Jonathan Crystal, Managing Partner at Crystal Venture Partners, talks about investing in early-stage AI-driven insurtech companies. After leading his family's insurance brokerage to a successful exit, Jonathan launched his $33M fund when he realized AI was the catalyst insurance had been waiting for. He explains why entrepreneurship means "dooming yourself to years of terror," and why the best investments happen when founders identify problems before revenue models. With investments in companies like Bright Harbor, which helps families navigate disaster recovery, Jonathan explains how domain expertise enables conviction at day one—when there's no product, just a founder with an audacious vision.
Jonathan Crystal, Managing Partner at Crystal Venture Partners, talks about investing in early-stage AI-driven insurtech companies. After leading his family's insurance brokerage to a successful exit, Jonathan launched his $33M fund when he realized AI was the catalyst insurance had been waiting for. He explains why entrepreneurship means "dooming yourself to years of terror," and why the best investments happen when founders identify problems before revenue models. With investments in companies like Bright Harbor, which helps families navigate disaster recovery, Jonathan explains how domain expertise enables conviction at day one—when there's no product, just a founder with an audacious vision.
In this episode, you'll learn:
[02:14] From Texas to Princeton to building an insurance dynasty in New York
[04:04] Why insurance rewards creativity and curious minds
[07:24] The brutal truth: 99% of a VC's job is saying no
[10:31] Exiting the family business and finding the "why now" moment for venture
[12:10] The ChatGPT revelation that launched Crystal Venture Partners
[14:13] Investment thesis: $1-3M checks at day one for transformational companies
[19:11] Why building a venture company means years of terror—and that's the test
[21:59] Bright Harbor case study: From revenue model questions to product-market fit during LA fires
[25:30] Most common reason for no: "We're not your best source of capital"
[29:40] Finding investment opportunities in unusual areas
The nonprofit organization Jonathan is passionate about: 12/64
About Jonathan Crystal
Jonathan Crystal is the Managing Partner of Crystal Venture Partners, a $33 million early-stage venture fund focused on AI-driven transformation in the insurance industry. Before entering venture capital, Jonathan spent 20 years as an operator in the insurance brokerage business, ultimately serving as CFO of Crystal and Company, a top-25 national insurance brokerage firm founded by his family. He led the firm to a successful exit to Alliant Insurance Services in 2018. Jonathan brings deep domain expertise and company-building experience to his investments. He backs seasoned, often serial entrepreneurs building transformational companies, writing $1-3 million checks as early as day one. His portfolio includes companies like Bright Harbor, Sixfold AI, NevadoAI, Comulate, and Corvus Insurance.
About Crystal Venture Partners
Crystal Venture Partners is a $33 million early-stage venture capital firm founded in 2022 to capitalize on the AI transformation of the insurance industry. The firm writes $1-3 million first checks, often as the first institutional investor or alongside other first institutional investments. Crystal Venture Partners invests in 4-6 companies annually from a pipeline of 300+ opportunities, maintaining a highly selective approach with domain expertise enabling conviction at the earliest stages—sometimes backing founders on day one before product development. The firm's portfolio of 10 companies has shown strong momentum, with over half securing follow-on financing in multiple rounds within a year of initial investment. Led by Jonathan Crystal, who brings two decades of insurance industry operating experience, the firm specializes in identifying transformational opportunities where AI can create and capture significant value in risk management and insurance markets.
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"You gotta understand that being an entrepreneur is like terrifying, and not just terrifying at the beginning. It's always terrifying. So you're like dooming yourself to years of terror if you're gonna go forward with this and are you ready for that? And like, even though I said that kind of tongue in cheek and sort of an encouraging way, it's a little bit of a test. Are you like willing to deal with the pain?" - Jonathan Crystal
[00:00:27] Gopi Rangan: You are listening to The Sure Shot Entrepreneur - a podcast for founders with ambitious ideas. Venture capital investors and other early believers tell you relatable, insightful, and authentic stories to help you realize your vision. Welcome to The Sure Shot Entrepreneur. My guest today is Jonathan Crystal. Jonathan is a managing partner at Crystal Venture Partners.
[00:00:58] He's based in New York and he invests quite actively in similar areas to mine, InsurTech and insurance related topics. Jonathan is a very experienced investor. He spent many years in the world of insurance, and then he recently entered the venture capital sector. We're gonna find out about him and why he decided to become a venture capital investor and what kind of companies he likes to invest in, how many companies he meets, how often does he say, "yes, I want to invest"? How often does he say no and why he says yes and no as well. Jonathan, welcome to The Sure Shot Entrepreneur.
[00:01:36] Jonathan Crystal: Thank you, Gopi for having me.
[00:01:38] Gopi Rangan: Let's start with you; get to know you a little bit. You grew up in San Antonio, Texas. You have made New York your home over many years now. Walk us through that journey. How did life get started and how did you spend more than a couple of decades in the insurance world?
[00:01:55] Jonathan Crystal: Sure. I had the great fortune of growing up in San Antonio, Texas, which was a phenomenal environment, great place to be a kid. Traditional, typical suburban environment. Hot Texas, sun. Came up east to go to school, went to Princeton University. Probably best thing I got out of there is I got to meet my wife.
[00:02:14] And so my wife and I celebrate our 25th wedding anniversary this year. Classmates in college? Uh, both of us. Yeah. Thank you. We've made it. I tell her that even felons get parole after that much time, but she didn't seem to appreciate that too much. No, we're doing great. We both went away in New York, professionally, and we've built a life, we've built a family. We've got three great kids, 21, 18, and 15. Two in college now. We've got a dog. And it's been amazing to build a career here as well. I spent 20 years as an operator in the insurance industry, insurance brokerage business. Before that, I started out in management consulting. And after that long, extensive career in, brokerage, after an exit kind of moved on to start the next chapter, which has led to launching Crystal Venture Partners as a venture capital firm.
[00:03:03] Gopi Rangan: What did you like about insurance?
[00:03:04] Jonathan Crystal: It's funny. Growing up an insurance family, I didn't mention this, but I did ultimately join my family's insurance brokerage business. Anybody who comes from a family business environment will tell you stories of hearing about business at the table at family dinners and and such.
[00:03:18] So I kind of always grew up with issues of risk around me. Everything I've done in the course of my life has kind of touched risk or some degree of risk management. And when I came into the insurance business, the business side, I understood the idea of, "hey, we're selling a product that people need, everybody needs it. Let's support them when they really need. It took me a while to get passionate about the business. I came in, I was the youngest of three sons in a family business, and I was 25 when I first came into the business, and so it took me a while to kind of navigate understanding the insides of the business. It wasn't until I really was out there talking to clients and helping them think through what was going on in their business, where were they trying to take it, what were they worried about? What were the things that could happen?
[00:04:04] Insurance, believe it or not, is this like opportunity for creativity? You have to imagine the unimaginable, what would happen and what could happen, and then help design an insurance program that meets those needs, or try to anticipate, "Hey, where are you taking this thing? Are you looking to make acquisitions? Are you looking to expand internationally? Are you looking to bring on a different type of employee and attract them to your business? Are you personally taking different sets of risks in your own activities, driving sports cars around or boats?" All of that kind of rewards someone who's got a curious mind, who likes to get to know people.
[00:04:36] And so that kind of aspect of the business really attracted me is like for you to do anything, in insurance right is to be of a problem solver, a creative person, somebody who understands business, understands people. And I think that was ultimately what led to some degree my success in that insurance environment.
[00:04:54] Gopi Rangan: Fantastic. I've always felt that the insurance industry is so noble because it touches people's lives at highs and lows on a daily basis. When good things happen, like when you have a child, or when you buy a house or buy a car, or sometimes, unlucky things happen, like if you fall into bad health or natural calamities or any of those type of things happen and insurance is there to support you and it's probably the only business world that touches people's lives in such a meaningful way at highs and lows. It's good to have that safety net to build wealth and prosperity for the family.
[00:05:31] Jonathan Crystal: Well, in some sense that's the tragedy of the insurance industry. The goal is to help people in the worst of times and to give them the resources and support to help them navigate those times. The reality is that most people hate their insurance company. It's one of the most reviled industries in the country. And I think, to some degree it's an issue of branding and messaging that part of the business is declining claims and not being there. I think a lot of it is just incompetence sometimes being presented as malicious intent.
[00:05:56] I used to say as a manager, please, assume I made a mistake before you assume I was trying to do something terribly bad. But I don't think the insurance industry gets that much of a free pass. Some of it's earned. At the end of the day, most insurance companies are publicly held, certainly profit making businesses and they should be if they wanna be sustainable. But it is a real challenge to explain to people what this really complex product does, why they're spending so much for it, how they're supposed to access it and use it from a claim standpoint, and then why it benefits them.
[00:06:26] And sometimes there's a real disconnect between what's sold and what people think they're buying and that can contribute to things too.
[00:06:32] Gopi Rangan: Venture capital and insurance are now very close parallels. In both industries. We think about what is possible in the future and one more optimistically, one more pessimistically. And we think four steps, five steps ahead and anticipate some tail event that can be dramatic and huge. And in venture capital, that's the upside and in insurance, that's the downside risk that you wanna protect. It's a very similar world. Saying no is also a very common thing in both industries, and venture capital much more often. And you have to keep saying no to a lot of founders until you say yes to one founder and invest. In insurance, claims happen quite often. I'm hoping that most insurance companies will say yes and pay out the claims, but sometimes they do have to say no for good reasons as well, and that's painful. It's a very strong people business.
[00:07:24] Jonathan Crystal: It's funny that you talked about saying no. I was sitting down for dinner the other night with my 15-year-old and I turned around and said, "Abram, do you know what I actually do?" And he said, "yeah, venture capital." I said, "But what do I actually do?"
[00:07:35] And he said, "well, you invest in technology companies", which is accurate. I said, "honestly, like 99% of the time, my job is to say no." We meet probably... the last year was well over 300 different companies that we were, maybe saw their pitch deck or maybe we had a conversation with a founder. We have to do a pretty quick assessment. Is this a company that we want to continue a conversation with? Is this as a founder that we might like to get behind? Is this something we could even do because it's aligned with our investment strategy or aligned with the type of check size we wanna write? We can get to know really quickly usually. Having said that, oftentimes that's like the most important conversation that person's gonna have maybe that day, potentially that week, potentially that month. And so like we have to respect that. W e are defined by the people we say no to more than the people we say yes to.
[00:08:27] W hen I think about the people who carry our brand name out there and talk about who Crystal Venture Partners is, what we're like as investors, it's going to be numerically the 99 out of a hundred that we say no to, more than the one out of a hundred we say yes to. So we're conscious of that.
[00:08:43] I think it's an incredibly courageous and brave thing to do to start a business. It's one of the things that inspires me to do what I do as an investor, is to get the opportunity to be able to support these incredibly brave and courageous founders. And so when we do say, "Hey, this is not gonna work for us for maybe just any number of reasons, frankly once again, it's got a lot of things have to line up to get to, yes, we try to be direct, candid, constructive, give thoughts and suggestions for other investors they might wanna speak to. And it all comes down to like the only thing we can't get more of is time in this life. And so if we can be in a position to say, " here's a couple of things you may want to think about more. Here's some people you may want to talk to who can give you some more direction. Here's a shortcut that can help you answer a few questions."
[00:09:30] We're delighted to do that as much as we can, but at the end of the day, our job's to find the yeses. And so, we want to get through the nos as quickly as possible so we can get to yes.
[00:09:39] Gopi Rangan: I want to get to that part now. Why you started a venture capital firm. You are from Texas, and now I see that your loyalty is firmly rooted to the East coast. You've lived there for a long time. You built your life there. After many, many years in the world of insurance, you decided that you're gonna start a venture capital firm. That's a very unusual path for an insurance expert. What attracted you to venture capital?
[00:10:04] Jonathan Crystal: Yeah, well, it's not as much of a straight line. I wouldn't have thought 10 years ago that you would find me leading a venture fund. At the time, 10 years ago, I was a CFO of a national insurance brokerage firm, top 25 national insurance brokerage firm, and I did lead that firm to a sale. Crystal and Company was the name of my prior firm, and we sold that to Alliant in 2018. And then I worked with Alliant to integrate those two businesses with tremendous success.
[00:10:31] One of the things I'm incredibly proud of is how many of my former colleagues are still thriving and succeeding at Alliant and it's a terrific business. And, I had an opportunity, I think I was probably 44, to say, "Hey, is this time for me to think about doing something really different."
[00:10:47] I had the opportunity to stay at Alliant and thrive and grow with them or to do something really different. And so I took that second path and really spent about a year figuring out what was next for me. I'd been writing some checks as more of an angel, getting to know some entrepreneurs, evaluating what's the path I wanted to take. The more common path maybe for someone with my background might've led to private equity. Another path that I might've taken would've been to start my own venture and be entrepreneurial in that way. And then maybe the one that was at least obvious was to start a venture fund.
[00:11:20] And so I kind of fought it for a while. I had made, as I said, a number of venture style angel investments, some pretty sizable ones, some that have done quite well, like Comulate, Comscience, Corvus, Flywheel. Corvus and Flywheel both exited. Comscience and Comulate are thriving right now. Dilo and Stream too. All companies are doing really, really well I enjoyed a few aspects of that, which is the intimacy of getting to know the founders, seeing the problems, helping them navigate some of the trickier aspects of that. But I thought, " does the world need another venture fund? There's like so many venture funds." And I fought it for a while, and frankly it wasn't until we saw this transformational wave of artificial intelligence technologies come out in 2022 that committed to launching a fund, because that was my like, why now moment. The first time I saw this technology, I was sitting down with Alex Schmelkin, who's the founder of Sixfold AI, which is today one of our portfolio companies, and they were showing me a very early iteration of what is now ChatGPT. And I had this experience that I'd only had once before, which is really in the original kind of internet worldwide web development in the mid and late nineties. This is something truly different. I'd been waiting for this moment of like, what would create inertia for change in the insurance industry, probably for my whole career. And I said, this is kind of it and I know how it goes. Like the gun goes off, everybody starts sprinting, and it's like, who can get to the best outcome? So I said, all right, this is it. I was built for this moment, raised a fund, put my team together, and here we are today. Crystal Venture Partners is a $33 million fund: fund one, we have 10 portfolio companies really thriving. And we're looking ahead in an exciting future firm.
[00:13:10] Gopi Rangan: The venture world is already expanding and needs to bring new types of people who can shepherd innovation for the future.
[00:13:16] I'm delighted to see that you are bringing decades of insurance experience into this ecosystem to help founders.
[00:13:23] Jonathan Crystal: And it's also company building experience because it's such a hard thing to build a business from scratch and to understand what it's like to hire, to do complex sales. I was on the frontline in sales in my prior business. I've been there. To think about how do you navigate all the aspects of developing a commercial partnership? How do you think about an acquisition? Those are things you get from a little bit of experience business building.
[00:13:45] So to be able to take my insurance insights and connectivity and the business building expertise, and then just to have the empathy of like, man, this is so hard to do, to build something from scratch and like, I want to be there to help these founders build incredible companies, that's pretty special and distinctive.
[00:14:03] Gopi Rangan: I wanna talk about AI, but I want to get some details about the firm out first. What stage do you invest? What is your sweet spot and what's your typical check size, and how many companies do you invest in?
[00:14:13] Jonathan Crystal: We write $1 million to $3 million checks. That's our first check. And we go in very early, sometimes as early as what we call day one, behind a founder and an opportunity. Usually we are first institutional check or alongside first other institutional checks, and that's been the case across our portfolio to date. We look for companies building transformational companies, creating and capturing transformational value. And so we think about things like capital efficiency. We think about the kind of the nature of the business. We look at the founder background and to partner with seasoned, usually multiple time founders who are building serious businesses and have audacious goals and aspirations for what they're looking to build. And I think that's one of the advantages we have being having domain expertise and being a specialist is having the insight to go that early. It is like an act of right, on the edge of insanity to invest as early as we do with the kind of level of conviction we do. But it is a very, tough thing to do, to say, "look, this is a business that may be there's no product. There may be a small team. There may be just the first inclination or indications of commercial success and say, we can imagine what this company can be."
[00:15:22] We can imagine why customers need the solution, can understand how AI technologies can make this company successful in a future that we don't quite know what it's gonna look like and to say, we're gonna commit significant capital behind them. And to date, that's been very successful. We have over half of our portfolio have secured follow on financing and multiple rounds of follow on financing, I think on average, well under a year since their initial financing.
[00:15:50] Gopi Rangan: You are willing to go as early as day one, so nothing is too early for you. How late is too late? How big of a company would you be willing to entertain as an investment opportunity? When does it get too big?
[00:16:02] Jonathan Crystal: We tend to stay at a certain point, usually somewhere between A and B. The business has validated the problem it's gonna solve, it's identified the customer it's gonna serve. The business model is set. There are enormous challenges ahead of execution and growing the business and expanding the team and all the things that are incredibly challenging to build a business at that scale and to achieve a billion dollar plus exit. It gets messy and it's less fun and it's less creative.
[00:16:32] And we find that there are other firms that should be bringing their capital to the table then, and we're less impactful at that stage. Our view is like, we should be bringing our capital to the table where it can make the most impact and where we have a reason to be writing that check, reason to show up and reason to earn our place on the cap table.
[00:16:49] There's one view that says all money is green and therefore capital is commodity and I understand there are a lot of circumstances where that's the case. What we've seen with the founders that we've gotten behind, and as I said most of them are multiple time founders, is they say, yep money is green, but who we surround us with, it often makes a difference, particularly in the difficult moments. And I've just found that my life and my career is like in the difficult moments who's by your side is often what makes things most meaningful.
[00:17:18] Gopi Rangan: Very similar to insurance, those are moments when VCs can be valuable to founders. How many companies do you invest in roughly in a year?
[00:17:27] Jonathan Crystal: Between four and six. Last year we made six investments. So it gives you a sense of kind of deployment. Going back to this like number of yeses and nos, it's like once a quarter we get to a yes.
[00:17:39] It doesn't quite work that way. Sometimes we're building relationships with founders for years and one of the founders we backed this year, Sharon Rodriguez at NevadoAI, I've known for well over a decade and had the opportunity to partner with her as she was contemplating the next stage in her career.
[00:17:57] I don't know, is that a 2025 decision or was that a sort of something that was in the makings for a decade, but yeah, to get to the confidence level of saying like I'm gonna write you a check, it just requires like a high level of trust and confidence that takes time to build. That's not the case in every circumstance. We realize ventures sometimes means moving fast, and there are different circumstances that come into play, but ideally you're in a place where you've built a relationship, you understand what they're looking to do, you understand their strengths and weaknesses. And if you can't answer that question by benefit of having a lot of exposure, then you gotta find other ways to get to the answers to those questions too.
[00:18:32] Gopi Rangan: Some of those relationships take months or even years. I track many of the founders that I've worked with in the past, and I'm waiting for the day when they're gonna start a new company.
[00:18:40] But I'm always in touch with them to brainstorm new ideas and new business ventures that they want to eventually start. But more often it's a stranger that comes in through an introduction and you sit down with them, hear their story in a few meetings, maybe sometimes even one meeting, you make a decision to move forward.
[00:18:58] I want to talk more about what happens in that first meeting, second meeting, even with people you've known in the past. When you hear the story of, "Hey, here's a new business idea and here's what I'm thinking about it," what goes on in your mind? What do you look for?
[00:19:11] Jonathan Crystal: First meeting is really about the person or the founder more than the business.
[00:19:16] Who is this person? What's motivating them? What's their character? Building a huge business from scratch is like not only a courageous and brave thing to do. You gotta understand that being an entrepreneur is like terrifying. Not just terrifying at the beginning, it's always terrifying. So you're like dooming yourself to years of terror if you're gonna go forward with this. Are you ready for that?
[00:19:37] Even though I said that kind of tongue in cheek in sort of an encouraging way, it's a little bit of a test. Are you like willing to deal with the pain that's associated with building a venture style company and to navigate all the way to the end to an outcome that's good for your investors.
[00:19:53] And so, that's a conversation. Is this somebody who could build a venture scale business? That's a quick assessment. And then another thing is like, "okay, I understand roughly the problem that they're going out to solve, or the market they're looking to crack, or the product that they're looking to build. Is this person suited to that? So we call that kind of like founder market fit. Does this person have what it takes or does the team have what it takes to be successful? Because there's lots of ways to be successful in this life, but if you're an engineer, and this is a highly commercial strategy, or if you're a very commercial person, and this is a highly technical strategy, maybe this isn't the right fit. And sometimes we'll have conversations with that and say, Hey, have you thought about it this way? Or, here's a business model. That's an interesting business approach you're taking. Here's another way that you can maybe think about creating and capturing value for what you're building.
[00:20:41] So is this someone we want to be in the foxhole with? Can they build a venture scale business? Are they suited for what they're doing? And then probably the fourth thing that we're gonna get on our first call is like, is this a problem worth solving and we want to get behind solving?
[00:20:55] Sometimes a lot of people approach insurance with a one dimensional view of what it takes or maybe not without a fully developed insight of where the opportunity comes from. There's lots of ways to make money in this world. There's lots of versions of how to be serving the insurance industry.
[00:21:09] Having done this for as long as I've been doing it, both as an investor and as an operator, you see these common themes, assumptions people make, about how easy or not easy it is to go direct to the customer without a agent involved or certain lines of " oh, we've developed a new product and all we need to do is just put that product out there and the world will find their way to it." What's your distribution strategy there? How are you thinking about that? We have some pattern recognition that just comes from decades in the industry and understanding where value's been created and, we'll map to that.
[00:21:41] And if someone's really, really off the map, we might just say, Hey, this isn't for us. Or we might say, Hey, you're kind of off the map but you're an interesting person. Here's another way to look at that. So that's sometimes the best conversations.
[00:21:53] Gopi Rangan: Can you give an example with one of your investments? What got you to say, "yes, I want to invest?"
[00:21:59] Jonathan Crystal: We backed Bright Harbor in 2024 and got behind Joel Wish, who was a multiple time founder who had come outta the healthcare world. We were introduced by another investor I know out of Israel, had a really great conversation with him in terms of just as a founder. And he said, " I think that when people go through a natural disaster, when they lose their home, something like a fire or a flood, this is a moment of real trauma."
[00:22:27] He'd seen situations like that in the healthcare world and he said, people need a helping hand; someone to help them navigate that experience. I said, "yeah, I agree with you. I've seen that. Brokers aren't really incentivized to help people navigate that. It's tough for insurance companies to do more than just write the check. So, yeah, I buy it when you say that there's a need." And I started to take some notes and I remember on my pad, I had on the side of my desk I wrote down ' revenue model question, distribution model question.' My question here is what's the revenue model and what's the distribution model?
[00:22:58] And I just kind of almost like fell over my chair because I was like, great, now we can have a conversation, try to figure this out together. And a couple ideas came into play modeling around employee benefits distribution and thinking about how do corporations think about their role in resilience and continuity for their employees.
[00:23:17] And we ended up coming to an agreement to invest in that business right before there were two major hurricanes that hit Florida and North Carolina in the fall of 2024. And then boy, the wildfires hit in LA the following January, so January of 2025, and it just exposed what a tremendous need there was.
[00:23:35] I just remember as these fires were underway in LA getting texts from Joel going, "I'm getting like inbounds from major Los Angeles employers saying, 'Hey, can you help our employees who've lost their homes?'" I got chills at that moment because to see product market fit hit instantaneously like that, literally over a course from like a Thursday to a Sunday, hundreds of text messages, that's what it's like.
[00:24:00] Early stage venture you better be good with text because you're on that phone all the time. This is not like I'll get back to you in a week or a month. It is high intensity. So I felt like I was right there. I had had that experience from my brokerage days of helping people navigate something serious, like losing a home and how, once again, traumatic that is. It's not just property. When you lose a home, it's your memories, it's your community, it's your neighbors. It's your life and kind of the prospect of that. And so I was really proud of what they built there. They subsequently have continued to really grow and expand and they raised a significant amount of capital last year and are really incredibly positioned to create a whole new category of business that is not broker, not adjuster, not insurance company, but , to help families navigate this experience of losing their home in a natural disaster.
[00:24:49] Gopi Rangan: It's great to see so many moments how this could be the potential that could be unleashed in this business and how big it can be and how impactful it can be to the users and the customers. I see that came through in many of those interactions for you. It's very inspiring to see that.
[00:25:07] Jonathan Crystal: Thank you.
[00:25:08] Gopi Rangan: You evaluate about 300 plus companies in a year and you end up making four or five investments, roughly one per quarter or so. You say no very often. What's your most common reason to say no: beyond like it's not in your zone or like the obvious no, beyond that, why do you say no? What's the most common reason?
[00:25:30] Jonathan Crystal: I will say to people frequently, "we're not your best source of capital; we're not the right capital for you." And that can mean a lot of things. Sometimes it means, go out and raise a half million or a million dollars of friends and family capital and validate that what you're doing is gonna be meaningful. Don't raise a ton of money. We're gonna write least a million or $2 million into your business but you're not necessarily at a place where you validated that this business opportunity exists. Get the least amount of capital you can possibly raise to validate it. Let's have another conversation when you do that. Sometimes they've, already raised a ton of capital and we might like them and like what they're building, but we're just not the right investor for them because we want to get the kind of return profile for our investors that doesn't match if it's a later stage investment.
[00:26:18] I think that's probably the most obvious thing is we're not the right fit for what you're doing. And that's not a personality thing. That's not a strategic thing. In many cases, these are good businesses, maybe even great businesses. We're just not the right capital.
[00:26:31] Gopi Rangan: Now, early in my career, I used to start with the set of questions that helps me evaluate what's the business? What's the market? What's the product, unit economics, sales strategy, go to market, many other things like that.
[00:26:43] And then eventually I would ask the question, "okay, how can I be useful to this company and the founders? But over the years, now that I'm gaining more experience in venture capital, I start with the first question, is this a company, is this a group of founders that I can be useful to?
[00:26:59] If I can be useful or if I at least believe that someday I can be useful, then I go through the rest of the questions to understand the technical details. So I've flipped the narrative on how I have these conversations with founders these days.
[00:27:14] Jonathan Crystal: That's also the privilege of choice. We get to choose who we spend time with and the type of businesses we want to spend time with.
[00:27:19] There times, and I'll say like, I just don't wanna spend time on this business problem. You can make money on it. This may be a good business, but this is not something I'm gonna spend time on.
[00:27:28] Gopi Rangan: You're a new entrant into the venture capital world. What is one thing that you want to see the industry change to make this sector better?
[00:27:37] Jonathan Crystal: I have no aspirations to change the venture community. I'm a big believer in the free market and capital markets will dictate outcomes. And so I concern more about like what's gonna be important for our success than thinking about how to change the industry. And so navigating success in the future is like we're competing against these incredibly large multi-Strat firms, whether it's Andreessen Horowitz or Lightspeed or others.
[00:28:02] Are we competing against them? Are we collaborating with them? Are they the consumers of the product we create? There's lots of ways to think about the role of venture capital. Is venture capital even an asset class? Is it a singular asset class? So I think the market will adapt.
[00:28:17] My current thinking about the venture capital sector is that it's playing out in some ways similarly to hedge funds and private equity, which is a little bit of a barbell, which is that you're having high degree of concentration among the largest firms and then you have a diverse and thriving smaller into the sector that that bring, we say that's where alpha comes from and beta tends to come from the largest players. Sure, I would have lots of people from this industry argue with me about how I view that. But my view is that's like part of the maturation of this industry. It's super cottagey for the longest term. It is maturing. It's still very, very, very small component of the overall financial services sector. And, and I like to remind people that is you think a hundred million or a billion dollar round or a unicorn is a big number. BlackRock is like a $10 trillion institution. I haven't looked at what JP Morgan's current assets look like but those are trillion dollar institutions. Venture has lots of different shades to it. I love the personality of it. I love that it's a relationship based industry as well. Having said that, I do think that they're like many industries, that factors like bias and gatekeeping kind of creep into it. And so thinking about how to keep it open to founders from different backgrounds and to people from not just from the coast. One of our investments last year the founder lives in Springfield, Missouri, and we're delighted to back his business.
[00:29:40] It's a founder we've backed previously, have a tremendous amount of confidence in what he's building. Couldn't be more fortunate than to have been invited onto his cap table. But I don't think there are a lot of my peers in venture capital who are spending time in Springfield, Missouri nowadays.
[00:29:56] Gopi Rangan: I'd like your take on how you view venture capital compared to other asset class categories and how each of these are maturing and how they're different in their own ways. We're coming towards the end of our conversation, and I wanna ask you about your community involvement. Is there a nonprofit organization you are passionate about? Which one?
[00:30:15] Jonathan Crystal: Yeah. So, parallel to my background in family business, i'm involved in an organization called 2164, which works with multi-generational families and helps them perpetuate their philanthropic values over generations. And then just like my venture activities, I have a handful of very early stage social entrepreneurs who I say to them, I am not going on your board, but you can call me or text me at any time. And happy to help you achieve your goal because just as we see incredible founders, brave, courageous, visionary founders in the technology sector, some of those are also very much in the nonprofit community as well. And many of them don't have the kind of business skills that you find in venture backed businesses, and certainly they don't have access to the capital.
[00:30:59] Gopi Rangan: Jonathan, thank you very much for spending time with me today. Thank you for sharing insightful observations on the industry and specific details about how you make investment decisions, how you engage with founders, what you look for in your conversations with them.
[00:31:14] I look forward to sharing your nuggets of wisdom with the world.
[00:31:18] Jonathan Crystal: Thank you, Gopi.
[00:31:20] Gopi Rangan: Thank you for listening to The Sure Shot Entrepreneur. I hope you enjoyed listening to real-life stories about early believers supporting ambitious entrepreneurs. Please subscribe to the podcast and post a review. Your comments will help other entrepreneurs find this podcast. I look forward to catching you at the next episode.