Ep. #786 - How to Get VC Funding
Covered In This Episode
How to get VC funding? That’s a question that most entrepreneurs want to be answered. With Foundersuite, fundraising and investor relationships will be faster, well-structured, and efficient.
Listen to Matt DeCoursey and Nathan Beckord for insights on getting VC funding in this Startup Hustle episode.
Tune into this Startup Hustle episode, “What Makes VCs Write the Check,” for additional tips.
- Nathan Beckord’s background (2:17)
- Foundersuite (4:16)
- The Data Room (6:17)
- Fundraising is a Sales Process (7:50)
- The Horse or the Jockey (14:10)
- The money is in follow-ups (18:45)
- The Don’ts when Fundraising (21:39)
- The Anti-Lists (33:12)
- Nathan’s Freestyle (42:10)
- Wrapping up (44:14)
Fundraising is simply another sales process that can be broken down step by step and learned by anyone and you know, 99% of founders who go out to raise capital, it’s their first time doing it, they haven’t done it before. Like you mentioned, a lot of them are maybe engineers or product people, they’re not natural salespeople or Hustlers. But they don’t have to be to raise capital. And there’s, you know, there are some nuances to it, it’s not rocket science, it can be learned pretty quickly. But it is just another sales process where you’re building a list of leads, qualifying that list, engaging with them, overcoming objections, and kind of moving them through the stages of a pipeline or funnel.Nathan Beckord
If you’re early stage, you’re selling yourself as much as you’re selling your company. And part of that is the way you present yourself, the way you go after it, that you, hey, look, you got to show I love entrepreneurs with scars, right? Because they got back up off the mat and got back into the fight. That’s why they’re scarred, they’re hungry. They’re passionate about what they do. And this stuff really shines through.Matt DeCoursey
My single biggest tip is your job as a CEO when raising capital is to get momentum going for your deal, following up fast after meetings, and then just keep those relationships alive, nurture them, and you’re gonna get a term sheet at the end if you’ve if you follow those basic principles.Nathan Beckord
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Following is an auto-generated text transcript of this episode. Apologies for any errors!
Matt DeCoursey 0:00
And we’re back for another episode of Startup Hustle. Matt DeCoursey here to have another conversation I’m hoping helps your business grow. Alright, folks, I’ve been doing this for a while this fourth year, probably the 600th episode that I’ve recorded the Startup Hustle. Thank you for following. Now with that, I have a lot of conversations about startups, both with guests outside of the show and without a doubt, the most popular thing that people want to talk to me about is getting funded. And that’s exactly what we’re gonna get into today. I’ve got an expert with me today. We’re gonna talk how about how to get VC funding now before we get into that today’s episode of Startup Hustle is brought to you by Gusto. Gusto has modern solutions for modern HR problems, whether it’s talent management, payroll, or onboarding. Gusto HR platform has it all for you to be smarter than your competitors. You can try a three-month subscription. Now all you do is sign up at gusto.com forward slash Startup Hustle. Once again, gusto.com forward slash Startup Hustle. There’s a link in the show notes for that. You don’t even have to remember what to type. Just scroll down. Just go and do that. Now. Click it and sign up for what happens with me today. I’ve got Nathan Becker. Nathan is the founder and CEO of Foundersuite. They do a lot of amazing stuff with startups and founders and are really helping startups raise venture capital, you can go to foundersuite.com. But more importantly, by the way, there’s a link in the show notes for that too. Straight out of the bay, San Francisco, California. Nathan, Welcome to Startup Hustle.
Nathan Beckord 1:38
Thanks for having me. Really appreciate it. Excited to be here.
Matt DeCoursey 1:41
I appreciate it. I’m looking forward to this because this is such a hot topic. And I know you have so much expertise, but before we flex that expertise, let’s start with a little bit about your backstory just like you and also why you started founder sweet and what, as we say in Kansas, What are y’all, what y’all do there?
Nathan Beckord 2:01
What y’all do? It’s almost more Texan than Kansas. But
Matt DeCoursey 2:06
I saw on your LinkedIn, you have spent some time in Texas, so you know that once you’ve been around that, you’re always fighting the yalls juror. Yeah. Like fighting?
Nathan Beckord 2:17
Yeah, yeah. So yeah, I’m, I’m kind of a one-trick pony. You know, I have gotten very deep on one topic throughout my whole career. And that’s raising capital for startups. And my, my journey is pretty linear, really. I went to school out here in California, got out of school, went to work in investment banking for a little bit of time, not too long. But spent some time during the gogo years.com days, helping companies raise capital. And that was fun. That a little time in New York and JP Morgan’s private placement group, which was helping companies raise later stage rounds of capital. And then I kind of took that playbook and brought it back to Silicon Valley and spent about a decade under a consulting firm, I started called Venture Archetypes, helping companies raise capital. And so it’s really been a pretty linear journey. After doing that for about 10 years decided to have this idea or decided to launch this company to help companies raise capital. And that’s where our founders came from. So we’re really just building tools and processes for raising capital, kind of taking, like the best practices have learned from, you know, almost two decades of doing it for companies and turn it into software products.
Matt DeCoursey 3:38
Well, first off, thank you for doing that. Because honestly, this is a process that as I talk to more people about it, and more and more and more, I realized, first off, how bad so many people are at the whole process, largely because they don’t understand it, there isn’t necessarily a guide outside of the tools that you’ve got that really kind of walks you through. Now with you now, with that, let’s talk for a second about those tools. Because I think it’s important for people to know that this stuff exists, like, what are some of the just basic tools that you have in the Foundersuite that are useful?
Nathan Beckord 4:16
Yeah, um, well, we start with we started five years ago, I guess, with an investor CRM. And so when I was consulting as startups, I would, they would hire me. I would help them with their pitch deck with their financial model, I would put in 50 hours of research, and build a target investor list. Then I would load all those investors into a fancy spreadsheet or Google Doc, and kind of give that to the client, right? And so our first product we launched was an investor CRM to really manage a pipeline of investors. When you’re talking to 50, 100, 200 investors. You really got to, you need to have some way of staying on top of all the actions and tasks and activities Go on with that fundraiser and other things. Otherwise, things slip through the cracks. The fundraising gets, you know, sloppy messy, and you just don’t ever have, you know, the momentum you really need. So that was our first tool. And then we’ve been adding to that. We launched a database of investors a couple of years ago, we’ve been growing that out. And we’re up to about 208,000 investors in our database. And that includes angels, VCs, private equity, family offices, funds to funds. So pretty much the whole kind of universe of investors. And then we launched an investor update tool for doing like your ongoing communications and updates, we launched a pitch deck hosting tool, which is kind of like a doc send light where you put up your deck, send it out track who’s viewing it, once an email tool for doing the follow-up, emails that always happen. And then most recently, we launched data room just a couple of weeks ago, which is really where you’re putting up your confidential documents, sending it out, tracking who’s viewing it, who can download. So if you think about kind of the fundraising journey, we’re building tools for each step of that journey, right? From prospecting, all the way through due diligence.
Matt DeCoursey 6:17
So a couple of things. And since we’re doing a full-on how to hear that, I think let’s back up for just a second, because, you know, one of the things I mentioned, like trying to help people give folks advice, like, I’m honestly shocked that I mean, probably four out of five really early stage people like you haven’t done it before, don’t even know what a data room is. So like, what is the data room? And why is it important?
Nathan Beckord 6:41
Yeah, so data room usually comes in a little bit in the later stage of a fundraise, like I mentioned due diligence, but it’s pretty simple. Basically, it’s a place you can create like folders and file structures, like corporate documents, intellectual property, product demos, and roadmap, Team backgrounds, and things like that. And then you’re simply uploading documents to that, that you will then share with investors doing during due diligence. And then you can what’s kind of unique about the data room versus using just like Dropbox or Box or something like that, or Google folder is you can then designate, Alright, I’m gonna give Matt viewing privileges for this particular document, I’m going to give Jennifer another investor viewing and downloading privileges, or I’m going to watermark these documents. So I, I know Matt’s not going to share these or, you know, spread these around, I can track and view how many times did Matt come into this certain folder? How much time did he spend there, really, so the whole tracking and analytics is really what makes that all, you know, kind of a unique product?
Matt DeCoursey 7:50
I love that, by the way, so I compare fundraising to just as a sales process. I mean, it really does. And, you know, for me, I’m, I’m, I’m a self-admitted salesperson, Nathan. Yeah, a lot of people don’t like to admit it, I admit it with pride. My name is Matt DeCoursey. And on many days, I’m a salesperson. But this is, you know, in sales has a process, I used to be a sales trainer as well. But you go through a whole a whole process that involves an introduction, qualification presentation, handling objections, and hopefully closing or selling something. And I mean, getting funded is the exact same thing. Now, one of the things that comes with that, as I find a lot of a lot of tech founders, you know, they’re so product obsessed, they don’t like they’re bad, I want to be a salesperson, okay, well, tools like yours are going to help you even know that that needs to happen. But what I like about what you just mentioned, is alright, so if you throw a if you look at 500 sets of eyeballs, it looks at anything you’re trying to sell, knowing which ones are trained on your product coming back and looking at it tells you who’s interested in it. And when you look at a big sea of people, and a lot of time, a lot of effort. This is a hectic process, it’s it can be confusing, it can be frustrating, it can feel demeaning on some days, just meaning like it’s like, you know, you sit down and people are very open about telling you what’s wrong with what you’re doing on many days. So being able to have the validation of seeing who’s interested and chase that and have that follow up, I think is really valuable. And that’s something you’re not going to see with the kind of generic folding tools that you mentioned, you know, like Google Drive to the best of my knowledge doesn’t tell me that you looked at my pitch deck, you know, and whatever. And I think that’s pretty cool. So thank you for building that. And for those of you listening, I’m not wrong about seeing who’s actually paying attention because one of the things with the process of getting funded is and this is that I’ve had this experience or at least feeling and others have voiced it to me is you know, it’s oftentimes you think Some people, or organizations or funds or whomever, are interested in what you’re doing, and really, they’re just being nice and not telling you they’re not on some levels. And, you know, really, and we’ve done so many episodes about this is, you know, first off, I’m going to just give you the guarantee that it’s gonna take you more pitches, more conversations and more calls than you think it is. I’ve been I’ve done a very unscientific survey for those that have gotten funded. And most people tell me, it’s, it’s 70 to 125 is in that ballpark? You know, some people get it done sooner. I mean, like a real round, not like, yeah, not at Mary’s angel round. That happened before you built anything, but keeping all this stuff together and having a logical process. And really just a template. Because this, I mean, Nathan, is it fair to say that, that 90% of this process is the same for most get funded?
Nathan Beckord 10:59
Yeah, yes. So everything you just said, there’s so much insight and wisdom, and everything you just said 100% agree that it is a sales process. And this is something that pounding the table constantly, like right after our talk, today, I’m giving a talk at founder Institute, which is one of these accelerators. And my slides start off with exactly what you said, fundraising is simply another sales process that can be broken down step by step and learned by anyone and you know, 99% of founders who go out to raise capital, it’s their first time doing it, they haven’t done it before. Like you mentioned, a lot of them are maybe engineers, product people, they’re not natural salespeople or Hustlers. But they don’t have to be to raise capital. And there’s, you know, there are some nuances to it, it’s not rocket science, it can be learned pretty quickly. But it is just another sales process where you’re building a list of leads, qualifying that list, engaging with them, overcoming objections, and kind of moving them through the stages of a pipeline or funnel. And so, so, so much agree with that. The other thing that you mentioned that I want to kind of also corroborate is, you know, being able to track and see who’s actually following along your journey. And that can be a couple of different things like we, one of the things I like to talk about a lot is sending out an investor update or company update to investors, even, you know, months before raising capital. So you’re kind of nurturing these investor relationships before asking them for money, and tracking and seeing who’s actually looking at your updates. And who’s, you know, maybe responding by email? Oh, thanks so much for this update, but who’s actually reading your updates, goes a long way to really know who’s going to be writing your check, right? And that same thing goes along with your pitch deck, who’s looking at it? How much time are they spending on it? Who’s sharing it? And then of course, once you get into the data room who’s actually downloading your term sheet or whatever it is, and and following along, so 100% agree with everything you just said short version there. But you know, I also think you’re right in that 90% of fundraisings kind of follow the same pattern. But there are a lot of different slightly different ways to do it. One of the surprising things, we have our own podcast called how I raised it, it’s interviews with founders, just about how they raise capital. And I actually thought I knew everything about raising capital. And then I started doing this podcast, interviewing people raise their money. And I’m like, blowing my mind just like how many different ways people there’s like a common DNA and all their successful fundraisings. Right. But then there’s also lots of other kind of variances of, you know, this guy is really working the angel group, like circuit, you know, or this person’s really doing a lot of like, even cold, cold email is tough. I mean, it’s kind of interesting how different people have slightly different twists on it, even though it all shares that common thread or DNA of running a sales process. nurturing relationships. So yeah, that’s, that’s kind of what it comes down to. Really.
Matt DeCoursey 14:10
By the way, I tell people a lot that off air that the one thing Startup Hustle repeatedly teaches me is how much I still have to learn. Just be like, you know, it’s like, so many days to do, I’m like, wow, I got a lot to figure out. So I’m now embracing the fact that Okay, first off, if you’re listening to this, and you’re one of those people that’s like, I’m sales adverse, get over it. Yeah, get over it if you want to get funded, or you need to find a co-founder or someone else or really lean hard on these tools because there’s no way around that you are selling your opportunity. You are primarily selling yourself in the history of this show. I have asked everybody. Well, Nathan, do you let me continue this so we’ll do this in a live way. Why do investors bet on the jockey or the horse?
Nathan Beckord 15:07
The horse did the horse meaning the company, the jockey being the founder?
Matt DeCoursey 15:11
Yes. Now I know inherently they bet on both. But if they only pick one?
Nathan Beckord 15:19
I almost that’s a good question. I almost want to say there’s different answers depending on the stage of the deal. At the earliest stages,
Matt DeCoursey 15:30
early, we’ll say earlier, early, early,
Nathan Beckord 15:33
super early, where it’s Angel precede. I’m gonna say the jockey, right? Because there usually isn’t that much of an actual company, there might be
Matt DeCoursey 15:43
100%, by the way, I thought you were going to be, maybe, the first for a second, but I’m literally at 100% on that one. And you’re right, there are different stages and whatever. But the thing is, isn’t the point that I want to make to the listeners is that if you’re early stage, you’re selling yourself as much as you’re selling your company. And part of that is the way you present yourself, the way you go after it, that you, hey, look, you got to show I love entrepreneurs with scars, right? Because they got back up off the mat and got back into the fight. That’s why they’re scarred, they’re hungry. They’re passionate about what they do. And this stuff really shines through now part of I literally just did a small little social media week about the reasons that startups fail. Number seven on the list was actually poor follow through meaning like, they don’t execute their own plan. And so many times it’s related to investments. So they reach out and they’re like, hey, Nathan, you know, I’d like you to consider investing in my company. And then you’re in Nathan says to me, says, Oh, this seems like a good opportunity. And then the person presenting it just sits back and waits for that other person to just show up and be like, I need you to cash my check, please. You know, and that’s not the way it works. That’s so the follow through part. And you know, that’s back to the tools and I love this how to the How to nature of this episode, coupled with the tools. So you know, and that’s what I think is really cool about what you’re offering. And by the way, Look, folks, Nathan’s a gas, I don’t have any vested interest in you signing up for founders who would I genuinely think this is cool stuff. So just I just want to clarify that. So you know, when it comes to like the follow up the customer emails, the presentation, and then the main thing here is, is during the sales type process, you need to make it easy for people to buy your pay, don’t put obstacles between you in the cash register, that’s rule one and selling right. So you know, with that also expect objections. An investor or a quote buyer that doesn’t have some objections or questions to your offer, quite honestly, probably isn’t interested. So I think a lot of people make the mistake. They’re kind of they he’s they’re picking apart so many different things. They have so many questions. I don’t know, if they like what we do know, if they didn’t like what you did, or doing or offering. They wouldn’t even ask, they would move on. You know, I don’t spend time asking inquisitive and deep and introspective questions to people and organizations that I’m not interested in learning more about.
Nathan Beckord 18:27
Yep. Yeah, I think I think you’re right again, once again, you’re just batting into the park. No, that’s, there’s a lot of good stuff.
Matt DeCoursey 18:36
By the way, out on Thanksgiving, this is coming out on that I almost said Thanksgiving, Valentine’s Day. And that’s because we love raising capital.
Nathan Beckord 18:45
Uh-huh. Yep. I think there’s a great phrase I heard somewhere, I think it was from an investment banker client of ours one time, but it was like, the money is in the follow-up, and I actually love that phrase because a lot of veterans will take a shot, they’ll, you know, get an intro to an investor, or they’ll have a pitch meeting or whatever it may be. But you’ve got to kind of keep pushing and prodding all these investors through the stages of your funnel, right? Going back to the sales process. You know, it’s your job. If you think about a sales funnel or an investor pipeline, which is really what we’re talking about here. It’s your job to move all of these, whether it’s 50, 100, 200 investor prospects, from the research into the context stage into the pitch stage into the diligence stage, and then into either that said yes, committed, or said no, right? You’re, that’s kind of your job is to be moving. Everyone through the stages of the funnel and the follow-up is how you do that and, of course, generating the excitement and momentum for your deal along the way. We’ll help you do that. But I was having another conversation with an accelerator last night we were talking about different follow-up email threads to do what you know, What’s the follow-up after you? Let me back up one of the little tips we talked about is often a permission email, right? So even before fundraising, reaching out to investors, and asking your permission, can I send you our company update? Right? I’m not raising money right now. Can I send you our company update? Matt, you know, can I get your permission to add you to our monthly distribution list? Right? Following up on that, if you haven’t responded. Segue that into, you know, sending you the pitch deck, following up on the pitch deck, if you haven’t looked at it yet, nudging that along into setting up an actual live zoom, or face-to-face meeting. And of course, all the stuff that happens after the pitch meeting, you know, what did you ask for? Right? What were the objections that you had about my business? You wanted to see more customer metrics or analytics, or you want to talk to customers, you wanted to get some references. Following up on all that really quick, there was another phrase I like to talk about with founders a lot is there’s a direct correlation between the kind of the speed and tempo at which things are moving in your fundraiser. And the likelihood you are to actually get a check at the end of it. And so, you know, the follow-up again, the money’s in the follow-up, whether that’s following up in the earlier stages or following up when you’re in due diligence, with 20 different investors trying to get, you know, seven-term sheets, so you have full negotiating leverage. Never been the bottleneck, where things are slowing down because you’re, you’re not responding fast. So anyway,
Matt DeCoursey 21:39
honestly, you just don’t look like you want it or care about it that much. If you aren’t on it, you know. So I’m looking forward to discussing this morning. Before we move into the next part of our conversation, managing your team can be as easy as 123 with Gusto, no more late nights for processing payroll, or dealing with business tax violence, no more painful spreadsheets, for attendance tracking, say hello to your new smart HR platform, check out gusto.com forward slash Startup Hustle, get a three-month free subscription. Once again, gusto.com forward slash Startup Hustle, you know, Gusto is a cool tool for you to look at these things in life that, that if they weren’t automated or didn’t, we didn’t have certain tools are things you hate. And like payrolls doing one of them, man, it’s like miserable, like your own accountant doesn’t even want to do your payroll because they would have to charge you too much. So check out a tool like ours. And the same thing with Foundersuite, like, I’m loving this thing because I think this is exactly what founders need. And you know, and for some of that, like, if you’re not a, quote, salesperson, then you better be a systems person. And this is the system. So like this has been, you know, we talked about that, like is 90% of its sent the same? Well, first off, no path to revenue or funding or anything is going to be exactly identical. But the steps that you travel through are pretty predictable. And, you know, with that, I think a lot of folks make some mistakes, especially in those early introductions and presentation phases, where they just eliminate themselves from consideration by doing really dumb stuff like mainly it’s about. Okay, so first off, don’t ever email me about your tech company from your Yahoo or Gmail address. Like I say that a bunch, don’t do it. Just don’t do it. Because no, I don’t take it seriously like, if you don’t even have a domain set up with your own email at it, like how are you a tech company like that screams I don’t know what I’m doing. So like, literally, I see people do this like I get emails regularly like this. And there are other things that you need to look like you’re in the business of doing whatever it is you say that you do. So Nathan, in your, in your deep experience with us? What are some of the real like, dumb stuff that people do that just gets you crossed off of a list? Keep in mind, the people you’re getting chased in money from, you’re not the only one that’s reaching out to them. So there’s only so much time you have to look at one-pagers, pitch texts, emails, all of that. So you throw a lot of them away. If they immediately look at they’re immediately like,
Nathan Beckord 24:21
yeah, no. Yeah. So how much time do we have? I mean, I could go on for hours about a mistake.
Matt DeCoursey 24:37
I would say a couple of the top. Yeah, that was a perfect reaction because you’re right. Like, I could probably talk for like three hours about this.
Nathan Beckord 24:46
I would say one of the things founders do, oh gosh, where do I even start? One of the most common things I see is founders don’t put in the time to really thoroughly research their target list again, you know, back to fundraising the sales process, step one is building a list of targets or prospects. And one of the things like I, I even see this with our own users on Foundersuite, is they’ll go into our database, and we’ll search on a category like SAS or FinTech or something, and I get a customer support email, like how do I, you know, there are 10,000 investors in SAS, how do I download this entire list and blast them an email, I’m like, we will never let you do that. Because that’s not how you fundraise, you’ve got to put in the time to kind of click through to their profiles to look at what stage deals they’re doing to really make sure they’re investing in early-stage companies. You know, are they geographically or regionally focused? I mean, things like that. And, and really qualifying your list right back to sales, sales process, good salespeople qualify their leads, you know, thoroughly before kind of pursuing them. And so that’s one thing, and investors on the other side can sense right away, I’m sure you get these all time, where founders clearly like spray and pray or did a mass blast to investors, they got a list from somewhere, and they haven’t done the research, right. So ideally, you want to really spend the time qualifying investors having a good your investors want to hear from you. If you are doing types of deals that they’re looking for, they’re looking for deals. But if you’re FinTech, in Fintech startup, and you’re reaching out to, you know, medical devices, investors, you’ve just shot yourself in the foot, you might even get, you know, flagged as spam, and then you’re not going to be able to reach any investors. So that’s one common one, I would say also trying to go around, for better and for worse, invest raising capital still runs on the warm introduction. Founders hate this, because it takes a little time and, and hustle to get those intros. It’s much easier to cold email investors. And there are some ways to effectively cold email investors which happy to talk about, but there’s still a warm intro path for most deals that happen. Now, that can be leveraging the network you’ve already built up to get those intros, it can be creating new intro paths by networking with other founders, which is a very effective way to do it. But trying to circumvent that, you know, puts you at disadvantage investors, especially like popular investors, you know, whatever that means, are getting 50 warm intros a day from people they know and trust. So if you’re trying to do the cold approach into them, you’re probably already at a disadvantage. So that’s another one. And I’d say just to round it out, maybe the top number three on the list is just going out with bad pitch materials, kind of not being polished, not having crisp, concise, clear slides in your deck, not having a really crisp, like intro email, you know, maybe you’re using connectors to connect you, your intro email should just be really crisp about what you’re doing. What’s sexy and exciting about it, maybe it’s a growth rate, maybe it’s a partnership deal, you’ve got whatever it is. And then you know, just having like, kind of that clarity. I see a lot of founders with massive cluttered pitch decks attached to an intro email that’s six paragraphs long that have the entire history of the company that’s really boring and has no like, momentum to it, or excitement to it. So those are like probably the top three I see.
Matt DeCoursey 28:42
And those are strong, I got a few as well. So kind of in the vein of some of what you said. So first off, folks, no one wants your 60-page business plan attached to the introduction email. I don’t think in the history of anything anyone’s ever read that, right? Yes. That’s not the purpose of the intro. You know, this is why one pager exists or other things. Other things I mentioned earlier, not creating obstacles between you and the quote, cash register. You know what, you don’t need an NDA in place to do an introduction call with me. Right? Like, you know, like, these are things these are just like, Why do I want to have to send something to my legal department to hear about your opportunity from you that I don’t know, in which we don’t have to necessarily talk about anything proprietary in that first call. So that’s
Nathan Beckord 29:36
fine that you don’t know what you’re doing. Right. Asking for the know. Yeah, yeah.
Matt DeCoursey 29:41
And by the way, so my business partner and Full Scale, Matt Watson all like his response to that is very vehement and he’ll say, hey, look, I’m not going to steal your idea because I’m not passionate about it. So even if I did, I wouldn’t be a very strong competitor because I don’t care about that solution. That’s your thing, not mine, you know, so That’s gonna block. Yeah. And it’s just gonna make you look and flexible. Another thing as much like Nathan said, with the poor materials, within those materials, I often see things that you use look at them, and you’re like, so you’re planning on taking 30% of market share in year two, that’s an aggressive approach, you know, and it’s like, look, when I hear that, when I hear the term, the word projection, I immediately I associate that with wrong, because projections are always wrong, you know, you’re like, you don’t have a crystal ball. investors know that. But at the same time, if, if it just seems like a fantasy, you don’t look like you know what you’re doing. Or it’s just like, you’re like, come on, you know, like, and so. And then the last thing is, there’s a variety of things that you can say, that are like an immediate know, like, if you do end up on that intro call, here’s a good one, well, I don’t really need the money. And that’s not a good thing to say, it’s not a good thing to say. And other things is like, if you’re going to say something like, Well, I don’t have any competition. First off, you better make sure you don’t. And then also, if you say that, you need to understand that here in 2022, if you’re there, I could be sold on the belief that there are almost no unique ideas left. So if you don’t have any competition out there, there’s a pretty good chance there isn’t much of a market for it. Or you are in fact, the world leader at something. Now those could be the same thing. But Oh, dude, I get I just I’m rolling my eyes folks like, and I don’t do that a lot, but literally have had people, Hey, I don’t have any competition. And in the context of that person saying that I’m googling it. And within like, 60 seconds, I’m like, not only do you have competence, you have a whole lot. Yeah, so that just tells me it’s like you haven’t really looked into it. And then I think the last thing is, is you really need to show your passion about what it is because like, for me, if you’re not passionate about your business, about your all of it, it tells me you’re going to quit. And that’s it. Because passion drives you through the city moments as an entrepreneur, it keeps you moving. In fact, in many cases, it just rolls off you. Now, if you’re not passionate, then it really becomes a grind, it becomes a problem. And you know, like overall, and then the last thing is really stupid valuations that can’t even be supported. Like, you know, it’s like I’m seeking an $8 million valuation for something I don’t have a line of code on. I’m sending it to you from my yahoo email, blah, blah, blah, like, there’s got to be something that substantiates these things because the AI role that you’re in now, look, you might not even need to get into that. You don’t need to get into it right away all the time. But these are so those are some of the things and then everything Nathan mentioned, because here’s the thing, folks, we want you to raise capital, we want you to have it be easy and get get moving. And these are things that are just going to get you out of conversations.
Nathan Beckord 33:12
Yep. Yeah, there’s on the value valuation is tricky, because there’s, I just saw a great Bessemer Venture Partners releases their anti list, and it’s deal they passed on. And one. Yeah, no, it’s great. I think it’s Bessemer. Yeah, they passed on Airbnb, because they had, like, when Brian Chesky came to them, they had like, 100k, revenue, MRR, and there were seeking, like, don’t quote me on this, like a $50 million valuation or something like that, and they’re like, their valuation is way out of line, right. And so they passed on it, and then that 100k quickly moved to 200k the next month 300k And kind of exponentially scaled, and you know, ended up being a $10 billion company. So they have some of the reasons they passed, and sometimes it is valuation, which seemed absurd at the time and then, later on, proves to be, you know, grades, valuation can all the way out.
Matt DeCoursey 34:16
I Googled Bessemer, anti less and you can go to bvp.com forward slash anti hyphen portfolio. And, this is an impressive list of passes. Airbnb, Apple, Atlassian, Coinbase, eBay, anybody heard of these companies? Facebook, when they were so-called Facebook, FedEx, Google Intel, but you know, there are reasons for this, but this really supports the fact that like, hey, look like investors are people too, and what you’re offering needs to have value and fine and have logic to it. Now. With that, I want to remind people that if you make this all one-sided, like Okay, so like a $50 million valuation, Shouldn’t or whatever with a really tiny MRR, it feels pretty one-sided. And, you know, one thing that I noticed a lot, the world’s most popular radio station is actually WIII FM call signals what’s in it? For me, that’s actually the that’s the station that everyone’s tune into. And you need to dial into that a little bit, you need to make it about us. IE, not I and me, you know, so you’re teaming your partner, you’re working together, these are things these are, these are value phrases where I, me, you know, like these, those are greedy, those sound like those sounds self-centered. And, you know, these are just like little turn-offs. And, you know, keep in mind, like investors are people too. They’re talking to a lot of people, they’re seeing a lot of pitches. And by the way, I always go with the rule that assumes that you have about 10% of their attention. So with that as your baseline. Yeah, sure. You know, I love the anti-list man. Yeah,
Nathan Beckord 35:59
it’s a good one.
Matt DeCoursey 36:01
I’ve got a little anti-list myself. I had, you know, just one yesterday, I had a chance to do something company, really early stage would have been really good companies got 78 million in funding.
Nathan Beckord 36:12
Wow. Yeah. I’ve had a couple of those. It’s hard to happen. Hard to see that we’ve been wrong. We move on, we move on.
Matt DeCoursey 36:20
I die. Is this where you use that phrase? I digress. Is that how that works? So then, I don’t understand what that really means. Because I’m not that smart. But okay, so a couple of things here. And you know, I’m going to like, so first off, while you spoke for 30 seconds earlier in the episode, that’s how long it took me to sign up for founder sweet. Thank you for making that easy. So I have an account, use my Gmail boom, I man, I love the fact that there were already some things pulsing and showing me where to start and get through that. So one of the things I’m going to do this on your behalf, because I think this is a great founder suite as an investor, CRM, and investor database, because that’s one thing that and by the way, I’m not I don’t want to down sell what you’ve got, but so many people like where do I find investors like scope servers, Google? Google it, Google it, people google it, Google knows a couple of things. And like I said, Now yours is more sophisticated, updated, and reliable. I like that. Investor updates. So look, keep people informed. Keep it warm, you know, keep the deal hot. pitch deck hosting, which is important just for the tracking, I love that. Some customize emails. Hey, look, if you don’t know what to say, I’m assuming that helps you with it. You also have some startup documents in there. I think that that is important. Because, look, folks, if you haven’t done this before this, this gets confusing. It feels overwhelming. You start to ask yourself, like, am I getting a good deal? Where do I do, you know, like, really, in the end, you need to go you need to get an attorney, get someone to give you some advice. Now this will, you know, it says you’re undecided save 1000s and attorney fees because a lot of the stuff you can kind of learn by reading reviewing understanding, you don’t necessarily need an attorney for all of it. But overall, like Love it, love it, man, I’m a big fan. And so I’m actually going to use this because a company that I own 25% and that is about to go out in funding really needs this, and I’ve just spent a bunch of time building one-pagers and, and pitch decks, which by the way, and I don’t have any vested interests I I’ve used a live play on in the past with that, not because I liked the front half of what it builds, I love the projections and the financials that it spits out that honestly LivePlan do a little better with the actual one pager creation and the other stuff and you get my full endorsement but creating accurate and readable and understandable. So projections and financials are hard. Because keep in mind, if you add an extra zero to 100,000, you’re now off by 900 grand. And you know, that’s one of the things that later down the road, and you’re like, hey, look how profitable you get. And like, Dude, I’ve done this a lot. I’m like, Yeah, but you know, there’s an extra zero here, you remove that, you’re like, Oh, wow. So we’re actually going to run out of money. And half of the time we thought three months. Yeah. Yeah, or something. By the way, that’s another No, no, ask for way more money than you need people. Because if you think if you’re selling if your pitch is that you’re selling this, like a perfect game that you’re gonna pass on the way to like, not run out of money. Anyone that’s smart knows that you want because it’s just like, just rarely, if ever happens now. You know, speaking of things that aren’t rare. Today’s episode, you know, we’ve had about 800 of these, and today’s episode is brought to you by Gusto and just you know, if you’re looking for that all-in-one HR platform, by the way, I hate HR, so anything that helps me do it. I’m almost like Michael Scott from the office with HR, like, the HR person comes around, and I’m Like, hey, look, I know this stuff drives me nuts. But Gusto will help you with that. And it’s time to check it out. You got everything you need, it’s just a few clicks away. You get three months free use the link in the show notes is Gusto.com forward slash Startup Hustle. I also want you to click it, so they know you’re paying attention because I like it when they pay us to do the episode helps us promote it. We’re getting funded in that regard. Once again, gusto.com forward slash Startup Hustle. With me today as a reminder, Nathan Becker. Nathan’s the CEO and founder of Foundersuite, foundersuite.com, I’m really digging this tool, folks, I signed up for it, and I’m going to use it to try to help. Like I said, you get more details on our funding efforts. And we’re keeping track of that. But you know, we want to move on or find and
Nathan Beckord 40:45
use the turtle, and then we’ll get you on our podcast about how I raised it.
Matt DeCoursey 40:50
See how that worked people then. And guess what? I’ll follow up on that to make sure it actually happens. Ding ding, ding. All right. So Nathan, you know, time flies by here on the show. And this is awesome. I love the tools I love just being given some of the basic how-to advice. Because this doesn’t have to be crazy, crazy. Difficult. Now, we’re at the end of our time, and I like to end my shows with what I call the founder’s freestyle. I say my shows I’m not the only host. If you haven’t figured that out yet, tune in to the weekly show with Andrew Morgans. He talks all about Amazon and E-commerce. Also, Matt Watson has a weekly show coming out in March. So you’re probably used to hearing me and Matt together. We decided to put him out and make him do some other work too. So listen to Matt’s upcoming weekly shows. And don’t miss the weekly show with innovator founder Lauren Conaway. Great stuff, great content. If that isn’t enough, find us on Facebook, join Startup, Hustle, chat, YouTube, all of it. But it’s time for. More importantly, it’s time for the founder’s freestyle. So Nathan, like, what do you what do we leave out? What is a good highlight or anything else you want to say by way I’ve heard people rap, do poetry, do a whole lot of stuff, because it is a freestyle. So I’m not limiting you. I’m just trying to, you know, yeah. Here’s the mic.
Nathan Beckord 42:10
No, I think I’ll just leave kind of a little summary of a few tips for fundraising. I wish I could wrap it. I’ll come back on your show, and maybe come up with a wrap for this. But listen, if you’re gonna be fundraising, you know, you, you can do this. Like I say, it’s a skill that’s learnable by anyone, right? No matter your background, whether you come from engineering, whether you come from the product, no matter your age, sex race, you can learn how to raise capital. It’s not, it’s not rocket science. But you know, keep a few core principles in mind. One is to do the research, put in the time, and this could be 50 hours of research, to build a really good target list of investors. The more time you spend doing the research, the better. Kind of step two, you know, ideally, build intro paths to each investor. And that could be any network you already have. But it could also be reaching out to founders that those investors have invested in, hopping on a quick zoom with them, chatting with them. We have some templates for this, like these email outreach, but you know, engage with them and then ask them for the intro. Those intros lead to your pitch meetings. Like we talked about, make sure your pitch and financials and everything else are buttoned up and killing it that they’re awesome. And then once you’re in pitch meetings with a bunch of investors, get that momentum going, make sure you’re never the bottleneck, make things move fast, and generate momentum. I guess my single biggest tip is your job as a CEO when raising capital is to get momentum going for your deal, following up fast after meetings, and then just keep those relationships alive, nurture them, and you’re gonna get a term sheet at the end if you’ve if you follow those basic principles.
Matt DeCoursey 44:00
And if and what’s the name of your podcasting,
Nathan Beckord 44:03
How I Raised It.
Matt DeCoursey 44:06
I’m assuming that’s all and all the same places where podcasts are found.
Nathan Beckord 44:10
Spotify, iTunes, SoundCloud, YouTube.
Matt DeCoursey 44:14
So folks, go check that out because listening to people, you know, we’ve had, you know, we are, we had a little ebb and flow with the format in which we do this show. And one point, you know, is a little more story related based on like the startups’ actual experience. Now, that said, I’ve learned so much from listening to other people talk. So here, we’re kinda into my freestyle here. First off, I did just make a note that I kind of want to make a music video about getting funded because I actually think that would be pretty popular and funny, I think a lot of people, so I may do that works in the music industry for almost 10 years. So I got some interesting tools and resources there. But, you know, that said, you know, the, you know, learn from other people like you mentioned the warm intro First off, reach out to your network and ask people to introduce you. Most sites that are from funds or specific investors show the other companies that they’ve invested in their portfolio companies as they refer to it. And, you know, see if you know anyone there 70 want to give you an intro. In my experience, those results in a very accelerated process compared to the cold outreach, but don’t give up on that. Another thing, too, is, remember, on many levels, this is a numbers game, but Nathan’s, you know, write about the fact that you can’t just spam it, you know, so get down to like 100, 200, ideal targets and be personal with it. Don’t just do junk. And you know, like, an overall like, your thing, you just got to keep going, you keep going and going and going. The one thing I hear from people that didn’t get funded, it’s like, yeah, I reached out to like five different people. Yeah, cool. Yeah, like 70, short of the minimum, for most of the people that I know, that is really good at this. So that’s just the way it goes. Don’t get frustrated, be humble, and be receptive to the input you get because, by the way, that is a valuable part of the continued transformation of your pitch along the way. So I like your rage, rest, and repeat. You know, like, it’s kind of how it goes. And you know, you got to make adjustments along the way. I’m not a Patriots fan. But I love Bill Belichick saying you don’t wait until halftime to start making adjustments. So listen to what they say, Don’t just be like, Oh, they’re wrong. They’re telling me because if everyone’s telling you the same thing, that’s the echo. You need to be listening to that said. I’m gonna go finish setting up my Foundersuite, Nathan, so I gotta get out of here, man. I’ll see you down the road.
Nathan Beckord 46:47
Right on, carry on, plow through. And yeah, we’ll get you on our podcast after you guys raised some money. It was really a pleasure to be here. Thank you so much. See ya.