that we got into because of our ability to try to help them in the Midwest as they were expanding from the West Coast. So we've seen it work in practicality. There's a couple of our companies that are in the industrial space that they really sought us out through some potential partners of theirs because they know this is an area that they could to our point before exit off of, right. If they could penetrate it. And now that's kind of where as we build out fund two that becomes like a critical phase for us, right, is that that model can be proven. And again back to our corporate support in the region. It'll probably be tested to some degrees from that perspective. But yeah, at this point, who we've gotten involved with some of the again, it's kind of interesting looking at our investment cadence over the last couple of years. When we initially started, obviously everything was pretty regional. Right. And you'd love for every deal to accelerate like Splash did. But then we kind of spent most of our time out in Silicon Valley land, New York, and a lot of our deals sort of in the middle, were those types of deals. And then as the environment kind of got out of hand in our mind as far as valuations were concerned, late 2021, right. We came back home. Our last few investments were all more regional investments because they were priced appropriately. I think that the expectations were appropriate. They weren't caught up in all that. And again, it wasn't like we intentionally decided to stop doing deals out there. It just aligned itself that way where these were more appropriate, which has helped us through this process. That because those are the types of companies we've invested in and those are the types of partners that they have. Knock on wood, we've still got 21 portfolio companies right. Which a lot of RVCs can't say at that point. So it's a lot of leaning on everybody.

Jeffrey Stern [00:33:03]:

Can you help paint a picture for where you're trying to go from here? Right? Because I think we've understood a lot about where you're coming from. What does Fun Two look like? You mentioned seedish. Is that kind of the sweet zone that you're hoping to stay in? What does success ultimately look like? What are you hoping to achieve?

Bill Manby (Interstate Fusion Ventures) [00:33:24]:

I mean, that's that's a good you know, we have just a remarkable group of partners. We actually did an advisory meeting, I guess it's three weeks ago now, which was really appropriate timing after the thing. Right, so but what was really interesting is we talked about a number of things, but kind of the main focus was, look, what's your guys opinion? And we've got guys in New York, we've got guys in the West Coast on where we go. And like, is now a time to batten down the hatches and wait things out and see how the dust settles? Or is now a time to step on the accelerator? Understanding that just because we step on the accelerator doesn't mean we're going to have enough gas. Right. But to a person in that call, and there was 1213, I think they were all like, now is the time to go, and we will help you in any way we can, and we want you guys to be successful because we have portfolio companies that can benefit from what you're trying to do. So how do we get lift? Right. I guess when you said what does success look like? The first thing is a big exit, right, that defines it. But for us, it would be two types of exits. It'd be a local exit and a coastal exit. That would totally sort of prove out the model. Right. Land then if I'm talking to you in a couple of years about fund three, we've probably been successful. Right. The icing on the cake for us would be to have way more VC activity in this region develop as a result of it. We have, as I said, lots of partners that are know they want to help in any way they can. It's come down to, hey, Bill, maybe you're better off coming and working at our firm right. Land taking the mission that you have and helping that portion of our portfolio. But we still believe that this is a place that we can do this. Right. So clearly we've got a long way to go. We'd like to raise $30 to $40 million. Right. But we did our first close and we're around five. We just did at the end of the year so that we could keep making some investments. We're targeting another close in June, but the whole thing right, like the whole ecosystem dramatically improving. But for us, it really comes down to the show me part. Right. So the exits prove out everything else. Yeah.

Jeffrey Stern [00:35:46]:

What do you think? It could just tie back to exits. But if it does not work out, what do you think would have gone wrong, like, to play the devil advocate, part of this thought experiment projecting into the future? And what does that more broadly speak to the challenges we face in Northeast Ohio?

Bill Manby (Interstate Fusion Ventures) [00:36:11]:

Yeah. Well, I think we can go back to what we were discussing earlier about the proof being in the pudding. Right. It really comes down to can we deliver on the corporate side? Right. Not just from because, look, we're not raising that kind of money unless we have strong institutional and corporate support for what we're like. There's there's not enough family offices and enough individuals to do and I'll paraphrase one of my really sharp West Coast guys, but he was talking about the corporate venture world and we've got a lot of that activity here and I know a lot of those many times. And as I said, I'm paraphrasing he's like the corporate venture struggles because they don't really have the risk tolerance to get deals done and then they don't have the filter to understand what a reasonable deal is. Right. And then on top of it, there's a lot of resources that have to be thrown to it. As opposed to what are they paying groups like you, bill at a 2% management fee to be boots on the ground. Bird dogging deals for them at earlier stages than they would ever probably have the time and energy to do, and then bringing them to them. Right. As opposed to having the vet, the ones that are brought to them. So for us, I think that's where the whole sun rises and sets. Right. Can we get this community around what we're doing and if we can't, we're probably not going to be successful, right. Or we're going to have to be successful in a different lay. Right. Not to compare myself to LeBron, but he is from Akron. Right. But I fully believe that if LeBron had not gone to Miami where he had the pieces in place to win championships and learn, we might not have seen one in Cleveland, right. Because when he came back, what could LeBron do then, right. He could pull talent to Cleveland, right. Unlike he could before we left. We don't want to have to take our toys and go someplace else, right. But we could. And we know that we feel like we could be successful because there's enough value to what we bring. But that's all we want. Right. We can do this here, and it doesn't take a lot, right. It just takes a better coordinated effort of everybody, and that's, I think, all that we really need. And then again, start checking those boxes. But it's going to be hard to wait for those exits to then say, okay, yeah, no, it makes sense now we believe, let's go do it. It might work. Right. But I think we've got a big opportunity that we're going to step over.

Jeffrey Stern [00:38:51]:

Do you feel it's more of a zero sum or positive sum game when you layer on that? It's not just the Midwest that has this opportunity in front of itself or even just Northeast Ohio, but it's a lot of these cities across the country that have this entrepreneurial activity, but just not quite at the density of San Francisco or New York.

Bill Manby (Interstate Fusion Ventures) [00:39:15]:

Well, so again, I think that the zero sum game affects this region. A, like, honestly, we had mentioned you had Dan Hampu on a couple of weeks ago. What we're trying before he went over to we, really what we felt was a role that was lacking here was someone telling the story of how you support all legs of the Stool. Now, you can argue over how many there are, right. But there's economic development stuff, right. Land that is services that are provided by it. There's economic development, which is facilities like Bounce down in Akron. There's venture, right, which is investing in these deals. And then there's what I will call really early stage stuff like the Northeast Ohio student venture funds doing seeding deals at $10,000. And I think our problem is, to my knowledge at least, there's not someone out there presenting the story as a whole, right, that says, hey, this is not one piece of the pie that everybody has to go fight over. Back to your zero sum game question. Right. There's different pies, actually, that we can carve from, but they all work together and they all help achieve an outcome, but we're not fighting over the same stuff. Right. It's kind of back to like, look, some of this stuff should be balance sheet transactions, some should be income statement, right? Some should be. I don't expect to see anything for this. Right. And that's kind of where we're stuck sort of in the middle, I think, is that there's a lot of money that will be given that corporate expectations, is that they don't get anything from it. Right? Like, this is their box checker. And then if they're looking to invest in a venture, it checks much, much bigger than we can accept. Right? We couldn't take on a $10 million investor. It'd be too big. Like, we couldn't afford to spend that much on one vertical. So we have to convince them that there is a place in the middle that'll ultimately maybe get us there at some point, right? If we're suddenly talking about a hundred million dollar fund in Northeast Ohio, that could make sense there. But that's I think back to the zero sum game. I think it's treated that way. Right. I think that everybody sees this finite pot that can support everything and all that is startup entrepreneurial efforts. Land it's not really that way, right. It's all needed in different ways.

Jeffrey Stern [00:41:42]:

When you think through the trajectory of some of the companies that you've been able to work with for the ones that are breaking through, what do you feel is allowing them to do that?

Bill Manby (Interstate Fusion Ventures) [00:41:56]:

I think it comes back. Part of it is fundamental, right? Like, they've got a good product, it's growing. But you had asked me, I know something about founders mentality and what you look for in a founder, right? Land I think that one of the most important qualities a founder needs to have is that they need to be not just able to listen and take advice, but allow other people to do things. Land lead and take on roles. I always say a founder is always a founder, but a founder is not always a CEO, right. And you don't have to be. You'll still be a founder. So the companies that we see growing, first of all, they're surrounded with great resources, right? In a lot of cases, their past, where we're as influential to them as we are. We can help them raise money when they get stayed, but they're in other people's hands. But passion is like a tough emotion that I think is underestimated with people. Every founder has to be passionate about what they want to do. But passion can kind of sometimes create blindness, right? Like, where you're so passionate about your company and what you're doing that you can't listen to what's on the outside and what you need to do to actually get know. Our Pod Foods Group is a perfect example of this, that Larissa and her Fiona The, started an organic cookie company. And that's what they did. They raised money around it, and then they realized that distribution in the food business is tough. It's really dominated by three massive players. It's pretty archaic. It's about front space. So they realized that there was a huge gap in the market that could be fixed by technology. And I give them a ton of credit, they pivoted the whole company and instead of leaving their investors in the dust, they brought them around for the next ride, so to speak. But that's a good example of, look, sometimes what you're doing isn't working. It doesn't mean it can't in another way. But it's tough though, right? Because this is your baby, right? So it's tough to not be sensitive to criticism, right? But it's got to be there. And I think for everyone across the board, humbleness, shucking the egos at the door. We don't work with VCs that are too full of themselves, right? We don't work with founders that are too full of themselves. That might ultimately not be the brightest decision, but life's just a little too short to deal with that. And that's the thing that we found is there are so many really good VCs out there and I'm not saying that other ones are bad, I don't mean it that way, but there's really strong, passionate it's about really getting some amazing things done together. And if you can have that group and you can surround those companies with those types of people, those are the ones that we're seeing hitting these trajectories. But by the way, there's also companies that have all those pieces in place that aren't right, some of it's pandemic based, right. Where you just can't avoid the things that are happening. Some of it could be a lot to do, this banking crisis, right? One of the things that I didn't recognize was a big deal, know, you think about these banks and that they know to VCs and to these startup companies. But the big piece that I don't know the people in the Midwest are aware of is that there aren't a whole lot of banks that will lend a startup founder who's not taking a salary money to buy a car, right, or buy a house. So that was a big role that a number of these banks filled for these startup companies and that's not going to be something that banks are going to be rushing to take over, right. Like the non collateralized loan. Right. I don't know how ultimately that dust will settle, but something happens in the banking industry every 20 years and guess what? We always get through it, right? It always just happens. But I think that's a big one, right? Is it? To be able to surround yourself with good people and then be willing to listen to them? That's probably the biggest thing.

Jeffrey Stern [00:46:07]:

Can you share what the evolution know where you see Akron as an entrepreneurial hub in its own journey within the larger region of yeah.

Bill Manby (Interstate Fusion Ventures) [00:46:20]:

So, you know, we have a tremendous facility, and I know a lot of people aren't even aware of it, but the bounce innovation hub, which is in Akron, right behind Canal Place, right by where Gojo is. It's a 300,000 square foot facility. They've renovated the whole first floor. They got a $4 million. I think partial of it was a grant. It's literally a world class facility. And when I bring people here, they're amazed by it. We just got to get people here. Right. And the we also have to surround them with the resources that ultimately leads to success. So they want to come here. Akron's reinvented itself a whole bunch of times. I tease people, but it's not a joke. 80 to 100 years ago, akron was like the Silicon Valley of the United States. People don't believe me when I say it, but I was like I mean, honest to know when those tire companies came over, man, like, the sun rose and set in our backyard. And the really cool thing is most of those companies are still here. Right. And it's just a matter of how are we going to reinvent ourselves know? I think for me, what I struggle not struggles what I think would be the best thing is that if we could somehow really package Northeast Ohio as a region, right. Instead of Akron in Canton land, Cleveland, how do we just as a region, we become massively powerful. Right? Like, we are one of the top ten economies in the country, but for whatever reason, the turnpike seems to separate everybody from who they are. And it's a struggle. It's a struggle because it doesn't make any sense. You look at places like, you know, when I go there to do my valley, like, I spend an hour and a half in the car from San Francisco all the way down to San Jose. They all call themselves Silicon Valley. Right. They have no pride of, like, it's whether you're in Palo Alto or you're down. And that's where the most brilliant thing we could do is to figure out how to make that happen. Right. I think because together we would be so much stronger. And it's not that we're against each other, but believe it or not, we are half the time. It's not a healthy collaborative effort in Northeast Ohio, and we're winning in spite of ourselves sometimes, but it could be so much easier.

Jeffrey Stern [00:48:55]:

Yeah. It's somewhat the tyranny of small differences that for some reason persist. Yeah.

Bill Manby (Interstate Fusion Ventures) [00:49:02]:

And again, look, I don't think it's intentional. Right. It's just oh, no.

Jeffrey Stern [00:49:06]:

But it's to your point of collaboration and it's needed not just with corporate and startups, but geographically as well.

Bill Manby (Interstate Fusion Ventures) [00:49:17]:

Yeah. It's our biggest challenge, probably.

Jeffrey Stern [00:49:19]:

What are you most optimistic about looking forward?

Bill Manby (Interstate Fusion Ventures) [00:49:22]:

So you have to be optimistic, like, every day. To me, I'm most optimistic about the fact that I think the pieces are in place. Right. To me, this is super doable and it could be super impactful. And that's what gets us out of bed preaching this thing every day. Right. So that's what we're most optimistic about is that this could be everything that we say it could be. But as it becomes the thing we're most optimistic about, like I said before, it's also the thing that you almost worry about as much, right. Can you make it happen? Right? And that's what we'll see, right? We'll see if we can execute to the level that we want to. We're making it happen. We just would like to make it happen much bigger.

Jeffrey Stern [00:50:06]:

Yeah. Well, it all resonates the thinking and intention and goal here. So excited to follow along, I think, in the journey.

Bill Manby (Interstate Fusion Ventures) [00:50:20]:

One of our advisors mentioned this, too. He said it about like, he thinks our fund. He's like, look, you guys punch above your weight class, right? Like, what you guys are doing in this fund, comparatively speaking, our first fund was $6 million. It's not a lot, right? So to get into the deals that we've gotten to are impressive. But I tell them, I said, I kind of feel like that's the region in general, right? Like, we punch above our weight class. And when you look at the philanthropic activity in this region compared to the socio or the economic base, it's remarkable. Right. It's one of the fundamental reasons we did what we did in 2008, because we just saw how passionate people are about supporting things that they love in this community. Why not do it and make a ton of money at the same time? But that's who we are. That should be our slogan, right? Punch above our weight class. Because we're always underestimated what we tend to deliver.

Jeffrey Stern [00:51:14]:

Yeah, I like that. Well, we'll close it out here with our traditional closing question, which is normally for your favorite hidden gem in the region, but I'll make it more specific because I'd love to hear maybe two that you have one for Akron specifically and the one just more generally.

Bill Manby (Interstate Fusion Ventures) [00:51:34]:

This is also general, but I'm a golfer. You travel places to play golf, right? People take week long trips. And I think what this area's regions really underestimated is how good a golf is. Could you think about if you took a four day trip you could play or a weekday trip, you could play so many great golf courses, whether you go down to Columbus, to Merfield, or you come up to Cleveland. And that's one thing. When I have people travel from the coast, they're baffled, right, at how good a condition they're in, at how nice so the clubs are and the people are. So to me, I think that that's something that we don't even appreciate land. Then you go spend all this money to go on a golf trip someplace, and the you're know, I could have gone down to Canton and played Brookside, and then I could have come up to Cleveland and played Pepper. I mean, you still got to know people. Don't get me wrong, right? But I think that's one of the hidden gems when especially when I see people that come from California or someplace else, they really appreciate mean, you know, Firestone's a special place right. And those types of things as far as Akron specific and it's know the metro parks in Cleveland are a big but but Akron is really sort of developing a culture around this. And the tow path that is pretty interesting. They're creating a level three rapids for kayaking off of the Cuyahoga that's literally going to be like a destination spot where people are going to travel and do the whitewater rafting and then they're also going to have kayaking. So I don't think anybody would ever pin that on Akron. Right. That you could go to one of the top white water rafting places in the country and it's in Akron. But I remember I had a client I worked with in Denver that there's right off the mouth of it's, just east of Cleveland. I guess it's one of the best places to catch steelhead in the world. So this guy would travel from Denver where you'd think, if I'm going fly fishing for steelhead, why in the heck would I be coming to Cleveland, Ohio? And he's like, best in the world. So there's lots of those little hidden gems around here. I think.

Jeffrey Stern [00:53:38]:

I like those a lot. Thank you for sharing.

Bill Manby (Interstate Fusion Ventures) [00:53:41]:

For sure, yeah.

Jeffrey Stern [00:53:42]:

I just want to thank you again, Bill, for coming on, for sharing more about the work you're doing. Land again, kindred thoughts on a lot of these things. So I appreciate it.

Bill Manby (Interstate Fusion Ventures) [00:53:51]:

Well, I think look, not just me, but all of us that are in this space, thank you for doing what you're doing because I think it's really important, as I said back to listening to Dan Hampu and Daniel Eisenberg telling our story, pounding our chest, right. It's not something we're necessarily really good at. This is a really great way for you to help right. Understand what's actually going on here. Because we don't understand it here, let alone outside of here. So that's a big piece to success, right. Is making people aware of it. Yeah.

Jeffrey Stern [00:54:28]:

Well, thank you. I do appreciate that. If people had anything that they wanted to follow up with you about, what would be the best way for them to do so.

Bill Manby (Interstate Fusion Ventures) [00:54:36]:

So you could always go to the website. So interstatefusion.com, it's got a couple links. Like if you're a startup that thinks that we might be an appropriate investor, they can send us go through the portal to get there. People that are interested in investing, there's a separate we're a closed fund, so we're not a public offering. Right. So we always have to do some background stuff before we can get too involved in a conversation. But we'd love to talk to anybody, whether they're interested in making an investment or fun or interested in figuring out how to support the region better. It all helps, but we look forward to talking to anybody who's passionate about this. These conversations are hard to have with a lot of people if they don't get it right. So the more people we can talk to that get it, the better off we all are.

Jeffrey Stern [00:55:28]:

Yeah, well, thank you again, Bill. This was awesome.

Bill Manby (Interstate Fusion Ventures) [00:55:30]:

Thank you, Jeffrey.

Jeffrey Stern [00:55:33]:

That's all for this week. Thank you for listening. We'd love to hear your thoughts on today's show, so if you have any feedback, please send over an email to Jeffrey at layoftheland FM or find us on Twitter at podlayoftheland or @sternjefe. J-E-F-E. If you or someone you know would make a good guest for our show, please reach out as well and let us know. And if you enjoy the podcast, please subscribe and leave a review on itunes or on your preferred podcast player. Your support goes a long way to help us spread the word and continue to bring the Cleveland founders and builders we love having on the show. We'll be back here next week at the same time to map more of the land.