430 Investments, Zero Finance Background: Why Gut Beats Spreadsheets

"For every great founder that comes out of a big university, there's tons more founders that come from nowhereville." Paul Bragiel doesn't mince words when it comes to the myth of pedigree in Silicon Valley.

As a three-time entrepreneur turned investor who's now made 430+ investments across 40+ countries through seven different funds, Bragiel has seen both sides of the table. His journey from bootstrapped founder who "didn't even know what VC was" to running global investment funds offers a rare perspective on what actually matters in venture capital.

In this candid conversation, Bragiel reveals why gut feeling trumps spreadsheets, how he's made more money as an investor than as an entrepreneur, and his controversial take on why junior VCs tend to be "cocky assholes."

Paul Bragiel: Hey everybody, my name is Paul Bragiel, three time entrepreneur turned investor. Over the last decade plus, I've been building funds around the world. Currently have seven funds. I think we're about 430 total investments across 40+ unique countries, and yeah, actively investing in really early stage seed Series A companies around the world.

I have no finance background, neither do most of my partners. My first company was bootstrapped. I didn't even know what VC was, and this is in the 90s. Then my second, third company, we raised money from angels and VCs and that's why I moved to Silicon Valley. We realized, hey, this is actually kind of a cool path and this is a way to help encourage entrepreneurship grow.

I sold my third company. This is 2010. As I do, I was sitting there looking for what's next. I started brainstorming things like this and in the brainstorming part, I started realizing that I'm good at building things. But also sometimes I like to build multiple things at a time. In VC you kind of have to focus on many things. So I found out that VC and investing was better suited for me. Also, if I look at just pure money made, I've made more money as an investor than I've made as an entrepreneur, so I'm probably a better investor than I am an entrepreneur.

Paul Bragiel: My main fund here in the United States is called Braga Brothers, and that implies that I work with my brother. I'm a little bit louder, more outgoing, and he's more organized and he's more thoughtful, right? And we started one of the world's first venture capitalist funds I would call it more of an accelerator, a thing called IO Ventures, and that was the beginning of my investing career and we combined five people's capital together me, my brother Dan, and my friend Ashton, he started BitTorrent, my friend Jim had started Hotterott, my friend Abra had started MySpace. It was a really cool group of people.

This is like around 2010, 2012, 2013 time frame that did really well, and we decided to go out there and raise larger funds after that. And that's also when we started making transition to raising funds globally as well too.

Paul Bragiel: Silicon Valley, we believe in doing more deals that are higher risk, which means that we have more failures. But when it succeeds, it becomes huge. Let's say you look at 10 companies. We expect one company to pay back the whole fund. When we put it to a company, we say, can this company be a 10 or 20 or 100x? It could be to the moon or it could be straight dead.

Us VCs, we try to project that we know what we're doing at all times, but honestly, no, we also make a lot of mistakes too as VCs. Sometimes I've made decisions too quickly and I didn't get to know a founder really well. I've had people kind of betray us or do things. I mean, very rarely, but we've had people, you know, kind of cheat or do really bad things that happens at 1 out of maybe 50 or 100 companies, but still you feel really big personal responsibility when that happens.

Other things we've done is like we didn't show enough conviction. Like there's a deal we liked, but we were a little bit scared and we didn't put enough money in. Damn it, you get pissed off like I should have put more money in, right? Should have doubled down and then of course there's always missed deals as a VC. It's important that we see the deal. So if we saw the deal, we missed it, I'm OK with it. The biggest problem is that we never even saw the deal. Some really hot company was raising money in our backyard and we didn't see it, then we consider that a failure.

We're not perfect. I mean, far from it. We get a lot wrong. Look at the VC model. Nine out of 10 companies are failures and one does well. So we kind of have a lot of failure built into our respective investing thesis.

Paul Bragiel: Yes, so VC has gotten pretty popular in the last five or 10 years. I think it's for a couple of things. One, entrepreneurship has been much more cooler in the last 10 to 20 years. Some people feel they're not ready to become an entrepreneur, but they would like to be involved in entrepreneurship, so they think VC is a path. Two, there's just so many more companies now and there's so many more verticals in technology that there needs to be more VC funds created. So as a result, the VC industry has grown as well too.

And then also VC looks pretty sexy. Outside, oh, I just give money. That's the easy part, giving the money out, right? Then the problem is supporting your companies, then returning money to your investors. That's really hard, right? So people look at VC as this really easy, glamorous job, but the reality is if you've been on a VC for more than 10 years, you've seen more than one or two cycles, it's actually quite hard.

Paul Bragiel: If you want to enter the VC market. One, be super humble, two, put your head down and grind, and three, be very, very supportive of the community. This is not necessarily even like early VCs to anybody starting early in their career, just be helpful. Try to help your friends constantly help, help, help, help. You'll get more in return later, but just don't ask for things. Give first, take later. Don't ask.

Paul Bragiel: Why junior people in VCs tend to be cocky assholes. Yeah, I don't get this. This is a really horrible trend. It actually makes the VC industry look bad. Maybe, you know, they feel accomplished or they feel that because VC is really hard to get into. So if you're like that 0.001% that made it in, maybe that gives people kind of extra confidence that's not necessarily warranted, yeah. We should slap that out of the people. They should come in humble, honestly.

Paul Bragiel: So there's different types of VC funds. Some focus on pre-seed, some do seeds, some do Series A, some do Series B, some do like pre-IPO. There's slightly different skill sets for different VCs. Pre-seed and seed, it's a lot more gut and people-based. Series A, it's a mixture between still of guts, but also some numbers and maybe some product validation. Series B and beyond, you're doing spreadsheets and you're kind of doing calculations and I'm a gut guy.

I mean, I think gut feeling is what separates the best from the average or if not the worst. It's about having self-confidence. It's like you've seen certain patterns in your life. Everyone else is saying no, but you have to go out there and take that risk. And also, if you had a gut feeling and you were wrong, you have to go out there and learn how to reevaluate what your assumptions were wrong and why that gut feeling was correct, so you have to constantly calibrate your gut feeling.

Paul Bragiel: People often ask me, hey, you're early in your VC career or you're an angel investor. How do you go out there and build up your kind of gut feeling? And the simple way to do that is just by volume. Be as active as possible, talk to as many people as possible, and alongside that, be as helpful to as many people as possible.

If you're part of a community and you're actively contributing, a lot of people are gonna, you know, give you feedback. They're gonna tell you what you're doing right, what went wrong. People will give you second, third chances if you're helpful. And you miss a deal, they might let you in later, right? And that's how you go out there and develop your gut.

OK, so I missed it. Why did I miss it? What was I doing wrong there? Why did I doubt that person and they still succeeded. So by being part of the community, by being super helpful, people will kind of help you develop your gut feeling and you have many chances to kind of figure it out and you know correct your mistakes and go out there and do a better job in the future.

Paul Bragiel: When you're raising your first fund, it's more about you and your team than anything else when you're an entrepreneur and you're raising money for your company. You're raising on the team, but you're also raising on the product you're building. In VC there is no product, it's just you, you are the product.

When you're raising your first and oftentimes your second fund, you're raising just on your personal track record. So either you were a successful entrepreneur before or you were very helpful in the community or you're a great angel investor. So when you're going out there and you're raising that first fund, you tell people like, hey, I'm Paul. I built this company that these angel investments, give me money, and you go to your friends first and then you go to friends and friends, and beyond that, you really don't have much to show. It's just like, hi, I exist, and if you don't have good connections or you don't have a good reputation, you won't raise your first fund.

Paul Bragiel: Historically, the VC market was very closed off to anybody that was not from the Stanfords, the Berkeley's, the Harvard's of the world. Also, it's been very hard to get that first job, right? The first job is something that's the most important job because once you have that, then you have it in your resume. You can go to other VC funds.

A lot of people were asking like Paul, VC seems pretty cool. How would I get involved and especially a lot of young people. I thought it'd be a really cool opportunity to go out there and share opportunities that we have. Decide to go out there and open up to anybody. The whole goal of the 101 fellowship was to allow people who would have never had a chance to get into VC to potentially get into the VC.

So if you wanna become a VC, it's obviously a great foot in the door. If you want to be an entrepreneur, it's great to see what the other side of the table looks like during this program. And on top of that, you'll make a really good network. You'll meet a lot of other great people going through the program at the same time, so it's a great way to make connections early in your career of really high integrity people and hardworking people that are gonna go to the next level.

Paul Bragiel: We look at people first. The vertical and things that they're attached to are not as important, of course it's important, but we wanna know who the people are. There's a famous saying, you could take a mediocre idea and a great team, and they'll pivot away from that a bad idea, but you take a great idea and a bad team, they're gonna lose to somebody. You'd rather back a great, great individual or groups of people over an idea.

Paul Bragiel: I am the type of person that kind of more organic and just having a conversation with the person. If you're an engineer, how'd you get started coding? If you're an artist, designer, what were your some of your early project, what are their early influences? What were you like at university? What were you like early in your career? So she's trying to get an idea for where the person started and where they're growing and where they might go.

So I'm just trying to figure that out from a just a general conversation, kind of the vibe, the confidence, the strength, how transparent a person is. One question I always ask in my head if I was 21 years old, would I quit my job and work for this person for five years? If I would not want to work for this person for five years, then why should I put money in? Or why would anybody else quit to join that person, so that's like the ultimate question. If not, then why would I put money in because a VC commitment is a 10 year potential commitment.

Paul Bragiel: Obviously, if we like the team, then we have to also look at the market. The things we're looking for is like one, is this market huge and there's a lot of room for error. So this entrepreneur comes in here, can they capture some percentage of that and you know, make some mistakes along the way and still potentially succeed? Or is the opportunity here to go out there and create a brand new market?

So, hey, we're gonna go out there and we're gonna create a brand new market around video games, brand new market around enterprise software, brand new market around food and agriculture, so we're looking, is there opportunity where this market can grow alongside the entrepreneurs, and sometimes the market won't grow, it's only finite, but there's an opportunity to go out there and break it open. Or yeah, this market's really small, but it's gonna become huge in the next five or 10 years because either technological changes or societal changes or market dynamics are changing.

Paul Bragiel: How do you get attention from VCs if your background is not traditionally? You didn't go to Stanford or Harvard or whatever. And to that I call bullshit. Every great founder that comes out of a big university, there's tons more founders that come from nowhereville, right? Or didn't even go to a university.

Yes, going to the university helps, but it also can hurt you in some ways too because sometimes people get so stuck in their heads that they don't try aggressive things. So the best way if you're from like an unknown university or an unknown country is one, show up, start going to networking events, and start talking to other founders, and you'll find your way in. Two, most important thing, just start building on your weekends, your nights, start building, make things happen.

People get excited about that build, not talk. I know a lot of people that have great resumes, they don't do shit. They just sit there and think about how awesome they are versus people who build. You're gonna crack no matter what. If you wanna make it, you're gonna make it. There's so many great stories of people that went to no amazing universities that did really, really well.

Paul Bragiel: Common mistakes that founders make when pitching, sometimes they come across as too robotic and they're just kind of like reading a pitch and it's not interactive. I like it when the entrepreneur leaves opportunity to discuss all throughout the pitch and actually the best pitches when there's almost no deck and you're just kind of hanging out a conversation, right? I mean, and they're doing it because they're prepared or they might be nervous and it's normal. It's like, but they should be allowing for conversation to happen. I think it's one big mistake.

Another big mistake I think founders making when they're presenting is they're talking about the product, but they're not talking about what problem the product is solving. A lot of times like this is so cool and it's just awesome tech. It's like, yeah, but what does the average user get out of that? And they don't focus on the problem, they focus too much on what they've built or what's cool about what they're gonna build.

Paul Bragiel: I like stories, living cool stories, and I think by going to the edges of entrepreneurship or edges of society or edges of anything, that's when you go out there and have the best stories. So for me, I get really excited because when you go to new places, you meet new people, you're constantly learning new things and you have different crazy new adventures and money for me is a tool to experience cool new adventures.

Yeah, if I had billions and billions of dollars, what do I do? I'd do the exact same thing. I don't see myself stopping anytime soon.