Lighter Capital CEO BJ Lackland is on a mission to change the way startups raise the funding they need to grow.
As a former venture capitalist, he’s seen what a big infusion of cash can do for a business. But he says VCs aren’t the “omniscient seers of the future” that most entrepreneurs make them out to be.
“One of the major misconceptions entrepreneurs have is that they are overly enthralled with venture capital and venture capitalists,” Lackland said. “I am constantly amazed by how much entrepreneurs believe getting VC funding is huge validation and ensures success.”
Instead, Lackland has built his company around a new, more entrepreneur-friendly investment model.
Lighter Capital doesn’t take equity, but instead uses proprietary technology to streamline the lending process for entrepreneurs. It creates what it says is a more efficient fundraising system online for raising cash — somewhat of a “Capital-as-a-Service” tool. In the past two years, it has increased its investments by 10X and now funds six companies per month.
Lighter Capital, founded by Seattle investor Andy Sack in 2010, last month closed a $100 million fund, backed by Community Investment Management, planning to make 500 investments in tech startups.
“It might sound like I am a VC-hater. I’m absolutely not,” Lackland said. “It’s a great thing for our economy and some companies could never be built without it. However, it’s not a fit for most businesses, and it’s not as magical and filled with riches and wisdom as many entrepreneurs think.”
Before running Lighter Capital, Lackland grew up in Seattle and went on to live in Los Angeles, Las Vegas, Nepal and Taiwan.
“I’ve done everything from meditating under a Bodhi Tree, to getting a master’s degree in Chinese political economy and an MBA, to founding and financing tech startups,” he said. “Don’t ask me how it all fits together. Somehow, it does.”
Meet our new Geek of the Week, and continue reading for his answers to our questionnaire.
What do you do, and why do you do it? “I have young kids, so life is pretty much work, wife and kids. However, with work, specifically, I grow and finance startups, on either the investing side or the operating side.”
What’s the single most important thing people should know about your field? “Software and big data is finally hitting financial services like it has disrupted lots of other industries. Including changing how entrepreneurs access capital. Today, in this era of big data and machine learning, in which corporate data resides in the cloud and flows from application to application, it’s absurd that raising capital is still stuck in the days of pedigree, pattern recognition and PowerPoint. It’s one of the problems we are solving at Lighter Capital.
Overall, entrepreneurs need to realize that VCs’ investing success rates are incredibly low. Venture capital as an asset class has performed horribly since the dot-com days. It only thrives when it hits home runs, which is why VCs need to hit for the fences. So getting VC funding doesn’t mean you’re going to be rich or successful. It means you’ve strapped a rocket pack to your back and you might shoot to the moon, but most likely you’ll blow up half way there.”
Where do you find your inspiration? “I find inspiration in learning new things while tackling great challenges. At work, this comes from two related experiences: building a company and the personal development that happens while growing business. In the challenge of building a company, you struggle every day. It takes incredible creativity, wits and grit. Every day there are opportunities for countless lessons. Plus, you get to work with great people who share these ups and downs, and if you get some lucky breaks and a few big victories, you have a shot at building a successful business. Then others can learn and develop and grow and support themselves, investors can make money, etc.
In terms of the personal development, the diversity of skills needed is intense and constantly changing, so you’re guaranteed to be good at some things and terrible at others. Building a business exposes your best and your worst. If you like that kind of brutal self-reflection and criticism, it’s exhilarating. If you don’t, then best to stay at your job and be happy.”
What’s the one piece of technology you couldn’t live without, and why? “My iPhone. It’s attached to me.”
What’s your workspace like, and why does it work for you? “Like everyone else at Lighter Capital, I have an Ikea desk setup in an open floor plan. I like the open plan because I spend so much time in internal and external meetings that I’d miss the fun of being with colleagues if my desk were in an office.”
Your best tip or trick for managing everyday work and life? (Help us out, we need it.) “Arriving at work early, before everyone else, and after my kids are asleep is when I can take care of my direct work.”
Mac, Windows or Linux? “Windows.”
Transporter, Time Machine or Cloak of Invisibility? “Time machine. It offers the best adventures.”
If someone gave me $1 million to launch a startup, I would … “Make sure the investment is not structured as equity so I don’t get diluted. Then I’d find a technical co-founder and build a SaaS business for a niche market that I could dominate without having to raise massive amounts of capital. There are so many attractive spaces that still aren’t served by SaaS offerings. The key is to find a niche that’s not served and yet is large enough to build a meaningful business.”
I once waited in line for … “A latte. But then I realized drip coffee is just as good, and you don’t have to wait for it to be made!”
Your role models? “I think it’s blinding to follow someone too much, since everyone has strengths and weaknesses. It’s best to find things you admire in lots of people and cut your own mold.”
Greatest Game in History? “Life.”
Best Gadget Ever? “The stirrup, of course! It enabled the industrial revolution. The stirrup allowed for mass transportation on a pack animal, which ultimately enabled the specialization and capital formation necessary for the industrial revolution. Without that, I’d just be a farmer — without an iPhone.”
First Computer? “An x86 clone computer that I got as hand-me-down from a friend. It took about 50 floppy disks and 20 minutes to boot it up. No mouse. Black and green screen.”
Current Phone? “iPhone 6.”
Favorite App? “Email. The true killer app of the Internet.”
Favorite Cause: “Children in situations of poverty and/or abuse. Children are our greatest legacy.”
Most important technology of 2015? “Lots of financial technology. Of course I’m biased here, since I work at a fintech company. Overall, increasing access to capital on reasonable terms enables lots more people to have opportunities and improve their lives.”
Most important technology of 2017: “Self-driving cars, only because it has the potential for saving so many lives.”
Final words of advice for your fellow geeks: “Entrepreneurship isn’t something that you do for money, it’s something that you do because you love the challenge.”