Adriana Saman of Clocktower Ventures

Welcome to The Puck, Venture Capital and Beyond, a show that explores the evolving landscape in the venture capital world. We'll have candid conversations with today's VCs and entrepreneurs who are shaping those changes. I'm Jim Bier, the managing partner of Bier, Negron, and Troff and the president of CMEG Advisors. This podcast brings change makers to the table to discover the inner workings behind their decision making strategies and ultimately to how they got to where they are today. I'm proud to say that today half of our investment team is women.

We put a lot of emphasis in the way we recruit and making sure that we're spending enough time to adjust for any sort of potential unconscious bias that's going under. We can do so much better and, like, I think everyone can. Today in the Puck, I sit down with Adriana Semen, a principal of Clock Tower Ventures, a Southern California based venture fund focused on investing in the future of financial services. Saiman, born and raised in Ecuador, shares her world viewpoint both as a new generation investor and young South American influencing the rapid changes in the fintech space. Adriano Simon, welcome to the POC, and we are so excited to hear about Clock Tower's investment strategy and your relationship with them.

So tell us a little bit about your background. Thank you for having me, Jim. Super excited to be here. I'm originally from Ecuador. I was born and raised there in South America, came to US as an international student to pursue my undergrad at UPenn.

I was actually a political science major, was not intending to be where I landed. Towards the end of my school year, I of my school period, I realized that I really wanted to stay in New York and figure out that investment banking was one of the more feasible paths to staying with a Visa sponsorship. And so I joined JPMorgan Chase to cover their Latin America m and a practice as an investment analyst. I was there for two and a half ish years until I decided to join Chase Digital in an abrupt movement towards pursuing a passion in fintech, where I had already figured out that financial inclusion had been something that really resonated across as a mission that I want to pursue in my life, and I want to be more involved in whatever this fintech term meant. Couldn't really pinpoint or figure out a way to do it, especially could not join a startup at the moment with my Visa stuff.

So found this opportunity that allowed me to understand from a top bottom all the strategy behind the Chase app. So I was working with the product managers directly in every single money movement feature that 65,000,000 users go on every day, and it was pretty interesting. Towards the end of my year there, I had met Clocktower and already figured out that venture was the next path that I wanted to pursue, especially in fintech. So I ended up moving to Santa Monica three years ago to join the team, and it's been history since. When you talk about Clock Tower and what attracted you was this real interest in fintech, What about fintech, for instance, excited you?

We think about it as the amount of efficiency that can come off the way you optimize the trade of people of every single thing that they do in life, and it comes down to finance in most natural ways. Right? Even the way you go and buy a coffee can maybe become more efficient, let alone the way you do all the other more meaningful activities in your life. And in The US, it's reaching a point of much higher efficiency that it's interesting. But in places like Latin America, it's like a key difference between having access and not having access to what I think should be, like, fundamental rights of personal finance.

And so to me, putting financial inclusion on steroids was sort of what fintech felt like. I really wanted to make sure that I was involved in this sort of revolution, not just in The US, but eventually in emerging markets. But definitely picking up learnings, figuring out how to make it better, and learning how it works across borders. So when we talk about FinTech, there's a lot of new regulation and different people doing online banking and all sorts of interesting things. Is your focus on a lot of cross border things that are involving cryptocurrencies, for instance?

Even within fintech, are there specialties that you're looking at? Yeah. We technically cover six or seven verticals that span across insurance, banking and lending, payments, personal finance, real estate tech when it involves a financial transaction, and enterprise stack of software that can embed financial services as well. So it spans across a wide array. But for me, personally, I I really like payments as a vertical and consumer finance.

I've spent a lot of my time in those two, even though we are pretty generalist and I basically cover investments across all of those. And crypto, we don't really spend too much time in crypto. We're primarily financial services ex crypto. Got it. So when you're looking at what's unique about Clock Tower's approach, what would you say is different from the traditional VC model, and how do you differentiate yourself?

Yeah. So I think there's a few things. First and foremost, we have invested in over a 125 companies, and we have zero board seats there. And we have led zero rounds. So we have this extremely friendly mandate where we try to become the best co investor in the world.

And so what that means is we're highly collaborative with VCs in the way we help syndicate rounds and in the way we participate in diligence processing without taking over the majority of the round. And we're pretty friendly with founders in that we try to build a relationship more on the cheerleader side rather than the shareholder, where we're there present in ad hoc situations when they need our help for very specific advice or request instead of on a day to day operational basis. I think that has resonated pretty well across the ecosystem in terms of building a lot of goodwill and positive relationships. I think that's one thing. And then the other thing that I think is very important of Clock Tower is the DNA that we have as a venture fund.

It comes from economic macro hedge fund exposure. So Cloudtower Group has two airlines of business in US macro and China macro hedge funds. That yields a pretty unique set of relationships that I think are very difficult to replicate if you're only doing tech. And that has proven to be pretty valuable for our founders as they progress in their build of their companies. We just bring relationships that we think will be accretive at the right time and the right place, and that will be very difficult to find other ways.

So when you're looking at the world today and how fintech is affecting us and it appears in our life, if you're prognosticating and looking down two years from now, for instance, where do you see new industries or new products coming out that will change the way we think of fintech? So I think the key change we're seeing in how we think of fintech is that fintech won't just be one vertical. Everything will include fintech. And that is massive. Right?

So when I started investing three years ago, you saw very little of this embedded lending, embedded insurance. It was not a thing. The key innovation would be that you can get a loan at a better rate. You can buy insurance faster. You can get a binding policy online.

You can sell software to a CFO that does accounting better, but you can't provide the working capital when you figure out exactly what's going on in the accounting for that month. Right? And I think that's an extent where we're heading towards is everything that we experience as consumers and as companies will have an embedded financial component to it that will be just so seamless and so much better powered by such customized data that it will allow distribution of financial services to be better for everyone involved. And we're seeing that in, like, a lot of vertical software place where you're really selling a software, and then you're getting a lot of upsell and cross sell opportunities of it. And on the consumer front, we're seeing it with better automation of all the things that we as consumers journey on across, you know, savings and investing and spending money and borrowing.

So circling back for a second, you talked about a 125 investments where you didn't lead and where you didn't take board seats. Do you get invited into rounds typically by other investors in the rounds? Or for instance, you talked about your special relation with founders. Do founders come to you even though you're not leading the round? What's the typical way you source deals?

It's primarily driven by our VC network. There's a a lot of occasions or most of the occasions, there's a VC that gave a turn, and they're like, I want you. I want to tag along a fintech expert to the cap table where I love your network. I love the way you've worked with other founders. Come join us in this round.

We just share more openly what we're looking at because there is a complimentary relationship rather than a competitive relationship, and that makes deal flow a lot easier to interact on. And then on the founder front, the more founders we invest in and the more good experiences I find with you, the more prone they are to refer us to other founders. And that has become a pretty important channel of deal sourcing and building your relationships on the founder side of things. So as we're coming out of COVID or we've seen changes in terms of your business and the way you've been interacting with companies that you invest in otherwise, are you seeing any change trying to take place? Are people going back to the office more?

Are there more in person meetings? Or do you feel like we're all destined to spend most of our lives in virtual environments and on Zoom? No. I would say that this fall, something changed. I've been on the road, I would argue, even higher levels than I was in 2019 before COVID.

You can just tell that people are ready to meet in person again. I think this is a job where a lot gets lost over Zoom. We were able to invest throughout the pandemic. We never stopped deploying, and we're very pleased with the founders we met. But at the same time, it's not just that.

It's spending quality time. It's feeling a real relationship, and that in person contact cannot be replaced by Zoom in that regard. We were actually just in two conferences in Vegas, money twenty twenty and ITC, and they were full with people. And you can just tell that we're back and I think it's here to stay. When you're looking at the Southern California ecosystem and investing from Southern California, the fintech world, do you see unique aspects to our environment down here?

Yes. I love it. I never thought I would join a VC fund in LA. When I was doing for Clock Tower, I always assumed it was gonna be in San Francisco, and I am actually very glad we're there. I think there's very special things about SoCal.

There's a lot of tech talent that we can leverage that I think is underrated from outside. There's a more accessible cost of living all across. Importantly, it's also not too far from San Francisco. Right? So you can just take a quick flight if it comes down to maintaining relationships with other investors or having business development meetings.

It's a very feasible trip, which I do very often, but you can benefit of other aspects of the community by being a little more isolated and in a totally different setup. I also really love the venture scene in SoCal. I think it's particularly collaborative and energetic. It's my favorite, really, even though there isn't that much fintech going on there yet. And That means that we spend a lot of time on the road in SF New York meeting prospects.

We're still very proud to be imposing the SoCal ecosystem forward. As we're sitting here, do you think that in terms of Southern California's fintech industry, Is there been a reason why it it's mostly been up north, and do you see it changing in the next few years down here? The main reason is that you had Stanford and Silicon Valley and this notion that VCs would never invest this phrase of, like, don't invest anywhere you can go. It's thirty minutes from where you are because there's a sense of being hyperlocal, hyper involved on the day to day, and just clusters of talent that are spinning out in specific companies are staying there and leveraging that ecosystem to continue to grow. And so I think you still need a few more breakouts company in LA that will enable smaller groups of entrepreneurs who want to stay there and have available talent at their disposal.

But I think we're heading in that direction with the amount of companies that are starting to form in LA without present. And I think COVID is a big catalyst of that as well. Right? So we spent two years where we realized that, yeah, Zoom doesn't solve all of your problems, that you can do a lot over Zoom. And especially, you can have an investor that you can talk to over Zoom eventually, and you don't need to be living next to that person.

So I think that has opened up the mentality on both ends of the spectrum, investors and founders, that they don't need to be in one specific city to be successful. When you're choosing to invest in a fintech company, for instance, how daunting is sometimes the regulatory issues you have to look at in terms of assessing whether or not there's gonna be a challenge? There's a lot of breaking new ground. Right? Yeah.

There is. I think in The US, we've gotten pretty familiarized with the frameworks that are pretty standard across all the new versions of services. And building a fintech commentaries are different than ten years ago. Right? Today, you have partners that will enable you to turn on the ability to take deposits, the ability to issue cards, the ability to process payments.

And those partners are already set up in a way that is regulatory compliant. So it makes it easier to plug and play and turn into a pseudo provider of these repackage of services at a much more cost efficient way. So in The US, we haven't encountered too many challenges. There's been some specific cases where there's true innovation of product where you're merging an insurance product and an asset manager product or stuff like that that actually have required a lot more resources and time. But I would argue it's more on the minority end and the majority of services are being built upon an established regulatory structure that is not too crazy.

In Latin America, the emerging markets is a very different story. You can see that countries are trying to catch up with technology and trying to be as open as they can, but at the same time, there's still a lot of work to be done, and there's actual risk of you landing in great areas that might not be the most convenient. When you mentioned Latin America, when you're looking at investing, are you investing in companies in The US that are doing business in Latin America, or are you actually investing in companies that are headquartered in Latin America? How does that breakdown look? We recently launched a dedicated vehicle to invest in companies that are headquartered in Latin America, only fintech as well.

We announced it q one or q two of this year, and we've already done around 20 investments down there across the countries. So, yeah, we do that, and we separately have our other classic strategy of covering US and Europe. When you're looking at Latin America, for instance, and fintech, is there anything unique about focusing on Latin America versus other parts of the world? Yep. I've always had a personal passion for Latin America, which led me to spend more time understanding what was going on on the fintech perspective.

But after doing a lot of work, we realized that the opportunity is unique to Latin America today. There's a lot of exciting things happening down there. At a broad level, it is a combination of amongst the highest smartphone penetration rates in the world, amongst the highest concentration of banks and most profitable banks in the world. So each country would have an average five to seven banks that own roughly 70 to 80% of the market share. It's a pretty attractive income into this route.

Right? And then you have an unprecedented way of interest in venture capital and local talent that is growing and starting to develop things on their own. There's also a wealth of information of what has worked and what has not worked in The US and Europe that allows for inspiration in business models and learnings on how to think about what you're building. Even though most of them are still homegrown in their own particular ways, there's a lot to learn that there wasn't in the past. And there's early evidence of of exits.

There's two IPOs this year, the local VTechs. There's one more coming up, NuBank. And so I think it's truly a perfect storm of opportunity where fintech sort of lands first given the current state of financial services there. For young people or entrepreneurs rushing in to fund a company to do fintech, when you look at the mistakes people have made in landmines that they should avoid, based on your experience, what advice would you have for our listeners in terms of the challenges that they should be thinking about? I'll take it from the fundraising angle, which I think is pretty fundamental to move forward.

There are certain things that I think founders should just avoid doing when they're starting to raise, especially their first round of capital. One is always assume that VCs sell each other everything. Don't lie to what you see about interest of an RPC because you will find out, and you will come off as less transparent than the issue. No code your numbers, and you need to make sure that you're nailing your own sense of the business that you're building and that you can convey that you understand the vision that it takes to turn it into 5,000,000, 10,000,000, and a $100,000,000 in revenue. Understand the industry extremely well.

And I think most importantly is show passion. Avoid coming off as, oh, I wanted to start something, so I came across this idea. I think authenticity behind what you're building and true passion will be the key values that will allow you to attract talent. And if you cannot attract talent, you cannot build an amazing company. And VCs really want to make sure that you are giving out that sort of aura.

From a valuation perspective in terms of where the market is right now, I know that there's some statistics out there, like, on the real estate front where the cap rates have just gotten so hard that you have to be able to finance the companies. I mean, in software companies or in startups or in Bitcoin or even in the stock market, you don't have to necessarily have the money to make it pencil out. So there's no particular thing you're solving for. You can always be that incremental next person. Whereas with real estate, there has to be some ability, assuming you don't pay cash, to have the rent be enough to pay off your expenses, and that ratio seems to be high right now.

But you and your principals and partners, when you talk about stuff, do you think the market's a little frothy right now? Are you expecting any changes in the next six months? It feels frothy. It feels frothy for the past two years, but I don't anticipate changes in the next six months. I think it'll remain in that direction.

There's just a lot of capital in the market, and so the capital will be allocated somewhere. It's hard to predict that it will end soon too. Right. Have you seen any changes in the size of rounds that have been done? Like, what do you see changing there?

So three years ago, a seed raise was never more than $3,000,000. Never. Now it's between 5 and 7,000,000 easily, and that is crazy to me. It's not necessarily wrong because if there's evidence of bigger and bigger outcomes later on and if you can secure that amount of money, you should. But, yeah, series a's are twice the size that they used to be.

Series b's feel like what used to be a growth round in the past. And, again, it's all a matter of having the outlook to see how big can these businesses really get and how much evidence is there of as big exits. And if you look in the history of venture, the exits in the past ten years have been bigger than ever before. And so it's a matter of thinking, who exits continue to remain bigger? If that's the case, then it makes perfect sense that rounds are getting bigger as well.

Or will that change? And it's very hard to figure out where we're in that side. When companies come to you and they're looking for financing in today's market and they're talking about, for instance, one of their expenses being leased space, are people taking on less new space going forward, or is it the same from the a modeling perspective? Yeah. I think right now, yes, because it's so primarily distributed in so many cases.

I don't think that'll be the case where I I think a year or two until things are fully, fully normalized in terms of the inhabits of the workplace. I would anticipate founders to go back to more normal office space. Has COVID and the use of Zoom and remote stuff for your companies, are they allowing people and finding more diverse talent because they're allowing themselves to hire people that they're not requiring to come into the office? I don't know if diverse necessarily. If you mean, like, good quality technical talent, probably, yes.

But I think to hire diverse talent, it takes more than just being able to not having come to the office. It takes a more creative sourcing strategy. It takes consciousness about what you're doing. And I'm not sure that this is necessarily triggering that. I don't have any hard evidence.

Maybe I am wrong and it is happening, but I don't get the sense talking to founders that people are taking part in favor of selling because of how true they are. There's some founders who really care about it. There's some founders who are more focused on staffing faster and more efficiently, and there's for sure a trade off in those decisions. And I think it goes beyond where your office is located. That makes sense.

So digging down a little in terms of technology, there's new products coming out every day. Are there technological changes that have taken place in the last few years and that are continuing to take place now that will revolutionize the types of products that come out? So in financial services, I don't anticipate any key piece of patented technology to come in next five years and alter the way we do it. It's actually how much better we are at processing data and how much better we are at getting creative in how we share these services that will ultimately make such a difference. We're not investing the day to day in breakthrough tech.

We're investing in tech enabled creative ways to facilitate the way people access financial services. So I think there's a key difference there. There's this other verticals where there's actual technology developments like climate tech that I'm sure will totally change the way we we view the world in ten years from now. I think fintech will always be able to leverage other new technologies in order to, again, remove as much inefficiencies as we can from the transaction, but not necessarily will be a driver of key unprecedented technology. As a firm, you don't take board seats.

You're not leading rounds. When you institutionally think of yourselves as being different than other firms, what other types of unique values do you think you bring to the investment world? It's really a network. You need to talk to someone in policy. We can get you there.

You need to talk to not the biggest carrier, but, like, another carrier that could be your partner will take you there. You you want some deadline capacity. We can offer you, like, 10 ideas of what we should be talking to. We're thinking and breathing fintech and financial services all day long. And And so we're doing that for you, and we'll be there for you when you need to leverage that knowledge and that connectivity.

That's what we work relentlessly on every day. And I think that's what founders think of us. It's very specific request. We'll do them. They will often involve people that can change the path.

They will likely not involve feedback on the latest product release because that's not where we take pride in. But we're happy to do that as well because we really try to go out of our way to make it happen for anything that our entrepreneurs want us to be helpful with. Has anything changed with all the technological crackdowns that's coming out of China? Is that impacting people's way of thinking of fintech at all? I think more so on the crypto side, and that is a total different conversation.

Right. In the more traditional access to financial services in The US, especially, I don't get the sense that we're feeling threatened. And help me understand. I think you had said that there was this concept of embedding products for the consumer, for instance. Can you expand a little bit about that, painting a picture of how that would impact an actual consumer?

Like, what would appear differently on our iPhone or iPad in an embedded way that we might not otherwise think about? Yeah. So an example would be auto insurance and micro mobility. Like, an example would be that you take a scooter and you turn it on, and the moment you turn it on, your entire ride is insured and you turn it off and you get off the scooter. And if something happened, you recover.

And if it didn't happen, you're fine. And that is an example of seamless acquisition of insurance. Meaning you have a relationship with that carrier that allows you to turn it on anytime you write a Twitter, or maybe the scooter company has a partnership where they are insuring every single mobility experience that they offer. So that is one way that it could happen. Another way is you're a digital freight forwarder, and you own all the information of the piece of package that you're shipping across the border from Mexico to United States.

Who's better suited than you to, by the way, embed shipping insurance there and tell you you can pay them in thirty days, and they can take care of the trade finance aspect of it all at the same time? In payments, it's just mindless things. Like, I don't think we will cease to try to improve until you can go anywhere, grab a bag of chips, and walk out the street, and you just pay automatically, or you pay with your eyes, or you pay with your finger, and there's no friction in the experience because who you are is so validated and what your worth is and what your risk is is so much more clear than before that you can afford to do these things much more seamlessly. I always like asking that question because even things like scooters, I mean, which I've used periodically, don't really think about insurance. I mean, again, whether or not they have insurance or otherwise.

But if I run into somebody or I fall off and knock myself out, that's an example of something like, oh, you know, we need to change the way we're thinking about stuff. You know, on the freight shipping stuff, that also is an interesting example. I mean, in terms of how we finance accounts receivable or getting AR insurance for accounts receivable insurance and things like that, do you see any movement towards people being able to insure accounts receivable in a more seamless way, for instance? Yeah. I'm not sure about insuring them, but for sure, financing in a less risky way.

Right? And so there's a b to b payments right now, there's a massive movement towards digitizing that part of the world. Like, consumer payments is a blip in the water compared to the size of b two b payments. And so there's a lot of room to take it. But, again, it can be embedded in different ways.

Right? Do you tackle it from expense management by allowing people to automatically track that part of the account and then cross sell other parts of FP and A? Do you do it by enabling software that keeps track of your accounts receivable easier than ever before? So there's different angles you can go at the same problem, and I think they will all converge in ultimately automating, making a process totally mindless that can also in the more profitable services that are distributed a cheaper way. That makes sense.

In terms of where your firm is going in terms of changes or things that you see going forward, are there and you talked about the diversity. Is that something that is a firm you're focused on in terms of trying to create a more diverse workforce in this environment? Yeah. We are. I'm proud to say that today, half of our investment team is women, and we put a lot of emphasis in the way we recruit in every aspect of the process.

And we make sure we are being conscious of minority founders when we're interviewing them and making sure that we're spending enough time to adjust for any sort of potential conscious package that's going on there. So we care about it a lot. We can do so much better and, like, I think everyone can. I think there's progress towards at least honestly trying to to do better. In terms of the types of deals you're being shown, are you seeing a more diverse group of founders and a leveling out in terms of access to capital?

Yeah. I'm I'm not sure if leveling out, but, yes, more diverse founders for sure. I think it also helps where you look. So I tend to be very involved with Latinx groups and women groups. And so you skew your deal flow to where who you're talking to.

I think having a diverse investment team helps in the diversity of deal flow, and it's fundamental for us to be able to look holistically opportunities that involve more than the typical non diverse founders. And in terms of kind of where the puck is going and the world is going and and how fintech is gonna change our lives and stuff like that, what makes you the most excited about the next years in terms of what's gonna surprise us and you in terms of the next few years? I think just how mindless services will be. You will wake up one day, and you won't even have to think about paying your own bills because it will be taken care of. And if you didn't have the money, an automatic loan will be made on that behalf.

And then you walk and and you pay, and the exact card they should have paid for that thing will pay for that thing. And so I think we're shifting towards a mindless automation of consumer finance that feels futuristic, but also so important for consumers to stop paying for overdraft fees and for just the cost of inefficiency. So that I'm very excited about. I'm very excited about for us to have next level experiences with the way we manage our personal finance in ways that we've never even dreamed of could be delivered before. Are there any particular passions that you have and that your firm culture has that influences the types of companies you're attracted to right now?

So we tend to be much more focused on the founder itself. I guess what determines who we are is we just really care about the people who are building things, and we're happy to run-in what we think matters in the world if a person is proving us wrong. And so, no, there isn't a real inclination of a specific segment. It's a real inclination to back in the best people we can find and doing as much as we can in our power to help them succeed. And it spreads up pretty evenly across verticals in fintech, luckily, but it's less related to bigger, I think, topics.

Thinking Latin America, financial inclusion is predominant for more obvious reasons on what current structure of socioeconomic possibilities is there compared to The US. But in The US, I think it's pretty even. How many people from CollectAware are actually in Los Angeles these days? All of us. That's the only office we have.

So we are hardcore SoCal lovers. Cool. The change from 01 to 09 was interesting, but the change from, like, 2015 to today in LA is just crazy. The growth is explosive. There really is a community now.

I know. And by the way, I still think there's a lot that needs to happen. It's not perfect, and I can't stay only in LA and invest in fintech companies. But it's definitely better than even when I moved 2017. There's more people, more people moving from New York and San Francisco, more founders from SF that just wanna hang in the lane.

That helps. That helps a lot. I still will take our weather over San Francisco's weather. Any day, of course. Exactly.

It resembles more Ecuador's weather. Right. Ecuador's even hotter and more humid, but it's like one single season all year long and that's how I was raised and I love it. So Adrianna, this has been wonderful. I love your energy and Thank you.

Nice to see you.