April 17, 2025 • 22 mins
In this episode, Joel Palathinkal talks with Billy Libby about the formation and evolution of Upper90, delving into its unique approach to investment strategies and deal structures. Billy shares valuable advice for emerging managers, emphasizing the importance of identifying market gaps. The discussion explores Upper90's focus on specific companies and industries, particularly in light of AI's impact on investment sectors. Billy explains the key financial metrics used to evaluate investment opportunities and highlights the significance of in-person networking in the investment landscape.
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Episode Transcript
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(00:00):
I'm just unbelievably impressed by that.
(00:02):
And and that's kind of, like, something thatdrives upper 90, and Jason and I talk a lot
about is the people that are taking that riskand betting their lives should end up having
more of a financial outcome than the growthequity or private equity investor that comes in
late when it's derisked.
And so that's part of, like, how you set upyour balance sheet and, you know, how you think
(00:24):
about using credit gives you a lot moreoptionality and rewards the people taking the
most risk, which is the founder.
Welcome to The Investor, a podcast where I,Joel Palothinkel, your host, dives deep into
the minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
(00:48):
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
All right.
So we are live here with a good buddy of mine.
We got Billy Libby, who's the co founder andCEO of Upper ninety.
I got to spend some time with him in person acouple maybe a couple months ago, I think
(01:10):
before the holidays, but he's a New York OGlike me.
You know, we know a lot of the people that havekinda built the New York tech ecosystem.
And just excited to kinda get on the horn withhim and just go a little deeper on what he's
building and what he's built over time.
And then we're probably gonna do some morecommunity building in person with some of the
other leaders in the ecosystem.
But just I'm just gonna do a quick overview,and then Billy's gonna go a little deeper into
(01:34):
his background.
And we're gonna cover a couple hot topics withall that's going on in the news.
But Billy Libby is a cofounder and CEO of Upperninety.
They're a leading hybrid investment firmfocusing both on private equity and credit
strategies for high growth companies.
With a background in trading and riskmanagement, Billy leverages data driven
strategies to support founders in buildingsuccessful, sustainable businesses.
(01:58):
Upper ninety has backed numerous successfulstartups companies and continues to innovate in
the venture capital landscape.
So welcome to the show, Billy.
Thanks for making time for us.
The great introduction.
Thank you.
Thank you.
I memorized the whole thing, you know, didn'tread anything at all.
But you know, why don't you unpack the intro?
Just tell us a little more about, yourbackground, where you went to school, where you
(02:21):
grew up and, you know, how you kind of builtthese these platforms and communities around
investing.
That's great.
So thanks so much for having us.
It's been fun to spend time together recently.
I grew up in the DC area, went to school inPhiladelphia, and went to New York and was
really fortunate to get trained, you know, onWall Street and get exposed to technology as a
(02:44):
Goldman.
And we were really early in what is now common,like high frequency trading and quant trading.
And it was a really good way to see the impactof technology.
And as that became more scale oriented, Ireally felt the innovation was happening in the
tech world.
And I think when you start in finance, it'shard sometimes to move to that other industry.
(03:10):
You have to start over or you have to startsomething.
So I think it took a lot of time to figure out,like, what what are some of the problems or
ways that my background can help add value intothat tech ecosystem?
And I met my partner Jason Finger who hadstarted Seamless Web and Grubhub.
And, you know, he said, look, there's a lot ofthese startups that have revenues or they have
(03:33):
equipment or they have some receivables, andit's just not common for that audience to use
credit.
You know, it's very much like an equity drivennarrative, and we partnered up because I said,
look, it's all about sourcing.
How do you find these opportunities?
Like, it's not rocket science to underwritethese deals.
(03:55):
It's finding them at the right time.
You know, probably like the wealth manager.
They have to find that person at the right timebefore they go public, and Goldman and JPMorgan
come after them.
So it's all about sourcing.
And so I thought Jason will be a great partnerwho has access to that startup world, look like
your customer.
And then we built our LP base around otherfounders.
And, you know, if you have an interestingcompany with a complicated capital lead, call
(04:19):
Upper90.
So that was kind of how we've evolved and builtthe firm.
How'd you come up with the the name upperninety?
So I played soccer growing up.
I played soccer in college and, you know, itwas this my wife, I think, actually helped me
think of it.
It's the top corner of a goal.
So it seems like nichey, hard to hit skillbased deals.
(04:41):
And Yeah.
You know, one thing that I've always felt isthese strategies, like, in life are often
capacity constrained.
And we in private credit, it's like boomed.
You know, since we started in 02/2018, we hadto explain private credit.
It wasn't Mhmm.
Very common.
Now it's very common.
You have to explain why upper 90.
(05:01):
But I think so many firms that I see are justtrying to build bigger and bigger and bigger
funds.
Unless you're the biggest, I think you end upcreating, like, a competitive disadvantage.
You're going after the same size deals withouta low cost of capital.
So we've kept our fund size pretty disciplinedand small, and we can do 10 or $20,000,000
deals, which is in their credit world, youknow, not that big, and nobody wants to be
(05:24):
bothered with it.
So
I think that's a huge edge too when you cankinda go after a certain gap in the market.
I would say just advice to emerging managers.
Right?
I mean, it's sometimes the less sexy areaswhere you plan or just the areas where just,
there's just a huge gap.
Right?
They're super early, and then there's kind oflike super late stage and, you know, private
(05:46):
credit, you know, where those those deals areminimum, you know, hundred million to probably
$250,000,000.
So if you can find that unique edge and then,you know, that's the edge where you can kinda
do really well, and I think that's kinda whereyou can carve out, as an emerging manager.
Know, tell me a little more about your, know,just backpedaling a little bit, tell me a
little more about your education and, you know,that time I think you went to Wharton as well,
(06:09):
right?
I did.
So with your education, that cohort ofgraduates, what were they pursuing?
Were they pursuing just private equity jobs orlooking at consulting?
Because one thing that you mentioned was reallyinteresting where there was a convergence where
people that were working in banking, especiallyin 02/2008, a lot of those people just got
burned out and they they went into tech.
Right?
They were trying to become a product manager atAirbnb.
(06:30):
So, you know, maybe just walk me through alittle more of that that ecosystem when you
were kinda playing in it and then how it'sevolved.
And, you know, now with everything that's goingon in the market, what what are some things
you're seeing?
Yeah.
It's I'm trying to it's a long time ago now, soI'm trying to I'm trying to think back.
And I think something that worked well for mewas just being open minded and taking advice
(06:56):
from other people and, you know, just trying tosolicit that from the smartest people you know.
To be honest, when I graduated high school in1999, I didn't actually know that the Wharton
School existed.
You know, some people were obsessed withbusiness, like so when I applied to UPenn, my
dad's like, you should apply to Wharton.
I'm like, what's that?
And he's like, you know, here's here's why youshould apply.
(07:18):
And I'm very lucky that I did that when Igraduated.
When I was interviewing at Goldman, they werethe one bank that said, we see more of you at
21 than you see of us.
And so if you're a good fit for the firmculturally, we will decide where we think
you'll have the greatest impact.
And every other bank at the time that Iinterviewed with UBS, Lawrence Stanley, there
(07:39):
you have to apply to, like, the FX trading deskor the high yield desk or the equities research
sales group.
And at that age, like, how would you know, youknow, that even some of these ecosystems
existed?
So I think part of it was, you know, figuringout, trusting people that have more experience
and can direct you and and just being the bestthat you can be at that role.
(08:02):
And if you do that, you know, you kinda getother opportunities.
But for me, I think it was really helpful tohave some of that structure.
Like, I think I applaud all these entrepreneursthat are, you know, jumping in at or right
after college into, you know, kind of thisunstructured ecosystem and creating structure
and outcomes.
(08:22):
I'm just unbelievably impressed by that.
And and that's kind of like something thatdrives upper 90, and Jason and I talk a lot
about is the people that are taking that riskand betting their lives should end up having
more of a financial outcome than the growthequity or private equity investor that comes in
late when it's derisked.
(08:43):
And so that's part of, like, how you set upyour balance sheet and, you know, how you think
about using credit gives you a lot moreoptionality and rewards the people taking the
most risk, which is the founder.
Yeah.
And and walk us through, you know, where you'reallowed to just kind of a typical deal where
there's a hybrid of credit and some equity,right?
(09:03):
Are you kind of coming in with when you haveyour term sheet, I guess I'm assuming there's
kind of those dual terms in there, which offersome type of interest product, I'm assuming,
and then, you know, obviously, some ownershipas well.
So maybe you can walk through that and thenkind of the typical companies or the stages of
the revenues that you're looking for.
Well, I think, you know, first off, like, worlddoesn't need another venture capital firm.
(09:28):
So we really try to solve that role of beingthat initial credit provider, which is pretty
tough to get.
Sure.
So that that's really what we try to lead withand focus on.
Where I think the term hybrid comes in is thetypical lender is viewed as a temporary partner
(09:48):
or a temporary capital provider.
They provide capital usually for a year or twoor three, and they move on, and they get some
warrants for kind of that service.
And what we found is we wanna be aligned withour companies.
And so when we provide the debt, we often willinvest up to 10% of what we do in debt and
(10:10):
equity.
And I always tell founders, like, if I wasstarting a business, I would almost demand that
my lender had some skin in the game becauseoften when things go wrong, you know, it's like
that's the opportunity for the lender to toact, you know, across the table.
And so I I think you wanna create somealignment, which I think we can accomplish
through equity in smaller scale.
(10:32):
But we really always wanna see that there's alead equity and there's other capital
supporting the business so we're not on bothsides of the table.
Sure.
So you so you try to find some partners, youknow, upstream and downstream as well.
Yes.
Yeah.
And you guys have done go ahead, Billy.
No.
No.
Go ahead.
Yeah.
No, I was just gonna say you've done a lot of,you know, fintech deals and we've got some
(10:54):
common friends from New York in the fintechspace.
So, you know, outside of fintech, you know, Iguess what are some other sectors when you talk
about asset heavy industries, right?
Are there some, companies that actually havephysical assets as well that you think are
attractive with this kind of Yeah,
think one of the things that we always I thinkthe two things that we try to improve on and
(11:17):
have room to improve is one, how do youdescribe the typical deal for upper 90?
Because as credit, you can solve a probably awide variety of problems and, you know, trying
to make it easier for people to send us dealsand explain what we do.
That's one.
Number two is we as companies scale, we justdid, a multi hundred million dollar upsize for
(11:44):
Crusoe, which is building AI infrastructure,data centers, cloud computing.
We've been financing their NVIDIA GPUs forseveral years before it was a well understood
asset, and they've had a lot of success neededto grow, outsized our LP base.
So we brought in some other institutions thatcould help us scale with the company and kinda
(12:05):
play that capital markets role, which is reallytime intensive for founders.
So I think one thing for us is, like, who wouldbe the ideal partner for us that as these
companies scale and need lower cost of capitaland we're already there, how do we kinda grow
and have somebody who already has that thatinsurance capital or that bank capital?
(12:26):
But so that's just one thing we're thinkingabout, so we can stay in our trades longer as
they derisk.
But the types of deals that we're looking atare still pretty broad.
I'd say there's three main buckets.
One is fintech and some of these nicheindustries.
So we just completed a deal in a company calledSunbound, and they build software for
independent nursing homes.
(12:48):
So nursing homes, 60% of their payments are incheck.
It's almost like probably, you know, whenSeamless or Toast help restaurants go online
and organize all their data.
That's what Sunbound does the nursing homeindustry.
Sure.
And they have really strong recurring softwarerevenue.
FICA led their last round.
They just are now gonna raise another equityround.
(13:09):
And one of the needs that they found for thenursing homes is that often somebody takes a
nursing home bed and they get paid sixty dayslater from insurance.
So they need that working capital.
So they were introduced to upper 90 to helpfactor that insurance receivable.
So it's kind of finding these niche industrieswhere we can, you know, kind of bolt on a
(13:30):
finance product.
That's one.
Two is companies that have kind of uniqueequipment.
So Crusoe is a great example where NVIDIA GPUsweren't really well understood yet.
We're talking to a humanoid robot company inTexas that had signed some enterprise customer
contracts and now need to finance that deliveryof humanoid robots against those contracts
(13:57):
that
are in place.
And the third is just interesting roll ups.
We just financed a company that's doing anaccounting and tax services roll up Mhmm.
And wanted to do some additional acquisitions.
So I think those kind of are the three majorbuckets that that we've been focused on over
the last few years.
Yeah.
No.
It's amazing.
And I know we got about six minutes left, and Inoticed that you said the word AI, you know,
(14:20):
and you can't have a podcast without, you know,talking about AI.
Right?
I mean so, so look, we talked about, you know,a few years ago, you know, everyone talking
about LLMs, and then it was, co pilots, noweveryone's talking about agentic, right?
So, I guess, where do you think AI is headed?
One trend that I'll say in fintech is just kindof the interesting trend with Robinhood, right?
(14:43):
Robinhood is slowly eating the bank, right?
So as software eats the world, they're takingoff little pieces of different workflows of the
bank, right, when it comes to wealthmanagement, when it comes to credit, and just
kind of thinking about a holistic plan.
I think that's kind of interesting.
And then I think there's agents that, cansupport that.
So I don't know if you see any industry trendsor just kind of things that are, you know,
(15:06):
leveraging agentic.
And then, you know, what do you think is gonnabe the buzzword in, you know, eighteen months?
Well, just it's since you mentioned Robinhood,it just makes me think what I I'd started my
career at Goldman.
I left to go to the buy side.
I came back and really wanna do somethingentrepreneurial and just it all hadn't clicked
yet for me.
(15:27):
And I was introduced to Robinhood when it was aseed kind of pre revenue idea.
I was offered the role to be an adviser there.
And then I went back to Goldman where you'renot allowed to, you know, spread your time
inside
to Yeah.
Air up that adviser agreement, which probablywould have been worth a lot more than, you
(15:47):
know, going back to, but it's it's funny.
On the AI stuff, I think where we can play thebiggest where add the most value just on the
infrastructure side.
Like, I'm not far enough to keep up with allthe trends and buzzwords and, you know, I think
a lot of people have been using these tools inthe quant world for a long time.
Yeah.
And so I I you know, there's no, like, freemoney.
(16:09):
There's no you know, if a company goes fromzero to a hundred million dollars, it can also
go back to zero.
Like, you know so I just feel like we believethat there's like, it seems that there's a need
for energy to power all of this, and there's aneed for, like, compute equipment, and NVIDIA
kinda reminds me almost like where the iPhonewas.
You in the middle of almost every industry,it's gonna be hard to fuck them.
(16:32):
So I kinda feel like instead of trying to pickeach company and, you know, perplexity or this
or that, like, or in Tropic, you know, like buyExxon, buy Nvidia, and, like, invest in
companies like Crusoe.
So I think it's really hard to pick.
Like, the only area that we're focused on is,you know, some of these roll ups where you can
(16:53):
buy an offline business.
There's a function that really can be automatedor consolidated and, you know, you can improve
margin that way.
So I don't know.
That's kinda where we're from.
We're more simpletons.
Like Yeah.
You know, buy a good business and you canimprove it versus, like, having to kinda split
the item.
And then real quick, when you're looking at thefinancials of a company, what are some KPIs
(17:16):
that you've kinda used in your diligenceprocess?
You know, is there a certain, threshold for,you know, profit and EBITDA?
I guess, what are some of the things on thefinancials that you look at?
Sure.
So we we wanna make sure they have, like, arelatively simple balance sheet.
Mhmm.
That's why think it's really important forfounders to you know, do you need six VCs on
(17:36):
your cap table?
You know, especially if you're a capitalintensive business, probably not.
Pick three and pick one upper 90.
Like Sure.
You just want so we look for simple balancesheet.
We don't wanna be like mezz debt.
We don't wanna be off balance sheet.
We wanna have, like, you know, kind of a simplealignment with the company.
That's just number one.
Mhmm.
Number two is that you wanna make sure that thecompany, like, is able to make good unit
(17:57):
economics or it's, like, often referred to asexcess spread.
So, like, how much are they making on theirloans versus how much they're paying?
And so you just wanna make sure that there'ssome cushion there that they're able to earn
enough yield or enough return so that they canwithstand some of, like, the market shocks,
(18:19):
like tariffs or tax increases or competitivechanges.
So if it's too tight, I think it just leavesyou have to be too perfect in terms of price.
Yeah.
And then I just think, you know, making surethat the company is, you know, not over
levered.
They, you know, have the right amount of debtto equity Mhmm.
And, you know, if they're doing acquisitions,they're not paying too much for assets.
(18:41):
You know, real estate, it's like 90% of thebuy.
So a lot of it's just like looking at kind ofthe leverage profile and making sure you're not
overspending because it's you know, then itkinda puts more pressure on capital markets and
ability to raise equity, which we can'tcontrol.
Sure.
Well, we're right at the buzzer here, Billy.
Thank you for your time.
(19:01):
Maybe we can wrap up with just one final pieceof advice.
It could be professional advice or could justbe life advice from a mentor or whatever
whatever you wanna leave us.
No.
I think it's it's great.
I mean, it's awesome that you're doing this,you know, these segments for the community.
I I think what I've learned is all of thesedeals and all the relationships, one of my
(19:21):
mentors, really, really in the quant world andhas built a great fintech business, said it's a
contact sport.
And so I think if you wanna find deals and youwanna raise money, I think you have to be off
soon.
You have to figure out how to get in front ofpeople.
And I think that people who appreciate that andinvest in that will have a lot more success
(19:45):
than the ones that are on Zoom and Mhmm.
Having quite as many meetings.
So we've really tried to prioritize that,especially as we look for deals.
And I think we've seen a big uptick in qualityand number of actionable deals by kind of
getting back to in person with people.
Yeah.
I totally agree.
I mean, I I know we're out of time, but onething I wanna say is, I mean, I knew somebody
(20:06):
who was, like, fifteen years younger than me.
And this person, I met him at one event, andI'm able to get away to one event a week maybe
or one event every two weeks.
And he's like, yeah, Joel, like, I live in NewYork, and I go to, like, five events a week.
I'm like, man, you probably have, like a crazycompounding network.
So I think just getting out and meeting people,talking to people, some of those things turn
(20:27):
into multi year relationships.
And some of the people that I mentioned, youknow, when we met Billy, I mean, and you
probably did the same.
I mean, I've known those people for you know,close to a decade now, but we met at, like,
some fintech happy hour or something like that.
So But you have to, like, reinvest in that inperson element.
I totally agree.
Because it just I think a a lot just doesn'thappen if you're on screen, but you have to be
(20:53):
really then purpose built around, like, I'mgoing to Austin next week.
Like, who can I meet with?
How do I
in those meetings now?
How do we think about planning events in thefuture?
And I don't know.
I did I think figuring out, like, sales is justyou know, everything we do is sales.
Mhmm.
You know?
Getting your wife to say yes, sales.
You know?
(21:13):
Getting an investor to say yes, sales.
So I think it's hard to do sales if you're notin person, but then you have to be smarter.
I'm sure AI can help in how you keep activeyour relationships and keep track of what
people's interests are.
I mean, I'm excited about AI because, like,even how you take notes or how you transcribe
this podcast or you know, like, I think there'sjust so many things we're wasting time on, but
(21:33):
hopefully then you can use that time for inperson.
Sure.
I totally agree.
Well, hey, Billy.
Thank you for making time for us.
I know you're super busy, so means a lot andwe'll catch up soon in person.
Absolutely.
Thank you for having Yep.
Take care.
Bye.
I'm just unbelievably impressed by that.
(00:02):
And and that's kind of, like, something thatdrives upper 90, and Jason and I talk a lot
about is the people that are taking that riskand betting their lives should end up having
more of a financial outcome than the growthequity or private equity investor that comes in
late when it's derisked.
And so that's part of, like, how you set upyour balance sheet and, you know, how you think
(00:24):
about using credit gives you a lot moreoptionality and rewards the people taking the
most risk, which is the founder.
Welcome to The Investor, a podcast where I,Joel Palothinkel, your host, dives deep into
the minds of the world's most influentialinstitutional investors.
In each episode, we sit down with an investorto hear about their journeys and how global
(00:48):
markets are driving capital allocation.
So join us on this journey as we explore theseinsights.
All right.
So we are live here with a good buddy of mine.
We got Billy Libby, who's the co founder andCEO of Upper ninety.
I got to spend some time with him in person acouple maybe a couple months ago, I think
(01:10):
before the holidays, but he's a New York OGlike me.
You know, we know a lot of the people that havekinda built the New York tech ecosystem.
And just excited to kinda get on the horn withhim and just go a little deeper on what he's
building and what he's built over time.
And then we're probably gonna do some morecommunity building in person with some of the
other leaders in the ecosystem.
But just I'm just gonna do a quick overview,and then Billy's gonna go a little deeper into
(01:34):
his background.
And we're gonna cover a couple hot topics withall that's going on in the news.
But Billy Libby is a cofounder and CEO of Upperninety.
They're a leading hybrid investment firmfocusing both on private equity and credit
strategies for high growth companies.
With a background in trading and riskmanagement, Billy leverages data driven
strategies to support founders in buildingsuccessful, sustainable businesses.
(01:58):
Upper ninety has backed numerous successfulstartups companies and continues to innovate in
the venture capital landscape.
So welcome to the show, Billy.
Thanks for making time for us.
The great introduction.
Thank you.
Thank you.
I memorized the whole thing, you know, didn'tread anything at all.
But you know, why don't you unpack the intro?
Just tell us a little more about, yourbackground, where you went to school, where you
(02:21):
grew up and, you know, how you kind of builtthese these platforms and communities around
investing.
That's great.
So thanks so much for having us.
It's been fun to spend time together recently.
I grew up in the DC area, went to school inPhiladelphia, and went to New York and was
really fortunate to get trained, you know, onWall Street and get exposed to technology as a
(02:44):
Goldman.
And we were really early in what is now common,like high frequency trading and quant trading.
And it was a really good way to see the impactof technology.
And as that became more scale oriented, Ireally felt the innovation was happening in the
tech world.
And I think when you start in finance, it'shard sometimes to move to that other industry.
(03:10):
You have to start over or you have to startsomething.
So I think it took a lot of time to figure out,like, what what are some of the problems or
ways that my background can help add value intothat tech ecosystem?
And I met my partner Jason Finger who hadstarted Seamless Web and Grubhub.
And, you know, he said, look, there's a lot ofthese startups that have revenues or they have
(03:33):
equipment or they have some receivables, andit's just not common for that audience to use
credit.
You know, it's very much like an equity drivennarrative, and we partnered up because I said,
look, it's all about sourcing.
How do you find these opportunities?
Like, it's not rocket science to underwritethese deals.
(03:55):
It's finding them at the right time.
You know, probably like the wealth manager.
They have to find that person at the right timebefore they go public, and Goldman and JPMorgan
come after them.
So it's all about sourcing.
And so I thought Jason will be a great partnerwho has access to that startup world, look like
your customer.
And then we built our LP base around otherfounders.
And, you know, if you have an interestingcompany with a complicated capital lead, call
(04:19):
Upper90.
So that was kind of how we've evolved and builtthe firm.
How'd you come up with the the name upperninety?
So I played soccer growing up.
I played soccer in college and, you know, itwas this my wife, I think, actually helped me
think of it.
It's the top corner of a goal.
So it seems like nichey, hard to hit skillbased deals.
(04:41):
And Yeah.
You know, one thing that I've always felt isthese strategies, like, in life are often
capacity constrained.
And we in private credit, it's like boomed.
You know, since we started in 02/2018, we hadto explain private credit.
It wasn't Mhmm.
Very common.
Now it's very common.
You have to explain why upper 90.
(05:01):
But I think so many firms that I see are justtrying to build bigger and bigger and bigger
funds.
Unless you're the biggest, I think you end upcreating, like, a competitive disadvantage.
You're going after the same size deals withouta low cost of capital.
So we've kept our fund size pretty disciplinedand small, and we can do 10 or $20,000,000
deals, which is in their credit world, youknow, not that big, and nobody wants to be
(05:24):
bothered with it.
So
I think that's a huge edge too when you cankinda go after a certain gap in the market.
I would say just advice to emerging managers.
Right?
I mean, it's sometimes the less sexy areaswhere you plan or just the areas where just,
there's just a huge gap.
Right?
They're super early, and then there's kind oflike super late stage and, you know, private
(05:46):
credit, you know, where those those deals areminimum, you know, hundred million to probably
$250,000,000.
So if you can find that unique edge and then,you know, that's the edge where you can kinda
do really well, and I think that's kinda whereyou can carve out, as an emerging manager.
Know, tell me a little more about your, know,just backpedaling a little bit, tell me a
little more about your education and, you know,that time I think you went to Wharton as well,
(06:09):
right?
I did.
So with your education, that cohort ofgraduates, what were they pursuing?
Were they pursuing just private equity jobs orlooking at consulting?
Because one thing that you mentioned was reallyinteresting where there was a convergence where
people that were working in banking, especiallyin 02/2008, a lot of those people just got
burned out and they they went into tech.
Right?
They were trying to become a product manager atAirbnb.
(06:30):
So, you know, maybe just walk me through alittle more of that that ecosystem when you
were kinda playing in it and then how it'sevolved.
And, you know, now with everything that's goingon in the market, what what are some things
you're seeing?
Yeah.
It's I'm trying to it's a long time ago now, soI'm trying to I'm trying to think back.
And I think something that worked well for mewas just being open minded and taking advice
(06:56):
from other people and, you know, just trying tosolicit that from the smartest people you know.
To be honest, when I graduated high school in1999, I didn't actually know that the Wharton
School existed.
You know, some people were obsessed withbusiness, like so when I applied to UPenn, my
dad's like, you should apply to Wharton.
I'm like, what's that?
And he's like, you know, here's here's why youshould apply.
(07:18):
And I'm very lucky that I did that when Igraduated.
When I was interviewing at Goldman, they werethe one bank that said, we see more of you at
21 than you see of us.
And so if you're a good fit for the firmculturally, we will decide where we think
you'll have the greatest impact.
And every other bank at the time that Iinterviewed with UBS, Lawrence Stanley, there
(07:39):
you have to apply to, like, the FX trading deskor the high yield desk or the equities research
sales group.
And at that age, like, how would you know, youknow, that even some of these ecosystems
existed?
So I think part of it was, you know, figuringout, trusting people that have more experience
and can direct you and and just being the bestthat you can be at that role.
(08:02):
And if you do that, you know, you kinda getother opportunities.
But for me, I think it was really helpful tohave some of that structure.
Like, I think I applaud all these entrepreneursthat are, you know, jumping in at or right
after college into, you know, kind of thisunstructured ecosystem and creating structure
and outcomes.
(08:22):
I'm just unbelievably impressed by that.
And and that's kind of like something thatdrives upper 90, and Jason and I talk a lot
about is the people that are taking that riskand betting their lives should end up having
more of a financial outcome than the growthequity or private equity investor that comes in
late when it's derisked.
(08:43):
And so that's part of, like, how you set upyour balance sheet and, you know, how you think
about using credit gives you a lot moreoptionality and rewards the people taking the
most risk, which is the founder.
Yeah.
And and walk us through, you know, where you'reallowed to just kind of a typical deal where
there's a hybrid of credit and some equity,right?
(09:03):
Are you kind of coming in with when you haveyour term sheet, I guess I'm assuming there's
kind of those dual terms in there, which offersome type of interest product, I'm assuming,
and then, you know, obviously, some ownershipas well.
So maybe you can walk through that and thenkind of the typical companies or the stages of
the revenues that you're looking for.
Well, I think, you know, first off, like, worlddoesn't need another venture capital firm.
(09:28):
So we really try to solve that role of beingthat initial credit provider, which is pretty
tough to get.
Sure.
So that that's really what we try to lead withand focus on.
Where I think the term hybrid comes in is thetypical lender is viewed as a temporary partner
(09:48):
or a temporary capital provider.
They provide capital usually for a year or twoor three, and they move on, and they get some
warrants for kind of that service.
And what we found is we wanna be aligned withour companies.
And so when we provide the debt, we often willinvest up to 10% of what we do in debt and
(10:10):
equity.
And I always tell founders, like, if I wasstarting a business, I would almost demand that
my lender had some skin in the game becauseoften when things go wrong, you know, it's like
that's the opportunity for the lender to toact, you know, across the table.
And so I I think you wanna create somealignment, which I think we can accomplish
through equity in smaller scale.
(10:32):
But we really always wanna see that there's alead equity and there's other capital
supporting the business so we're not on bothsides of the table.
Sure.
So you so you try to find some partners, youknow, upstream and downstream as well.
Yes.
Yeah.
And you guys have done go ahead, Billy.
No.
No.
Go ahead.
Yeah.
No, I was just gonna say you've done a lot of,you know, fintech deals and we've got some
(10:54):
common friends from New York in the fintechspace.
So, you know, outside of fintech, you know, Iguess what are some other sectors when you talk
about asset heavy industries, right?
Are there some, companies that actually havephysical assets as well that you think are
attractive with this kind of Yeah,
think one of the things that we always I thinkthe two things that we try to improve on and
(11:17):
have room to improve is one, how do youdescribe the typical deal for upper 90?
Because as credit, you can solve a probably awide variety of problems and, you know, trying
to make it easier for people to send us dealsand explain what we do.
That's one.
Number two is we as companies scale, we justdid, a multi hundred million dollar upsize for
(11:44):
Crusoe, which is building AI infrastructure,data centers, cloud computing.
We've been financing their NVIDIA GPUs forseveral years before it was a well understood
asset, and they've had a lot of success neededto grow, outsized our LP base.
So we brought in some other institutions thatcould help us scale with the company and kinda
(12:05):
play that capital markets role, which is reallytime intensive for founders.
So I think one thing for us is, like, who wouldbe the ideal partner for us that as these
companies scale and need lower cost of capitaland we're already there, how do we kinda grow
and have somebody who already has that thatinsurance capital or that bank capital?
(12:26):
But so that's just one thing we're thinkingabout, so we can stay in our trades longer as
they derisk.
But the types of deals that we're looking atare still pretty broad.
I'd say there's three main buckets.
One is fintech and some of these nicheindustries.
So we just completed a deal in a company calledSunbound, and they build software for
independent nursing homes.
(12:48):
So nursing homes, 60% of their payments are incheck.
It's almost like probably, you know, whenSeamless or Toast help restaurants go online
and organize all their data.
That's what Sunbound does the nursing homeindustry.
Sure.
And they have really strong recurring softwarerevenue.
FICA led their last round.
They just are now gonna raise another equityround.
(13:09):
And one of the needs that they found for thenursing homes is that often somebody takes a
nursing home bed and they get paid sixty dayslater from insurance.
So they need that working capital.
So they were introduced to upper 90 to helpfactor that insurance receivable.
So it's kind of finding these niche industrieswhere we can, you know, kind of bolt on a
(13:30):
finance product.
That's one.
Two is companies that have kind of uniqueequipment.
So Crusoe is a great example where NVIDIA GPUsweren't really well understood yet.
We're talking to a humanoid robot company inTexas that had signed some enterprise customer
contracts and now need to finance that deliveryof humanoid robots against those contracts
(13:57):
that
are in place.
And the third is just interesting roll ups.
We just financed a company that's doing anaccounting and tax services roll up Mhmm.
And wanted to do some additional acquisitions.
So I think those kind of are the three majorbuckets that that we've been focused on over
the last few years.
Yeah.
No.
It's amazing.
And I know we got about six minutes left, and Inoticed that you said the word AI, you know,
(14:20):
and you can't have a podcast without, you know,talking about AI.
Right?
I mean so, so look, we talked about, you know,a few years ago, you know, everyone talking
about LLMs, and then it was, co pilots, noweveryone's talking about agentic, right?
So, I guess, where do you think AI is headed?
One trend that I'll say in fintech is just kindof the interesting trend with Robinhood, right?
(14:43):
Robinhood is slowly eating the bank, right?
So as software eats the world, they're takingoff little pieces of different workflows of the
bank, right, when it comes to wealthmanagement, when it comes to credit, and just
kind of thinking about a holistic plan.
I think that's kind of interesting.
And then I think there's agents that, cansupport that.
So I don't know if you see any industry trendsor just kind of things that are, you know,
(15:06):
leveraging agentic.
And then, you know, what do you think is gonnabe the buzzword in, you know, eighteen months?
Well, just it's since you mentioned Robinhood,it just makes me think what I I'd started my
career at Goldman.
I left to go to the buy side.
I came back and really wanna do somethingentrepreneurial and just it all hadn't clicked
yet for me.
(15:27):
And I was introduced to Robinhood when it was aseed kind of pre revenue idea.
I was offered the role to be an adviser there.
And then I went back to Goldman where you'renot allowed to, you know, spread your time
inside
to Yeah.
Air up that adviser agreement, which probablywould have been worth a lot more than, you
(15:47):
know, going back to, but it's it's funny.
On the AI stuff, I think where we can play thebiggest where add the most value just on the
infrastructure side.
Like, I'm not far enough to keep up with allthe trends and buzzwords and, you know, I think
a lot of people have been using these tools inthe quant world for a long time.
Yeah.
And so I I you know, there's no, like, freemoney.
(16:09):
There's no you know, if a company goes fromzero to a hundred million dollars, it can also
go back to zero.
Like, you know so I just feel like we believethat there's like, it seems that there's a need
for energy to power all of this, and there's aneed for, like, compute equipment, and NVIDIA
kinda reminds me almost like where the iPhonewas.
You in the middle of almost every industry,it's gonna be hard to fuck them.
(16:32):
So I kinda feel like instead of trying to pickeach company and, you know, perplexity or this
or that, like, or in Tropic, you know, like buyExxon, buy Nvidia, and, like, invest in
companies like Crusoe.
So I think it's really hard to pick.
Like, the only area that we're focused on is,you know, some of these roll ups where you can
(16:53):
buy an offline business.
There's a function that really can be automatedor consolidated and, you know, you can improve
margin that way.
So I don't know.
That's kinda where we're from.
We're more simpletons.
Like Yeah.
You know, buy a good business and you canimprove it versus, like, having to kinda split
the item.
And then real quick, when you're looking at thefinancials of a company, what are some KPIs
(17:16):
that you've kinda used in your diligenceprocess?
You know, is there a certain, threshold for,you know, profit and EBITDA?
I guess, what are some of the things on thefinancials that you look at?
Sure.
So we we wanna make sure they have, like, arelatively simple balance sheet.
Mhmm.
That's why think it's really important forfounders to you know, do you need six VCs on
(17:36):
your cap table?
You know, especially if you're a capitalintensive business, probably not.
Pick three and pick one upper 90.
Like Sure.
You just want so we look for simple balancesheet.
We don't wanna be like mezz debt.
We don't wanna be off balance sheet.
We wanna have, like, you know, kind of a simplealignment with the company.
That's just number one.
Mhmm.
Number two is that you wanna make sure that thecompany, like, is able to make good unit
(17:57):
economics or it's, like, often referred to asexcess spread.
So, like, how much are they making on theirloans versus how much they're paying?
And so you just wanna make sure that there'ssome cushion there that they're able to earn
enough yield or enough return so that they canwithstand some of, like, the market shocks,
(18:19):
like tariffs or tax increases or competitivechanges.
So if it's too tight, I think it just leavesyou have to be too perfect in terms of price.
Yeah.
And then I just think, you know, making surethat the company is, you know, not over
levered.
They, you know, have the right amount of debtto equity Mhmm.
And, you know, if they're doing acquisitions,they're not paying too much for assets.
(18:41):
You know, real estate, it's like 90% of thebuy.
So a lot of it's just like looking at kind ofthe leverage profile and making sure you're not
overspending because it's you know, then itkinda puts more pressure on capital markets and
ability to raise equity, which we can'tcontrol.
Sure.
Well, we're right at the buzzer here, Billy.
Thank you for your time.
(19:01):
Maybe we can wrap up with just one final pieceof advice.
It could be professional advice or could justbe life advice from a mentor or whatever
whatever you wanna leave us.
No.
I think it's it's great.
I mean, it's awesome that you're doing this,you know, these segments for the community.
I I think what I've learned is all of thesedeals and all the relationships, one of my
(19:21):
mentors, really, really in the quant world andhas built a great fintech business, said it's a
contact sport.
And so I think if you wanna find deals and youwanna raise money, I think you have to be off
soon.
You have to figure out how to get in front ofpeople.
And I think that people who appreciate that andinvest in that will have a lot more success
(19:45):
than the ones that are on Zoom and Mhmm.
Having quite as many meetings.
So we've really tried to prioritize that,especially as we look for deals.
And I think we've seen a big uptick in qualityand number of actionable deals by kind of
getting back to in person with people.
Yeah.
I totally agree.
I mean, I I know we're out of time, but onething I wanna say is, I mean, I knew somebody
(20:06):
who was, like, fifteen years younger than me.
And this person, I met him at one event, andI'm able to get away to one event a week maybe
or one event every two weeks.
And he's like, yeah, Joel, like, I live in NewYork, and I go to, like, five events a week.
I'm like, man, you probably have, like a crazycompounding network.
So I think just getting out and meeting people,talking to people, some of those things turn
(20:27):
into multi year relationships.
And some of the people that I mentioned, youknow, when we met Billy, I mean, and you
probably did the same.
I mean, I've known those people for you know,close to a decade now, but we met at, like,
some fintech happy hour or something like that.
So But you have to, like, reinvest in that inperson element.
I totally agree.
Because it just I think a a lot just doesn'thappen if you're on screen, but you have to be
(20:53):
really then purpose built around, like, I'mgoing to Austin next week.
Like, who can I meet with?
How do I
in those meetings now?
How do we think about planning events in thefuture?
And I don't know.
I did I think figuring out, like, sales is justyou know, everything we do is sales.
Mhmm.
You know?
Getting your wife to say yes, sales.
You know?
(21:13):
Getting an investor to say yes, sales.
So I think it's hard to do sales if you're notin person, but then you have to be smarter.
I'm sure AI can help in how you keep activeyour relationships and keep track of what
people's interests are.
I mean, I'm excited about AI because, like,even how you take notes or how you transcribe
this podcast or you know, like, I think there'sjust so many things we're wasting time on, but
(21:33):
hopefully then you can use that time for inperson.
Sure.
I totally agree.
Well, hey, Billy.
Thank you for making time for us.
I know you're super busy, so means a lot andwe'll catch up soon in person.
Absolutely.
Thank you for having Yep.
Take care.
Bye.
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