Real Non-Dilutive Funding, Champagne Problems, and Leonid Capital Partners with James Parker

In this episode of The Startup Defense, host Callye Keen sits down with James Parker from Leonid Capital Partners to dive deep into the financial strategies essential for defense startups. They discuss the crucial phase of avoiding the dreaded "Valley of Death," where many promising startups falter. James shares insights on leveraging government contracts for non-dilutive funding, the importance of maintaining equity, and how Leonid Capital’s innovative credit-focused approach provides vital support for companies tackling national security challenges. They explore real-world scenarios, from securing initial SBIR awards to managing significant contract wins, and offer practical advice for founders navigating the defense tech ecosystem. This episode is packed with actionable tips and inspiring stories that highlight the impact of financial strategies on the success of defense startups.

Key Takeaways

Leverage Non-Dilutive Funding: Non-dilutive funding, such as government contracts and SBIR programs, is crucial for startups to maintain equity while securing necessary capital for growth. James Parker emphasizes the importance of leveraging these opportunities to avoid giving away equity too early and to preserve ownership.

Understanding and Negotiating Government Contracts: Many startups face challenges with the complexities of government contracts. James advises founders to thoroughly understand and, if necessary, renegotiate their contract terms, particularly CLIN schedules, to ensure a steady cash flow and avoid long payment gaps that could hinder their operations.

Strategic Use of Credit Financing: Leonid Capital Partners’ unique credit-focused approach allows startups to borrow against future contract values. This innovative financing solution provides immediate capital to support growth without diluting ownership, making it a valuable tool for companies in the defense sector.

Impact and Ethos in Business: Embedding a mission-driven ethos into the business model can lead to both personal fulfillment and business success. Leonid Capital’s commitment to giving back a significant portion of profits to military families and veteran communities highlights the importance of aligning business operations with personal values and societal impact.

Navigating Growth Challenges: Startups often encounter the “champagne problem” of rapid growth following significant contract wins. James discusses practical strategies for scaling operations, managing cash flow, and ensuring sustained growth without compromising the company’s stability or equity.

Key Quotes

• "Keep your equity, execute your equity when it's really important, find strategic partners." - James Parker
• "Build something to own it forever, and the best way to get an exit is if you don’t have to sell it." - James Parker
• "It's about avoiding the champagne problems of success and ensuring you don't crash and burn in the Valley of Death." - Callye Keen

About James Parker
James Parker is co-founder and President of LEONID. He has also served as CEO and CFO in a variety of privately held and publicly traded companies. In addition to his experience as a NASA Flight Controller, James also worked as an engineer and consultant with major Defense and Aerospace companies including Lockheed Martin, Northrop Grumman, and Raytheon

Transcript

Callye Keen: 0:00

Welcome to the Startup Defense. My name is Kali Keene. Today I have James Parker and we're going to talk about money, but, more seriously, we're going to talk about avoiding crashing and burning in the valley of death, the long delays of what could happen, or, as I like to call it, champagne problems. How do we avoid the champagne problems of success? Before we dive in, James, of course, I want you to tell everybody who you are, how you got here, all the wonderful things that you've done. But same question that I ask everybody what are you passionate about right now?

James Parker: 0:43

Yep, what we are passionate about here, leonid, is very specifically. A lot of this goes back to my partner's background. My partner was a DARPA-funded neuroscientist. Prior to his finance degree, I was an engineer in the aerospace and defense world. We love the market, we love the tech.

James Parker: 1:02

Neither one of us is about to jump back in the lab anytime soon, um, and part of the reason why we're so passionate about what we do here is that we get a chance to be impactful to thousands of people argue well, not yet.

James Parker: 1:17

Well, go ahead to all of our clients, which you know, um, and help them build their business and be successful and have exceptional outcomes for themselves and their investors. We fully admit we're a small part of that. By no stretch of the imagination are we taking credit for it. But, like the ability to touch point, to be able to touch point and for each of those groups in that effort is just really. It's really exciting from our side, really exciting from our side of the table Just being able to be part of that whole process, to bring real capabilities to the warfighter and to be instrumental in those companies' success long-term, while at the same time giving them a chance to keep more of their company to themselves, which, just as an entrepreneur ourselves, we know we're really passionate about that. All in all, it's just being part of the journey. Being one part of other people's journey is great, especially being in a what we think is a highly supportive.

Callye Keen: 2:11

So let's step back for a second and put that into context. So what do you do? What do you do in this whole ecosystem? Because I have so many questions for you and I want everybody to get on the same page as me.

James Parker: 2:26

I can't wait. So, yeah, so at very simply, what we do at Leonid Capital Partners we invest vital capital into companies that are solving national security challenges. What we do is in a very what's unique about us is the way we do it and the structure we do it, and that is to say, we take a credit focused approach to it, which is extremely unique in the market. And, very specifically, what we do is we will allow companies that have signed contracts federal prime contracts and borrow against the future value of those contracts for capital today to use to drive growth within their business. So if you have nailed down anything from a phase two SIBR to a three-year POR and you want to leverage that asset what we view as an asset for capital today to hire more engineers, staff up a contract capture team, pursue more commercial work something focused on driving growth within your business, we're happy to be your partner in that sense.

James Parker: 3:23

It sounds odd to say, but we're actually kind of alone in the market with that sort of structure. There are some other groups out in the world that they're great I love everybody who's involved in it but they'll focus more primarily on receivables, financing or factoring. They'll give you some credit for earned but unbilled. The difference with us is we allow you to get out, get you know, to go as far out as you know the final cleanse on your contract and pull some of that value forward, take that advance in order to drive you know what investments you believe are important in your business. And we do so without taking control positions or board seats or trying to drive the strategic traction of your business. And we do so without taking control positions or board seats or trying to drive the strategic traction of your business. We do it from a credit mindset. At the end of the day, we're a credit partner to provide additional growth and working capital for your business in this space.

Callye Keen: 4:15

What gets me so excited about this is one for everybody that listens to the show. I'm a massive proponent of non-dilutive funding. Keep your equity. Execute your equity when it's really important. Find strategic partners. If you're going to give away equity, get more than just cash for it. There's great investors out there. So I don't want to put a slight against people doing great work, but, at the end of the day, be a steward of people who have invested, of the stock options of your employees, of yourself and your own life. Look for non-dilutive funding.

Callye Keen: 4:49

And the second reason that this gets me excited is that in the commercial world let's just say e-commerce I spent years working with, say, commercial and e-com product businesses, teaching them to grow, and there's capital options for those businesses at every turn. There's inventory financing, there's cashflow financing. There's literally financing. Oh, you usually make money every month. I'll give you more money because you usually make money. Cashflow financing. There's PO factoring. There's all of these tools that they have to support high growth honestly, fairly low margin businesses that are, in my opinion, unstable. One bad news report or your influencer saying one thing, or becoming less popular, or the fad being over and that financing can fall apart, whereas we're in this innovation, moving the needle, stable business, but it hasn't been traditionally something that attracts the same type of capital options that you'd have in the commercial world. So what you're doing?

James Parker: 6:10

Frozen up on me. Is that on my side or on?

Callye Keen: 6:13

yours, unfortunately, can you? Can you hear me now? It'll it'll record all locally, so that's okay.

James Parker: 6:20

That's fine, I'm just making sure, yeah.

Callye Keen: 6:25

One nice thing about this product is that it records all locally. So if, even if your internet goes out and you could record the whole thing and let it sit and it would upload and we wouldn't lose the episode.

James Parker: 6:37

It's really nice.

Callye Keen: 6:39

Yeah, I don't. I don't know what I was saying.

James Parker: 6:41

You were talking about the fact that the you have all these early estate, you have all these variety of ways of financing businesses, say on the e-commerce side, but in our side, which seems to be more steady and and focused, there's there's a lack of it for lack of their right yeah right, right, yes.

Callye Keen: 7:01

So so from this, what you're offering is essentially a dual use innovation to the market, even though it's a capital allocation, even though it's a capital support perspective. It's really interesting bringing commercial solutions something that's not totally bizarre in the world and bringing it to the new market.

James Parker: 7:21

I love that framing. I guess we talk dual use all the time around here and I've never thought about it in that sense, but that's exactly right. What's interesting about our market is that traditionally it's been ignored because, at its core, what it comes down to is that government contracts, as we kind of all know, can technically be canceled at any time for any reason with 30 days notice, with no penalty, and that's what's kept banks out of the market.

James Parker: 7:50

ostensibly is that they don't want to take multi-year money, put it at risk against cash flow streams that could disappear effectively overnight. What we did was take a perspective on well understanding the government can cancel these contracts. How often do they actually do so? And, more specifically, how often do they actually do so within our sub market, which is another one of the problems, right Is that if you look at government contracting as a holistic, like single it can, it can look very different. You'll put, I would say, contract performance characteristics and very, very wild, you know, wildly.

James Parker: 8:32

Construction contracts change in scope all the time. Procurement contracts can get canceled for capricious reasons, like I tell sort of this joke that is actually accurate. Like if you're, if you win the bid to supply one ply toilet paper to the VA and you show up with the same amount of toilet paper for the same amount of money, but it's two ply, you're just as likely to get terminated as you are to get paid. So if you try to take government contracting across the board, it can look choppy and it can look scary from an investment standpoint. I think one of the unique things about us is that we focus so specifically on the call it the defense innovation sector sign of things that we just have that different. We have this sort of like it's almost like I call it, complexity of security Like people working on these contracts are likely the only group, if not one of very few groups, in the country that can do that work. And complex work takes time and has issues and has delays baked into it and both you know, importantly, the government customer understands that, but critically for a for a borrow of ours. So do we right? We don't set up our loans in such a way where if you have a modification or a delay or your contracting officer goes on TDY, you can't go, you can't get a hold of him. Like we don't freak out, like we get paid when you get paid by the government. We don't have a monthly overhead and you pay down your loan as you execute on these contracts.

James Parker: 9:58

So it's a trick of just our understanding of the nuance, specifically of our specific side of the world.

James Parker: 10:05

That kind of got us to this market to begin with.

James Parker: 10:09

But that's why we love it so much and that's, you know, I think, quite frankly, why we stand alone is just that we have a very unique Venn diagram and my partner and I's background and our professional experiences that have almost accidentally landed us in the Ciber world at first when it came to our original offering, but that we have since expanded out to the phase threes of the world in those sort of early stage PORs, but specifically in our niche. That makes our product make a lot of sense to us and to our investors, which is fundamentally yeah, we underwrite your business. You have often early stage companies um very often have burn rates on. The fundamental difference is is we'll take that future value of your contracted cash flows and we roll that into our credit decision and that, to your to your point earlier of a champagne problem, you get companies that like have a win, a large new contract that can be meaningful for them. That fundamentally changes the math on our end of things as far as a credit decision in a very positive way.

Callye Keen: 11:08

Yeah, let's unpack two scenarios. So the one is the SIBR scenario, which people go for this. They don't really know what's behind, they don't really know what's on the other side of the award, and so where does private capital play into me? I got this SBIR, now what?

James Parker: 11:30

It's interesting and I've got a weird. I've got a whole bugaboo of late. I keep on hearing people refer to Sibbers as non-dilutive. I have won non-dilutive funds. Non-dilutive, it's non-dilutive funds. I'm like it's not non-dilutive, it's sales, like guys, that's the best kind of funding you could get, like you're, you're selling a product or service to the government, like that's a, that's a sales component. Um, so I'm not.

James Parker: 11:56

I think there's just sort of an internal bias of wanting to say non-dilutive a lot and you take this thing that I view as like the greatest example of product market fit, ie a paying customer and then to call it something else.

James Parker: 12:09

So with us in particular like I'm not going to belabor the Ciber program in general because I'm sure your audience understands it left, right and center but what's different with us is that when you show up with your, you know your, your, your directive, phase two, and it's $1.4 million, and you're probably two months away from starting billing and you might have your first clin is three months after, that is, from after three, two months, you know, three months after starting work, and then, yeah, you get paid rapidly but you're still looking at probably a four or five month working capital gap from starting there.

James Parker: 12:44

I think that's where we can be really helpful, in the sense that the minute that's awarded and has a dual executed contract, you've got a contract number. We can come in and get you anywhere from 50 to 75 percent of that on day one in the form of a loan or a line of credit and you can either take that as a one time shot at capital and drill it down as a loan and pay back over time. Take that as a one time shot at capital and drill it down as a loan and pay back over time, or you can use it as a revolver to handle those working capital swings you might have usually around payroll on this side of the world.

James Parker: 13:21

And, more importantly, we don't have a defined use of capital requirement we have for you, other than you need to use it for corporate purposes, like you're there to run your business with it, right, so it gives just that extra. I would call to your point before a very traditional amount of corporate lubrication that is, for whatever reason, largely denied that side of the market, like I know for a fact the vast majority of our clients my partner when he had his first CBER would go to their banks. They'll go to their banks and say look, I've won a $1.5 million contract with the Air Force. I'd like to get a line of credit. And they say congratulations, we'll give you a $20,000 personally guaranteed credit card. They just don't give you credit for it. That's the very simple solution we're here trying to solve.

Callye Keen: 14:05

Yeah, I'd put this evolution alongside of how other forms of private capital have evolved more recently for better or worse. In the past, say 10 years ago, if I was working with somebody and they wanted to go get anything, they wanted to go. It could be a loan, but it could be investment. People don't have knowledge of this market, that are outside of the market, and so it looks very opaque and it's very hard to underwrite something that you don't understand. So you coming as an industry insider to then understand the market and then underwrite it makes a ton of sense.

Callye Keen: 14:46

You know, fast forward to today, there's, you know there's a ton of VCs and arguably not all of them really come from industry or understand the speed and how the industry works. But there is capital on that side but still, like money from them comes in tranches. The money from these innovation programs or SBIRs come in tranches, which maybe I have a great team. I'm already paying them payroll, but I do hard tech stuff. Somebody is going to have to buy something day one a piece of equipment, material, maybe a strategic hire. Something is going to hit day one.

James Parker: 15:25

Yep, and that's again a great use case, for what we do is taking out those. For lack of a term, mobilization costs is handled like on contracts, especially on the hardware side. We do see that a ton, especially as you have the increase obviously in the space market which is, I mean, is overwhelmingly hardware dependent, right Understandably. So, fortunately, I have my moon land, my mom's moon landing newspaper on the on the wall still. So, like you got a soft touch here when it comes to the space market, most certainly, yeah, it's. It's just an interesting. It's an interesting market To your point.

James Parker: 16:02

There are a lot of great VC partners and they do understand the world. Why, I think, and we work very well, especially since we are non-dilutive, like so when it comes to your existing cap table, you can, you know, take money from us, extend your runway in a lot of ways, drive up growth in your business without having to go back to your original investor set and tell them you need to take dilution for another group or go back, for lack of better term, hat in hand and hope and hope they're funded up in order to come in with their with their next tranche of investment.

Callye Keen: 16:37

Nobody wants to invest in. Nobody wants to invest in a bridge round, right? A lot of these people they expressively will not provide bridge funding and so, looking at, I need to have multiple different sources of. I like your point is, I always tell people customers are the best source of funding, but you need to have different options on the table. So I really like this. But yeah, coming from the VC or investor side of things, the money is tightening down and for sure, getting any kind of bridge funding will become almost impossible for quick moving startups. Which kind of leads me to the second big use. I think this is a little bit easier to understand. But, James, if I just won this $50 million contract and I'm a $2 million company, like what, what's going to happen? Like, how do I, what do I do? You know what do I do?

James Parker: 17:39

That is the proverbial champagne problem. It's like it's waking up and realizing you've got to staff up. Um, you need to go hire, you know, 10 engineers that are TSSE, tssci, cleared. Um, you've got to put a test bed in place. You've got to start doing you know, you've got to look, find facilities in place.

James Parker: 17:57

You know, all of this is is non-trivial by by any stretch of the imagination. So this is again a great, a great use case for what we do as we take this early stage company that God love you, no matter what position you're in. If you showed up with those sort of profiles, even if you had a stack of assets, a bank, a traditional bank, is not going to finance you on it. And even if they did, they would ask you to put a personal guarantee on it. And then anybody who's already taken outside capital from certainly the VC set is reasonably reluctant to throw personal guarantees on top of the massive personal risk they've already taken on this entire endeavor themselves. Or you can come to us right and you have a dual executed contract with, like I said, a live contract number. Like we can get you up to 50 of that 50 million dollar contract on day one, and don't get me wrong, you don't have to take 50 like we don't, we have no minimums, we have no real maximums.

James Parker: 19:02

Um, well, I guess no maximum, not true, but we have no minimums. You want to. You take what you need, like in fact, we often see this with our clients is they get very tactical with their apps, they take what they actually need, not necessarily what they can get, which I like because it shows a depth of thought and it shows it provides additional security on my side of things, which is important, obviously as a credit investor. But at the end of the day, this is a like. This is how you can stack up those multiple contract wins without having to go back every time to your existing cap table and find a way to make those bridge of those incremental financings until you're really ready to go in and take down that proper series BRC Right, and you've. You've shown that growth curve necessary in order to ratchet up your ratchet up your valuation to a point where it makes that additional dilution worthwhile to you.

James Parker: 20:05

But what we hate is the idea of people doing critical work, especially in the world we're in, and then end up with not very much of the company to show for it. At the end of the day. That's a hard role. We're entrepreneurs ourselves. We threw our arms around our equity and held it on like held onto it with a death grip, um. And eventually, every once, you know, after a while you have to make a choice, um, but you want to make sure that you've exhausted, you know, you make sure you've done everything you can and you understand what you're getting into, not just taking it because you feel like you're boxing into a corn.

Callye Keen: 20:26

It's amazing. This recurrent theme that I get from guests on the show is we work in this industry, we believe in the purpose of this industry and so the idea of triple bottom line startups or impact startups, impact investment, using your time to make a dent in the world. It carries over into defense and you have an amazing background. You've worked for some of the big boys. You've worked in a number of different positions right, You've worked for large primes and how do you see what you're doing today with startups impacting this defense ecosystem?

James Parker: 21:16

it's a great question. I love it, um, very like. There is definitely I we. It helps to it.

James Parker: 21:26

The overall mission here is really what drives us to get out of bed every day and, at the end of the day, what we're about is supporting companies that are putting the best possible capabilities in the hands of warfighters to protect our nation on a day-to-day basis, and we do this from a very personal perspective. Both my partner and I come from multi-generational Marine Corps Army households. Neither one of us had the honor of serving ourselves, but it's very much a world that we came up in and the ethos is there for us on a day-to-day basis. My partner in particular. He's got a PhD in neuroscience.

James Parker: 22:02

His thesis work was on traumatic brain injury treatment protocols. It was work you could do in the back of a Humvee for a guy who suffered a concussive blast injury to buy him some extra time. Right At the same time he's working on that thesis work, his brothers at Ford deployed marine influsion right at the height of the IED crisis, because you can imagine like he took that work home with him every single day. The idea that we get to be here and be a financing partner for people who are doing, you know, in some way, shape or form, contributing to the safety, security and capabilities of our country, and our warfighters in particular, is critical to our just our, driving ethos around here.

Callye Keen: 22:46

Um.

James Parker: 22:47

I love the fact that we get to do it from a credit perspective as well, because we have a unique position where, if we have made in, like the basic math of credit right is, it's not betting on one win out of 10. Right, I've got like one bad deal takes out nine of my good deals is the basic structure and functionality of. So when we make an investment like, it is incumbent upon us to provide every bit of support we can to do every to be as available and effective for our clients as humanly possible. Um, quite frankly, because the math doesn't work if I don't like. So we're in an overwhelmingly positive and supportive position for our client base to make sure that they have an exceptional outcome on that contract and hopefully beyond that.

James Parker: 23:37

And I get to do that very honestly where we have to expect almost 100% success rate across our portfolio to even make the math of our business work. It puts us in an overwhelmingly positive, contrary to the popular vision of credit people being crusty and risk averse and angry all the time. We have to be overwhelmingly cheerleader-like because we need people to get through it for our business but else, at the same time, given our overall mission, I can't ask for anything better To be able to geek out over the tech people are doing because of the capability we're providing people. It's just an awesome angle to have on this end of the space where generally early stage investing can be sort of the winners take everything. And then I hate the idea of really good tech and capability getting left orphaned because the growth curve might have not been there two quarters in a row. That doesn't do our guys on the ground any, any help, but also, let alone the entrepreneurs that are busy, you know, frankly, busting their ass trying to contribute something to the country.

James Parker: 24:45

So that's fundamentally the core of a business side. We've actually baked it in even a little bit further around here, just even on our origin story of our business, and I tell this like so, four and a half years ago this is right before COVID my partner, chris, came to me and was like he had an idea for a pure play financing platform in the defense, you know, in the defense and national security and space arenas. I was like I was looking for something else to do. I wanted a chance to work with Chris. Finally, we had some experience in the space together and some shale deal flow and I said sure I'm in let's do it, like, let's take a run at it.

James Parker: 25:21

And he says I just want to be clear with you, though. I want to do something different, like I want to make a meaningful impact, like different, like I want to make a meaningful impact, like I want to give back a meaningful percentage of the profits of the company to nonprofits that serve military families in the veteran communities. And I was like sure I'll bite. And I was kind of thinking of quote, unquote, normal amount. You know, you see five and 10%, you know. And I was like how, how much is big? And he's like half. And I think I literally almost spit my beer directly in his face, like at the time. And you know, but we talked it out and you know the mentality there is a twofold Like it's.

James Parker: 25:59

Everybody always says they're going to go start something, make it big, and then they're going to give back and try to change the world, like. And his perspective was like why are we waiting? Why wait to do it? And, at the end of the day, we all know how the world works Goalposts move, lifestyles change. What seems like a lot and would have been enough five years ago is not enough now. So you're just constantly pushing off this promise you're making, whereas if you bake it into the ethos and the structure of the company very directly, you can't really run away from it. For one thing, you really do then get to use it as a serious, like part of your for lack of a better term your internal motivation and marketing.

James Parker: 26:42

And, at the end of the day, if you really dial back the entrepreneurial jury, like like, there's a couple of different hard parts of entrepreneurship. One is going from zero to a hundred. The other is going from a hundred to a thousand and they're both difficult but they're both different things. But if I'm starting at zero, the idea of the challenge going from zero to a hundred is now zero to 200. Well, that's basically the same problem. So we went ahead and committed to doing that. We still hold to that today. It's how we attracted our first set of advisors to our board of advisors and, quite frankly, as I think, allowed us to grow three times faster than we had any business growing in our market.

James Parker: 27:20

There's almost, you know, it obviously has come back and done us a wealth of of make, created a wealth of advantage to us in the uh, on the business side of things. It also just at the end of the day, is really kind of the cherry on top of like I said, like being able to get out of bed in the morning. It's like you're going and making, doing something meaningful to a world that is meaningful to me. To put a very fine, you know, very fundamental end cap on it is those of us in this market, the defense tech space. It's especially like we don't have a business if without the men and women that are, you know, are on, that are downrange or soon will be, and their families are paying, taking that risk and paying that price along with them. And it's incumbent upon us to remember and recognize that as we're building our business, we're going to make money here. There's a there's another side to it that needs to be addressed to, um, or else none of us are actually here to begin with.

Callye Keen: 28:16

Wow, I love that for so many reasons, but to bake in impact and cause into the way that your business works is is I mean, it's commendable. This is really commendable.

James Parker: 28:33

I'm sure I appreciate that yeah.

Callye Keen: 28:39

Well, it's really great to hear, I think, that supporting innovation for the impact of of helping founders that are chipping away at hard problems on this net-net or large scale, it is a way to support the warfighter, it's a way to support everything else. We can bring it from this macro lens all the way down to a micro lens and say, okay, it's to a micro lens. And say, okay, it's one X special forces person who's founded this business. Their family is now behind them to become an entrepreneur and a founder. It is our job to support this person as much as possible so they can support who they were a couple of years ago and who they could be a couple of years from now.

Callye Keen: 29:30

When you're interacting with that persona, with that that person who's just you know, they've just jumped in and you know to your, to your point, you can look at the zero to one version of this as, like I just won my first award, or the one to a thousand version of this, like oh, my God, I've got to scale up really quickly.

Callye Keen: 29:51

Those are very difficult problems and it doesn't matter if you've come from Boeing or Raytheon, it doesn't matter if you've come from the field. You, you don't have it and until you start doing it, nobody's going to want to join your team and really support you. To do it you need to get mentors, advisors, great companies, great employees. You need a support system. You need this support ecosystem to is you have an opportunity because you see many, many, many founders right, you see many innovators go across this. So my my background being in product development, I kind of get to sit at the table and see these problems over and over and over again. That's why I jumped into startups Uh, I guess like eight, nine years ago now, because I'd see the same mistakes over and over again that people would make. I was just curious what some of those sticking points are and maybe what are some resources or techniques that people can use to overcome those things.

James Parker: 31:06

Yeah, we very much view our relationships with existing borrowers, with future borrowers, everything is a partnership right. We make sure to stick to our knitting, I will say. However, there's a lot of folks who will come to us and say, can you help me get a contract? And that is very much not what we do. We're not experts in that. We wouldn't want to weigh in there and lead somebody astray. We do, however, have a raft of people we can refer people to and do so willingly, even if it ends up being something effectively competitive to us. This world is a huge market, but it really operates like a small town at the end of the day. So you do as much as you can to be as effective and as helpful to people at that particular point of need, and that's going to do good for you long term, either directly with that client coming back, you know, six months down the road, or a referral he makes along the way. So, number one we just make sure that we are as aggressive as we can with our offers for support, referrals and partnership across the board, but sometimes it's just even more direct.

James Parker: 32:21

We had a prospect come in, looked great, it was a brand new company. I think they'd spun up their LLC like two weeks earlier because they had just won their phase two. They wanted to direct to phase two and it's like, oh, we need an actual company now IN schedule before, because it was like it was like a year before they were going to get paid. And it was like one check. And we're like not only, if you look at our model, that's going to end up kind of going upside down a little bit for folks, but we went back to them and we said you really ought to call your contracting officer and ask him or her to adjust the schedule. They're like it looks like you kind of took the first bid. You didn't really for lack of a better term, being nice, you weren't really familiar with how the process worked. You put through a number out there because you're hoping to win, and then you did, and now this is not really going to be helpful for you, but you should go back and see if you can get that adjusted. And they were like, can we even do that? And we're like, yeah, you actually can. And they went and they went back and they got it adjusted so much so they didn't need our services anymore, which we chalked up actually as a huge win, because it's one more player in our space and they had a positive interaction with us and they're much more likely to come back the next time when they you know, when they, when they graduate to that phase three or they win their next three, phase two is they're much more likely to come back to our house.

James Parker: 33:52

So, um, that's just sort of the overall mentality we have here, like there's everybody's trying to row in the same direction here. We're not really at odds. Um, we financed a company that does a pretty um company Phase Four. They do ion propulsion engines and I could have geeked out over that technology for days. I probably did, we did, we announced that funding and three days later somebody hit me on LinkedIn. They were borderline chastising me on LinkedIn.

James Parker: 34:23

Why did you invest in them? My technology is way better and I'm like book a meeting, like let's go, like I'm not, you know, I'm not beholden to one particular player in one particular tech, like another benefit of my model, I'm not making one singular bet in any particular area. Like we are come one, come all the best tech we can into this market, as nimble and as funded and as non-dilutive as possible, because that just helps everybody along the way. So there's a long and rambling way of answering it, but I think you get to it. We're sort of about building the entire ecosystem and quite frankly, I don't think I've run across anybody else in the market who's against that idea. I'm not trying to say we're unique in that sense, but we very directly have an ability in our structure and the way we take risk to be widely, widely supportive in a number of ways and then, you know, go out of our way, like we like to think so to do so.

Callye Keen: 35:20

It's amazing, James. I really appreciate you taking the time to be on the show today Before we get out of here, do you?

James Parker: 35:30

have some words of wisdom to take us out. Oh, I don't know. I mean, I don't have any groundbreaking insight for people. Everybody is fighting an intense battle on the entrepreneurship front. Just make sure you take time for yourself and make sure you look out for yourself. At the end of the day, it's the best way to get the best outcomes for everybody. And build something to own it forever is the best way to get an exit, because if you don't have to sell it to somebody, then that's the minute that people come looking to buy it.

Callye Keen: 36:01

Love that Perfect. Thank you again.

James Parker: 36:05

Hey, thank you so much. I really appreciate it.

Callye Keen: 36:08

My name is Callie Ke.